Credit Cards and Personal Loans Debts

[paeng]

Hi,

Quite a big subject here, i know, but yeah, i have this load on my shoulder and i somehow need some advice.

Seven months ago, I joined a former collegue on his business along with his partners and work for him as a web designer. One and a half months pass, i found out that he is freelancing. Sometimes he puts some projects for the company, but still with some kickbacks. So salaries had been delayed and unpaid. His partners decided to kick him out. They offered me to be a partner instead since they dont know much of the internet business. They said it still not going to be in paper since transfer of shares will take a year. I didnt mind since i have no money invested anyway other than the unpaid salary.

(Sorry, the personal loans and credit cards will pop up very soon in this long story, please be patient )

I was quite excited that time since i have always wanted to be in a business. I was quite hesitant to accept it since i have some debts to pay regularly, but still i took the offer. I was told that we will be working for the company and not for the salary anymore, the main investor told me. He is quite a nice guy since he was not expecting some big money to go in yet but told us that we need to support ourselves.

It was a roller coaster ride since then. A few projects came, but not enough to support us, so til now, im getting financial support from my fiance, which is quite awkward, and i feel guilty.

I know in my heart that the business will pick up very soon. We have just made some good alliance with some people, although it still not sealed yet but its going there.

The banks have been a very consistent caller nowadays since i have some 2 months overdues on CC's and loans, and interests plus late payment fees and over limit fees are all blooming. Legal actions are a constant phrase from them. Somehow im getting immuned but now i want this to end without quitting the business.

Should i look now for a job? I was thinking of loaning money again from the bank to stop the bleeding temporarily, but friends have told me its going to be a suicide.

My other partner is also a nice guy. He is very talented and the latest work we have done from a very small budget is such a big hit. The client loves it.

We are diverting now in video production, which is more fun and exciting. That is my partners expertise, and what i do is get some clients and do websites.

Whats keeping me here til now is that, people i have met loves our work, and promised that theyll help out.

What will you guys do if you're in my situation?

[Zukin]

Hi paeng,

I have a few questions and if you could answer them it would give myself and others a lot of insight about your situation:

How well do you trust your colleagues? Do they have your best interests in mind?

Is there any way you can cut costs further?

Is there a way you can prove to the banks that you will have consistent cash flow? Do you have promises of purchases from clients and contracts to prove it?

Look at the situation from the bank's perspective. Is there anything you can do to prove to the bank that you will increase your revenue in the very near future?

This article may also be helpful:
How to Negotiate Debts - BusinessTown

[cdn2wheeler]

Paeng, your story rings so very familiar.

First of all, let me give you a little background of who I am: I've been involved in personal and professional finance for decades, working at banks and large institutions.

When making a loan or investment decision, there are a number of things that are taken into account (no pun intended):

• Credit history
• Zeal to be in the business
• A solid, practical and reasonable business plan
• Other financing arrangements.

From what I read here, you've got one out of four going for you; that is, the zeal and "fire in the belly" and it's clear that you love what you do.

That said, it's not enough. Yes, you have to enjoy your work but you can't base financial decisions on things like, "I know in my heart that the business will pick up very soon" and "He is quite a nice guy" and "My other partner is also a nice guy" and "people i have met loves our work, and promised that theyll help out."

So here's some practical, rubber-hit-the-road advice, in order of importance:

1. Talk to your banker. Tell them exactly what you've told us. Contrary to popular belief, bankers are actually human (well, most of them, anyway) and if they can make arrangements to help you get over this hump, they probably will;
2. Start generating some income outside of this business. It may mean taking another job or something of the sort, but reality is that cash flow is king;
3. I'm sure your colleagues are all very good people and nice and whatnot. So, they won't mind it at all if you have a look at their business plan so you can see for yourself what their plans are for the future and how well their previous projections have stacked up against reality;
4. Same with the books. If they want you as an investor, you've got the right to see the balance sheet. Study it hard
5. If they refuse to show you either the business plan or the balance sheet, then my suggestion would be to cut your losses and move on. That doesn't make them bad people and it doesn't make them the enemy, it just means that you're not in a position right now to invest further time/money because of your current situation.

Hope this hslps. If you need further info, PM me and maybe I can help. No charge.

[impaul99]

Good advice from cdn2wheeler.

I might add a few things:

(1) You might want to have a chat with your fiance and set some goals. Tell your fiance "Here's my plan. I think this business is going to work out within the next 60 days tops. *IF* for whatever reason it still isn't working out within 90 days, I *WILL* go and get a part time job that makes me $x/month to at least stop the bleeding. I'll still work on the business, but at least I'll make some money to cover some expenses. THen, *IF* it the business is still not making at least $x within 12 months I'll get a full time job and I'll do this business part time on the side if at all"

Letting your fiance know what you're thinking is a good idea. Plus, once you make a promise like that to your fiancee you are much more likely to stand up to your partners at the business as well.

(2) Let your partners know the same thing. Let them know that you are there for the next 60days and after 90 you're going to work part time at least. Maybe this will help THEM get THEIR asses in gear as well.

(3) DON'T neglect personald development during this time. Always work on yourself. At any given time, even in a conservative scenario, you're always at least 80% at fault for all your problems in life. Some of us believe 100%, but that depends on your spiritual beliefs. Look for what you see as the problems with the business, and look for solutions to those problems within yourself.

(4) Remember this is a time of growth, learning and testing for you. If you try to get this going and your partners OR your fiancee are being idiots about it, then pay attention to that. If your fiancee is being supportive, make a note of that for the future. Be grateful that you have such a loving future spouse at your side. If your partners tell you that "If you go back to work part time, you're not really committed to this thing" tell them they are full of ****. Tell them you have to take care of your self as well.

I was once in a business in a similar situation. A manager would tell people that they need to suck it up and borrow money or whatever they needed to do in order to keep the business going. Then he sold out a few months later and went and got a job himself. So, whatever...everyone out there will always take care of their own needs. You need to take care of yours as well. Don't feel guilty about that.

Tell your partners you want to build a business that makes you money NOW AND IN THE FUTURE.

if you can't see eye to eye with them, if they tell you you're stupid or don't know what you're talking about, then ask yourself "Is this who I want to build a business with?"

(5) Lastly, most important.... LISTEN TO YOUR GUT, YOUR INTUITION. If something doesn't feel right, pay attention. If it does, pay attention too. Your INTUITION is your best teacher. Learn to develop it and trust it. It's an INDESPESIBLE BUSINESS TOOL.

[paeng]

Thanks for the support fellows. It means a lot. Ok. Here are the people who i am working with:

Partner 1: He is the one who financed Partner 2 to start business here in Dubai last year. Both of them put all their trust on my former collegue to run the show. Now Partner 1 is not putting any more funds since he lost all of it from my collegue. We tried to squeeze every penny from him but he didnt give. Partner 1 told us "forget it, if its a loss then let it be". He asked us whether business is still possible or not, and i told them it is. He pops up here in Dubai once in a while since he is busy with some other business.

Partner 2: He is the talented guy. He is more of a creative person than a business guy.

So the dilema right now is whos going to step up as more of a leader between Partner 2 and me. We are really not those kind of people. But we are creative guys who just happen to have some dream of making good works for clients. I thought that client needs somebody like us who are not too business minded. Right now though, we figured out that pick season here starts from October til March. After that, its hibernation. We have to fatten up for the winter(although that is summer here then )

I think for the past 7 months, they always make me take the lions share of whatever it is on the table since they know my situation. Partner 2 says that maybe i should consider looking for a job temporarily a month ago. I said ill think about it. He also keeps telling me to take the small jobs money and not put it in the company. Although i can do that easily, but since i dont want to repeat a bad history, i always tell them that im working on this and that and if its ok for them i take this money, then its fine. Something like that.

As for the business books and all. We dont have that yet. We give proposals and quotations for client with contracts to sign and we wait for the money after project completion. And we divide it into 2. Right now company is in negative.

The loan and cc's was a big mistake i know, but im trying to look at it right now, and im thinking i wouldnt be here talking to you guys about it if it wasnt for that, and i wouldnt be taking 30 success programme too. So somehow i think it was sort of like a destiny. I never felt so pumped up and excited about life until now Thank you Steve!

O yeah one more thing. I reviewed my cc bills yesterday and found out that they are charging me for "overlimit fees" even if its not overlimit. So they told me they will reverse Sept billing but not the others. I told them how come? They said i have to pay first my 2 months overdues and they will reversed the 3 other months. I was thinking if this is a mistake or deliberate thing that bank is doing to people like me who is piled up in debt since we will not be looking very deligently anyway in billings right. hmmmmm? If i was in US, this could be a lawsuit, eh

As for the payments of CC's, why is it that i dont see any changes on the total amount? I have been paying this like forever already? Can somebody englighten me please on this, since im becoming very suspicious about this bank computations. When will it end?

[{aspiring_to_clarity}]

If you are only paying the minimum and have high interest and fees, it will seemingly take forever and the balance won't change much.

Definitely talk to the lenders and let them know your situation. See if they will work with you. I think they are much more likely to do so if you come to them with the intention to make good on your debts. Maybe they could lower the interest?

I don't see harm in getting a part time job and still working on growing the business. It may help you all around not to have the stress of bills piling up on top of worrying about getting the business you need to succede.

Good luck.

[cdn2wheeler]

Originally Posted by paeng

As for the business books and all. We dont have that yet.

A business without books? A balance sheet? P&L statements? Are you sure??

[CStrunk]

Originally Posted by paeng

As for the business books and all. We dont have that yet. We give proposals and quotations for client with contracts to sign and we wait for the money after project completion. And we divide it into 2. Right now company is in negative.

If there is no record of business, how are you expecting to get paid for work done? I mean, if you don't have record of your "unpaid salary" it's never going to be paid. You should have some information written down about your projects and you should have some idea of your cash flows and all. I read that you're in Dubai(?) and I don't know anything about their legal structure, but no financial statements = RED FLAG. Just sources of conflict in the future.

Also, the company is in the red (negative) because you are taking all the profits from the individual jobs straight to your pocket! How is it going to be positive without getting any of that money? Sorry, it just doesn't make sense to me.

[paeng]

Ok. Maybe you misunderstood me or i just probably dont know what im talkin about. A guy who is going to take care of this sort of things like balance sheets and all is coming to join us very soon. I know the small business we have right now is not properly set up, maybe thats also the reason why we are in some sort of turmoil. We are trying to fix that now.

We started on a clean slate last June 2007. The scambag was kick out last may, so during one month, we were still in aftershock. But we are ok now. Somehow its still not organize but we are trying. Reason for lack of balance sheets etc is because there is not much to balance anyway. 2 projects came in between june til now. thats it. And we are still chasing these two projects unpaid payments.

Temporary arrangement right now is share what we have and if there is any extra, which we still dont have, is going to company. There is a small system right there which is a work in progress.

I thought about this situation a lot since posting, and most of your advice are leaning towards part time jobs. So now ill try and speak with them about this and see how it goes.

Current situation now. Well, we have some big project coming. This ad agency which we have worked for on one project and got impressed by our job, is giving us another shot on some big real estate project. They usually invite other suppliers to propose but we got in without competetion. We just need a good presentation and thats it. It involves not just website but the whole package once we make this right. Our goal is to tie up with at least 3 more of these mid size ad agencies, and keep them happy. Big profit is not our aim now, since we know once there is word of mouth marketing, itll spread like fire. This is whats lacking in this market, good service, and we are trying to take advantage of it.

Thank you guys for all the advice

[albertlee25]

Hi Paeng,

After reading all your posts, i am worried. It seems that you and your partners do not have much experience in doing business.

You need to get help in running a business. Someone with experience in how to do marketing, advertising and keeping balance sheet to ensure the company is running on a healthy cash flow, and must be able to project break even point and the time line, growth forecast.

And never borrow money to pay debts, it is just digging a bigger hole to cover the initial holes. One day you will find yourself too deep inside to come out.

I would suggest you take up some other steady income source immediately, sort out your personal finance before your fiance starts to get negatively affected by the situation, and you need to at least fill your stomach before you can pursue your dreams.

Good Luck!

Albert Lee

[cdn2wheeler]

Originally Posted by albertlee25

Hi Paeng,

After reading all your posts, i am worried. It seems that you and your partners do not have much experience in doing business.

You need to get help in running a business. Someone with experience in how to do marketing, advertising and keeping balance sheet to ensure the company is running on a healthy cash flow, and must be able to project break even point and the time line, growth forecast.

And never borrow money to pay debts, it is just digging a bigger hole to cover the initial holes. One day you will find yourself too deep inside to come out.

I would suggest you take up some other steady income source immediately, sort out your personal finance before your fiance starts to get negatively affected by the situation, and you need to at least fill your stomach before you can pursue your dreams.

Good Luck!

Albert Lee

^^^ What he said. Two thumbs up.

[OnionJack]

Originally Posted by paeng

He is quite a nice guy since he was not expecting some big money to go in yet but told us that we need to support ourselves.

Originally Posted by paeng

My other partner is also a nice guy.

Just my 2cents...

Business and Nice don't always go together.

This is something I deal with also, as I try to be a nice guy.

So remember business is business.

-OJ

[paeng]

Hi,

Again thanks for all the support. We decided just now to pack up our bags and move on to look for a career and become an employee again. It was a great 7 months run. If i knew what was about to happen then... i probably would have run off Overall this was my decision, and i have nobody to blame but myself. It was a nice experience though. Learned a lot of things. Its kind of hard for me breathing this past few days because i knew this was going to happen sooner or later. Im trying to cry but i couldnt. Im still in shock.

Oh well, ill get over this in a few days.

[Zukin]

Hi paeng,

I wish you the best with your career and any future businesses that you get involved in. Now that you know the factors that can harm a business, your future enterprises will be much more successful.