Me, My business, My problems.

[KieranJ]

Firstly, Hello! This is my first post on here!

My names Kieran, im 27 years old from West Yorkshire operating in the B2B wholesale food sector. Im a little fish with big dreams plagued by low start up capital in a field that requires large start up capital

I started my business 3 years ago with less than £100 in the bank, a old Audi A3 and my girlfriends house for not fit for purpose storage! I have now managed to buy a Refrigerated van and have a unit with a large walk in cold room and currently turn over £200,000 and growing. Year 4 will be a big one for me i can feel it.

I currently sell around 200 lines mainly into Cafes/Restaurants in my local area with the average customer spend ranging from £300-£1000 per Week. I have built up good profitable rounds on 3/5 days of the week at the moment and have good supplier relationships and a handle on my stock. I have little to no Stock Waste at the moment which im proud of given the perishable dates. I currently sell the following items:

Fresh Salad
Fresh Vegetables
Eggs
Oil
Cheese
Cooked Meats
Packaging
Sauces
Tinned Items
Everything else to come.

Almost all my products are coming from either the source or high up in the food chain, Meaning on almost everything i currently sell i sell it cheaper than the local competition. Its took me alot of "cost to customer" deals to get to the volume required to even order mixed Pallet qty's of XYZ and be able to sell them before there use by date. Alot of these Cost to customer deals are also now not active. So im making almost full markup on most of my lines, But this will be increased substantially once i can offer a full across the board range and gain larger purchasing power. Its been abit of a juggling game. A big hurdle i face in not having a full range of products is most customers still have to retain other suppliers and a chunk of products to keep there orders healthy on that side. I seem to have a very good responsive set of customers when it comes to new products. I have alot of customers who will start buying everything i get in and understand the vision!

I now as of this month have a fully automated ordering system with custom pricing via APP/Desktop (3rd Party) reducing my invoicing, supplier ordering and admin work down to roughly 30 minutes a day, This scales. It wouldn't change much with a 10 fold increase in orders. Growing up i was a computer kid, so i am a big believer in automation and efficiency. The app is going well, Customers are ordering products they didn't know i sold and it has now given me the ability to easily consolidate my current customers down to certain days. Most of my Cafe customers (early morning route) are now on a MON/WED/THURSDAY delivery dates which works for them and i will now be using TUESDAY/FRIDAY to expand into a whole new city in this coming weeks. My restaurants are on 5 day weeks, As there later opening times falls into a whole new category to 5/6am cafes. Once i have 2 more good days per week i should be able to get my first driver. Freeing me up to start a whole new area and so on.

The biggest problem im currently and have always faced is lack of capital. I dont have a rich family or any hand me outs available to me. Its just me! and my bad personal credit score what i foolishly ruined when i was 18 years old!

7-8 months ago i realized something had to give and decided i needed to get a full time nights job to try get some money to expand. I have been working from the hours of 6pm-4am, Then delivering for my business from 4:30am to 11/12pm, 5 Hours sleep, Rince repeat! Its been great for weigh loss but not so healthy on the mind! Ive recently took a step back from a second full time job and now just work 6pm-10pm everynight to provide me with some additional income. I hope to faze this out in the coming months with a big new customer drive coming in the coming weeks.

Financially im not losing money, But im not really gaining either, My overheads eat up most of the Gross profit i require to invest into new stock lines. Without the new stock i cant grow and without growth in stuck in abit of a cycle. I offer credit to all my customers as it greatly reduces the time required for invoices and taking payments at each stop and its just something i want to offer. To this date i have not had a single £0 not paid out of the £500K+ in sales ive done so from a risk/reward standpoint i do believe in keeping credit, although been pro forma to most of my suppliers it can cause issues with having no money to re order until someone pays me! Its something that will become less prevalent in the future but its still a issue now. Starting a business with £100 was never going to be easy.

I work hard, I want this to happen. I just need to find the right people to help me get there. Im young, Ambitious. Im actually out there trying to get things done. Its not a pipe dream startup. Its happening and its growing.

The reason i am here is to get your views and advice on what options for funding i might have for Stock purchasing.

Personal loans. We can throw that out of the window.
(bad credit i never fixed from my younger years)

Family & Friends
(Not possible)

What are my other options?

I have tried to apply for several business loans and unfortunately without a personal guarantor this isn't a option for me.

Investors/Angel Investors.

Do you guys know of any place i could find someone whos willing to take a punt on me? A group, a angel investment?

Just any general advice on how you might get out of this situation would be great.

 

[Shopclicks]

Yeah but what are you doing on the weekend???

Seriously, well done on achieving what you have. It's good to hear story of someone who started with next to nothing and made something. You deserve future success.

I would never advise someone to borrow for cash flow.

Far better to find something that increases your revenue, because at the same time you're actually building added value into the business, not creating debt.

Have you thought about your own market stalls on the weekend or your free days? The ROI has to be better at retail prices and if you choose the locations wisely. You might have to travel but you are no stranger to long hours. You're buying at the right price, so you just need to sell more. Are there other revenue streams untapped? Direct to consumer?

 

[Clinton]

Financially im not losing money, But im not really gaining either, My overheads eat up most of the Gross profit i require to invest into new stock lines.

Fix that first!

Well done on getting to where you are but if you're not making a profit, that's a bigger problem than not having growth.

You say you "want" to give credit, but I suspect you probably don't have a choice! Maybe you can release a bit of working capital via invoice financing (or reducing credit facilities if that possibility exists). Or renegotiate the credit you're getting from your suppliers! How much is your total credit with suppliers worth? Why do you run out of money to pay them if you've got adequate credit lines with them?

This is not the time to borrow money as you'll need to show (most) investors how you'll afford the repayments. "I'll be able to do a higher revenue" won't cut it as there's no evidence as to what operating profit you'll make on that higher revenue. If you've grown from £100 to £500,000, I suggest you now start working on profitability.

Business loans and stuff often work based on your business history. Ideally, you want to show a net profit every year and without drawing all that net profit (ie a balance sheet that keeps growing).

With a £500K t/o what are the main numbers on your balance sheet? Current assets / liabilities and net assets/shareholder funds?

 

[JEREMY HAWKE]

Not knowing your industry but understanding the game I would guess that you might be under-pricing your product
Everybody is increasing prices to survive at the moment and there is no shame in that

 

[Siobhan-DFH]

I don't believe that your problem is inventory. You could offer coconut juice, but someone will want fresh coconuts, and another will want dessicated coconut. Where does it stop?
Do you ever shop in two supermarkets on the same day because one doesn't sell the things you want? We all do it. They still retain customers.
I think you need to specialise and work on profitability. What can you get that's cheaper than other local suppliers while still being profitable? As an example, if you became the specialist in fruit, veg & Mediterranean products, all your existing customers would know what to buy from you, and new ones would understand your service.
I know you're looking for advice on investment, but I'd tidy up your offering and be ruthless about current opportunities for profitability first. Do you know about the 80-20 rule (Pareto Principle)? This seems apt here.
Good luck

 

[MOIC]

@KieranJ well done to where you’ve got, it’s admirable and you’re obviously not shy of hard work. My advice is the following:

1. Negotiate with your regular suppliers for credit terms with your reasons why (your post).

2. Offer a small discount to your customers for 7 day payment or even pro forma.

3. Eventually increase prices where you can.

4. See what discount structure you can get from your supplier, or alternative suppliers if you stock their products.

5. Offer discounts to your customers if they buy larger volumes. Keep credit to a minimum.

6. Increase your customer base.

7. Offer new allied products, which are niche in your sector with higher margins (ethnic, vegan. . . )

8. Offer same day delivery ( if that’s feasible) at an ‘extra charge’.

9. Negotiate with non perishable goods suppliers on a sale or return policy explaining your current position, your growth, expansion and how it will help their sales, due to your regular customers and business model.

10. Grow organically.

Well done so far!

 

[KieranJ]

Yeah but what are you doing on the weekend???

Seriously, well done on achieving what you have. It's good to hear story of someone who started with next to nothing and made something. You deserve future success.

I would never advise someone to borrow for cash flow.

Far better to find something that increases your revenue, because at the same time you're actually building added value into the business, not creating debt.

Have you thought about your own market stalls on the weekend or your free days? The ROI has to be better at retail prices and if you choose the locations wisely. You might have to travel but you are no stranger to long hours. You're buying at the right price, so you just need to sell more. Are there other revenue streams untapped? Direct to consumer?

Catching up on sleep and general accounting, app improvement work!

Unfortunately my products are not designed for retail! 2KG/5KG Blocks of cheese, 20L cooking oil, 5KG Sausage. Its all just abit to big for the average person. Running a fruit and veg stall is far from where i want to head.

 

[Shopclicks]

Unfortunately my products are not designed for retail! 2KG/5KG Blocks of cheese, 20L cooking oil, 5KG Sausage. Its all just abit to big for the average person. Running a fruit and veg stall is far from where i want to head.

How are you promoting the App? Are you finding new customers who found the App?

 

[Ian J]

Maybe you can release a bit of working capital via invoice financing (or reducing credit facilities if that possibility exists).

Invoice finance is certainly an option for you to consider and if you don't know what that is have a look at my website https://factoringsolutions.co.uk/our-services/factoring/ and contact me next week without any obligation if you think it's of interest

 

[Mark T Jones]

I would certainly look closely at the above advice - particularly fro @MOIC

I would take a step back and in your spare time ? do some serious cashflow modeling, because my fear here is that you are potentially running faster and faster to the same end point.

I do if course get the economies of scale thing - but it isn't guaranteed to work

 

[Chris Ashdown]

Catching up on sleep and general accounting, app improvement work!

Unfortunately my products are not designed for retail! 2KG/5KG Blocks of cheese, 20L cooking oil, 5KG Sausage. Its all just abit to big for the average person. Running a fruit and veg stall is far from where i want to head.

But if you buy in quantities you get the better cost price and if you then sell in smaller quantities you get higher profit. After all how hard is it to cut up and wrap say cheese, a large bag of spuds split up or similar

 

[pentel]

I have now managed to buy a Refrigerated van and have a unit with a large walk in cold room and currently turn over £200,000 and growing.

Financially im not losing money, But im not really gaining either, My overheads eat up most of the Gross profit i require to invest into new stock lines.

You have turned £100 into a refrigerated van, walk in cold room and stock.

It seems that you are profitable but low on cash.

!st thing to do is to produce a weekly profit and loss forecast and cash flow forecast.

 

[MBE2017]

Plenty of useful advice. I would add to the above, employ a telesales person to contact all your hotels and restaurant, your target market in the area you prefer to increase business in. You already stock the lines they are after, and try not to give credit out so easily, you could consider cash with order, proforma etc to help with your cash flow.

Ask for reviews of your service from good existing clients, that will help you a lot if you can say these five top hotels now use us every week, due to quality, service and competitivenes.

 

[Ray272]

I would suspect if this scales like you think it does, you need to go and explain this story to a local network, like a small business network or your local chamber of commerce. the story sounds great on paper so why not go and run with the story. There may be lots of local business people who would be interested in partnering up with someone who is young and ambitous and it sounds like you have technical skills aligned with an understanding of how to manage a perishable business. That part where you mention zero perishable stock to date, that sounds very impressive. Crowdfunding, is this not also an option?

I commend you, the idea of that business is frightening, the perishable aspect of it is very scary but you seem to have it under control.

Best of luck

 

[Financial-Modeller]

Congratulations on your growth so far.

I suspect that the reason that some of your customers love to deal with you is because you're spending more providing them with produce than it costs you to do so!

If your numbers are accurate, you have no more than thirteen customers. You're visiting them 3 to 5 times a week to deliver goods valued in some cases at £60 to £100.

If your profit margin is 50% or more, it probably makes sense, but if your margin is significantly less, its likely to be costing you more to serve them than you're making.

Work out your delivery cost; I bet with your time, fuel, van lease / maintenance, road tax, etc its £10-15 per delivery

Even with no other changes, ensure minimum order value is £125 or something to filter some of the losses out.

Once you know how much net profit you're making, you need to consider whether you should continue to supply some of your smaller customers on the current basis or whether you can develop them into more profitable customers. If you can't do so, don't be afraid to stop serving them and spend your time developing more profitable customers.

You're doing the right thing by pausing to ask questions and refine your offering before you develop business further afield.

Hop it goes well. Let us know.

 

[thetiger2015]

Turnover is vanity. Profit is sanity.

I would be cautious about taking on any debt, you'll need to repay the loan and if your profit margin is wrong now, it will get even worse if you add a loan with interest on top!

You've got turnover, you've got customers. You need to build in that profit margin now, try to grow a little bit as well, a few more customers with a slightly improved net margin will do wonders without much extra work.

As others have mentioned. Be cautious with your trade customers. They'll be happy to take your product, if you're cheaper than the competition. They don't care if you can afford it or not. If you go pop, they'll just go back to the other supplier, they're unlikely to be buying from you because they like you, it's purely business.

Never make knee jerk reactions. Take your time. Run some reports and see if there are opportunities to maximise profits from what you have already.

 

[Paul Kelly ICHYB]

Well done on getting to where you are.

The biggest problem im currently and have always faced is lack of capital.

There are only a few approaches to resolve this:

1. Increase sales volume
2. Reduce costs
3. Increase prices

Whilst all are important, increasing prices is the one that will have the fastest impact and if you were going to do that, now is about as good a time to do it. It doesn't have to be a lot and doesn't have to be on everything.

 

[UKFinanceGuy]

Firstly, Hello! This is my first post on here!

My names Kieran, im 27 years old from West Yorkshire operating in the B2B wholesale food sector. Im a little fish with big dreams plagued by low start up capital in a field that requires large start up capital

I started my business 3 years ago with less than £100 in the bank, a old Audi A3 and my girlfriends house for not fit for purpose storage! I have now managed to buy a Refrigerated van and have a unit with a large walk in cold room and currently turn over £200,000 and growing. Year 4 will be a big one for me i can feel it.

I currently sell around 200 lines mainly into Cafes/Restaurants in my local area with the average customer spend ranging from £300-£1000 per Week. I have built up good profitable rounds on 3/5 days of the week at the moment and have good supplier relationships and a handle on my stock. I have little to no Stock Waste at the moment which im proud of given the perishable dates. I currently sell the following items:

Fresh Salad
Fresh Vegetables
Eggs
Oil
Cheese
Cooked Meats
Packaging
Sauces
Tinned Items
Everything else to come.

Almost all my products are coming from either the source or high up in the food chain, Meaning on almost everything i currently sell i sell it cheaper than the local competition. Its took me alot of "cost to customer" deals to get to the volume required to even order mixed Pallet qty's of XYZ and be able to sell them before there use by date. Alot of these Cost to customer deals are also now not active. So im making almost full markup on most of my lines, But this will be increased substantially once i can offer a full across the board range and gain larger purchasing power. Its been abit of a juggling game. A big hurdle i face in not having a full range of products is most customers still have to retain other suppliers and a chunk of products to keep there orders healthy on that side. I seem to have a very good responsive set of customers when it comes to new products. I have alot of customers who will start buying everything i get in and understand the vision!

I now as of this month have a fully automated ordering system with custom pricing via APP/Desktop (3rd Party) reducing my invoicing, supplier ordering and admin work down to roughly 30 minutes a day, This scales. It wouldn't change much with a 10 fold increase in orders. Growing up i was a computer kid, so i am a big believer in automation and efficiency. The app is going well, Customers are ordering products they didn't know i sold and it has now given me the ability to easily consolidate my current customers down to certain days. Most of my Cafe customers (early morning route) are now on a MON/WED/THURSDAY delivery dates which works for them and i will now be using TUESDAY/FRIDAY to expand into a whole new city in this coming weeks. My restaurants are on 5 day weeks, As there later opening times falls into a whole new category to 5/6am cafes. Once i have 2 more good days per week i should be able to get my first driver. Freeing me up to start a whole new area and so on.

The biggest problem im currently and have always faced is lack of capital. I dont have a rich family or any hand me outs available to me. Its just me! and my bad personal credit score what i foolishly ruined when i was 18 years old!

7-8 months ago i realized something had to give and decided i needed to get a full time nights job to try get some money to expand. I have been working from the hours of 6pm-4am, Then delivering for my business from 4:30am to 11/12pm, 5 Hours sleep, Rince repeat! Its been great for weigh loss but not so healthy on the mind! Ive recently took a step back from a second full time job and now just work 6pm-10pm everynight to provide me with some additional income. I hope to faze this out in the coming months with a big new customer drive coming in the coming weeks.

Financially im not losing money, But im not really gaining either, My overheads eat up most of the Gross profit i require to invest into new stock lines. Without the new stock i cant grow and without growth in stuck in abit of a cycle. I offer credit to all my customers as it greatly reduces the time required for invoices and taking payments at each stop and its just something i want to offer. To this date i have not had a single £0 not paid out of the £500K+ in sales ive done so from a risk/reward standpoint i do believe in keeping credit, although been pro forma to most of my suppliers it can cause issues with having no money to re order until someone pays me! Its something that will become less prevalent in the future but its still a issue now. Starting a business with £100 was never going to be easy.

I work hard, I want this to happen. I just need to find the right people to help me get there. Im young, Ambitious. Im actually out there trying to get things done. Its not a pipe dream startup. Its happening and its growing.

The reason i am here is to get your views and advice on what options for funding i might have for Stock purchasing.

Personal loans. We can throw that out of the window.
(bad credit i never fixed from my younger years)

Family & Friends
(Not possible)

What are my other options?

I have tried to apply for several business loans and unfortunately without a personal guarantor this isn't a option for me.

Investors/Angel Investors.

Do you guys know of any place i could find someone whos willing to take a punt on me? A group, a angel investment?

Just any general advice on how you might get out of this situation would be great.

Hi Kieran,

Hope all is well. Did you manage to get any movement on the capital you wanted (in the above post)?

Cheers,

The Finance Guy.

 

[Paulzx]

Kieran, as someone who has spent 25+ years running my own business, and started out like you, I have the luxury of some hindsight, and what I would say to you is, consider doing something else rather than going in to debt to carry on running something that will probably never pay off the way you want it to.

I know that may not be what you want to hear, but you have gained some experience that will be useful going forward. Don't encumber yourself with debt and unrealistic targets, you're in a sector that's dominated by bigger suppliers, unless you can clearly see how this would work out with a cash injection, I would say use your energy and experience and put it into something you can succeed in that will give you the reward your effort deserves. Otherwise you may find that you've put years of time and effort into something that will just never reflect what you've put into it.

 

[Blood Lust]

Firstly, Hello! This is my first post on here!

My names Kieran, im 27 years old from West Yorkshire operating in the B2B wholesale food sector. Im a little fish with big dreams plagued by low start up capital in a field that requires large start up capital

I started my business 3 years ago with less than £100 in the bank, a old Audi A3 and my girlfriends house for not fit for purpose storage! I have now managed to buy a Refrigerated van and have a unit with a large walk in cold room and currently turn over £200,000 and growing. Year 4 will be a big one for me i can feel it.

I currently sell around 200 lines mainly into Cafes/Restaurants in my local area with the average customer spend ranging from £300-£1000 per Week. I have built up good profitable rounds on 3/5 days of the week at the moment and have good supplier relationships and a handle on my stock. I have little to no Stock Waste at the moment which im proud of given the perishable dates. I currently sell the following items:

Fresh Salad
Fresh Vegetables
Eggs
Oil
Cheese
Cooked Meats
Packaging
Sauces
Tinned Items
Everything else to come.

Almost all my products are coming from either the source or high up in the food chain, Meaning on almost everything i currently sell i sell it cheaper than the local competition. Its took me alot of "cost to customer" deals to get to the volume required to even order mixed Pallet qty's of XYZ and be able to sell them before there use by date. Alot of these Cost to customer deals are also now not active. So im making almost full markup on most of my lines, But this will be increased substantially once i can offer a full across the board range and gain larger purchasing power. Its been abit of a juggling game. A big hurdle i face in not having a full range of products is most customers still have to retain other suppliers and a chunk of products to keep there orders healthy on that side. I seem to have a very good responsive set of customers when it comes to new products. I have alot of customers who will start buying everything i get in and understand the vision!

I now as of this month have a fully automated ordering system with custom pricing via APP/Desktop (3rd Party) reducing my invoicing, supplier ordering and admin work down to roughly 30 minutes a day, This scales. It wouldn't change much with a 10 fold increase in orders. Growing up i was a computer kid, so i am a big believer in automation and efficiency. The app is going well, Customers are ordering products they didn't know i sold and it has now given me the ability to easily consolidate my current customers down to certain days. Most of my Cafe customers (early morning route) are now on a MON/WED/THURSDAY delivery dates which works for them and i will now be using TUESDAY/FRIDAY to expand into a whole new city in this coming weeks. My restaurants are on 5 day weeks, As there later opening times falls into a whole new category to 5/6am cafes. Once i have 2 more good days per week i should be able to get my first driver. Freeing me up to start a whole new area and so on.

The biggest problem im currently and have always faced is lack of capital. I dont have a rich family or any hand me outs available to me. Its just me! and my bad personal credit score what i foolishly ruined when i was 18 years old!

7-8 months ago i realized something had to give and decided i needed to get a full time nights job to try get some money to expand. I have been working from the hours of 6pm-4am, Then delivering for my business from 4:30am to 11/12pm, 5 Hours sleep, Rince repeat! Its been great for weigh loss but not so healthy on the mind! Ive recently took a step back from a second full time job and now just work 6pm-10pm everynight to provide me with some additional income. I hope to faze this out in the coming months with a big new customer drive coming in the coming weeks.

Financially im not losing money, But im not really gaining either, My overheads eat up most of the Gross profit i require to invest into new stock lines. Without the new stock i cant grow and without growth in stuck in abit of a cycle. I offer credit to all my customers as it greatly reduces the time required for invoices and taking payments at each stop and its just something i want to offer. To this date i have not had a single £0 not paid out of the £500K+ in sales ive done so from a risk/reward standpoint i do believe in keeping credit, although been pro forma to most of my suppliers it can cause issues with having no money to re order until someone pays me! Its something that will become less prevalent in the future but its still a issue now. Starting a business with £100 was never going to be easy.

I work hard, I want this to happen. I just need to find the right people to help me get there. Im young, Ambitious. Im actually out there trying to get things done. Its not a pipe dream startup. Its happening and its growing.

The reason i am here is to get your views and advice on what options for funding i might have for Stock purchasing.

Personal loans. We can throw that out of the window.
(bad credit i never fixed from my younger years)

Family & Friends
(Not possible)

What are my other options?

I have tried to apply for several business loans and unfortunately without a personal guarantor this isn't a option for me.

Investors/Angel Investors.

Do you guys know of any place i could find someone whos willing to take a punt on me? A group, a angel investment?

Just any general advice on how you might get out of this situation would be great.

You could use a factoring company but they will take a cut of your profits from each invoice.

You could look at government business grants but would need to come up with a way to satisfy their criteria. Such as taking on a disabled employee, going green, you know the kinds of trends going on at the moment politically.

You could even try and wing it to get your local college/uni business grads do a full case study on your business to offer recommendations.