Business Bankruptcy
Prior to the business failure, which was the main cause of my bankruptcy, I worked for a tied agent of a major life insurance company. Two colleagues and I subsequently departed from the company to launch our own business.
We formed the partnership in June 2003 and subsequently incorporated to form a limited company in December 2004. As a start-up business, obtaining finance was difficult. This did not deter us and we decided upon a low cost start up strategy. Even though we spent time planning and identified the threats that could cause problems we did not foresee the failure two and a half years later. I personally did not think that bankruptcy would be the fruits of my labour!
From my partners flat we started telemarketing. Cold calling using the BT phone book proved difficult, yet successful. Telephone costs could be paid in three months time when the quarterly bill arrived. We kept our wages down to zero and survived off what little money we had available to us following our employment.
As the revenue began to flow and we profited from our efforts we employed more people and increased Internet marketing efforts. Just after a year had passed we became a prominent player in the online market and had several major life insurance companies showing interest. The business was approaching a turnover of half a million pounds per year and we had employed 17 people into various functions across the business. We were also offered large sums of money for shares in the business.
With the Internet being a relatively new route to market for the life insurance industry there was little competition. Things soon began to change though.
As other large life insurance brokers and life insurance companies implemented their Internet marketing strategies the competition increased and so did advertising costs. The Financial Services Authority also commenced regulation of the industry in January 2005, which increased business costs and caused unprecedented change to the industry. As a small business we were financially sensitive to these changes. At this point in time we incorporated to become a limited company due to the legal risks involved in operating an insurance brokerage within a regulated environment.
Still, as things got worse I still did not foresee the looming bankruptcy. At first, even though sales remained high advertising costs increased and we were achieving less revenue per sale. This drastically impacted the profit and loss statement when combined with the increase in cancellations. Corrective action was taken but the losses were too great to recover.
Coping with the chasing creditors whilst trying to rescue the business was difficult. Knowing you were arriving at work to phone calls for money was really disheartening. Staff, some of which were good friends, were made redundant and the advertising was significantly reduced in an effort to reduce costs and return to profit.
The accountant was approached for advice. As the business became insolvent it was in my opinion that there was no chance we could recover it. I therefore called a meeting with the other two directors to propose the appointment of an insolvency practitioner. However, they disagreed and were happy to continue trading so I resigned.
As with most start-up businesses, any credit obtained had to be guaranteed. Therefore as the losses continued and the debt built and my personal liability increased. As far as I was concerned that was it. I had £450,000 of potential debt to consider. I felt my only option was bankruptcy and after seeking advice from a solicitor and a charity debt organisation I decided it was my best option.
Piggy's Blog Home Page
We formed the partnership in June 2003 and subsequently incorporated to form a limited company in December 2004. As a start-up business, obtaining finance was difficult. This did not deter us and we decided upon a low cost start up strategy. Even though we spent time planning and identified the threats that could cause problems we did not foresee the failure two and a half years later. I personally did not think that bankruptcy would be the fruits of my labour!
From my partners flat we started telemarketing. Cold calling using the BT phone book proved difficult, yet successful. Telephone costs could be paid in three months time when the quarterly bill arrived. We kept our wages down to zero and survived off what little money we had available to us following our employment.
As the revenue began to flow and we profited from our efforts we employed more people and increased Internet marketing efforts. Just after a year had passed we became a prominent player in the online market and had several major life insurance companies showing interest. The business was approaching a turnover of half a million pounds per year and we had employed 17 people into various functions across the business. We were also offered large sums of money for shares in the business.
With the Internet being a relatively new route to market for the life insurance industry there was little competition. Things soon began to change though.
As other large life insurance brokers and life insurance companies implemented their Internet marketing strategies the competition increased and so did advertising costs. The Financial Services Authority also commenced regulation of the industry in January 2005, which increased business costs and caused unprecedented change to the industry. As a small business we were financially sensitive to these changes. At this point in time we incorporated to become a limited company due to the legal risks involved in operating an insurance brokerage within a regulated environment.
Still, as things got worse I still did not foresee the looming bankruptcy. At first, even though sales remained high advertising costs increased and we were achieving less revenue per sale. This drastically impacted the profit and loss statement when combined with the increase in cancellations. Corrective action was taken but the losses were too great to recover.
Coping with the chasing creditors whilst trying to rescue the business was difficult. Knowing you were arriving at work to phone calls for money was really disheartening. Staff, some of which were good friends, were made redundant and the advertising was significantly reduced in an effort to reduce costs and return to profit.
The accountant was approached for advice. As the business became insolvent it was in my opinion that there was no chance we could recover it. I therefore called a meeting with the other two directors to propose the appointment of an insolvency practitioner. However, they disagreed and were happy to continue trading so I resigned.
As with most start-up businesses, any credit obtained had to be guaranteed. Therefore as the losses continued and the debt built and my personal liability increased. As far as I was concerned that was it. I had £450,000 of potential debt to consider. I felt my only option was bankruptcy and after seeking advice from a solicitor and a charity debt organisation I decided it was my best option.
Piggy's Blog Home Page
You may also like to view my bankruptcy website.
If you have any questions regarding my experience then please feel free to E-Mail me.
posted by Piggy Bankrupt at
10:03 PM
1 Comments:
Hi
last January (07) I petitioned for my own bankruptcy which was accepted...an income payment order was set up over the next three years which i pay into each month via a solicitor...no problem...my question is, when is it likely for me to be discharged from bankruptcy? As I have had no contact with the Official receiver since this time....I reluctant to contact the O.R as I don't want to upset the apple cart.....many thanks for any advice
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Anonymous, at 8:58 PM
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