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Basically, you are not responsible for your parents' debt. They are. If your position was that of an employee, you aren't responsible for company debt, either.
A lot depends on the legal form of the business. If it's some kind of Limited, then the company can go bankrupt, and the owners are not liable with their private money.
You should consult a lawyer as soon as possible. -
@Fast-Nop Well, they(parents) definitely aren't forcing me to pay, and they feel guilty about me being intertwined in this. Due to various reasons, the debt was personal in nature. So I am, actually required to pay it off. :/
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@adwalvekar taking personal debt for a business is an incredibly stupid idea. That's exactly what a Limited is for.
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@Fast-Nop yeah, I understand that now. Thanks anyway
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@adwalvekar maybe your parents should reconsider their retirement plans. Also, they should pay some of the debt from their retirement funds. I mean, retiring like that and just leaving the mess to you alone would be a complete dick move. Plus, if they have signed stuff, too, then they don't get out of their responsibility just by retiring.
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@Fast-Nop Yeah, I accounted for that too in my estimate, they are more than willing to do that. I guess I just have to move to a different country with a better paying job
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Are you 100% sure that the company must be shut down?
If it's just 3 of you in your company, the two main problem you have are low sales and debts. Trying to solve the sale will solve debt issue as well.
Since I don't know the nature of your business and your exact situation, I also can't provide any other advice yet. -
@cursee Hey, no, we are actually a company of about 15 - 20 people. We are in the business software and services industry. Sales is the Cruz of our issue, and I'm sure that if that was fine, things will be fine in a matter of a year. But we've run out of money in order to increase sales. Does anyone have any advice on increasing sales?
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@adwalvekar I see. Ok then it's more than two problems. You guys have monthly expenses.
Before talking about increasing sales, you should find ways to get cash flow. Lower your prices. Accept annoying clients and projects as long as they are paying. Getting cash is the most important thing after all.
Once you have stable monthly cash flow, you can think of cost efficient marketing channels to help the sale.
Another approach is to sell the business somehow. It's better than shutting down. -
@cursee try to expand services as long as you don't have to spend anymore money.
For example, my company started with web development services. But then since I have designers, we also started accepting design projects like making logos, branding materials etc. -
@cursee I should really look into this. I guess my mind was really blocked as a result of all the stress. Thanks mate!
I will start looking at other type of software offers, you're right cash flow is King. -
@helloworld I understand where you're coming from, but I'm not from the West, and just because this situation has taken place, doesn't mean I can quit on them, they have been very supportive, but I will also consider what you said. Thanks mate
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@adwalvekar utilize on free of charge options to help with the marketing. Which means using social media accounts effectively. But if you are not spending money, you will have to spend your time and effort.
And before selling to new customers. Try to look at your old customer database. Look at all the dead ones, cancelled ones, terminated ones. Analyse and plan how to sell something to them again. -
@cursee and another very important thing is to keep your current customers by all means. Give your best quality products, best customer services, best prices, *by all means*.
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@cursee got it, since we got stuck in some big projects that got executed successfully and we were restructuring, we couldn't focus on sales. I'll look into the old customers like you mentioned. This actually helped me quite a bit. Thank you
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I don't know which kind of business you run, but in my company where I work for, we have the target to get at least 50% of income from recurring maintenance and support agreements. this way we can handle the projects up and downs much better. but it requires a good quality of your software and a good amount of customers, otherwise you will pay more than you will earn.
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@seraphimsystems business software. ERP, BI, integrations. That sorry of thing.
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@adwalvekar sort*
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did you have a talk with your employees for ideas on how to save the company? A company workshop may bring some insights and ideas.
Read up on the Design Thinking Method. https://en.wikipedia.org/wiki/...
And this Book gives you praktical guidance on how to gather insights and structure a workshop. With the goal to save your company and win new customers and improve your products.
https://amazon.com/This-Service-Des...
some questions...
How long can you keep your company open? could you change your company to a limited liability company?
When did the down turn start?
Do you know what your running costs are?
How does your company in marketing and communication? -
also does your company own the property it resides in? or do you rent it?
If you own it, you could rent it out and go full on remote company. With one small office left for mail and bookkeeping. That way you could increase revenue and make your devs more relaxed and more motivated. That means more output and it gives you more flexibility in hiring and firing. -
these courses could maybe be something for you. https://www.ideou.com
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@adwalvekar I sincerely hope you can resolve this, it seems that the issues are more complex with each new snippet of information. I would however say, as a parent myself, never jeopardise their future for my failings, it is not a case of them helping you so you should help them, absolutely not. By all means do whatever you can to resolve this, but don’t carry this debt forward to your family and your children, it is completely not your responsibility.
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@heyheni Hey, just to answer your questions:
We can keep the company open for a couple of months.
The downturn started when we had to change our strategy from sticking our hopes and income on one big project to more projects with lesser value. Honestly, I feel that this change was necessary, cause most of the time, we felt that we were at the mercy of the client to pay, and sometimes when that didn't happen, we had to really agree to things we hadn't initially agreed in the project to get payments.
Our running costs are relatively high, I feel, because our rent is quite high. But this place has very very low retainers. And if we want to shift to another place with probably 1/3rd of the rent that should be perfect for us, they want a retainer of 10 months without negotiating. That's is why I feel we are stuck on that front. We are strongly considering the possibility of going fully remote to reduce our costs. (1/2) -
@heyheni (2/2) the Downside is that many of our clients are bigger corporate companies. So they really vet their vendors. And office visits and staff interviews are one big part. Previously, because our address is a high value address, we've won bids because of this fact. It's so weird and we don't understand why people care about where our office is, but it is.
Marketing suffered quite a bit during the aforementioned restructuring. This situation is the result of that. I've takes steps to hire a marketing person purely on commission basis, but I feel that may take a bit of time before fruition. The situation I feel, is not impossible to get out of, but will require a crazy amount of work and a healthy dose of luck.
I'll definitely go through the links you sent. Thank you all so much for investing your time to help me out. I definitely will keep you guys updated on what happens. -
@ShotgunSurgeon Thank you. I really appreciate it. Speaking to many of our community has really opened possible solutions. I'll work towards that.
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@helloworld Hey, thank you for your words. I definitely agree with you that it shouldn't be " just because they helped me, I should help them back". But after speaking to people and doing some basic research, in the case that I have to shut down the company, getting a job in a different country with a much better economy, and keeping my expenses low, will allow me to finish this up in a fraction of the time. And that way, I will have time for myself and my parents will be debt free. So I guess, I can really work on that situation.
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"80% of sales come from 20% of clients" and that means 80% of your clients waste your time by inflating the workload. 80% of your income is generated by 20% of your best employees.
80% of the work is done in 20% of time.
So fire 20% of your worst clients and employees.
Invest that freed up money and time in Marketing and Sales. "People don't drink beer, they drink marketing." Heineken.
If you cut down marketing and sales it will bite you.
Pareto 80/20 principle
https://en.wikipedia.org/wiki/...
https://youtube.com/watch/... -
@heyheni ah the 80-20 rule. I wonder if that rule also applied to programming. Example : Only 20% of code you wrote are ended up at production. 80% live apps have critical bugs. Etc
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@Fast-Nop now we have to figure how many % of your comment is right?
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@cursee Only one way to figure that out
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@adwalvekar hey did you come up with new ideas allready?
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@heyheni Thanks for following up, yeah. Things seem to look better. Unfortunately that hasn't still translated to cash in the bank. But I'm hoping soon that it will. Got someone to market the company purely on commission basis. And he seems to be doing well, a good friend of mine and I had a very convincing idea in the same field of work to get more customers essentially in a way that the marketing happens on its own. I'm looking at things to get settled in the next 2 months. If it does, then I'm getting the personal loans cleared immediately and never making that mistake again, if it doesn't. Well we decided that selling the house and buying a house in a different place is the way to go. My parents said it doesn't make sense to spend 5 years of my life on a business error that they had made. So I'm mentally in a better place. What happens in the next 2 months, I'll definitely post the end result here.
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@adwalvekar yeah very happy to hear this dude. All will be well 🤗
Frankly speaking I am also in slightly similar situation as well. But in my case it is me who took the loans 😛 so I can't say much to my parents hehe. My business is also on critical stage and these next few months will tell me the result. -
@adwalvekar yo man, just a phase.
My company is also not in very good state. But well I just gotta work hard and do my best to have a good backup plan.
You are doing fine 👍 Moving on is the most valuable lesson we can learn in this life.
My family (dad, mom and I) runs a software business. Things were going decent when I was in college, and just as I was about to finish college, it went slightly bad due to lack of some technical insight. So I figured, I had the knowledge to do so, and joined in the family business as my first job. When I joined, I found out that things were worse that what I expected, (lack of processes in the company to handle day to day business). But we took a year to fix it and solve issues. But during this year, while the company finally runs as a proper company, we went into some serious debt to keep it running, as we were expecting it to get resolved soon. But now, although the company is structurally fine, the sales have seriously dropped. This has us cornered and we aren't able to do anything. We are seriously considering shutting the company down.
Which is not the worst part. The worst part is the debt. Since I, was a part of the company too, I am equally responsible for paying it off. And now, due to both my parents hitting the retirement age, I will be the only one repaying it. I really don't want to invest an estimated 8-10 years of my life living very modestly and spending a large (70-80%) of my income in repaying this.
I don't even know what to do, and things just seem very hopeless for me. Looking for any advice anyone has.
I guess if I had a bit more experience in the real world, I would be better at dealing with this, but I'm literally just 1 year out of my college.
rant