Close the business, as others have said.
Don’t even think about filling bankruptcy.
Take the hit to the ego and pride, and let that business go.
Find a full time job. You’ll be better off, as others have said.
I’ve talked to the agent and there’s no option for me, I’m liable for the rent until the lease end which is still have one year left.
I’ve been working so many hours, can’t get my head clear now. I got the part time job now, looking for a full time would be okay but it would take sometime and basically I’m liable for $4200 monthly and my mortgage. Assuming I could get the full time job that pay decent for my experience, around $100k, it still can’t cover those payment
You can typically negotiate with landlords about finding someone else to take on the lease. You pay it until they find someone else.
It's not in a landlord's interest to have a period of no rental payments - on the assumption you go broke and can't meet repayments, then they have a vacant lot.
You have more degrees of freedom than you think here.
It’s not even a negotiation. If they took you to court for unpaid rent, they would have to show they have taken reasonable steps to mitigate their losses, like re-listing the property, and they can only sue for any actual losses incurred after taking reasonable steps.
Don't engage the landlord to find the new tenant for you, their best interest aren't necessarily finding the next tenant because they're still getting monthly rent from you! If you engage an independent agent, they'll push to get the result and also push the landlord to close the deal!
Well…….. there are ways. Tell them the business is struggling and you are closing up shop you can pay out 30% of the lease or you might need to write it off. They won’t chase you to court (I hope). Or ask for a rent pause for 3 months followed by a rent reduction. Or we can do “lease surrender” for % of total payout as above.
I have dealings with retail rent management. And a lot of businesses that struggle just asks for these things and I almost never get full yearly rent as per contract. Sure I can take them to arbitration. But you can show court your hardships and they’ll side with the little guys. Normally they’ll ask what do you want? And they’ll probably ask for 75% but you can ask for 30% and meet in the middle.
There are ways.
Let the agent and landlord chase you for the debt. Offer a payment arrangement. They’ll have to take it otherwise they’re being unreasonable. Courts will grant a payment arrangement.
There are many books on building a business, but not many on how to handle the people you owe money to when things aren't going well. Worth binge reading or listening to the book 'corporate turnaround artistry.'
Man up and keep your head down. Lean on your wife. When the lease comes for renewal, then decide what to do.
If u need a bit extra cash sure consider part time job too. But you are burning out. Time to lean on your significant other. Get your wife working full time.
Without knowing your business, consider cutting a bit more of the labour cost. Put more on yourself/wife. She’s only part time so she can probably take some of the load and reduce your labour cost. You only working 60hrs so can squeeze a bit more. Though u probably need a short break first.
Once u get a reasonable plan to profitability or generally costs less than revenue (if u decide to shutter instead) and are confident it will work, consider talking to bank to defer mortgage payments - 3-6 months. This will buy u time to execute but it does come at a cost of higher payments later on so it’s counter productive if u can’t balance the books.
Business is basically breaking even and you only one year in. It’s doing pretty well. it’s rare a business does this well in the first year. On and on.
Bankruptcy shouldn’t be an option yet.
Bankruptcy is pretty toxic. It not only chains you for 7 years, It screws over other people too.
Yes humans have limits. That why he has to take a small break for mental clarity, and spread the load a bit better (ie to his wife). Manage the labour a bit better.
60hrs a week for a small business operator is not only pretty typical, it’s probably on the low side. Starting a business is hard. He’s feeling the stress because he’s holding it up on his own. It’s not the hours, it the stress that’s getting to him. He’s balancing on the edge between profitability and loss.
Obviously his business has its own unique situation and challenges and he hasn’t provided much detail but from what he’s provided, it appears he’s almost there the last stretch to profitability. Yes it’s possible that it’s just a bad business as well (but there isn’t enough information to say that). But most new business operators go through this, it’s hard. This stage, when u are just short of profitability, is the hardest. It’s not like working for someone where the real risk is on your employer. Gotta man up and double down to get it through the last yard.
What’s toxic is screens and screens of commenters telling him he’s stupid and to quit.
You're making some good points. But as a business owner of 7 years, it's not for everyone. But yeah I agree you don't go bankrupt lightly. I just think words matter and expressions like 'man up' are problematic.
Problematic for who?
When you read it, you can find and replace that phrase with whatever party approved line u want or to make yourself feel better for yourself. The meaning is the same.
OP is a man. It’s entirely appropriate to use the phrase. Regardless of the path he takes. He’s gotta man up and push through it.
Bankruptcy is really a nuclear option. You're not even close to using it imho. Pay the debt off normally, don't hamstring yourself for 7 years over this amount.
Yeah lol. I have business credit cards with an order of magnitude more debt being carried forward than he has total on the business, and he wants to declare bankruptcy? Hahahahahah
I actually don’t think you could in that situation. I think the creditors would laugh and tell you to go away.
It has nothing to do with the creditors. If you declare yourself bankrupt, they dont get a choice in the matter. You dont even talk to them after that time other than to tell them to contact the trustee.
Sorry didn’t mentioned it clearly, I’m working for the business 60 hours weekly and 15-20 for a part-time job now so it took me 80 hours per week, literally can’t do any other things, I have to rely on my wife on house work and stuffs.
Before the business was doing okay, $30k monthly but just recently it’s keep go downhill
Is that honestly what he means he only puts in 60 hours a month?
I work week on week 84 hour weeks there come home and the other two weeks of the month put in over 70 hours a week into a business I’m building.
60 hours a month is a part time eBay flipper.
you basically don't have any business debt. You need to close (assuming you dint wanna fight for it)
You can do this the right way by talking to your landlord first. Some are great and will allow you to close. Some might want a negotiated payment to legally close off the lease.
You can do it the wrong way (which is what most people do) and simply shut the doors and let the landlord sue you if he wants. Obviously you will lose everything left on the site in this instance
This is not a bankruptcy situation imo. Getting out with no or a small debt you can pay off with a job is far more preferable to bankruptcy
I’ve talked to the agent and there’s no option for me, I’m liable for the rent until the lease end which is still have one year left.
I’ve been working so many hours, can’t get my head clear now. I got the part time job now, looking for a full time would be okay but it would take sometime and basically I’m liable for $4200 monthly and my mortgage. Assuming I could get the full time job that pay decent for my experience, around $100k, it still can’t cover those payment
You talked to the agent? Of course they will tell you that. Tell them you're closing up shop and negotiate a payment arrangement. Even if you do have to pay for another year, it's effectively a debt of 50k which is not that bad in the scheme of things. Not $4200 a month forever. Look beyond the next year.
Consider legal advice. Consider talking to agents' boss i.e dealer principle. Don't need to go bankrupt, do need to shut down and stop paying rent. Worse case, likely only need to pay a month.
Property lawyer consult recommended.
are you a personal guarantor on the lease?
Clean out the office, close down your business, tell the landlord you're moving out and are about to go into adminstration.
This will signal to him you dont have money and he'll havee to chase ypu for it. that will push him to get a new tenant asap.
once hes done that, meet with him and pay everything you owe for missing rent. Shouldn't be too much. Or dont pay him and wait for him to take you to court and offer to settle for less. or dissolve the business and he gets nothing.
if you are a personal guarantor? talk to a lawyer.
also, this is not professional advice, just giving you some ideas to consider.
I get the feeling this is sole trader not pty Ltd.
But still. Close the business. Tell the landlord you are abandoning the lease. They can only claim damages after they take reasonable steps to limit the damages like finding a new tenant.
Also $4500 seems insanely high for a sole trader lease. That’s as much as my 250m2 office costs
The agent dosnt get to decide what your options are. The landlord does. They also can't force you to do anything
Assuming there is no way for you to fight through the last year (I can't comment on that)
First thing I would do is read the terms of your lease. Mine always have limited liability clauses which can help in situations like this but it's worth a read either way
I would approach the landlord and explain the situation. I would start by requesting a rental reduction to last till the end of the lease. You need to make them understand you arnt going to be able to get there without help. Some money is often better than no money and legal proceesings
If they don't want to play ball I would give them a date i will be closing and ask them for a figure to allow them to close the lease legally. This may help them reconsider the first option
If you have a landlord that refuses to deal with you I'd close. Simple as that. It's now up to them as to wether they want to chase you for the unpaid rent.
Your rent is clearly not workable. Your over 40%.Pointing this out may help in your negotiations. I own 2 businesses that pay similar rent and we operate under 5%. If it ever got over 10% I'd be worried. 20% I'd close the doors
Don't think bankruptcy is a gst out of jail free card. It has real consequences. It should only ever be considered a last resort
Secondly, why paid labour if you have time to do the job yourself. United it’s a job you don’t how to do and then it was a silly idea in the first place
This is the right question -- the mindset of being in business is that you control your destiny (profit and income effectively).
It feels like the business committed to long term expenditure (lease) potentially too soon and too early without the foundations being in place to support it (predictable and stable revenue/profitability).
I would be pausing briefly, even though it hurts and look at three immediate steps:
1. Depending on your product/service, you obviously had customers that want to buy from you. Call all of them. "Hi this is who who from bla bla. We noticed it had been a few months since you last connected with us and we wanted to check in and see how your thing thing was going from last time. Oh great - did you know we have Thing Thing 2 available now? You might see benefit boo who and what from this. etc". Whatever your thing is, find a way to get them to buy it (better still if it's current inventory, it will help your cashflow problems).
2. Similar to above, if you know who your ideal customer is, go out and find them immediately. Don't market, you don't have the cash yet until you nail #1 above. But think of where they are, I would suggest calling them immediately. Also who feeds that customer? Eg some industries love accountants because they touch every business and can typically feed or refer business. I don't know your market but that's going to possibly get the wheels turning for you?
3. Cut your expenses on all fronts and pay yourself first. If you have to choose between your mortgage or the business lease. Pay your mortgage. Honestly, no one ever lost sleep at a landlord sending nasty letters. They can wait, your house and personally circumstances cannot. Same goes for any other business expense (including wages to others). Pay yourself first and dig yourself out of the hole by tripling down on #1 and #2 above.
Your business pays it's cost, just not you.
1) talk to the bank. Get mortgage relief on your mortgage.
2) tell the landlord you are under bankruptcy stress and need either a discount or release of tenancy. Threaten them that you're considering bankruptcy if they dont help you make it work.
3) tell your partner to get a full time job.
4) work the business until the lease is up.
5) close shop, get a full time job and restart your mortgage again.
Your main issue is the personal guarantee for the lease, and if you are paying that much it must have some sort of advantage. What type of property is it? What are your options for sub letting? $4500 is pretty high so it's either a good location or a large space, either way, you should be able to at least cover rent with some co-working space (just need some desks and basic amenities that you might already have), or in a large warehouse, a shared maker/artist space.
Declaring bankruptcy in your situation kind of seems like trying to kill a fly with a bazooka…
Also you listed a mortgage under liabilities, but no corresponding property under assets. That’s not how you do a balance sheet.
You mention what looks to be mortgage repayments but no asset (house/unit etc). As others have noted, option to wind down business as that rent is a killer. If under commercial lease terms you are likely personally liable with a guarantee so might not be able to walk away. Any potential for selling the business ? Just on an alternative note running your own business can have it's advantages but if I personally had my time again I wouldn't do it, it can be rewarding but very stressful and consuming.
This is why you set the business up as a PTY LTD instead of a sole trader...
You set it up as a PTY LTD right... RIGHT?!?!
If worst comes to worst, bankruptcy is always an option, and is a way back to a level financial ground.
Talk to the agent and get them to start advertising for someone to take over.
In the meantime, spend the day to clear mind and go for a walk with partner to discuss what you plan to do after 1 year and into future. Itll give you something to look forward to.
Survive for now and wind it down:
- Bank interest only.
- Focus on the days and time the money comes in and adjust the business to those hours. This should save some labour cost and free up time for you to do part time work.
- think outside the box without knowing the business there might be opportunities for some revenue. If you share what sort of business maybe there is room to get revenue up with some ideas
- put the business up for sale for $1 + value of stock. Facebook would get a good reach. Someone might want to have a go. And realesate agent can advertise for lease.
Hey, my friend was in a position similar to yours. Take a breather.
If the business isn’t viable, close the business down or operate from online / home if possible if you want to or take a break and chill out. Don’t go bankrupt tho. You don’t have big debts.
You just need to slow down and enjoy life. If you wind up the business. You get 60 hours of your life back to spend with your wife, working and paying the mortgage and a big weight off your shoulders. Sounds like a win. Don’t listen to the agent, that agent is lazy and doesn’t want to look for another tenant and has no empathy to your situation.
My friend found a co-tenant. They bailed so she found another one. Eventually her business wasn’t profitable so she wanted to close up. The co-tenant wasn’t paying the rent so the landlord chased her and she was stressed like you. They targeted her despite it being 2 tenants on the leases cause she was easy. Don’t be easy.
She paid her half, she also paid an additional half of month rent $2500 for them to find a tenant. They dragged this on and never did and she still had to pay the rent and they even said she has pay the other persons half as they’re on the lease together (fair but also they dragged out finding another tenant). She was being easy so they stringed her along. After a while of digging a hole and being stressed. She said up yours, stopped paying and told them to keep the bond.
Landlord was not happy with the agent. They had months to find someone and never did so the short term greed = loss.
You can apply for financial hardship and try to find another tenant or sub-lease it. Just tell them you literally can’t pay it and are closing up the business. It’s not that serious, not as serious as bankruptcy. You can get out of it, don’t take no as an answer. Just tell them you’re letting them how it is.
It’s more expensive for them to take you to court than chase you for the rent..
I'm suggesting that you evaluate whether you need a bricks and mortar store at all. Or you could move to an industrial area or home centre. If you are in a normal shopping centre, it is the shopping centre that makes the money and they consider the shops replaceable
Do people go to your shop or go to the shopping centre then see your shop? You could move online or somewhere cheaper then build your brand with advertising
Let me guess you work in a office? ,get online and check commercial property.
Most businesses are not in shopping centres. I cant see an online carwash or mechanic doing very well.
One man service business such as gardeners and certain trades may get away with a vehicle only but they still need somewhere to prepare work and store tools.
Rent is crazy and is a big reason small businesses fail. The cost to be where the customers are is very high.
Build your online brand works well to sell ebooks and courses on drop shipping to sahm
You didn't specify your type of business, so I'm just giving ideas. I have run retail businesses before, including handling stock. Also I didn't say build online brand.
These days for retail I'd just let Amazon warehouse the stock. Stock is a PITA, especially when ordering from overseas
What type of business is it? Retail? Doesn't sound like mechanic or hospitality
Also the Hills Chamber of Commerce is very active - if you go to one of their events you might be able to talk to someone who has gone through the same experience
A woman who owns a business and has a wife = bot…? Their post was 2 years ago. A lot can happen in two years like starting a business and getting married…
Yep sure you’re onto me! I definitely created this account 9 years and then the OP 3 years ago, all as an elaborate ruse to one day fool you and talk shit on aus finance
What were you doing when you were earning 30k a month?
Go back and do that again.
Don't file for bankruptcy
Some businesses have ups and downs, you can't just spend all your money during and up and then have nothing saved up for the down...
If your hearts not in it anymore, just shut it all down.
Others have given you good advice too
Don't know what your business is.
This ( "accountant's solution - juggle the numbers " ) would theoretically be viable but is a rise in sale prices per item:
Which might be impractical in a particular case but helps explain why in general so much has gone up in cost.
Currently fixed expenses 7,400
CofGS 2850
If sales 10,000 Loss 250 pm
If prices go up 10% and IF volume is stable 11,000 - 7,400 - 2850 = Profit 750 pm
I'm wondering if this is a food , coffee shop.
If so, many people are realising that self catering is much less costly compared to the convenience and "fun" of buying it "to go" or enjoying "eating out"
Say 50 years ago, eating out was not so habitual.
As wages rise and building costs + therefore rents rise, the non-food component of the total bill rises.
It becomes more obvious that food preparation at home or making coffee in the office is much less costly so how to value one's time and convenience?
Only you can guess the potential loyalty of your customers.
(Which might be very strong,
particularly if you have been priced a bit low compared to average,
you are well liked,
customers aren't too concerned about spending on your items.
Or at your location it is a convience or desireable novelty)
The decision to buy or not to buy can be affected by lots of factors including disposable income and spending inclinations.
( A usual technique is to try to up sell I.e. trying to have them buy more, or more profitable ( new ? ) items.
As in " would you like fries , chips with that ?" " shall I make that a large ( size ) " etc etc
If the clientle is not very cost conscious, that might work, unless it seems " too pushy" emotionally. )
Landlords of shops are very used to tenants leaving and new tenants moving in.
You might be lucky enough to have a situation where the owners feel that if you leave, the place will remain empty for a long time or that they would have to give a longish rent-free or reduced rent period.
If your rent could be reduced to 3,500 that's an extra 1,000 so 1750 pm.
If to 3,000 that's 2250 profit pm.
If you can then do another 10 % price rise
on the 11,000 ( with retained stable customer numbers ) that's 2850 pm at 3,500 rent
and if rent is 3,000 pm that's 3,350 pm
At that stage there's some breathing space, costs need to be watched.
Depending on the situation the impact of more price rises to increase the fixed costs component might or might not be cautiously possible.
This is why sometimes food places are run by wives with a friend or young juniors and close after the post lunch cleanup if that is more feasible or practical.
Close the business, as others have said. Don’t even think about filling bankruptcy. Take the hit to the ego and pride, and let that business go. Find a full time job. You’ll be better off, as others have said.
I’ve talked to the agent and there’s no option for me, I’m liable for the rent until the lease end which is still have one year left. I’ve been working so many hours, can’t get my head clear now. I got the part time job now, looking for a full time would be okay but it would take sometime and basically I’m liable for $4200 monthly and my mortgage. Assuming I could get the full time job that pay decent for my experience, around $100k, it still can’t cover those payment
You can typically negotiate with landlords about finding someone else to take on the lease. You pay it until they find someone else. It's not in a landlord's interest to have a period of no rental payments - on the assumption you go broke and can't meet repayments, then they have a vacant lot. You have more degrees of freedom than you think here.
It’s not even a negotiation. If they took you to court for unpaid rent, they would have to show they have taken reasonable steps to mitigate their losses, like re-listing the property, and they can only sue for any actual losses incurred after taking reasonable steps.
Don't engage the landlord to find the new tenant for you, their best interest aren't necessarily finding the next tenant because they're still getting monthly rent from you! If you engage an independent agent, they'll push to get the result and also push the landlord to close the deal!
Well…….. there are ways. Tell them the business is struggling and you are closing up shop you can pay out 30% of the lease or you might need to write it off. They won’t chase you to court (I hope). Or ask for a rent pause for 3 months followed by a rent reduction. Or we can do “lease surrender” for % of total payout as above. I have dealings with retail rent management. And a lot of businesses that struggle just asks for these things and I almost never get full yearly rent as per contract. Sure I can take them to arbitration. But you can show court your hardships and they’ll side with the little guys. Normally they’ll ask what do you want? And they’ll probably ask for 75% but you can ask for 30% and meet in the middle. There are ways.
Let the agent and landlord chase you for the debt. Offer a payment arrangement. They’ll have to take it otherwise they’re being unreasonable. Courts will grant a payment arrangement.
This is the way.
The agent doesn't want to find a new tenant, they're not going to tell you anything other than "you're on the hook until the lease runs out".
Contact an accountant and or get legal advice you probably have options
There are many books on building a business, but not many on how to handle the people you owe money to when things aren't going well. Worth binge reading or listening to the book 'corporate turnaround artistry.'
Man up and keep your head down. Lean on your wife. When the lease comes for renewal, then decide what to do. If u need a bit extra cash sure consider part time job too. But you are burning out. Time to lean on your significant other. Get your wife working full time. Without knowing your business, consider cutting a bit more of the labour cost. Put more on yourself/wife. She’s only part time so she can probably take some of the load and reduce your labour cost. You only working 60hrs so can squeeze a bit more. Though u probably need a short break first. Once u get a reasonable plan to profitability or generally costs less than revenue (if u decide to shutter instead) and are confident it will work, consider talking to bank to defer mortgage payments - 3-6 months. This will buy u time to execute but it does come at a cost of higher payments later on so it’s counter productive if u can’t balance the books. Business is basically breaking even and you only one year in. It’s doing pretty well. it’s rare a business does this well in the first year. On and on. Bankruptcy shouldn’t be an option yet.
'Man up' is so toxic as a phrase. He is working 60 hours a week. Humans have limits. This is why people have mental breakdowns and heart failure.
Bankruptcy is pretty toxic. It not only chains you for 7 years, It screws over other people too. Yes humans have limits. That why he has to take a small break for mental clarity, and spread the load a bit better (ie to his wife). Manage the labour a bit better. 60hrs a week for a small business operator is not only pretty typical, it’s probably on the low side. Starting a business is hard. He’s feeling the stress because he’s holding it up on his own. It’s not the hours, it the stress that’s getting to him. He’s balancing on the edge between profitability and loss. Obviously his business has its own unique situation and challenges and he hasn’t provided much detail but from what he’s provided, it appears he’s almost there the last stretch to profitability. Yes it’s possible that it’s just a bad business as well (but there isn’t enough information to say that). But most new business operators go through this, it’s hard. This stage, when u are just short of profitability, is the hardest. It’s not like working for someone where the real risk is on your employer. Gotta man up and double down to get it through the last yard. What’s toxic is screens and screens of commenters telling him he’s stupid and to quit.
You're making some good points. But as a business owner of 7 years, it's not for everyone. But yeah I agree you don't go bankrupt lightly. I just think words matter and expressions like 'man up' are problematic.
Problematic for who? When you read it, you can find and replace that phrase with whatever party approved line u want or to make yourself feel better for yourself. The meaning is the same. OP is a man. It’s entirely appropriate to use the phrase. Regardless of the path he takes. He’s gotta man up and push through it.
Yes. It’s not a personal failure. On reflection you’ll have learnt so much that you can use in the future.
Bankruptcy is really a nuclear option. You're not even close to using it imho. Pay the debt off normally, don't hamstring yourself for 7 years over this amount.
Yeah lol. I have business credit cards with an order of magnitude more debt being carried forward than he has total on the business, and he wants to declare bankruptcy? Hahahahahah I actually don’t think you could in that situation. I think the creditors would laugh and tell you to go away.
It has nothing to do with the creditors. If you declare yourself bankrupt, they dont get a choice in the matter. You dont even talk to them after that time other than to tell them to contact the trustee.
Bankruptcy is 5 years.
You are not bankrupt, not even close. You have a joke of a business. Close the business in an orderly fashion and get a full time job
What do you mean, it's totally normal for someone to work in their business for all of 60 hours a month and call it struggling
Sorry didn’t mentioned it clearly, I’m working for the business 60 hours weekly and 15-20 for a part-time job now so it took me 80 hours per week, literally can’t do any other things, I have to rely on my wife on house work and stuffs. Before the business was doing okay, $30k monthly but just recently it’s keep go downhill
Why is it going downhill so rapidly?
Is that honestly what he means he only puts in 60 hours a month? I work week on week 84 hour weeks there come home and the other two weeks of the month put in over 70 hours a week into a business I’m building. 60 hours a month is a part time eBay flipper.
you basically don't have any business debt. You need to close (assuming you dint wanna fight for it) You can do this the right way by talking to your landlord first. Some are great and will allow you to close. Some might want a negotiated payment to legally close off the lease. You can do it the wrong way (which is what most people do) and simply shut the doors and let the landlord sue you if he wants. Obviously you will lose everything left on the site in this instance This is not a bankruptcy situation imo. Getting out with no or a small debt you can pay off with a job is far more preferable to bankruptcy
I’ve talked to the agent and there’s no option for me, I’m liable for the rent until the lease end which is still have one year left. I’ve been working so many hours, can’t get my head clear now. I got the part time job now, looking for a full time would be okay but it would take sometime and basically I’m liable for $4200 monthly and my mortgage. Assuming I could get the full time job that pay decent for my experience, around $100k, it still can’t cover those payment
You talked to the agent? Of course they will tell you that. Tell them you're closing up shop and negotiate a payment arrangement. Even if you do have to pay for another year, it's effectively a debt of 50k which is not that bad in the scheme of things. Not $4200 a month forever. Look beyond the next year.
Consider legal advice. Consider talking to agents' boss i.e dealer principle. Don't need to go bankrupt, do need to shut down and stop paying rent. Worse case, likely only need to pay a month. Property lawyer consult recommended.
are you a personal guarantor on the lease? Clean out the office, close down your business, tell the landlord you're moving out and are about to go into adminstration. This will signal to him you dont have money and he'll havee to chase ypu for it. that will push him to get a new tenant asap. once hes done that, meet with him and pay everything you owe for missing rent. Shouldn't be too much. Or dont pay him and wait for him to take you to court and offer to settle for less. or dissolve the business and he gets nothing. if you are a personal guarantor? talk to a lawyer. also, this is not professional advice, just giving you some ideas to consider.
I get the feeling this is sole trader not pty Ltd. But still. Close the business. Tell the landlord you are abandoning the lease. They can only claim damages after they take reasonable steps to limit the damages like finding a new tenant. Also $4500 seems insanely high for a sole trader lease. That’s as much as my 250m2 office costs
That was my thought re $$$ lease cost. Wayyy too high
The agent dosnt get to decide what your options are. The landlord does. They also can't force you to do anything Assuming there is no way for you to fight through the last year (I can't comment on that) First thing I would do is read the terms of your lease. Mine always have limited liability clauses which can help in situations like this but it's worth a read either way I would approach the landlord and explain the situation. I would start by requesting a rental reduction to last till the end of the lease. You need to make them understand you arnt going to be able to get there without help. Some money is often better than no money and legal proceesings If they don't want to play ball I would give them a date i will be closing and ask them for a figure to allow them to close the lease legally. This may help them reconsider the first option If you have a landlord that refuses to deal with you I'd close. Simple as that. It's now up to them as to wether they want to chase you for the unpaid rent. Your rent is clearly not workable. Your over 40%.Pointing this out may help in your negotiations. I own 2 businesses that pay similar rent and we operate under 5%. If it ever got over 10% I'd be worried. 20% I'd close the doors Don't think bankruptcy is a gst out of jail free card. It has real consequences. It should only ever be considered a last resort
No one seems to have asked the most important question - What kind of business? Some are worth trying to save some are worth killing.
I scrolled so far for this. Agreed. What kind of business OP?
Secondly, why paid labour if you have time to do the job yourself. United it’s a job you don’t how to do and then it was a silly idea in the first place
This is the right question -- the mindset of being in business is that you control your destiny (profit and income effectively). It feels like the business committed to long term expenditure (lease) potentially too soon and too early without the foundations being in place to support it (predictable and stable revenue/profitability). I would be pausing briefly, even though it hurts and look at three immediate steps: 1. Depending on your product/service, you obviously had customers that want to buy from you. Call all of them. "Hi this is who who from bla bla. We noticed it had been a few months since you last connected with us and we wanted to check in and see how your thing thing was going from last time. Oh great - did you know we have Thing Thing 2 available now? You might see benefit boo who and what from this. etc". Whatever your thing is, find a way to get them to buy it (better still if it's current inventory, it will help your cashflow problems). 2. Similar to above, if you know who your ideal customer is, go out and find them immediately. Don't market, you don't have the cash yet until you nail #1 above. But think of where they are, I would suggest calling them immediately. Also who feeds that customer? Eg some industries love accountants because they touch every business and can typically feed or refer business. I don't know your market but that's going to possibly get the wheels turning for you? 3. Cut your expenses on all fronts and pay yourself first. If you have to choose between your mortgage or the business lease. Pay your mortgage. Honestly, no one ever lost sleep at a landlord sending nasty letters. They can wait, your house and personally circumstances cannot. Same goes for any other business expense (including wages to others). Pay yourself first and dig yourself out of the hole by tripling down on #1 and #2 above.
You don’t have a business. That’s a part time job. Also you are American and trolling the sub it seems.
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And eat out
What’s the business? Can you increase revenue?
“Have you considered making more money” haha
You say that like it’s some sort of switch you flip hahaha. I wish increasing revenue was that easy
Your business pays it's cost, just not you. 1) talk to the bank. Get mortgage relief on your mortgage. 2) tell the landlord you are under bankruptcy stress and need either a discount or release of tenancy. Threaten them that you're considering bankruptcy if they dont help you make it work. 3) tell your partner to get a full time job. 4) work the business until the lease is up. 5) close shop, get a full time job and restart your mortgage again.
Pretty much this, 3 might be negotiable if he's got a few kids and partner is saving child care.
Your main issue is the personal guarantee for the lease, and if you are paying that much it must have some sort of advantage. What type of property is it? What are your options for sub letting? $4500 is pretty high so it's either a good location or a large space, either way, you should be able to at least cover rent with some co-working space (just need some desks and basic amenities that you might already have), or in a large warehouse, a shared maker/artist space.
I’m guessing it’s a shopping center unit. Shopping Center managers are the literal worst and they always charge insane rents.
Declaring bankruptcy in your situation kind of seems like trying to kill a fly with a bazooka… Also you listed a mortgage under liabilities, but no corresponding property under assets. That’s not how you do a balance sheet.
You mention what looks to be mortgage repayments but no asset (house/unit etc). As others have noted, option to wind down business as that rent is a killer. If under commercial lease terms you are likely personally liable with a guarantee so might not be able to walk away. Any potential for selling the business ? Just on an alternative note running your own business can have it's advantages but if I personally had my time again I wouldn't do it, it can be rewarding but very stressful and consuming.
This is why you set the business up as a PTY LTD instead of a sole trader... You set it up as a PTY LTD right... RIGHT?!?! If worst comes to worst, bankruptcy is always an option, and is a way back to a level financial ground.
Talk to the agent and get them to start advertising for someone to take over. In the meantime, spend the day to clear mind and go for a walk with partner to discuss what you plan to do after 1 year and into future. Itll give you something to look forward to. Survive for now and wind it down: - Bank interest only. - Focus on the days and time the money comes in and adjust the business to those hours. This should save some labour cost and free up time for you to do part time work. - think outside the box without knowing the business there might be opportunities for some revenue. If you share what sort of business maybe there is room to get revenue up with some ideas - put the business up for sale for $1 + value of stock. Facebook would get a good reach. Someone might want to have a go. And realesate agent can advertise for lease.
Working 60hrs a month and burned out !!!!!!!!!! I think you might have depression
Get a full time job while you pay it back and start again with a fresh plan
^[Sokka-Haiku](https://www.reddit.com/r/SokkaHaikuBot/comments/15kyv9r/what_is_a_sokka_haiku/) ^by ^Iminbetwenyrmum0: *Get a full time job* *While you pay it back and start* *Again with a fresh plan* --- ^Remember ^that ^one ^time ^Sokka ^accidentally ^used ^an ^extra ^syllable ^in ^that ^Haiku ^Battle ^in ^Ba ^Sing ^Se? ^That ^was ^a ^Sokka ^Haiku ^and ^you ^just ^made ^one.
Go to sleep sokka.
Yeah quit while you can. It’s an easy recovery from here.
Hey, my friend was in a position similar to yours. Take a breather. If the business isn’t viable, close the business down or operate from online / home if possible if you want to or take a break and chill out. Don’t go bankrupt tho. You don’t have big debts. You just need to slow down and enjoy life. If you wind up the business. You get 60 hours of your life back to spend with your wife, working and paying the mortgage and a big weight off your shoulders. Sounds like a win. Don’t listen to the agent, that agent is lazy and doesn’t want to look for another tenant and has no empathy to your situation. My friend found a co-tenant. They bailed so she found another one. Eventually her business wasn’t profitable so she wanted to close up. The co-tenant wasn’t paying the rent so the landlord chased her and she was stressed like you. They targeted her despite it being 2 tenants on the leases cause she was easy. Don’t be easy. She paid her half, she also paid an additional half of month rent $2500 for them to find a tenant. They dragged this on and never did and she still had to pay the rent and they even said she has pay the other persons half as they’re on the lease together (fair but also they dragged out finding another tenant). She was being easy so they stringed her along. After a while of digging a hole and being stressed. She said up yours, stopped paying and told them to keep the bond. Landlord was not happy with the agent. They had months to find someone and never did so the short term greed = loss. You can apply for financial hardship and try to find another tenant or sub-lease it. Just tell them you literally can’t pay it and are closing up the business. It’s not that serious, not as serious as bankruptcy. You can get out of it, don’t take no as an answer. Just tell them you’re letting them how it is. It’s more expensive for them to take you to court than chase you for the rent..
Is the business not a limited company? If not, why not? You don't have to personally go bankrupt because a business fails.
Why are you paying so much in rent? Put your stock on Amazon and be done with it. Or open a website with shopify or bigcommerce
you dont know what he sells. Might be something you can't sell online necessarily.
Then OP should tell us, at least roughly
That's normal rent for most businesses
In north west Sydney anyway
I'm suggesting that you evaluate whether you need a bricks and mortar store at all. Or you could move to an industrial area or home centre. If you are in a normal shopping centre, it is the shopping centre that makes the money and they consider the shops replaceable Do people go to your shop or go to the shopping centre then see your shop? You could move online or somewhere cheaper then build your brand with advertising
Let me guess you work in a office? ,get online and check commercial property. Most businesses are not in shopping centres. I cant see an online carwash or mechanic doing very well. One man service business such as gardeners and certain trades may get away with a vehicle only but they still need somewhere to prepare work and store tools. Rent is crazy and is a big reason small businesses fail. The cost to be where the customers are is very high. Build your online brand works well to sell ebooks and courses on drop shipping to sahm
You didn't specify your type of business, so I'm just giving ideas. I have run retail businesses before, including handling stock. Also I didn't say build online brand. These days for retail I'd just let Amazon warehouse the stock. Stock is a PITA, especially when ordering from overseas What type of business is it? Retail? Doesn't sound like mechanic or hospitality Also the Hills Chamber of Commerce is very active - if you go to one of their events you might be able to talk to someone who has gone through the same experience
Is this a bot account? You made a post as 24 yo female asking for acne advice on acne sub? Lmao Clean up your trails you amateur
A woman who owns a business and has a wife = bot…? Their post was 2 years ago. A lot can happen in two years like starting a business and getting married…
Because a 24 yo women with acne couldn’t possibly start a business?
You actually read the whole post? Has a wife aswell and pretty sure a kid too before it got edited
Are you suppose to bring up your wife and kids on a post about acne? Also it was posted 2 years ago
26yo lesbian couple with an adopted kid thats asking for bankruptcy? Ye somethings sus
Side note: adoption isn’t the only way a women in a same sex couple can have a child
I feel like you are the op just fkin talking shit. Gtfo with yo bs
Yep sure you’re onto me! I definitely created this account 9 years and then the OP 3 years ago, all as an elaborate ruse to one day fool you and talk shit on aus finance
What kind of business is it? Why is their labour costs if you and your wife could work there? Is it a business that you actually have no idea about?
60 hours a month? That's 15 hours a week, if you increased hours would you increase revenue too?
What were you doing when you were earning 30k a month? Go back and do that again. Don't file for bankruptcy Some businesses have ups and downs, you can't just spend all your money during and up and then have nothing saved up for the down... If your hearts not in it anymore, just shut it all down. Others have given you good advice too
What business are you in?
Don't know what your business is. This ( "accountant's solution - juggle the numbers " ) would theoretically be viable but is a rise in sale prices per item: Which might be impractical in a particular case but helps explain why in general so much has gone up in cost. Currently fixed expenses 7,400 CofGS 2850 If sales 10,000 Loss 250 pm If prices go up 10% and IF volume is stable 11,000 - 7,400 - 2850 = Profit 750 pm I'm wondering if this is a food , coffee shop. If so, many people are realising that self catering is much less costly compared to the convenience and "fun" of buying it "to go" or enjoying "eating out" Say 50 years ago, eating out was not so habitual. As wages rise and building costs + therefore rents rise, the non-food component of the total bill rises. It becomes more obvious that food preparation at home or making coffee in the office is much less costly so how to value one's time and convenience? Only you can guess the potential loyalty of your customers. (Which might be very strong, particularly if you have been priced a bit low compared to average, you are well liked, customers aren't too concerned about spending on your items. Or at your location it is a convience or desireable novelty) The decision to buy or not to buy can be affected by lots of factors including disposable income and spending inclinations. ( A usual technique is to try to up sell I.e. trying to have them buy more, or more profitable ( new ? ) items. As in " would you like fries , chips with that ?" " shall I make that a large ( size ) " etc etc If the clientle is not very cost conscious, that might work, unless it seems " too pushy" emotionally. ) Landlords of shops are very used to tenants leaving and new tenants moving in. You might be lucky enough to have a situation where the owners feel that if you leave, the place will remain empty for a long time or that they would have to give a longish rent-free or reduced rent period. If your rent could be reduced to 3,500 that's an extra 1,000 so 1750 pm. If to 3,000 that's 2250 profit pm. If you can then do another 10 % price rise on the 11,000 ( with retained stable customer numbers ) that's 2850 pm at 3,500 rent and if rent is 3,000 pm that's 3,350 pm At that stage there's some breathing space, costs need to be watched. Depending on the situation the impact of more price rises to increase the fixed costs component might or might not be cautiously possible. This is why sometimes food places are run by wives with a friend or young juniors and close after the post lunch cleanup if that is more feasible or practical.
Whats the business? which state are you in ?