business failure or me failure??

Furstenberg

I am 27yrs old and I love fashion so when the sports shop I was working in last year closed I decided to open my own boutique. Its a year on and I am stressed to bits, sick with worry and in some debt. My husband has been great and allowed me to dip in to our savings to pay off some suppliers. I have decided to close and want to be closed by x-mas but just cant seem to get out of it. The rent is €850 a week so the longer I stay here the money I am paying out.

I owe another €18,000 to suppliers, €2,000 to vat man,€28,000 to the bank and €3,000 to the county council. I ordered 2,000 bags with the shop name and ph no on them and I payed a €440 deposit. What the hell am I going to do with all these bags. I bought a Epos system (fancy till) for €11,500 and the company I bought it off said I would only get about €5000 for it because the training is the expensive part but I have advertised it in paper and have had no offers. I am left with about €50,000 worth of clothes. I brought them to the market and sold nothing. Saturday is meant to be the busiest shopping day but I only made €155 this saturday. I can't sleep, I feel sick and I don't know what to do. I am so afraid people are going to think I am a failure. Couldn't even last longer than a year. I tried MABS thinking they could help me, they said they would see what they could do but then I never heard from them again. Can anyone out their help me before I lose it all together??? Please

Gurgle

Furstenberg wrote:

I have decided to close and want to be closed by x-mas but just cant seem to get out of it.

Suggestion - keep open until january and have a closing down sale when people are out in their droves anyway.

You should be able to offload most of what you have in stock and reduce your exit debt.

Furstenberg wrote:

I bought a Epos system (fancy till) for €11,500

I think this is probably indicative of what went wrong.
When you made this purchase, what did you expect the till to do to justify the expense?

Did you make a business plan before you opened up? Was it a real one or just something thrown together to convince the bank? Did you follow it?

I wouldn't give up just yet, it may still be possible to recover your company and make it profitable.

Look at your problems - are people not coming into your shop or are they coming in and not buying anything?

If they're not coming in, you need to improve the look of your shop from the outside, you need to get them in there.

If they're browsing but not buying then either your prices are too high, your displays aren't done well or your sales pitch/methods are faulty. (I'm assuming you don't have 50k worth of crap goods in there).

You need a business advisor, who can be sourced through your local enterprise board.

SouperComputer

Sounds to me like you've almost given up before you started! This is what business is about, roll up those sleeves and get your heels stuck in.

Dont loose heart, take the advice posted above and dont give up. You HAVE to plan and stick to the plan. Get someone from the local enterprise board in. NOW!

Sell the 11K EPOS for a start, get a used one off ebay, anything that works. Dont take the companies valuation on it as gospel, shop around and get more opinions. Also, did you get the right amount of training, does the system work to your liking? Ive seen these POS places sell equipment that is way overpriced and over specced for the purpose. If you feel you were pressued by the company to go for this 11K solution, you may want to look into getting it back to them.

Whatever you do, dont get down on yourself. Having moved two the states one thing I have noticed is that if your business goes bad in Ireland, people tend to view themselves as a failure, here in the US, they just dust themselves off and have another crack at it.

Best of luck, be sure to post up your progress.

Savman

Good advice so far. Weathering the storm seems to the best option, you can't just throw in the towel now with such huge expenses hanging over your head. You really have to get it together, I don't know the exact circumstances of your business but rest assured if life teaches us one thing it's that no matter how bad things are, they can always get worse.

€11k for a POS system seems crazy, you can get bog standard tills for less than €1k from Viking Direct. I think you really need to get helping hands on board now and be extra shrewd to make up for the bad commercial management to date. There is always light at the end of the tunnel, do not give up, ever. Get a good night's sleep then fill yerself with caffeine and get stuck in. Take the bull by the horns and if if you take care of the little things the big things will take care of themselves. You can't obviously just conjure up €50k at the snap of your fingers so adapt a "baby steps" approach.

To attack a castle you must target its edges and work inwards...

Bear in mind you may have to make short term losses to get things moving again so start thinking outside the box.

Good luck with everything, hope you get it sorted.

Do-more

Hi Furstenburg - I had a wholesale distribution business which I ran for nearly 3 years before it closed me down! The whole aspect of being a failure really got me down for a long time after the business closed. The best bit of advice I got was from a business person who pointed out that 3 out of every 4 new businesses fail, usually within the first 3 years. You are not alone. If you look into the past record of some of the top business people they are usually the ones who keep trying new businesses till they find the one that works for them. Hard as it may be to do so it is best to look forward to the future than to dwell on the past.

ballooba

Furstenberg wrote:

I am 27yrs old and I love fashion so when the sports shop I was working in last year closed I decided to open my own boutique.

At 27 you have scope to have a good few more unsuccessful businesses before you hit the nail on the head. The only real way you could be a failure at 27 is if you give up.

Gurgle wrote:

Did you make a business plan before you opened up? Was it a real one or just something thrown together to convince the bank? Did you follow it?

Business Plans are an after-thought to justify intuition and a tool for instilling confidence in external stakeholders in that intuition. Perhaps her she was wrong to spend 11,000 on the EPOS perhaps it was necessary. Either way you learn from experience.

Do-more wrote:

The best bit of advice I got was from a business person who pointed out that 3 out of every 4 new businesses fail, usually within the first 3 years. You are not alone. If you look into the past record of some of the top business people they are usually the ones who keep trying new businesses till they find the one that works for them. Hard as it may be to do so it is best to look forward to the future than to dwell on the past.

Exactly, Everyone should have 4 chances at least.

That said, I wouldn't be too hasty to throw in the towel on this venture. Perhaps an outsiders perspective would be helpful, as it can be difficult to see where you are going wrong when you are completely immersed in the problems.

Gurgle

ballooba wrote:

Business Plans are an after-thought to justify intuition and a tool for instilling confidence in external stakeholders in that intuition.

I'm afraid thats probably the attitude that leads to 3/4 businesses failing.

If you do a proper business plan and follow it, then you cover the worst case scenarios and you plan how to get through them.

If you take away the business plan then the 'average' retail business comes down to; rent a shop, buy a load of stock and sell it.

What margin will encourage ppl to buy and still cover costs?
How much do you need to sell in a week to cover costs?
How long can you take setting up?
How much can you spend on the shop design internally and externally?
How much are you going to pay yourself?
How many ppl do you need to hire to open 7 days a week?
How much do you pay for good sales staff?

homeOwner

Furstenberg wrote:

The rent is €850 a week so the longer I stay here the money I am paying out. I owe another €18,000 to suppliers, €2,000 to vat man,€28,000 to the bank and €3,000 to the county council. I ordered 2,000 bags with the shop name and ph no on them and I payed a €440 deposit.

First of all you need to get money coming in and fast. I suggest you set up an ebay account and get selling your clothes online immediately just in case you get lucky and shift some. Also sell that POS system and get a cheaper one. With the money you get pay off revenue and some of your creditors.

Secondly you need to market you clothes at the right people. You took them to a market and nothing sold - what age group are the clothes for? If its teenagers and only older people go to the market you were targeting the wrong audience.

Thirdly either you are in a bad location or your shop isnt very inviting. Take a good look at some shops who you consider to be your competition and compare the look of your shop to theirs - be honest with yourself. A lick of paint here and there in the right colours can change the look of a place completely. What music is playing in the shop, is it offputting to your target audience? Have a discount bin and change the stuff in there every week.

Use your head - there is loads of things you can do before you give up! Get some tasteful christmas decorations out, give out free coffee, have an armchair with magazines where a husband can sit down while his wife is shopping......

Hang in there, get stuck in and give yourself a deadline. I think the other poster's idea of sticking it out till the Jan sales is a really good one but if it is still going no where by then you have to decide when to pack it in and come up with an exit strategy that will recoup some of your money.

Good luck.

Nuttzz

What about selling the busniess in whole, rather than lose money here and there say 6k loss on the EPOS, and €X,000's on selling the clothes on Ebay, it may be worth more as a going concern. It will depend on the type of lease you have on the shop and the location but you could get a reasonable price for the shop.

If you are doing €155 on a saturday either A) you dont have the footfall you dont have the right stock or C) you dont have it displayed properly. If you feel that there are plenty of people around and you have fashionable stock then contact the DIT about talking on one of their retail management students for the Xmas/ Jan Sales period, a fresh pair of eyes can make all the difference (btw I know the people in DIT who places students with companies so give me a PM and I'll pass you their contact details)

I am so afraid people are going to think I am a failure

funk them, You had the nerve to do something that 1000's more wish they had the guts to. What do you care what others think? what you think of yourself and how you husband feels about you is more important then the opinions of neighbours

Littlepete

Hey Furstenberg,

My advise is to keep open for the Christmas period and close down the second week in Janurary. What you need is a slow and steady get out strategy - continously discount the merchandise over time, drop 5% per week and have bargain of the day type sales.

Get rid of the fancy till as soon as you can, your a botique - a hand written reciept on a reciept book is perfectly acceptable.

Ask yourself the following questions:

How many potential customers pass my store?
Who is your potential customer (be specific - age, income, etc)
What invites customers in?
Is what you selling really something that customers would be willing to buy?
What percentage of customers buy?
What is the experience the customer has from the moment they see your store to the moment they leave with a purchase?
Are the prices competitive?
Do the customers feel they got value for money?
Do you have a system to encourage repeat business and word of mouth?


I'm not an expert but i am an owner of several businesses and if you based in Dublin - i'd be happy enough to give you an hour of my time and see if there's any practicle advice that might help?

soma

I would absolutely agree with the point that if you are sitting on 50k worth of stock, and about to enter the absolutely crazy period of dec-jan, then you should be looking at this period to reduce your losses. My girlfriend's family do alot of retail and they have always said that they are stunned at what sell's at that time of year, stock that sat there looking at them all year starts to get up and walk off the shelves.

Christmas, coupled with an aggressively-priced closing down january sale, could really IMHO put a serious dent in your losses so far.

I also think the idea of getting a quick online presence at ebay (and buy a digital camera) is a good one.

antoinolachtnai

Sorry to hear about your troubles Furstenburg. This stuff happens a lot. You are not unique, there are retail businesses failing all over the place, despite the boom economy.

Your business may have failed but it does not mean you are a failure.

It's only money. I know that sounds trite, but it really is. It's only money, nobody is dead, nobody's life is ruined. You have a husband who is going to help you out of trouble. You don't know it, and I don't expect you to believe me, but you are lucky.

You're actually not that badly off. If you can move on the inventory, you'll be able to pay off a good bit of the debt.

The EPOS might have been a bad move, but don't get preoccupied with it. The main thing is to shift that 50 grand of inventory.

Try and get your health together if you can. Think of that.

Best,

Antoin.

newman10

Hi Furstengberg

speaking as a clothing retailer try to stay in until after Christmas as this is the time to reduce stock. If you are definate abou closing maybe you should think about going on Sale before X-Mas, start on 8th Dec it is always a good draw.
If you only had €155 on Saturday with €850 pw you do have a problem.
How big is the town because that rent seems high for a retail unit in a country town. Rule of thumb is that rent is 10-15% of turnover and you do not say if you have any staff costs.
Also do you have €50k of stock at cost or is that retail value.
send me a pm and I will try to help

TempestSabre

Sorry to here your strife! I'm not in the retail trade but if it were me, I'd get some good financial and business advice, and some one to look over the business to see if theres ways of reducing the immediate operating costs, so that by staying open you make some money not increase your debts.

Again I know nothing about that trade but off the top of my head and perhaps these are bad ideas, but anyways. Could you look at doing Christmas markets, at low cost, get some family and friends into help you out (as volunteers not paid) perhaps find someone who'll take a share of any profits if they can sell some of your stock somewhere else? Into another store? Someone mentioned ebay, while I wouldn't spend much time at this, again you could get someone to do this and take share of profits instead of wages. At the end of the day if you can reduce your cost, get rid of stock, with actually spending money, thats the direction I'd be going. Easier said than done I realize.

pclancy

I wouldnt add much more then the excelent advice given in all the above but I just wanted to empathise. I had a business go under on me at 23 and it did nearly destroy me because I let it get to me too much, couldnt accept failure of the business as an option and kept going way past the point of sensibly stopping and getting out. You have a lot more assets then I had when things were bad and the time, as said above, is now to act. You can get out of this and still be alive and happy, at the end of the day if you still owe a bit you'll have time to pay it off, I will be for the next few years but the failure of the business I had taught me more about life then any degree and I know that some day I'll do it again properly. Most people I know my age are paying off college fees etc so I think of repayments as that. Life must go on and thought it feels a massive burden now and you just want out, im sure youi'll find after xmas things wont look so bad. Get creative about selling/advertising, find a way of filling the shop with bodies, grab it by the horns and just give it a big push allround-If I had another chance thats what I'd do!

Keep going, chin up and best of luck..

SimpleSam06

Furstenberg wrote:

I am 27yrs old and I love fashion so when the sports shop I was working in last year closed I decided to open my own boutique. Its a year on and I am stressed to bits, sick with worry and in some debt.

Hello Furstenberg, sorry to hear about your troubles. Going into business for yourself can be one of the most terrifying and rewarding things you can do. I'll add a few ideas to the excellent advice already laid out here...

1. Don't panic. Take full stock of your assets, what you have, and that includes people as well. You know where you are now, decide where you want to be, and map out a plan to get there, A to B to C.

2. Don't be too concerned about the debts building. Nobody wants to see a business go under, talk to the people you owe money to (calmly) and explain the situation to them, see if you can work out a longer term repayment. The rent is very high, you might look at moving to a less expensive place.

3. John Wanamaker said "Half the money I spend on advertising is wasted; the trouble is I don't know which half!" I know of one business (a furniture store in a very out of the way location) that has a very simple advertising plan; they take out a full page advert in the paper once a week. That fills the shop for the rest of the week and pays for itself. That approach may not work for you, but its an example of pulling in customers that I can say definitively works for them.

4. Form partnerships with other complimentary businesses. I'm not sure of the details of your boutique, but look at for example handbag shops, shoe shops, places like that. See if you can work out a deal whereby you send customers to each other, or recommend each other, put vouchers on the counter, that sort of thing. Maybe it might be possible to find a corporate sponsor to help with the bills, some big name brand that you can plaster the shop with.

5. The internet is low cost advertising. See if you can get an advert up on sites like weddingsonline.ie or forher.ie. Set up a simple website, make sure that your products are well displayed on it. If that works well enough, you might even move to being an entirely online retailer. Don't go with credit card ordering until you are getting in enough enquiries to justify the expense of that.

6. Creative stunts are usually a good idea. Get a coffee morning going or something, hold a wedding day special, hand out flyers while walking up and down the main street.

When it comes to opening your own business, there is no such thing as failure, merely instructive lessons. It sounds like something is going wrong somewhere; identify that weak link, or links, and rectify them. If its just that people aren't coming in, advertise. If its the case that people are coming in, but aren't buying, go poke around other successful boutiques and see how they are laid out, how the sales staff deal with customers. Note the places they are advertising.

You'll do fine if you keep your wits about you.

Savman

I think any further advice is pointless unless the OP surfaces again!

SouperComputer

Savman wrote:

I think any further advice is pointless unless the OP surfaces again!

Would be great to hear how things are going alright.

Last Activity: 13-11-2006

SoupyNorman

Must say its a fantastic standard of advice,

My spin on it;

Is this a business to you or a hobby? I dont mean to be offensive but you say that you have always been into fashion but there is so many levels of segmantation in the fashion world that you must have a target maket that is either A) rich and tasteless or mass market. What 'you' like will rarely be the same as what the public want!

A business plan for almost any business incorporates predicted loss-making for the first three years, believe it or not! So banks give you and me money to lose it for three years!

It boils down to a few factors,

Where you are : suburb/city (foot-traffic in a suburb is extremly low)
Target mkt : Do you know who they are?
Price : can your target mkt afford your clothes?
Personell: Are you and your staff good at selling

And most of all, can you be creative. There is 1001 independant retail outlets (how do you see yourself different from the competition?)

Nobody here can answer in full this 'case study' because we dont know the full details but the advice given has covered the fundementals and a little more.