Hi all, I’m 31 years old and have been self employed for 7 years. The business is primarily e-commerce (automotive accessories), however we did have (2) locations - 1 in Florida and 1 in California.
The Florida office was very small and for our employees who handle sales, service, and web design. Our California location was a warehouse for inventory.
The 5 years we saw great success and were doing $500k a month in revenue (roughy $20k profit). However, 2 years ago our site got hacked, Google tanked our rankings and we have never recovered.
At that time, I had to let go of my employees, I completely wiped out my own salary, and when my leases ran up I didn’t resign them.
For the last two years, my business partner and I have worked tirelessly to get the company back on track and despite our efforts, there is no improvement.
We are averaging $60k a month in sales, which doesn’t even cover our expenses so we are slowly taking on more debt.
Which brings me to my next point.
We have $140k owed on a loan and $20k owed on a tax payment plan. This accounts for roughly $6k a month in expenses. We also have some outstanding orders that need to be submitted ($10k worth).
So current day, we are looking at roughly $170k - $175k debt.
I’m to the point that I do not think it is viable to continue operating. My mental health has been run into the ground, I’m working 100+ hours a week(I picked up a full time job to supplement my income), it has taken valuable time from me as a parent to a young child, and I have lost all priorities.
The loans we have are not eligible for bankruptcy (not that I want to go that route but my back is against the wall). Ideally, the business would generate enough to pay down the debt but I think I’m being overly optimistic.
If I cease operations, I will have to have a monthly payment plan to pay back the $175k, which would likely hinder my personal life for the next 10+ years.
Does anyone have any advice? I do not have any business line of credit. Perhaps I should obtain that and pay down as much debt as I can, then if determined I would file Chapter 7 to at least free myself personally?
Thank you,
Im curious how you were only clearing 4% profit on 500k in sales in your beginning? Your margins for the industry you are in are astronomically low and depending on what style of automotive parts you were selling, you were selling for well under MAP pricing. You should have been clearing minimum 10-15% in profit margins for parts, more pending what sector of automotive parts.
Hate to hear about your struggles now, but honestly, it doesnt sound like you have truly ever been profitable and simply sustaining the business on new debt.