I own an Apple reseller somewhere in the United States. I bought this company from the former owner a few years back, despite having no education in business whatsoever (other than what I've learned on the job.) When I first took over as owner, it was kind of fun, challenging, a lot of work, and just slightly profitable (though with a debt from the loan I took out to buy the business). It was like this for about a year. Since then, not so much. Most days, I feel trapped and hopeless. So now I seek ideas.
posted by anonymous to work & money (20 answers total) 3 users marked this as a favorite
Here's where I am today: almost a year behind in sales and use tax to two states; owing about half a million dollars (though the vast majority of it is what's called "good debt," and NOT like the back taxes I just mentioned); I've shot the business credit to hell, so NOBODY will loan us ANYTHING; I sleep poorly every day; the chronic depression that I had finally gotten some control of during the mid-2000s has come roaring back; I feel more and more apathetic and resigned to my fate as a failure; etc. I drink every day, when it used to be responsible, social drinking. This adds to my weight, which adds to the depression, and along with the reduced motivation to go to the gym, has lead to a gigantic circle of suck that just continues to feed on itself. My personal debt is also gradually climbing up (and it was already about $80K when I bought the business.)
(I'm posting anonymously, because there's only so many companies in my line of business, and I can't risk someone identifying my business. This post may be a bit risky, so I'm being vague on a number of details, though not so much that any advice would be irrelevant.)
We don't have enough money to carry proper stock of Macs or iPads, and regularly have to tell customers who want to buy, say, a MacBook Pro that although we don't have it, we'd be glad to take payment for it, order it, and have it for them in a day or two. Some will do this, but many decline and go to the Apple Store or elsewhere. It's only slightly less of a horror show for iPads, but with something like a gazillion different iPad SKUs, we can only really afford a tiny smattering of the most popular models. I struggle to meet payroll every other week -- and about once every six to eight weeks, it actually bounces (as it did this week). Overdraft charges are a near daily occurrence. We lost Net 30 accounts with the two major Apple distributors over a year ago, so virtually everything is on debit card or the occasional credit card that might have a bit of available credit on it. (I was finally able to beg one of the vendors to give us a much smaller line a few months back, but it doesn't carry us very far.)
We're thoroughly unprepared for any kind of big buy-in if we need to stock up for some kind of inventory surge (e.g., the holiday season), and by not being able to have decent stock, we lose out on sales, and develop a word-of-mouth reputation as a fifth-rate, "wanna-be Apple Store." A customer trying to buy a personal machine, and not being able to, could be a decision-maker in a company's IT department, so a lost sale could be the starting point for a string of lost sales we'll never even know about. We're losing out on the simple, organic things that should happen to slowly help a business grow, because we're constantly cut off at the knees.
This state of affairs is chipping away at my mental (and increasingly, physical) health. There are far too many times when I just shut down — I become very quiet, staring off into space, and just obsess over how everything just went to hell. I don't even go into the stores as often as I used to, because I don't need people to see me like this. But by not being as involved in the business as I used to be, little problems grow big, and that snowball gets bigger and bigger and rolls faster downhill.
A few months ago, I went to a conference for fellow Apple resellers, but ended up depressed, jealous, and angry most of the time. Though I know it's self-destructive and bad for me, I ended up hating other resellers and being violently jealous and resentful of their success. They seem to be so much better off than us, have better looking stores, can freely talk about making big sales, etc. Meanwhile, I can't even afford to stock more than one each of 2-3 models of Mac (when there are 10-15 individual Mac SKUs at any given time). This anger and resentment eventually turns inward and becomes depression, feeds into my feelings of incompetence, lack of self-worth, and failure. And on it goes.
I am working to slowly catch up on the back sales taxes, paying off a month at a time, but at a frequency that is slightly faster than once per month — so that we should be current with it, hopefully, in a year's time (if they don't bury me with more liens or penalties). I try to order what I can, and get what little stock of CPUs I can, on occasion. But a large amount of money is what's needed to really turn this thing around, and I'm done asking for it. Much of the aforementioned half a million is in family loans (part of how it got that big is that they insisted on paying off two bank loans and "refinancing" with them instead), and I've given up on asking. I don't even consider the idea, because I don't honestly have faith that they'll ever get their money back.
There are (maybe) three possible ways out of this rut: (a) Maybe I can sell this thing; (b) maybe I can find investors (though I don't know how one does that); or (c) maybe I'll cash out most or all of the money I've set aside for retirement/children's college/long-term and just let it ride, gambling that the investment will pay off.
So I don't know what to do. Perhaps I could find a few people to become investors, but I (a) have no idea how one goes about getting investors (even though one of my employee's friends and one of my wife's friends have both approached me -- of their own accord -- to invest in the business), and (b) am leery about owing more people more money. Much of it would be used to properly stock up both stores, but inventory is almost completely "sunk" money — sure, a little bit of it comes back as profit with each sale (and I DO mean a little — Apple's margins for resellers are crap) — but much of it just gets cycled back into replenishing the same inventory. So how do I pay these investors back?
A little more on each option:
OPTION A: Selling the business. I have been approached by two different companies, each in the IT services/support field and each grossing about $60M annually. (We did $1.5M last year.) Neither does retail, nor do they have much interest in the storefronts (even though they both claim they'd keep the stores open for "branding" anyway) — their money comes from business-to-business and on the service contracts, etc. With Apple's rise in popularity over the last decade, they're realizing that many of their customers want to buy Apple products and/or have them serviced, and they can't do it.
That's because, about a year or so ago, Apple stopped taking new applications for resellers OR service providers. (We are authorized for both of those things, and are thus grandfathered in.) I'd say that this is why these large companies are coming to me, taking me to lunch and dinner at as much as $150 per person, and "just brainstorming" about possible acquisition. There's been a few meals together, and in both cases, it's come to mention of the next step being an NDA and opening the books. But in both cases, I've not heard from them after that point. Maybe this is part of the dance; I don't know. Maybe they ran our credit and saw the three tax liens (so far), and ran far, far away.
But my hope is that when Apple shut down the option for companies to apply to be resellers or service providers, the value of our existing authorization shot up overnight — ideally meaning that we hold the proverbial "golden ticket." (You could still apply to either of these channels back when I bought the business, so it wasn't so rare. And this was pre-iPad, too.) From what little I know of business sales, it seems to me that this makes us less a "financial" acquisition for a company than it does a "strategic" acquisition (or at least I HOPE this is the case). We have something that is in limited supply, and it could be of value to a larger, established player who happens not to have any Apple authorization.
But if we do the NDA, and I open the books, we'll look like garbage. The $1.5M in revenue is awful compared to what we would be making if we simply had product in stock and didn't have to turn away so many potential sales. Then throw in the nearly half a million in debt, and the fact that I struggle to even pay myself, and by conventional business valuation practices, I can't sell this thing even for enough to cover our debt. We are the business equivalent of being in an underwater mortgage.
So I'm hoping NON-conventional business valuation wins out. Our performance (or lack thereof) really isn't a relevant indicator of how a buyer with resources would do with this business. This is for a couple of reasons: (a) a buyer with a large existing B2B customer base (whereas ours is 90% consumer) can make a TON more sales, and take in a TON more machines for service than we do, overnight, just based on their existing relationships, and (b) the aforementioned "golden ticket" that is Apple authorization. They aren't giving these out anymore, so they only way to get in is to buy your way in. (Apple approval of the transfer would obviously be a contingency of any sale of the business.)
But I know every business owner thinks their business is a special snowflake, when that's usually not the case, so I've already steeled myself to be slapped down with cold, hard reality.
OPTION B: Getting investors. An employee has a friend who has money saved up and is looking to do something with it. My wife has a friend who's in much the same situation as well. And maybe I can find one or two more. But how do you go about doing this? How is it managed? How does one "advertise" to find other investors beyond these two possible ones? Hire a lawyer? Are there people who do this sort of a thing for a living (and won't be expensive as hell)? I know next to nothing about this.
OPTION C: This one will hurt, but it's the one I have most control over. I can take about $100K to $120K I have in managed stocks/investments and cash them all out (meaning my wife and I will have then have little to no retirement or college funds). About $30K will be eaten up overnight, just to get us caught up in back sales tax; another $50K to $70K will go into finally getting proper stock in the stores, and if there's anything else, it can go into just generally improving the cash flow picture. Part of what makes me even consider this course of action is that my parents will eventually leave us a decent sized inheritance -- more than the figures I just mentioned, but definitely nowhere near seven figures, either -- so it isn't as if my investments are all we have for the rest of our lives.
In the meantime, my quality of life has been declining for the last couple of years; my wife and I have had to put off trying to have a child because we have no idea of how we can support one; I drink too much, hardly ever exercise, am depressed damn near all the time, and hate to even wake up in the morning (if you define 11:30 AM as morning). I have to get out of this somehow.
Throwaway account, if you wish to contact me offline: firstname.lastname@example.org