Banks trying to kill SME's

Calibos

Not sure if this is the correct forum so please move if not appropriate.

My question is this....

Are the banks trying to kill every SME in the country??

We're a family run Newsagent in business for 80 years. Our turnover has dropped 35% during the downturn but we are still turning a reasonable profit. The seasons and the weather affect trade so there can be cashflow issues.

During the Celtic tiger years the business had a €30,000 overdraft. We'd be in the black several times a month. In the early years of the credit crunch and recession, while not in the black once a month it used to be in the black every other month. This wasn't a problem for the banks.

About 2 or 3 years ago they cut our overdraft to €20,000. This started to cause liquidity problems in the Winter months when business is slower. While in the last few years we have never breached the old OD limit of €30,000, we have breached the newer €20,000 OD limit for a few hours or a day or two 2 or 3 times a month in the Winter until the next lodgement went in. The bank would reject Direct Debits that would put us €1 over the OD limit. As the money would be in the account a few hours or a day or two later, the Suppliers got Bank Drafts instead. A few suppliers started getting jittery however and reduced credit terms or put unreasonable conditions on orders. Lots of extra hassle!!

We resigned ourselves to this liquidity juggling act during the Winter months with the knowledge that it eases off and ceases for the Spring, Summer, early Autumn months and that the bank is kept reasonably happy that the account goes into the black several times over the Summer.

However, the bank have just contacted my father and want to convert €13,000 of the OD to a term loan and reduce the OD limit to €10,000. This could be the end of us after 80 years. Like I said, even with such a drop in turnover, with the efficiencies we've made over the last few years we still show a reasonable profit at the end of the financial year.

Is there anything we can do, anyone we can talk to. Is it worth talking to our TD??

Gloomtastic!

Have you talked to any other banks about taking your business?

mneylon

I've heard of similar stories from other shops around the country.

Is your accountant able to help you ?

I'm not sure if any of the other banks would be able to do anything different - there isn't exactly a lot of competition in the Irish banking market

Peterdalkey

This the old style of banking that they are getting back to. Overdrafts were supposed to be for casflow vagaries and term loans for asset purchase and working capital. Term loan rates are generally lower than OD rates so the actual cost is reduced, if you have a HARD CORE working capital requirement.
On your specific case, a total of €23K as proposed would appear be a bit light, perhaps you could get them up to 15+15?
It is not a lot of money and you are proftable, so I would aslo look around at the other banks, you would seem like an attractive proposition to me!

pedroeibar1

Adding to what PeterD has posted you have not said if the business is a sole trade or a limited company. Being around that long your asset position should be very good. Talk to your accountant first, explore the options, (e.g. longer credit from suppliers? are you selling on credit?) then talk to the bank again but at a senior level - if you are a customer of very long standing and that does not work go higher and ask to see a regional manager.

As others have said there is not much competition out there. The thing that has always pi$$ed me off about these bank antics (very common/frequent) is that the banks then pontificate about 'new lending' which in reality is simply a conversion of an OD to a term loan.

Calibos

Thought I'd update this thread after I came across it again during a search for something else.

Still trading but things are on even more of a knife edge a year later. Its so frustrating. We are currently negotiating a new lease on the premises we've been in 80 years. Should go from 20 grand to 15. Historically throughout that 80 years when we could afford to buy the premises the owner wouldn't sell and when the owner wanted to sell we couldn't afford to buy. During lease negotiations they intimated a desire to sell. Of course at a time we can't afford to buy. 12x the rent is what they'd want and so 180,000. Our negotiating team for various reasons say thats over the top. Jaysus if we could get it for 160000 and afford it we'd bite their hands off for it. As the employed son of the sole trader I'd love to get a mortgage for that amount. On a long enough term the repayments on it would be significantly lower than even the newer lower rent we'd be paying.

However, its rock and a hard place. We've cut our wages to barely above dole levels to improve the net profit figures for the bloody bank so they don't get jittery and call in the term loans and OD and collapse the business. That means I wouldn't get a mortgage on my stated income. Sole trader father couldn't get a mortgage for the purchase of the premises either due to the other loans, his own house mortgage his age etc Reducing our wages also paradoxically means more of the profit of the shop is exposed to the top rate of tax via my sole trader father and thus the tax liability is higher. Its all bloody computers making the decisions in the banks. Theres no explaining to them that if they weren't jittery about net profit we could pay ourselves (the emplowees) more and save thousands in tax liability. If we owned the property we'd safe further thousands a year and they'd have a major asset as collateral etc

I dunno, maybe I have a simplistic understanding of all this....

delahuntv

have you looked at alternative finance such as linkedfinance - I have 2 buiness aquaintances who have used linkedfinance for loans of 15k & 20k.

It operates like an auction with rates usually at 8%-10% - a ot of business angels are on it and provide small amounts to most applicants €250 - €500. Linked finance do all the work, so you sign one piece of paper and make one payment back to them.

As for owning the property - it sounds a good idea, but (after an experience of my wn), a retailer should stick to retail and let bthe property owners stick to property.


Here's one example (not my own) - shop in Carlow Town was valued at 600k (500k £) in 1999 (before the gold rush), a few months back that shop sold for less than 150k. Why? Because the town centre of Carlow no longer has strong footfall as the consumer is very mobile and will spin to Newbridge or Kilkenny.

So I'd say forget about owning the property and concentrate on improving the retail side. See what others are doing, maybe look at joining a symbol group or seeing what seasonal products can be offered or can other things be done in the store.

My local newsagent has changed immensely in the last 2 years - it now sells a large range of freshly baked produce, local veg, local jams, has a small cafe, upstairs is a gift shop and they now supply food to the local pub for funerals and other events (thus helping another business). Whilst they have less everyday groceries, I spend a lot more there than before as do others and they seem to have more staff.

Gloomtastic!

Good to see you hanging in there.....

i may be wrong on this but it won't be you or your dad buying the premises, it will be the business who will be paying the commercial mortgage. Makes perfect sense to buy it and it will give the business a tangible asset that should increase your negotiating power with the bank.

Put together a detailed business plan for buying the premises, approach your bank and all the others to try and get the money. They have to see the benefit to the business as well.

Good luck and never give up!

Duckjob

Gloomtastic! wrote: »

Good to see you hanging in there.....

i may be wrong on this but it won't be you or your dad buying the premises, it will be the business who will be paying the commercial mortgage. Makes perfect sense to buy it and it will give the business a tangible asset that should increase your negotiating power with the bank.

OP mentioned his/her father is a sole trader so in that case I dont think there is any separate legal entity for "the business" (open to correction), so nothing there to "own the asset". Not sure how purchase of property as a sole trader would be treated in fact.

Gloomtastic!

Duckjob wrote: »

OP mentioned his/her father is a sole trader so in that case I dont think there is any separate legal entity for "the business" (open to correction), so nothing there to "own the asset". Not sure how purchase of property as a sole trader would be treated in fact.

Maybe time to start a Ltd co then. Best talk to your accountant OP.....

Calibos

Well its getting to the point of retirement of my father anyway. We have mooted officially taking over anyway. Those conversations went by the wayside the last while when we didn't even know if the business would survive and when we were just trying to save the business full stop. However if his retirement was actually something that helped safe the business by whatever means then he'd retire tomorrow. If I was the new sole trader with my brothers as employee's would that change anything with regard to eligibility for a business mortgage to buy the premises. ie. the low income I take from the business at the moment being a positive with regard to getting the mortgage as opposed to a negative like it would be if I were wanting a personal mortgage to buy a house for myself??

If a mortgage is possible is there term limits for a business mortgage to buy out the premises. Even if there was a term limit of say 15 years and the repayments were 15000 a year, surely the bank would think it better for us and them to pay them 15000 a year for 15 years than for us to pay a landlord 15000 a year in rent forever??

The business is basically sound. With our flexibility we've been able to outlast some competition thats closed or closing, have survived into the recession and out the other side and if we can survive these simple cash flow issues and some legacy debt with two years or so left, we're poised to come out the other side stronger than ever when consumer confidence and spending catches back up with the overall national economic and employment outlook. For instance our turnover dropped 40% not because footfall dropped 40% but because consumers spent 40% less. Footfall is basically the same which is a good sign I imagine. Being able to buy out the premises would be the icing on an optimistic cake. Even looking at it pessimistically it seems like a good investment. Say in 5 years we've saved the business but going forward it just doesn't look like convenience stores have a future. Upstairs is already an apartment we're getting nearly a grand a month for and if we closed the shop and converted it into an apartment too you'd be looking at 1000/month apiece rental (24000 a year). The fact that it sounds like such a good investment regardless of continuing a shop in it makes me wonder about the mooted 180000 purchase price that our lease negotiators seem to think is too much. It sounds like its not enough given what we could make out of it as a simple pair of flats. We must hold all the cards with regards to the lease or the owners ability to sell due to our length of tenure or something. Father has historically been solely involved with dealings which is why I don't have 100% of the info myself. Think I'm going to have to step up and start attending all meetings with accountants and auctioneers etc going forward so I'm au fait with all pertinent info.

I just hope the banks or revenue don't pull the plug on us in the last 100 metres when we are so close to getting out the other side in a better position than ever.

Duckjob

OP really this is all stuff that your accountant should be answering for you. Their job is to give you advice on financial arrangements that make the best sense for your business and for you.

On a related note, as a sole trader if the business did go bust with him owing money creditors could come after your fathers personal assets like his home etc.

Calibos

Cheers, I understand that. Was just trying to get the lie of the land so to speak so that I didn't make a fool of myself in front of the advisors with naive suggestions.

Gloomtastic!

Calibos wrote: »

Cheers, I understand that. Was just trying to get the lie of the land so to speak so that I didn't make a fool of myself in front of the advisors with naive suggestions.

Don't worry about that, that's what you're paying them for.
However, you will need to be clear where you want to be at the end of this process.
Eg You owning the business as a limited company, keeping your siblings on board and successfully getting a bank loan to buy the premises.

Duckett

succession is a tricky process and needs to be planned carefully with all the stakeholders (dad, children etc all involved in lots of coffee and tea chats) so everyone knows what exactly is going to happen next. Secondly, you need to be present at all meetings with funders, landlord etc so there are few surprises and you know where all the bodies are buried. As a sole trader it is not ideal and the Ltd company option should be given very serious consideration. Finally, I suggest you look at both MicroFinance Ireland and secondly consider approaching the Credit Review Office. While you have not had a bank decline you are very unhappy with your Bank's behavior and the CRO will be interested and may even be able to help.

antoinolachtnai

You really need some accounting advice here.

I have a feeling that the fundamental problem isn't your financing. It's that the business isn't making enough profit when you take into account the proper pay employees should be getting.

A lot of things have changed in your sector. There is no shame in looking hard at your business and trying to decide if it makes sense for it to continue in its present form.

delahuntv

as duckett has said, Microfinance Ireland (gov supported scheme) would be a good option.

Also as you are about to enter into a new lease (yes, you have security of tenure so LL has to deal with you), maybe this is a time for the business to transfer over to you and siblings and for it to become a limited company.

As a new company you will have tax free status for 3 years (or more assuming profits are not huge) and also be able to look at other forms of finance / incentives.


Definitely a business advisor or business oriented accountant could provide some very good advice that would be worth its weight in gold.

pedroeibar1

The best of the recent posts is IMO this

OP, bluntly you need to wake up and see the wood, not a tree. The least of your issues is finance – you are a small retailer, probably working day and night and by your own admission for less than the minimum wage. More debt is not going to fix that.

Your business model is not working and you are in denial as illustrated in

Calibos wrote: »

- The business is basically sound.

No, it is not sound, it is at death’s door, and that is why you cannot raise cash, particularly with a declining turnover. There are succession issues (elderly parent, siblings in the business), corporate structure issues and possibly the staff overheads are too high indicated by

Calibos wrote: »

If I was the new sole trader with my brothers as employees would that change anything….

You need a series of minimum wage part-timers, not family members on the payroll.

Calibos wrote: »

For instance our turnover dropped 40% not because footfall dropped 40% but because consumers spent 40% less. Footfall is basically the same.

You are fixated on the wrong topic (property/cash) and are missing the BIG question – WHY falling turnover? what is the reason for that? Unit price too low? Poor salemanship? Wrong/bad product lines? Bad pricing? Too high a margin? In the OP you said you were a newsagents – what percentage of that product accounted for your t/o? That sector is dying, you need to specialise or diversify in additional products.

Calibos wrote: »

going forward it just doesn't look like convenience stores have a future.

Wrong. Convenience stores DO have a future, it’s well-known that the future is the smaller store, as exemplified by Tesco Express, Carrefour City, etc. It is the very big ‘hypermarkets that have the problems – look at the news on the two former names and see how they are handling the matter.

New structure - Converting to a limited company is possibly the worst thing to do as it will frighten the cr@p out of suppliers and they will tighten credit terms (or refuse them without a personal guarantee).

And I wonder about your accountant – probably s/he is the same person for the last donkey’s years and has no idea of what needs to be done. Also, the first question is WHO is the accountant working for, you, your father or ‘the business’ because the advice given will depend on that.

That fact that your footfall is the same is very encouraging. Address the issues above first, then think about acquiring the property. Ensure that you have a break clause in the lease when you renew, and also try for an option to purchase one. Best of luck with it, I am a supporter of 'local'.

2moreMinutes

delahuntv wrote: »

As a new company you will have tax free status for 3 years (or more assuming profits are not huge) and also be able to look at other forms of finance / incentives.

The new company tax exemption only applies to new trades & is also linked to the amount of employers prsi being paid so it's not as glamorous as it comes across at first.

Definitely a business advisor or business oriented accountant could provide some very good advice that would be worth its weight in gold.

A good accountant should definitely be consulted or the terms of engagement with your current accountant updated to include business advisory services. It will obviously involve an additional cost but it will also pay for itself in the event of good advice.

Converting to a company seems to be the new cool advice given to/by a lot of people but to be perfectly honest, if the current business is only profitable due to staff taking significant wage reductions, there is far more to be concerned with than the structure of the business.

Although there may be nothing being hidden from you, I'd also highly recommend getting up to date with all the information that your father currently has.

Gloomtastic!

^ and along comes one of the Pedros to piss on the fireworks!

Try and take what he says OP as a positive as opposed to a negative.

Do it, review it, change it! You're already doing it (that's the hardest part). You just need to make it better. Buying the premises will help and you'll need to start a Ltd co. to make that happen.

He's right about looking for new advisers.

See where you want to be and make it happen. Talk to your suppliers, let them know you're moving forward, keep it all positive!

Gloomtastic!

^ and along comes one of the Pedros to piss on the fireworks!

Try and take what he says OP as a positive as opposed to a negative.

Do it, review it, change it! You're already doing it (that's the hardest part). You just need to make it better. Buying the premises will help and you'll need to start a Ltd co. to make that happen.

He's right about looking for new advisers.

See where you want to be and make it happen. Talk to your suppliers, let them know you're moving forward, keep it all positive!

pedronomix

If they are good fireworks, two Pedros are needed to extinguish the fire. The business is in decline and has been. It has survived by the family effectively subsdising it. Fine as long as it is being fixed/improved/reinvigourated and that the new model has a sustainable future. I see no evidence of either and clearly the bank are of the same view. As a long standing customer, it is probably burning goodwill etc at the bank. If it were a trade only going a few years, they would have called it lomh before now. Revenue arrears, no profits...the bank is relying on the defacto personal guarantee of the father, who probably has other personal assets they can seize, if push comes to shove. Pedro Eile put it rather poignantly, wake up, before it is too late.

pedroeibar1

The problem Pedronx, IMO, is they’re not fireworks. To remain with Gloom’s metaphor, I think you and I are agreed that the business cannot be described as a firework, it is a damp squib that is just about sputtering along, the odd fizzle keeping it going. Without addressing falling turnover it has no hope of taking off, particularly if it is to be shackled with more debt and a new corporate structure - simply, that will scare the bejas out of suppliers.

OP should NOT go near suppliers until he has a thought-through plan, a positive good news story to tell; they last thing they want to hear about is him buying a property or a shift to limited liability. They already know what is happening just by looking at his a/c on their sales ledger. And some probably have his account "on watch" already.

Calibos - I give what I regard as appropriate advice, hints and suggestions. I did say it was blunt. I don’t ‘do’ nice or blunt for the sake of it. A spade is a spade, I don’t call it a trowel to be delicate. Your business has a future because it has footfall and a guy who cares but needs to refocus. The spark is there, the rest needs re-igniting. What you have to do is refocus, match properly priced and sought product with the footfall you have and cut out the dead wood. Get that right first (i.e. put your business on a proper footing) and the rest will follow on.

Gloomtastic!

I'm on the OP's side here. He wants to make a difference, otherwise why would he be here?

I come from a family that traded in a small town in Ireland for over 180 years. My Dad took over the business from his Dad about 40 years ago. He ran it as a family business very successfully, it paid all the bills and survived throughout the 70's and 80's when this country was run to the ground. However, one of his weaknesses was he was too nice and let customers run up large credit accounts and then found it difficult to get the money off them, if ever.
When it came to succession, like his father before him, everything went to the eldest son. Regardless of ability, personality or acumen, the fate of the business was left to the vagaries of birth.
When my Dad, at the age of 81, could no longer run the business due to serious ill-health, my brother took over. It was gone in two years.

One of the original posters on this thread, PeterDalkey, a very talented businessman who generously shared his knowledge here for many years also inherited a family business. I don't know what the line of succession was in his family but his business acumen and attention to detail was blatantly obvious to all who came here. Imagine our surprise then when he announced that his business had gone too. He no longer posts here, and while we don't miss him losing his temper, this forum is a lessor place due to his absence.

So, is the OP more like my idiot brother or our former comrade Peter? I don't know. All I do know is that he wants to take his father's legacy and try and make something of it. For that he should be commended and helped.

pedroeibar1

What makes you think you are the only one on the OP's side? :rolleyes:
Of course the OP wants to make a difference, yes that is why he is here and why he - and other serious mature posters - deserve assistance and a variety of views, like those of the two Pedros and many others. However, a problem is that some people on this forum are like your idiot brother (your words) and either give inappropriate advice or, what is worse, follow wrong advice that has been given here.
FWIW PeterDalkey was AFAIK the sixth generation in the family business, and to say he "inherited" a business is not accurate - he inherited a crock and turned it around, built it up, sold its assets and did something else. That is called seeing the wood, not a tree (see my post above). And unlike your brother he was not the eldest son, and he "sometimes" posts here.:P:D

Calibos

I've taken a backseat and not involved myself in the financials very much because any time I did it was a bit of an exercise in frustration. My advice was never believed or taken. Mom and Pop know best! Lost out on a tracker mortgage in 2008 because they paid the builder his first installment with cash for some reason and when they finally went to the building society to pull the first tranche of funds for the builders next payment, they were told the mortgage agreement had expired and as they knew they had us over a barrel as demolition works had already started, the new mortgage agreement drawn up was variable. Then they fixed for 5 years at 5.6% in 2011 against my vehement advice. What would I know, I've never bought a house!!

As the liquidity/cashflow issues caused by the banks have caused more and more stress over the last few years and the aging father got closer to calling quits on the whole business, I thought I was fine with that. Because I kept out of things for reasons like above, what did I know. Maybe it was time to give up. Even if it was not, do I want to take it over and save it, do I want to deal with possible big family rows during the process.

However as the possibility of shutting up shop got closer and it became more real I realised that I do actually care, I am prepared to put up with some rows, I do want to see the business hit its 100th anniversary.

I know that buying the premises is not the panacea for our current problems but the fact that its a possibility is another tick in the pro column for not calling it quits now if there is hope of saving the business. If the business is dead on its feet then fine. We close it. But if its not definite and dad just doesnt have the energy anymore dealing with supplier,bank revenue demands etc to try and last another couple of years then maybe the prospect of finally not being under the thumb of the landlord is enough reason for me to fight just a little bit longer. ie. if we can just get out the other side of this we could be in a better position than ever.

The reason the premises purchase made my ears prick up is that historically every time we improved or did anything to the premises our rent was increased. Back in 97 we did a big job and doubled the floor area of the small shop. Our turnover doubled overnight (as did our rent) Then in 2003 when the Celtic Tiger consumer confidence really kicked in our turnover nearly doubled again in the space of a year. Up to 950,000 by 2007 IIRC. Haven't got access to 2014 accounts as the bank have them and they are lower than 2013 but not by a huge amount. 2013 Turnover was 700,000. So Turnover has dropped 30% from the 2008 high(not 40% like I said a while ago) and is back to 2003 levels. Anyway..the premises...Assuming we saw ourselves through the current troubles, the prospect of getting the premises for 160,000 odd seems like a no brainer(even the 180,000 the landlord mooted). If it was converted back to a single dwelling it would be worth more than that. If it was converted from a shop and 1 flat to 2 flats it would generate a 16% rental return. If we decided to sell, we'd get a lot more for a shop/flat and title deeds than some goodwill and a lease which is the case now. IF we survive we could double the floor area again if we wanted without asking landlords permission or fear a resultant rent increase. So to re-iterate. No I don't think the premises purchase is a panacea for our current problems, its not a priority either. We've to save the business first. But its possibly a reason to see an even brighter future than ever in a few years and another reason to fight for the business now.

Getting back to the turnover. It sounds like some people are saying that falling turnover is a reason to call it quits or a good reason for the banks to pull the plug?? How many rises and falls in turnover in depressions and recessions has this shop seen over the last 80 years? Surely one tries to weather the storm as best one can. Banks used to help you do that. However nowadays they don't care about your business or keeping you as a customer. You are just a source of deposit funds to finance the fact that they are defacto investment banks now.

I don't see my cut in wages as a reason to quit or give up. Surely its just something a family business has to do to weather the storms. Not a reason to throw up ones hands and say Fcuk It!! Shop can't pay me an ever increasing wage, I'm outta here WahWah!! I actually looked at family staffing the shop as giving us some scope for making cost efficiencies that other shops couldn't or wouldn't do and maybe help us to outlast the competition and come out the other side in an even better position. We are outlasting some competition so far. Other shops hit a staffing crisis where if they drop wages low enough the staff are better off on the dole and are gone. No staff, no shop. We were able to drop our own wages while at the same time were prepared to work longer hours.

Our wage bill was higher in 2003 with the same turnover as 2013. The banks and suppliers weren't jittery then. Thats whats so frustrating. We effectively lost two lines of credit at the same time. The banks cut back on our credit directly and also cut back on suppliers credit which meant they reduced our credit terms too. The thing that started the whole economic collapse ie. the Credit Crunch is the one thing they still haven't fixed!! Business still profitable but now much less access to credit to smooth out cashflow issues. Losing credit from some suppliers means having to purchase from wholesalers and losing margin. This also all means we haven't the spare funds atm to invest or risk new product lines or make improvements etc Its a Catch 22. Give us some breathing room lads and not only will we survive and you'll still have our business but we'll come out the other side stronger than ever.

Why is our turnover falling?? Why was it falling everywhere else in the country? Less money in peoples pockets. Thats why I thought that the footfall remaining broadly the same was the silver lining to that cloud. That it showed, we hadn't lost custom just seen a fall in spend per customer which would reverse itself when consumer confidence returned and people loosened the purse strings a bit more. That this wasn't like the Carlow town retailer another poster mentioned earlier where footfall evapourated. That this however added another layer of frustration. That it would kill me to think we lasted this long through the economic turmoil, with level footfall were poised to reap the rewards again when consumer confidence reached pre crisis levels again, only to fail because of banks not helping cashflow issues just before the consumer confidence turnaround happens.

Since I bumped the thread its mostly been asking questions about buying the business premises at some point and the original subject of the thread was the banks cutting back access to credit and the catch 22'2 that invokes.. Maybe thats why you haven't seen evidence of ideas for fixing improving or re-invigourating. The premises buyout kinda touches on that in so far as owning means being able to expand the floor area and thus make room for more product lines and a greater amount of same. I've been trying to tell my dad that groceries aren't a big seller for us simply because we don't have enough of them. We're not a destination for convenience groceries because we don't carry enough. Customers just say, Calibos's shop 'probably' doesn't have it we'll hop in the car to Tesco Express instead. He see's low grocery sales as a reason to get rid of those product lines whereas I actually see it as a reason to stock more. I'd be reducing shelf space dedicated to Magazines which are in decline due to the internet and expanding the groceries!! But again, without access to credit I can't buy the slushy machine or ice cream cone machine I think would sell very well, I can't buy the chiller to display the premade sandwiches or the coffee machine for the Dart Commuters, I can't afford to build the displays and shelves and window display ideas I have for the sweets and candy that are a big seller but could be much bigger. Its all in my head, I can't afford to make these revenue improvers/generators a physical reality at the moment. I don't even need to pay thousands upon thousands to shop fitters to make these dreams a reality. Jaysus, myself and my brother worked through the nights over 2 weeks a few years ago to reconfigure most of the counters and shelves quite dramatically with a bloody multitool and 12v drill that customers thought we had paid shopfitters a few thousands for. Major improvements to the efficiency of the whole floor area and eliminated deadzones and chokepoints. I've got the brain to formulate plans, am handy enough to do the cabinetry and joinery myself, Now enough about electronics to make innovative, eye catching custom displays, My mind is overflowing with ideas that could increase footfall even further and turnover but we simply don't have the spare funds to do any of them.

The timing of my grandfathers death was unfortunate in so far as it positioned the buyout of the family homestead next door to the shop (fathers siblings share of inheritance) right on the cusp of the financial meltdown which meant funds that could have been used to smooth cashflow and improve the shop to help us through the downturn went on the house instead. The timing of my greater interest in the shop and its future and my mind exploding with ideas was also unfortunate in that it happened after the shop was in trouble and not during the good times when there would have been more than enough spare capital to implement them all. When we had the money, I hadn't the desire,. Now that I have the desire we don't have the money :rolleyes:

Calibos

Jaysus, that wall of text is what you get when you have a touch of insomnia and a racing mind in the wee small hours.

Rest assured I've taken everything on board without prejudice. I'm under no illusions that the continuing credit crunch wouldn't be as big an issue if the profits hadn't fallen and were large enough. I counciled that we needed to be more proactive rather than reactive over the last few years to prevent us falling into the catch 22 credit hole we now find ourselves in but was told I couldn't speak for my brothers when it came to self imposed wage cuts. I think pride came into it a bit. I wasn't heeded when I explained my rationale that it was better to take a small hit to pride of dropping your kids wages but helping to ensure that you had a viable business to hand down to them rather than paying them their current wage till the last possible moment but risking losing the business and not having anything to hand down to them. It was the frustration at having things to say that in most cases turned out right but not really being listened to. This caused my to to go back to taking a backseat and thinking I should just let the cards fall where they may. Like I said earlier though, it's only as things looked closer to the end game and more real that I realised I couldn't hold my tongue anymore and did in fact want to save the business myself.

Will ask to attend any meetings with accountants, solicitors, financial advisors, bank managers etc going forwards. This thread was all about getting a feel for what might or might not be possible, what ideas are good or indeed naive to run by these people, what ideas I share with whom or equally not share. Eg talk to accountant or solicitors about ltd co but not suppliers or bank managers yet etc

antoinolachtnai

You really have to decide what you want here.

The reality is that certain things are possible, and other things are not.

I would say at a guess that this business can be saved. I say that not because I am grabbed by your enthusiasm but because it seems to be reasonably well located, there is space to extend and the rent is low. How the business could be saved is a technical topic and lots more can be said.

I think this is much more than a business however.

This business is part of the glue that is holding your family together. Unfortunately, it will not be possible to continue this, at least not in the same way. The business is too small to have so many people involved in its management. It is too small to support so many family members. The expectation that there will be anything of significance for your brothers (three?) to pass on to their children is unrealistic. The business is just too small. At the same time, the current leader of the business isn't really able to carry on.

You really have to deal with this family issue in tandem with the business issues. Realistically, I think you will have to find a resolution where one person will take on the business as the sole owner.

It may not help you much but I can tell you that your family are not alone. I recently saw somewhat similar problems in a famous Dublin business. They are turning around maybe 20 times what you are, but they still have your problems. The turnover is too low, the margin is shrinking, the old ways don't work any more, but they find it very difficult to appoint and stand behind new management.

pedronomix

The problem is as stated, TOO! Too much focus on family niceties/concerns, TOO many hanging out of the business. I just hope it is not Too late. Solution is simple, get them out or get out yourself!

Calibos

To clarify, it's the father and 3 of us. It's the minimum staff and still have days off. Even in grandfathers day before his son and grandsons became involved it was him and 3 staff. Certainly we were paid more than a minimum wager. So overpaid but not overstaffed. Overpaying of family member staff was not as much of an issue when that money was kinda recycled back into the overall family income pot where we paid our full obligations with regard to the costs of running the household. The side benefit was that some of my fathers tax liability was reduced. Unfortunately, now we have to keep net profit up for the benefit of the banks, hence a cut in wages but dad now had to take up the slack in the costs of running the house and the negative side effect is more profit exposed to his higher rate of tax. We can't minimise our tax liability like any good business should. We can't even purchase some of the things that will help us generate more revenue because the write offs would drop the net profit too low for the banks tastes. Catch 22 again.

antoinolachtnai

I think you should give your bank's representative a little more credit. He is doing what he can to advise you so that he can avoid the people in the lending department from just stopping all credit and pulling all the money back. Your business is so marginal that that is their mode of thinking. That is basically the choice. Pay the tax or stop drawing bank finance.

Your grandfather may have operated a similar model, but he (or his bankers and suppliers) didn't have to worry about tesco express, lidl and dealz.

Have any of the brothers gotten a professional qualification in retail or business?

Have you personally any ambition to earn more? I would really sit down and consider what is best for you and your family here, for the long term.