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,
Oh man, that’s a tough situation you’re in, and I genuinely feel for you. Here are a few things you might consider:
Consult with Professionals: Firstly, it might be worth speaking to a business consultant or turnaround specialist. They might have some insights or strategies you haven’t thought of. And given the magnitude of the debt, consulting with a bankruptcy attorney (even if you hope not to go that route) might provide some clarity on your best options.
Negotiate with Creditors: Sometimes, especially if they believe the alternative is bankruptcy, creditors might be willing to negotiate a reduced balance or better terms.
Rebrand and Relaunch: Given that Google tanked your site after the hack, consider rebranding and relaunching under a new domain. This is a bit of a Hail Mary, but it could be an option.
Pivot: It’s possible that some elements of your business could be salvaged or repurposed for a different niche or market. You have experience, knowledge, and possibly some assets that might be usable in a new direction.
Self-care: Your mental health and wellbeing are paramount. Make sure you’re speaking to someone - whether it’s a therapist, counselor, or supportive friends and family. Running a business is stressful, even more so when it’s in a challenging situation.
Assess Future Revenue Streams: Before diving into further debt or bankruptcy, do an honest assessment of any potential untapped revenue streams for the business. Could you diversify the product lineup, or offer consulting, or even pivot into a related but different niche?
Finally, remember that many successful entrepreneurs have faced tremendous setbacks and even failures. It’s how you react, learn, and grow from these challenges that define the journey ahead. Whatever path you choose, wishing you strength and clarity during these trying times.