Knowing when to pull the plug

Poppa's PTL Club · Posted: Jun 09 2011 Post subject: Knowing when to pull the plug

This is a topic branched from another thread, but I've never seen it addressed as a separate issue before and I'll bet there are some people who would like to either discuss it or think about it and get some thoughts and perspectives.

I am a huge fan of the Ramsey Kitchen Nightmares series (both the American and original BBC versions) and am amazed at the number of people who seem to be seriously in denial about their prospects, but continue to max out their available credit and drag their families down with them. It's something that's fascinated me for a while and I'll pose it as a couple of questions (feel free to add your own):

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Geronimo · Posted: Jun 09 2011 Post subject:

Nearly all the "name brand" places and a lot of the smart small business owners are incorporated so their personal affairs and finances are NOT tied to the business.

So IF things don't work out, they simply close the business and let the creditors fight over what little assets are left and call it a day all to start a new business under a new name down the street or across town. Shocked

One BBQ restaurant in my town (not sure if he was INC or not) took anything of any value and either sold it or hid it in storage to keep the bank from getting it then simply filed bankruptcy and told them they could have what's left. Shocked

If one is NOT Inc, the creditors can actually put a lien on your personal assets (home, bank, etc) to collect the monies due them.
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BBQMAN · Posted: Jun 09 2011 Post subject:

I'm a big fan of that series as well!

What I can't understand is the owners balking at the advice given.

If I was in that much trouble and Ramsey told me what to do to turn things around my only answer would be "Yes sir Mr. Ramsey, we will get right on it".

But that doesn't make for good TV now does it?

I'm looking forward to the answers given (if any are) from those that failed at their first (or second) attempts.

Not to sound like I've got the answers to your direct question (when to pull the plug) as I'm not in a failing business.

But I do know that now was not the time for me to pull the trigger.
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BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005.

Texman · Posted: Jun 09 2011 Post subject: Re: Knowing when to pull the plug

Poppa's PTL Club · Posted: Jun 09 2011 Post subject: Re: Knowing when to pull the plug

Jarhead · Posted: Jun 09 2011 Post subject:

I'll jump in and give you a deep dark secret on "Pulling the Plug".
Whe I got out of the Marine Corps, I was offered a managers job with the Wall Street Journal. A "New Home Delivery" system and the racks to go with it. Protected area, Mine, no strings attached. I worked it for 3 years and sold it.
I then proceeded to get one of those so called "Wild Hairs" and bought a tractor to go after the wonderful life as a Truck Driver. I found someone willing to hire me, as I was fresh out of Truck Driving School with a $1396/mo truck payment + insurance, + road and fuel permits and on and on.
Those wheels had better be rolling or you will be in trouble, and get there quick.
Freight came to a screeching halt for about 6 to 8 months. Hell it was slow in the beginning and I didn't save enough for a rainy year, let alone a rainy day.
Went to my accountant and he told me what my best option was. Yep, the big BR.
So, the corp filed BR, Finance Co. got the truck and a few dollars I had due and the trucking co. ate the permits, plates, etc.
And I walked away. It sucks, but they didn't get my house or first born. Very Happy

Hindsight, they could of had the wife. Twisted Evil

1. Get all your ducks in a row.
2. Get an accountant.
3. File for a Sub-Chapter S or LLC.
4. If you get into trouble and need to borrow to keep your business afloat, that accountant will be your best friend and adviser. Use him/her and get a "Been there and Seen that" answer.
5. Have an EXIT plan. (I know you're not gonna fail, but, see #1)

Or if you can afford it, Bankroll it yourself. But still incorporate.
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Texman · Posted: Jun 10 2011 Post subject:

Teleking · Posted: Jun 10 2011 Post subject:

I am also a big fan of the show and also DDD. SWSMBO tolerates my food shows at best but made an interesting comment the other night. After watching KN with all the owners and kitchen staff using frozen this and canned that and fresh can�t be done then turn over to DDD. Pretty much everything is made from scratch daily or made fresh to order. Talk about opposite ends of the spectrum and its obvious that it can be done.

NVA Wink

just an observation.

Cheers
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BBQMAN · Posted: Jun 10 2011 Post subject:

Texman · Posted: Jun 10 2011 Post subject:

NumberCruncher · Posted: Jun 10 2011 Post subject:

I love the Ramsey shows as well, and the Food Network recently started another with Robert Irvine as the Ramsey guy, which I don't like as much.

But what I find fascinating is it seems that every restaurant gets the same advice...shrink the menu and use fresh, local ingredients. Seems like any knucklehead that watches the show would know how to try and help themselves. But I guess if you're running a failing restaurant, you may not have a lot of time to sit around watching food shows. Very Happy

If you recall, there was a BBQ joint in South Bend, IN called something Willies ?? Either way, I drove by there last year and it's closed up and empty. So even Ramsey couldn't save it. I often wondered that once a show like that airs and you see how dirty the kitchen is, does anyone want to go back there??? In this case, I guess not. Some things are too big to overcome.
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halftimer · Posted: Jun 10 2011 Post subject:

i am 65 years old have only had a boss for 1 year in 1973 have been inc since 1984 do a gross of 4-500 thousand a year my banker will give me anything but will not loan two bits to the inc with out me as co signer. is he smart or am i dumb check another bank about 15 years ago and was the same.
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Poppa's PTL Club · Posted: Jun 10 2011 Post subject:

BBQMAN · Posted: Jun 11 2011 Post subject:

No bank that I know of is going to lend money (unsecured) for a raunt purchase.

It goes well with this thread- the banks know that this type of business has a high rate of failure.
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BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005.

Geronimo · Posted: Jun 11 2011 Post subject:

Louie · Posted: Jun 13 2011 Post subject:

The first time you have to juggle bills to cover payroll, close the doors.
Having a layoff cause you have no money, close the doors.
Having to borrow money to keep business going, close the doors.
Sinking personal money into an existing biz to keep it going, shut er down.

Thinking about calling Gordon Ramsay to straighten up your mess, RED LIGHT SELL ASAP..you should of sold ages ago!!! Wink

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From vending to Brick & Mortar

crashpilot · Posted: Jun 13 2011 Post subject:

Geronimo · Posted: Jun 14 2011 Post subject:

jess · Posted: Jun 14 2011 Post subject:

Poppa's PTL Club · Posted: Jun 14 2011 Post subject:

We're straying a little bit (there's always a rabbit to chase Very Happy

)

What would you look for in trends?

Are you removed enough from your business (do you have enough cool detachment?) to know when not only is it not working, but it's not going to work no matter what?

Can you recognize when you might be the problem and are you emotionally prepared to deal with that?
_________________
I likes to eat 'da pig!
Acts 11:5-9