Taking over family business

[Trowy13]

Hello, just joined the forum. Any advice is really appreciated.

I have been working for the family business for over 5 years full time and part time for most of my life.

My parents have decided they want to retire and move abroad.

We are currently going through the process of winding the company down and I have set up a limited company ready for takeover.

We are not set on a date for this all to happen yet.

The business is currently run from my parents home which is due to go on the market shortly.

My 1st hurdle is going to be a new location for the business to run, I have a external garage at the back of my property access is difficult and parking is nearly impossible for my van let alone 2/3 more. The other option is to rent a light industrial unit but obviously this is a whole new cost to the business and committing to this may put me under a financial strain before Iv even started to run the business.

I am looking at areas to rent at around £14-16,000 PA

If I was to find a rental unit am I able to sell cleaning products either online or as shop to utilize the new space and increase revenue for business? Or is this something that would require a license and extra costs come into play?

Would anyone have any recommendations on going about deciding what’s best?

If anyone has ever been in a similar position and had any tips for me I’d be greatful.

 

[fisicx]

Why wind the company down? It’s far more sensible to just add you as a director and everything continue.

You don’t tell us what type of business this is.

 

[Newchodge]

Without knowing something about the current business, it is difficult to answer. Is it online, is it a face to face business? Do you need a lot of storage space? How often do you get deliveries, and what size vehisles?

 

[Trowy13]

Why wind the company down? It’s far more sensible to just add you as a director and everything continue.

You don’t tell us what type of business this is.

Sorry. It’s a cleaning business. Winding the company down because all ties need to be cut for Spanish visa so we have been told?

 

[Trowy13]

Without knowing something about the current business, it is difficult to answer. Is it online, is it a face to face business? Do you need a lot of storage space? How often do you get deliveries, and what size vehisles?

It’s a cleaning business and we do not sell any products currently but I am looking into this a new line of business for the company

 

[Trowy13]

It’s a cleaning business and we do not sell any products currently but I am looking into this a new line of business for the company

Currently 3 vehicles and a large garage size space for all equipment

 

[Newchodge]

Sorry. It’s a cleaning business. Winding the company down because all ties need to be cut for Spanish visa so we have been told?

Told by whom. I am uaware of any Spanish visa law that states someone cannot be a shareholder in a UK company. They cannot dfo any work unless their visa permits it, so they cannot run the business from Spain without a work visa.

 

[Trowy13]

Told by whom. I am uaware of any Spanish visa law that states someone cannot be a shareholder in a UK company. They cannot dfo any work unless their visa permits it, so they cannot run the business from Spain without a work visa.

An accountant we use. Also told us to switch the current sole trader partnership to a ltd business for future mortgage application benefits for myself so I can still receive a wage

 

[DoolallyTap]

You can register a new Ltd company for about £15 online, you don't need an accountant or solicitor to do it for you. I hope you did not spend a fortune getting the Ltd set up! Buy the assets of the partnership, van/stock and put them into the new ltd company. No need to wind anything down, just keep trading under the new name.
If you are young, enthusiastic and motivated you will want to develop and build your new business, within cash flow constrains try to find a suitable commercial property that you can justify.

 

[Newchodge]

An accountant we use. Also told us to switch the current sole trader partnership to a ltd business for future mortgage application benefits for myself so I can still receive a wage

Sorry, I assumed the existing business was also a ltd company.

 

[MikeJ]

If I was to find a rental unit am I able to sell cleaning products either online or as shop to utilize the new space and increase revenue for business? Or is this something that would require a license and extra costs come into play?

Insurance and business rates will also be costs. No licence as such. Are the supplies hazardous?

 

[fisicx]

This is all very confusing.

There is no need to wind down the business. You just need to change from a sole trader to a PLC with you as the director. This would mean all your marketing, vehicles, contracts, website etc wouldn't need to change. Everything would just continue as before but with just a new boss.

 

[MikeJ]

Not a PLC. It's not going to be public, unless this is a much bigger business than the impression we're getting.

 

[Trowy13]

Not a PLC. It's not going to be public, unless this is a much bigger business than the impression we're getting.

Yea not a PLC only a small local business at the moment

 

[BusterBloodvessel]

I will let those better qualified than me advise about the winding companies up etc although I would agree it seems to be being made complicated.

Firstly, I don't understand fully your point about "putting yourself under too much pressure".... surely you know/can see the existing accounts from the business. At current levels, can it easily sustain the additional cost or not? if not I would suggest some creative thinking or looking where else you can scale back?

I wouldn't even entertain the idea of selling cleaning products. Why would anyone want to buy cleaning products from a small local cleaning company? You'd end up tying yourself up in knots with stock, shipping, marketing etc. If you need to grow sales, focus on the companies core business! Look at how you can get more clients or get more value out of them.

You may be able to upsell some niche products e.g. (and I'm guessing here as not my area of expertise) but "now we've completed your carpet clean, would you like this small bottle of 1l trade strength spot cleaner in case you have any spills" type thing. But day to day cleaning stuff and shipping it out.... I really wouldn;t bother.

 

[Socio South West]

With some knowledge and experience of this type of family business succession my guess is Mum and Dad have been running it without any type of agreement between them.

As others have said, no need for to run the business down - a simple plain English document handing the business to you should satisfy any apparent visa application: There may need to be a transaction relating to stock, or agreement to purchase it included.

As to the way forward, yes - set up a company, but be aware that new companies are treated very suspiciously by many suppliers, regardless of the trading history before incorporation. You are working with your accountant who should have explained the pros and cons of incorporation.

Premises - you need to do your budgeting and see if your turnover can sustain the business - or how much more business you need to be doing for the business to be sustainable, and then work out where that comes from. Make sure you account for the additional overheads that premises will bring... not just the rent.

Often the worst part of these situations is Mum and Dad refusing to take the rose tinted specs off and resisting relinquishment of control in practice.... regardless what agreements have been drawn up: This should be easier if they settle in Spain.

Best of luck.

 

[Frank the Insurance guy]

Why look at renting a full industrial unit and the associated issues and hassle?

To begin with I would suggest sticking to the traditional business - once running and finances allow, then have a look at branching out into a "shop/sales".

In the meantime, you only need to be looking for a local storage unit - you can rent these on a monthly basis - much easier than looking at renting a whole unit!

 

[fantheflames]

As others have mentioned, winding down the business won't be beneficial, as clients will start turning to other services. Take ownership of the company and phase out your parents' involvement. Since it appears you're planning to take over, consider the most effective way to transfer the business to you while minimising any potential harm to the business.

 

[Paul Kelly ICHYB]

all ties need to be cut

Why?

An accountant we use.

Speak to another accountant.

You keep mentioning about winding a company down - if they are self employed, there is noting to wind down.

Just take over the business - that's it!