Too often we have seen people who pursued the dream of owning their own business without careful thought and preparation. The result can be financial and personal heartache, and a personal bankruptcy.
Take the case of George (not his real name). After retiring from the military he thought starting up a food cart business would be a way to make money and stay engaged. He was able to get a substantial SBA loan, which was used to buy the food trailer and a truck to pull it. He leased new food preparation equipment and leased space for it. His wife co-signed. Within 6 months, the business was failing and he was behind on rent and struggling to make ends meet.
George’s wise move was to recognize the situation was out of control and not to turn a blind eye to it. We reviewed the business finances and both quickly agreed he should get out before more damage was done. The leased equipment, trailer and rental location were surrendered to the leasing company, business lender and landlord. Fortunately, George had not run up bills for unpaid payroll or sales taxes, and did not have unpaid bills for fresh produce or meat. These would have been major problems for which even a bankruptcy would not help him.
- He did not have any experience running this business or indeed any business. Thus he did not know how to market and was not able accurately to predict his cash flow.
- He over-extended himself with debt, which he personally guaranteed. He got this because of his then-stellar credit and military credentials.
- He did not research the market. Who else is in the food truck business? How are they doing? What do they do that makes them successful? Is there a niche or a clientele that is not being served? Being the newcomer in a business with established players who know what they are doing is never good unless you have reliable customers lined up.
Fortunately, with our help George got out and has found a job using his training and skills. He and his wife now have the fresh start they need. Both are wiser and happier.
If you are having trouble with a business venture, getting the right financial and legal advice is critical. We have helped many many people like George sort things out.