Congratulations! Join the other geniuses who didn't take professional advice

[Clinton]

As those who follow my posts know, I have very little sympathy for business owners who:

• didn't take professional advice when starting a limited company;
• didn't take professional advice when buying / selling a business;
• didn't read the contract properly before signing (especially with leases and subscription services).

It's amazing how such people can be allowed to breathe far less run businesses! I'm going to use this thread as a "Join The Other Geniuses" bookmark and simply link to this when the occasion arises (which seems to happen several times a day!)

So here's a fun thread just for them

To all you newbies (and some oldies) who've been sent to this thread, some advice:

1. There are times when you need to hire a professional. Yes, it costs money. But as you're probably discovering, you did something on the cheap and it's going to cost you more money now that you're knee deep in the brown stuff.
2. Accept that you've screwed up, apply some common sense at least now, recognise that you're not as smart as you thought you were, and go pay for expert assistance (instead of compounding your mistake by seeking free advice in these forums)!
3. Repent and don't make the same mistake in future.

Starting a company:

Yes, it's easy to open a new limited company, but there's tons to know before you start. Like:

• the difference between a director and shareholder;
• why a 50-50 split of shares is a bad idea;
• why you should always draw up a shareholders' agreement right at the start;
• what your responsibilities are as a director;
• what records you need to keep and how you need to plan for tax;
• lots more.

Don't inform yourself of all these important matters and you're bound to run into problems at some point. It's only a matter of time!

Buying or selling a business

It's a lot, lot more complicated than you think.

Even if you're paying £1 to buy a business, go pay a few grand for proper legal advice.

And selling a business is not risk free, you still need to hire an expert.

Whichever side of the transaction you're on, get a good corporate lawyer to draw up the contract! Relying on a free template you downloaded ...is at the dumb end of cheap.

Signing a contract

Businesses don't have the same protections as consumers. If you enter into a business contract the law assumes (probably incorrectly) that you're a smart, savvy, clued up, business minded person and that you fully understand the contract, the risks, your responsibilities.

Whether it's a lease or any other contract you should not be signing it without reading every single word and having an adult explain it to you. Yes, it's easy to click the "Accept" button. Duh! That's why the Accept button is so big, it's for people like you!

There is no cooling off period, there is no "I didn't read it properly" excuse. You signed, you're liable. Be grown up about it and accept you were naive/stupid/careless/ignorant (take your pick) to sign without understanding. Don't squeal like a kid that life is not fair.

Don't repeat

I say this, but I have every confidence most of you will go and do exactly the same thing again because you're too arrogant to appreciate just how little you know and/or you're too tight to pay for proper advice.

But I live in hope that at least a few of you will go away a little bit smarter. Good luck.

 

[MikeJ]

And selling a business is not risk free, you still need to hire an expert.

We sold our company in May. Our legal fees were almost £200k. The advice we got paid for itself in the second meeting.

 

[Mark T Jones]

Should be pinned!

And probably in the start up section

 

[Clinton]

Oh, yes, I forgot. To all those newbies reading my original post, please consider this as part of that post:

Don't come back to say that you are going to be getting professional advice and that you just wanted to see what we said first.

Because that's invariably what people come back to say! And we know you aren't, that you're trying to do it on the cheap.

If you are indeed getting professional advice that should be your first port of call, not this one.

 

[Lucan Unlordly]

Just a thought Clinton.

Isn't the best way to stop this forum functioning, to persuade, suggest, instruct visitors not to ask questions?

For every misguided thread starter there are surely dozens more folk, dropping in, reading, following and learning from others mistakes.

 

[billybob99]

Isn't the best way to stop this forum functioning, to persuade, suggest, instruct visitors not to ask questions?

That is the end goal.

 

[Clinton]

Just a thought Clinton.

Isn't the best way to stop this forum functioning, to persuade, suggest, instruct visitors not to ask questions?

We love questions. I answer a lot of them.

There are some questions that, whether the poster knows it or not, are best taken to experts, not forums.

We do the poster a disservice by answering those.

 

[Lucan Unlordly]

I get your point, i'm just not sure that advice from a professional is always the better starting place, that the opinions and experiences of wiser folk on here are a great help, if only to focus the conversation when sitting in front of a £300 per hour solicitor.

Rather like going to the doctors. I may not know exactly what's wrong with me but having scoured the forums I pretty much know what the options are and more importantly have a greater understanding of the diagnosis.

 

[Clinton]

....if only to focus the conversation when sitting in front of a £300 per hour solicitor.

They aren't going to be speaking with your £300 ph solicitor. Or any solicitor. That's the problem. They are cheapskates, or they don't realise that the matter is a lot more complicated than they think.

But you can feel free to answer their questions for them! Knock yourself out.

 

[Mark T Jones]

I get your point, i'm just not sure that advice from a professional is always the better starting place, that the opinions and experiences of wiser folk on here are a great help, if only to focus the conversation when sitting in front of a £300 per hour solicitor.

Rather like going to the doctors. I may not know exactly what's wrong with me but having scoured the forums I pretty much know what the options are and more importantly have a greater understanding of the diagnosis.

The problem, which seems particularly prevalent on this forum at the moment, is that the majority of those looking for ‘advice’ don’t actually want advice, they want to heAr what they want to hear. If just one out of 50 responses hints at what they want to hear, that’s the ‘advice’ they will follow.

Mostly they will ignore tough love. Sometimes they will attack the person giving it without any insight whatsoever

In theory at least, paid for advice will focus the mind.

 

[fisicx]

"Please help, I've just signed a 10 year lease, paid 100K for a business and now discovered the seller was lying. Can I get my money back. I can't afford a solicitor".

They will get 99 people saying no and 1 saying yes. Guess which one they respond to?

 

[Clinton]

They will get 99 people saying no and 1 saying yes. Guess which one they respond to?

Which is exactly what con artists go for!

They find a sucker who's getting advice he doesn't want to hear. They post publicly the answer that he does want to hear. They then contact him by PM to explain how they can help him.

The sucker then ends up losing a lot more than £300.

I've run large forums, I know how these scam artists work.

 

[Mark T Jones]

Which is exactly what con artists go for!

They find a sucker who's getting advice he doesn't want to hear. They post publicly the answer that he does want to hear. They then contact him by PM to explain how they can help him.

The sucker then ends up losing a lot more than £300.

I've run large forums, I know how these scam artists work.

Yip. Classic scammer low-hanging fruit.

The rogues in our industry rely entirely of giving an illusion of easy & cheap - and wannabe restaurant owners lap it up.

 

[Chris Ashdown]

Is not the purpose of the forum to assist business people who have raised questions, with a wide selection of possible answers from both experienced and less experienced posters

In a perfect world, There would still be college evening classes on starting up a business explaining the various things you need to understand, giving a good grounding,

Its easy to say talk to a accountant or solicitor, but what do they really know about small business apart from their own limited area, some are full of first class knowledge others just interested in how much they can get from you, just a one person suggestion, Where as the forum can give a very broad outline of options, some answers may be crap others first class, but on the whole supply first class area's for you to learn more about, which if required you can ask a expert about for advice at cost

Better to block someone out by not answering a post, than to condem everyone who does not follow your advice and get shirty about it

The fantastic answers we sometimes hear on here, are those replies that say, give me a call and i will explain a outline of what can be done and how for a free 20 min call

 

[Lucan Unlordly]

"Please help, I've just signed a 10 year lease, paid 100K for a business and now discovered the seller was lying. Can I get my money back. I can't afford a solicitor".

They will get 99 people saying no and 1 saying yes. Guess which one they respond to?

When the answer is 'you should have had a solicitor draw up the contract first', what do you expect?
From the point of view of the casual forum reader who is trying to learn, it's great advice which is only aired after the 'numbnut' starting the thread has asked the question. Encouraging people not to post because they have messed up, are tight, should have done x,y,z will surely reduce the number of threads?

As for not being able to afford a solicitor. Harsh reality? A mate of mine who's building company was being seriously squeezed when the main developer for the new Wembley Stadium build was slow to pay the multi tiered list of contractors, (they were near the bottom) hadn't the cash to buy a pint of milk for the office staff.

 

[MBE2017]

I get the feeling Clinton is beginning to chill and mellow these days.

 

[billybob99]

Harsh reality? A mate of mine who's building company was being seriously squeezed when the main developer for the new Wembley Stadium build was slow to pay the multi tiered list of contractors, (they were near the bottom) hadn't the cash to buy a pint of milk for the office staff.

Still waiting for councils to pay their invoices. Says they are paid 60 days from the day they are logged in their system, not from the day they were received.

What can you do.

Good thing a cheap and cheery pizza only costs £1 and I have several £££s.

 

[Ian J]

A mate of mine who's building company was being seriously squeezed when the main developer for the new Wembley Stadium build was slow to pay the multi tiered list of contractors, (they were near the bottom) hadn't the cash to buy a pint of milk for the office staff.

Why didn't you suggest that he speak to me?

 

[STDFR33]

Going to obtain professional advice is one thing. Taking action based on that professional advice is another.

Some people feel that Dave, the mechanic down the pub knows more about tax than their accountant and more about the law than their solicitor. Usually it is because Dave's dodgy advice benefits - only in the short term though.
It's usually not long before they realise that Dave's advice has cost them a small fortune and the professional fees are considerably more because the professional now how to sort out a big sh1t heap of a mess.

 

[SteveHa]

Its easy to say talk to a accountant or solicitor, but what do they really know about small business apart from their own limited area, some are full of first class knowledge others just interested in how much they can get from you, just a one person suggestion

I have to say I would hope quite a lot, given that by and large the posts I reply to are in my professional field of expertise. I do, however, try to back up my replies where appropriate with legislative references, enabling anyone who wants to to check.

 

[Lucan Unlordly]

Why didn't you suggest that he speak to me?

It was 2005. I didn't join til 2009

 

[Ian J]

It was 2005. I didn't join til 2009

I am available via telephone, email or telepathy

 

[Lucan Unlordly]

Going to obtain professional advice is one thing. Taking action based on that professional advice is another.

Some people feel that Dave, the mechanic down the pub knows more about tax than their accountant and more about the law than their solicitor. Usually it is because Dave's dodgy advice benefits - only in the short term though.
It's usually not long before they realise that Dave's advice has cost them a small fortune and the professional fees are considerably more because the professional now how to sort out a big sh1t heap of a mess.

Sometimes 'Dave' does...........
Whilst assisting a relative with the legals of her divorce, if it wasn't for the experience and advice from my 'Dave down the pub' she'd have been steam rollered into accepting a far from satisfactory final, settlement. Her legal team were, quite justifiably some might argue, warning her that the cost implications of proceeding down a certain route were prohibitive. 'Dave's advice changed the odds.

 

[JEREMY HAWKE]

We have a line in this industry

What can you teach a truck driver ?
Nothing he already knows everything !

This should also be applied to some of the start ups on here !

 

[Newchodge]

I am available via telephone, email or telepathy

and tardis, by the sound of it )

 

[Ian J]

We have a line in this industry

What can you teach a truck driver ?
Nothing he already knows everything !

I always thought that was a wife

 

[Clinton]

@Lucan Unlordly , your heart seems to be in the right place, but you are misguided.

I've dealt with many thousands of small businesses over the years (and given tons of free help, BTW).

Let me tell you something: the vast majority of owners of small businesses don't have the smarts to realise when they need paid advice.

They don't know what they don't know.

Of course it's difficult paying professional fees, professionals cost a lot of money. If the business owner is working for not much more than minimum wage, paying a professional a few hundred quid does hurt.

It hurts even more if they are not making a profit and need help to dig themselves out of a hole.

But the cost of professional advice should be part of the planning whether you're starting a business or selling it!

And they don't know this.

I agree, not every professional is worth the money spent. Some are dreadful. So one needs to also be careful which professionals they use. Research the professional. Use discretion.

That's all part and parcel of being in business. It's not just marketing, marketing, marketing!

And if you don't have those skills, you aren't switched on enough to figure when you need to get professional input, then you are highly likely to find yourself in trouble.

When you are in trouble you don't compound the problem by repeating the same mistake and going back to Dave down at the pub.

That, sir, is the definition of insanity.

The Daves and Sarahs are great for emotional support, patting you on the back and telling you that you're doing the right thing, telling you what you want to hear. They can also sometimes be the solution, but when people come to UKBF it's generally because Dave's solution was a complete and utter disaster (and they can't make a claim on Dave's professional indemnity insurance).

 

[Chris Ashdown]

Clinton, your advice is good But there is always a but

Many posters on here have run a business for years and found changing conditions mean things have suddenly got a lot worse, money is tight or non existent and someone tells you to get expert advice, where do you go to when your already doing 20 hours a day fighting your way through a tiny minute gap,

Your accountandt can tell you to the decimal penny your profit and loss and balance sheet, but knows nothing about your industry apart from that, they have no knowledge of your customers or suppliers, how far they can be stretched or how helpful they may be or not be so good for general advice but not much else, solicitors are much the same experts in law but not your part of industry, so the best option is to contact business forums and get advice hopefully from experts in your industry who may have been through near identical experiences and can give advice but maybe not solutions

You state time and time again you only work with companies with large turnovers of £1,000,000 so how does that relate to fred blogs who has a turnover of £200,000 if he is lucky

Those who have been around some time have read the startup books, understand cash flow balance sheet, marketing and selling and most likely understand SEO to a basic level and the benefits of a shareholders agreement and duties of a director,

Unfortunately many do not understand the need but want to be self employed and make mistakes

Rant over

 

[Clinton]

You state time and time again you only work with companies with large turnovers of £1,000,000 so how does that relate to fred blogs who has a turnover of £200,000 if he is lucky...

It doesn't. (Almost) nobody wants to buy that £200K business! When these go to market fewer than 5% of them find buyers (and that number may even be as low as 1.8%)!

Pay a decent exit adviser a few hundred quid and he'll tell you the specific things you need to fix to make the business more desirable to buyers.

Ask Dave down at the pub and he'll tell you what a fantastic business you've got and why you should get at least half a million quid for it. So you'll spend money advertising the business for sale and waste time dealing with a few dozen tyre kickers.

A year later you're still twiddling your thumbs. And you're probably a few grand poorer ...if you're lucky.

If you're unlucky, one of those "buyers" has used all the information you provided to set up in competition and wipe you out. That's because you didn't know how to handle buyers, what information to give out and when and what commitments to extract from buyers before disclosing the most sensitive commercial information. You had no idea how to protect yourself though the process!

Thank you, Dave.

...changing conditions mean things have suddenly got a lot worse, money is tight or non existent and someone tells you to get expert advice, where do you go to when your already doing 20 hours a day fighting your way through a tiny minute gap,

If you need to get expert advice and don't have the money for it, shut the business down! That's usually (not always, but in probably 99% of cases) the far cheaper option long term.

If you've run the business successfully in the past and now, despite working 20 hours a day, you're not making enough to pay a couple of hundred quid for good advice, do yourself a favour and shut the bloomin' thing down! I've been there and that's what I've done. You've been there and that's what you did. If it's good enough for you and me...

 

[KAC]

Starting a company:

Yes, it's easy to open a new limited company, but there's tons to know before you start. Like:
- the difference between a director and shareholder;
- why a 50-50 split of shares is a bad idea;
- why you should always draw up a shareholders' agreement right at the start;
- what your responsibilities are as a director;
- what records you need to keep and how you need to plan for tax;
- lots more.

Don't inform yourself of all these important matters and you're bound to run into problems at some point. It's only a matter of time!

... and isn't that the problem !!

Today anyone can form a limited company same day for £9.99

I was around in the 70s when the registration fee was £50, with professional assistance the cost was in the hundreds and you nearly always got advice on the matters above. In the price we charged, we even used to dish out a book from ICAEW on directors' responsibilities.

it wasn't an impulse purchase in those days as it took weeks before the company was registered. You could do same day registrations but they were unusual as they cost significantly more. There was big business for company formation agents in selling ready made companies which had very inventive names.

Insolvency was an unusual event and the Spongebob plan method of tax avoidance didn't exist.

Progress isn't always good

 

[lockyer]

This thread is a bit harsh on people who have tried, but failed and are looking for help.

Non sibi sed omnibus

 

[Mr D]

... and isn't that the problem !!

Today anyone can form a limited company same day for £9.99

I was around in the 70s when the registration fee was £50, with professional assistance the cost was in the hundreds and you nearly always got advice on the matters above. In the price we charged, we even used to dish out a book from ICAEW on directors' responsibilities.

it wasn't an impulse purchase in those days as it took weeks before the company was registered. You could do same day registrations but they were unusual as they cost significantly more. There was big business for company formation agents in selling ready made companies which had very inventive names.

Insolvency was an unusual event and the Spongebob plan method of tax avoidance didn't exist.

Progress isn't always good

So what method was used back then for companies that became insolvent and could not afford to liquidate?
Some different method?

 

[Clinton]

This thread is a bit harsh on people who have tried, but failed and are looking for help.

This thread exists, if you read the OP, as a bookmark for me to send certain people to - the people who sign up to UKBF and ask the kind of question that I believe they should be taking to a professional.

Let's not get our knickers in a twist assuming that everybody who asks for advice is being called dumb and being pointed to this thread.

My apologies to @MBE2017 , the quotes in my previous post that I attributed to him were actually from @Chris Ashdown

 

[MBE2017]

Not sure how Clinton managed it, but the quotes he used above with my name as poster are not by myself.

 

[Mr D]

Not sure how Clinton managed it, but the quotes he used above with my name as poster are not by myself.

Quotes on the internet are often suspect - Oliver Cromwell

 

[Lucan Unlordly]

@Lucan Unlordly , your heart seems to be in the right place, but you are misguided.

I've been called worse

One element of business that cannot be tamed is willingness to take on risk. Professional advice will rarely put their name to something that is risky beyond a level that doesn't tick all the 'how you should do it' boxes.

Some years ago I tried to take out a mortgage to buy a new house using the rental income from two others I had let out to students. The 'professional' financial advisor said 'don't you realise you will be mortgaged for £120k (yes it was a long time ago) and even including your salary it's an immense risk. I managed to get my employer to enhance my payslip, bringing an annual bonus forward into a current payslip and got the mortgage.

Long story short, I made some decent money then overstretched myself, selling the new home for a bigger property that needed work done on it, getting hit when interest rates touched 15%, losing my well paid job etc., So again, I took professional advice, although this time I listened, sold up (when my gut said I should have been buying another) and have regretted it ever since

Two examples of professional advisors getting it wrong?

 

[Clinton]

It worked out for you so everybody should take risks and, if they've taken professional advice, they should ignore it?

Great! It's a dumb argument, but do keep it for the next plonker we get.

 

[JEREMY HAWKE]

@Clinton & @Lucan Unlordly

You are both touching on the wrong point when it comes to professional advice at an advanced point in business
If you have been around a while you don't really need to take advice over the big picture . Lord Lucan! has proved this . He knew what to do but held too much respect for the bean counters .

At an advanced point in business you make the choices on your own and your experts basically tell you how things should be worded and what documents need submitting and where you may get you fingers burnt !

Clintons post is really aimed at the start ups that we love to mock when the ignore us !

Not very many of us have sold businesses so you would need good advice on that but if you know your onions and you have took a few punches . You should not really need an advisor

 

[The Byre]

Not very many of us have sold businesses so you would need good advice on that but if you know your onions and you have took a few punches . You should not really need an advisor

Yes and no!

I mentioned some time ago a 100-man manufacturing company sold to a US international by a friend of mine. They didn't need any advisors either - hell-no! They had all kinds of magic people in-house, people with Harvard and Yale MBAs and they had UK lawyers and accountants already on their staff, as they already owned a 500-man and a 100-man manufacturing plant in the UK, as well as several other EU companies.

To cut a long story short, they bought a company that had only licensed product from my friend and another engineer over five-year roll-over periods. This is normal in that branch of UK manufacturing - except they didn't know this. You come up with a funky new twist on a common engineering problem and you patent it and copyright the design as well and then you license the design to your own company. This is in no small part, because of the UK's strange tax laws.

So the US parent bought a company that within a few short years, didn't have any product to manufacture or sell and it was closed. My friend trousered a seven-figure sum and is today enjoying a comfortable retirement. His fellow engineer is today using his end of those designs in his own small and very elite manufacturing plant in Texas (big state subsidies!)

As @Clinton pointed out earlier "You don't know what you don't know!"

We all suffer from Dunning-Kruger syndrome now and then. We all look at businesses, situations and/or tasks and think "Well, that looks easy! I could do that!"

Or as one numpty put it to me "I'm gonna open a bar. I've seen a pretty girl serve a guy a beer in a bar and I realised that it don't take whole lotta smarts to sell a guy a beer!"

 

[Mr D]

Or as one numpty put it to me "I'm gonna open a bar. I've seen a pretty girl serve a guy a beer in a bar and I realised that it don't take whole lotta smarts to sell a guy a beer!"

And they are right.
Its the other bits besides serving a beer that are hard.
Well, so long as not a full pint in a pint glass anyway...