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wind up or continue business?

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batman1117
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wind up or continue business?

Postby batman1117 » Tue, 26 May 2009 3:25 pm

Hi,

We are in retail business for 10 years. Company uses to make money and the brand is already established. Due to some internal problems and funds is shortage. SO business is bleeding. Every month is lossing money. Confused to make an decision on continuing or wind up. Would like to hear some comments and suggestions.

1. Will I able to get investors or buyer of taking over business even it is at loss for last 2 year? Past records show it is making money. Is there any investor will buy such company?

2. What is the successful rate to refinace and revive the business in such economics situation now? If not, what should I do with business?
:???:
3. Company is in debt, should I borrow more money to repay the loan or just let company wind up by debtors? In future, any problem starting new company?

Appreciate your helpful feedback.

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ksl
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Postby ksl » Wed, 27 May 2009 12:05 am

These questions are difficult to answer without knowing what products you are retailing?

It is also something you should not be discussing too openly on a forum, for your own good. Unless you want to be taken advantage of, by your competitors.

You need at least 5 posts before you can send private message, it appears that you do need help, although one needs to evaluate a number of issues, before making any judgement at all.

No doubt the main cause of the losses is due to slower demand, however one needs to know the full reasons of why, is it the crash in the economy, or is it your product life cycle, or what.......without looking more closely at your business no one could help you.

Based on my experience of turning companies around, i would need more detailed information but I could give you more informative alternatives, if there is any life left in the business, whatever you do it is your choice!

What are you retailing for the last 10 years.

batman1117
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Postby batman1117 » Wed, 27 May 2009 1:06 am

Hi ksl,

We are in gift business. As you aware it has short life span and also need news ideas to attract customer. Due to cash flow problems, so companies do not have any injection of new products. But overhead is fix due to rental and wages. That why business is dropping on sales and profit due to slashing on price to get sales....so basically this conclude why business in loss.

However, we believe having new products line maybe will improve on the sales. But question is present crisis, what is the percentage risk taken on such situation? It will be on high risk. Will it sensible to borrow more money to continue with this business? Or stop the business and look into other business options. Any chance able to sell the business during such circumstances?Thanks

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ksl
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Postby ksl » Wed, 27 May 2009 1:43 am

batman1117 wrote:Hi ksl,

We are in gift business. As you aware it has short life span and also need news ideas to attract customer. Due to cash flow problems, so companies do not have any injection of new products. But overhead is fix due to rental and wages. That why business is dropping on sales and profit due to slashing on price to get sales....so basically this conclude why business in loss.

However, we believe having new products line maybe will improve on the sales. But question is present crisis, what is the percentage risk taken on such situation? It will be on high risk. Will it sensible to borrow more money to continue with this business? Or stop the business and look into other business options. Any chance able to sell the business during such circumstances?Thanks


Gift business, yes I'm afraid it's a bad time, and yes, you probably need to change direction into retailing something else, depending on your location and a few other factors....if you go bankrupt, you will not be allowed to start up again in the owners name for a period of time, I think 5 years, or until all the debts are cleared.

Not sure of the legal side, but SE may know more on that, although as i say, depends on a few other factors, if you should close shop...or if you should loan to reinvent your product offering, needs to be evaluated from scratch with a breakeven point to see how long it's going to take you to get out of the mess, without loaning more money if possible.

You need to be looking at cutting costs and inventory as well as knowing how long it's going to take to clear the debt you have. Basically you will be starting a new business with a new range of products, you can still remain in the gift industry if you choose the right products.

If it's corporate gift shop or tourist shop, one thing is for sure, it's a bad time, and the chances of survival are dim, based on your fixed costs, although you can minimise your high risk position, by doing your home work, to discover which businesses are not effected by the slump in consumer purchasing.

Think about it carefully, and ask yourself, where do you cut down your own spending, and where do you not cut down spending in a recession.

Everyone is different, yes, but their are products that are still in great demand, do you think consumers have stopped training for example, or stopped looking after their health? Always have a strategy in times of a recession, or heavy competition part of business planning to minimise risk.

If you have been around for 10 years, you may have a good loyal client base, which maybe of value to you or someone. Let me know your location if possible, shopping mall or other.

Is it a family business, how many employed ? what's the rental?

wcs
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Postby wcs » Thu, 18 Jun 2009 5:19 am

Sorry to hear about the position you are in.

Although you say it is a retail business, do you know if your customers are corporates who buy gifts? or just the casual purchase by locals or tourists?

I ask this because if you have a regular group of returning customers maybe it is possible to still service them whilst slashing overheads. Could you provide a catalogue or online shop for your customers to visit, then reduce the rental overhead or perhaps even some headcount?

It obviously requires a lot more follow-up but you could give a good service to your customers, even couriering the gifts to their offices.

If sales are adhoc and you have no record of your customers then it is a lot harder.

Best of luck with it.

morenangpinay
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Postby morenangpinay » Sat, 20 Jun 2009 4:46 pm

maybe you can offer a membership discount card to your customers....so they come back.. maybe you can offer personalizing gifts like putting engraving names those things?


goodluck hope you do turn it around.


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