Its been two months since we publicly announced the very real threat of Matthews Yard going out of business. We have worked tirelessly to try and improve our financial position by restructuring debt, attracting inward investment and increasing revenue under a new business model which carries less risk and has lower operating costs. Its been a tough ride with lots of hurdles. It now looks like the final fence is all that stands between us and the home straight.
Independent traders: A new model for MY
The new business model at Matthews Yard means we no longer provide food or drink directly, instead we will be working with independent traders to meet this need while generating a fixed level of income which increases in line with the growth of our traders. The rolling trading agreements allow for monthly or quarterly rent reviews and all traders have been contracted on the understanding that their rent would be equal to between 30% and 40% of their turnover.
Bobski’s focus is on coffee and cakes. He started trading in the middle of January, a tough time to start by any standard, let alone while MY had the cloud of insolvency hanging over it. Robert (Bobski) and his team have adapted well and are beginning to build their revenues and attract a loyal fan-base of their own. From April, Bobski’s will open from 10am – 7pm Tuesday – Saturday & 11am – 7pm on Sunday.
Brgr & Beer are now the third biggest investor in Matthews Yard, having stepped in at the last minute to provide crucial investment funding. We have been in discussions with BRGR & Beer since late November. The initial plan was for them to commence trading in February. Due to various issues this has been set back to 17th April.
Rise ‘n Shine
Launching on 31 March, Rise n’ Shine is a new early morning concession specialising in loose leaf tea and filter coffee. It will also serve a range of healthy breakfast options. The venture will open from 7am – 11am Tuesday – Friday.
Ty’s Food Corner
TYs food corner used to trade on Surrey Street Market. They moved in to MY in December and after a free period in a temporary set-up they now have a rolling agreement to trade within MY from midday until 7pm Tuesday – Saturday. From April, they will also open on Monday. Once things settle down, we intend to help TYs improve their branding and build their business.
We have an agreement in principle for Croydon Concierge to begin trading from MY in April. They will offer a range of goods and services including snacks, soft drinks and tickets. Croydon Concierge will also be your in-store point of contact for membership inquiries, event inquiries. The hours are yet to be confirmed but the service will be available on Monday and several other days of the week. Croydon Concierge will also fulfill a number of service contracts for Matthews Yard particularly relating to health & safety issues, issuing membership cards and handling in-store ticket sales for all MY events for a commission.
Financial position: past, present & future
My last blog post explains most of the financial history of Matthews Yard. We have never had a solid financial footing and from weak foundations and a business built entirely on debt we have done well to be approaching our third year trading in just a few weeks time.
In the last quarter of 2014 our debt was at an all time high. We owed more than £140,000 to more than fifty individuals and organisations, several of whom were threatening legal action. While the business was profitable, it wasn’t making enough money quickly enough to service the debt to a timeline which was agreeable to all our creditors. This left us in a difficult position and facing the real prospect of insolvency.
We launched the loan fund and began talking to people interested in buying all or part of the business. Despite various conversations a serious buyer could not be found. We launched the loan fund to help restructure the most urgent debt. We raised more than £15k and the most urgent creditors were repaid in part or in full.
In January the local enforcement officer from HMRC visited us to pursue the outstanding debt. A new sense of urgency emerged and we announced publicly for the first time that we may go into Administration. This led to a small boost in the loan fund, but harmed it more than it helped it as, rightly so potential lenders became more weary.
In February we focused on securing the investment we needed, via BRGR & Beer and continuing to restructure the business, reduce our debts and eliminate risk factors from the business. We submitted a new repayment plan to HMRC and also submitted our first ever funding bid – to the Tudor Trust (we found out that we were unsuccessful on Friday).
We have agreed the conversion of £45,000 of debt to equity from several creditors and while this reduces our overall debt and improves our long term position significantly it does not bring fresh capital or loan funding into the business to pay the urgent debts.
In March we agreed repayment terms and a freeze on all interest with our biggest credit card provider. This will see the debt (£3,300) repaid over the next 12 months without incurring additional interest. We have also reduced operating costs by removing service contracts and both myself and Leoni are looking at ways of diversifying our income streams in order to draw less from the business (more on that another time – but Life Drawing, Workspace, Rise n’ Shine all hint at things to come).
As of today we have total debts of £68,500. This was more than £135k at peak debt in Q3 2014. The debt breakdown is below, together with outlines of urgent debt (denoted by *)
Individual Lenders: £34,000
Credit Cards: £5,000
VAT Liability: £13,500*
PAYE Liability: £3,000*
Our most urgent debt is our VAT liability. Despite several attempts to negotiate an affordable repayment plan over the past six months, the local enforcement officer is still pursuing an aggressive repayment schedule and we urgently need to restructure this debt.
It is imperative that we restructure our VAT debt as soon as possible. To do that we are trying to generate revenue wherever possible – from concessions, from investment, from loan funding and from membership.
Our financial position, assuming we can successfully and swiftly tackle the VAT liability will strengthen in April and continue to strengthen as more and more debt is repaid or restructured or more investment is obtained.
For now, plans to convert to a CIC are on hold. With the current debt position attracting high caliber Directors is proving difficult and three are required for a CIC to be legally registered. We will revisit the idea in consultation with investors, members and stakeholders.
Thank you all for your support, past, present and future. MY wouldn’t be here without your help. I hope this final push in March and April is enough for us to repay our VAT liability in full and begin to use funds to invest in our space, rather than our debts.
If anybody would like to help in any way, if you are interested in investing, lending or becoming a member and have questions then please don’t hesitate to contact me by email on email@example.com in the first instance.