In 2009, I chose to set up a less stressful yet less lucrative “lifestyle” business. I retrained as a professional skipper and obtained my “Commercially Endorsed Yachtmaster”. I then bought a coded charter boat and setup a sea fishing trips business. All self financed from my divorce.
My accountant advised going limited from day one back in 2009, so I “lent” the company the money to buy the boat and off I went. The business made profit in year one and has done so every year ever since (although a modest lifestyle business). The business takes deposits online for future booked fishing trips, so there’s never been any debtors. The business has never had a loan nor any borrowings, not even an overdraft. But, the nature of the business is seasonal. 90% of annual turnover is generated between March and October (much like many other UK seasonal industries).
As a result, you become good at managing cash and budgeting to live through the winter. BUT, equally it’s a fact that cash in the business is always at its lowest in FEBRUARY each year. This couldn’t have happened at a worse time of the year!
In fact, turnover is negative, as deposits already paid are being refunded daily, as clearly no trips are happening.
At the moment I can’t pay myself £718, let alone the dividend. Neither the cash nor the retained profits are there to do so… as February is the bottom of the curve for my business as already mentioned.
I have no other income, but in normal times my turnover would now be in full swing.
I’m not allowed to work under any definition of the word. As my business is a boat I don’t have premises, my “rent” is annual moorings of £4500 paid in full each July. If I don’t pay the boat will be chained up and padlocked by the marina. The marina is currently shut anyway. We have it in writing that our key fobs to access our pontoons have been deactivated, yet no mention of a reduction in our fees to reflect this denial of service.
It’s debatable if I can furlough myself without breaking the law as I’m fielding customer calls for refunds daily. So my income is now somewhere between zero and £550 a month. My personal household rent alone is £1050. My year end is August 2019 and accounts due to be filed by May. The corporation tax due will be around another £6000.
Then the business will be going cash bankrupt (despite good value left in the boat).
Then, I’d say around Xmas, I’ll be evicted and homeless. As a 53 year old single man with no kids I doubt I’ll be housed so it’s the streets for me.
Self sufficient proud tax paying man to homeless street dweller.
I’m not writing this as a sob story as many of us are in the same situation… I thought I’d make it a personal story to add resonance to our collective plight.