When to call it a day

Hi Folks,

I set up a business last year and while things have been reasonable I don't know whether or not I should cut my losses and try to develop something else.

At the moment the business (it's a specialist retailer) has pretty much done its peak business for the year. It currently owes around 11k to suppliers. Rates since November 09 are also outstanding. All other tax issues are in compliance.

Would it be advisable to have things looked at by an external accountant (as opposed to our regular).

There is approximately €60k in stock on hand along with another €5k in assets so I am still in a position to salvage something before things get potentially much worse.

Any advice or opinions would be much appreciated.

Looks like you are carrying too much stock.

Anyway to liquidate some to pay debts ?

It's really hard to know without knowing the business. Talking to an outside accountant is a good idea but in the end you know better than anyone what to do. Try to take the emotion out of it and make a cold business decision based on the best advice you can get. From your post it sounds like you have the right mind-set and that's a good start.

Whatever you do best of luck!

I wouldn't be carrying a huge amount of stock in my opinion and actually have a bit less than any competitors in my part of the country. Having said that I am trying to liquidate a number of lines through price reductions. The problem is I put too much into a number of high cost, low turnover products at the beginning and now with my peak season over they are proving increasingly difficult to shift.

A lot of the product lines would be high end with retail prices of €1000-€1500 being typical.

Shannonman,

Its difficult but you may need to close it down. You really need to see a different accountant and run the numbers. I would be sceptical though.

Have you another means of income?

I may have some work (casual/not guaranteed) if I do decide to pack things in. It would only be a stop gap anyway as I would intend retraining.

On the legal side, where do I stand in terms of creditors. I will not close up until all suppliers ets have been paid but what would be the position on the lease on the shop.

Also as a director but also a PAYE employee, what are my entitlements to benefits.

For some help have a look at Donald Trump ... You can always set up business again ..even a different type of business ..Think logically now .


[FONT=Arial, Helvetica, sans-serif]Trump: The Art of the Comeback - Written by Donald J. Trump
ISBN: 0812929640 - Published by Crown Business in 1997[/FONT]

Directors pay PRSI Class S which has very little benefits (no dole). However, a ruling going through the EU at the moment, may rectify this.

I didn't know this was a company structure. This makes it all the more important to act fast if you have to.

When running the numbers, you need to break your costs down into variable and fixed. The fixed costs are very critical here. Is there a break clause in your lease?

The more costly items in stock, seems like they were a bad decision, made through inexperience in the business? A learning experience that you wont repeat.
If you were to offload these items, for something around cost or a little less, would the business be profitable.
Are you in a perishable type of product? Does your stock, apart from the few high cost items, hold its value or is it seasonale?

Getting advice from accountants is all well and good but you need one with experience in your type of business. Most accountants are good at the basics, but you know more about your business than anybody else. Would you talk to a similar business in another town, most business people are happy to lend their experience to others.
Your gut feeling will probably guide you. Best of luck with your decision.
Browtal