Biggins

Some of you may recall a topic I started a couple of weeks back with reagrd to starting a new business venture of some sort. I finally decided that property investment, either buying outright or "buy to let" mortgages, to let would be the way forward. However, delving deeper into this new world, I am starting to have concerns. All the usual "what if's????" are being posed and the answers don't make good reading. Interest rates are a concern for the future should I take on several "buy to let" mortgages & property values could also crumble leaving me in negative equity.

Having not gone into too much detail previously, I thought it might be interesting to elaborate on the circumstances leading me to this possible venture. As before, any advice & opinions offered will be thrown into the melting pot and thoroughly digested before action, if any, taken.

My current business situation.

I own/run a manufacturing business which is suffering the same problems as many others in the UK. Over the last 10 years we have been bombarded by countless, pointless legislation & constraints. Add to this the high value of the £ and our shocking labour market, rates & quality, and it's not surprising to see that we are on our knees and uncompetitive. In our particular industry, it is impossible to impose price increases, to the contry, yearly price reductions are expected. Our profit margins have been gradually eroded away year by year despite massive improvements in efficiency, and I feel we are nearing the end. It has now got to the point where only a handful of UK manufacturers are left, most have either shut shop, relocated to Eastern Europe, South Africa, Far East or are buying in cheap imports and distributing. We are too small (8 people) to dream of relocating and I do not want to become a distributor. To stubbornly carry on as a manufacturer in this Country would require a serious injection of cash to invest in new machinery/building alterations thereby removing certain labour intensive jobs. This investment would be in the region of £350k and would leave the Company without it's current cash reserves. It would also mean borrowing £ which we have never done as a Company and i'm very mindful of the risks. Having done the math, it would appear that even having invested heavily, the returns would be meager and we would still be expensive compared to our overseas competitors.

As a result of my current situation I now feel that it might be time to change tack and get into something more profitable & with a brighter future. The problem is, i've now reached the crossroads but am unsure in which direction to turn!!

With regard to investment capital. I own the business premises outright which is located in a very upmarket rural village and is valued at £450k commercial. However, if I were to sell the property, it would be to a private buyer or developer. It is a beautiful old school building with bags of character that, with a little work, would make a lovely house. Alternatively, the land & location would be a goldmine for a builder/developer. I am not sure of the planning permission laws these days but would have thought it would be ok. I'm sure that in the current market, the property/land would sell for upwards of £750k. Added to this, the Company has cash reserves of £250k in reserved profit which could be used. My fiancee and I are also looking at moving home this year, i have £50k mortgage on my £130k home.

Even though financially, I am in a strong position, I am finding it very hard deciding the direction to go. The thought of pooling all wealth and making a fresh start overseas has also crossed my mind.

Any pearls of wisdom from you financially minded SN'ers??

Biggins

C'mon, you guys love spending money ............ SPEND MINE!!!!!

Dream Weaver

Difficult one, I suppose the first decision has to be whether you start a second venture, or sell the current business and assets, pool the money and start a new bigger venture all on its own.