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Abigale had always worked in the clothing/fashion industry. Her income during the 1990’s through the early 2000s ranged from $150,000-$180,000 per year. Life was good. At the end of 2003 her commission structure was changed and her income dropped by over $60,000. That pay cut occurred at the worst time – during her new home construction.
Ever since her reduction of income she and her family had been struggling. Incurring more and more credit card debt to get just month to month, she wanted a way out of this debt trap. Her first solution was to continue paying her creditors and when possible a bit more than her minimum payments. She had done this for multiple years costing her many thousands of dollars in interest, but nonetheless she felt she was making some progress. Although her efforts were noble, the economic slowdown from the mortgage crisis and related credit contractions left her juggling these bills for only so long. The inevitable happened and in 2011 she decided to give us a call.
During our program she saw great results and excluding her mortgage, she visualized herself being totally debt free. Her newfound confidence coupled with her seasoned experience in the clothing industry spurred her on to start a business in the very industry she knew so well.
She was aware that about 80% of businesses started by entrepreneurs typically fail within the first 18 months, but her odds for success seemed much higher. Sandy Beach Junior (SBJ) started in July 2013 with a 50/50 partnership with Abigale and a seemingly trustworthy industry contact, Emilio. Abigale was very excited for this opportunity and felt that it was her ticket out of the rat race. The company’s purpose was to deliver finished clothing products to various vendors in the junior clothing industry (pre-teens and teens). In December 2014 they both realized that a mutual business relationship could not work (he was not doing his job to get new contracts with merchants and in retrospect it seemed his goals had shifted more to his relocation to another country), and they needed to part ways.
Acting in bad faith, Emilio’s foreign relocation was not divulged to Abigale until after his move was successful. He vowed after the move that he would help her process the current balance of open purchase orders – which he never did. Abagail was left holding the bag. He was also fully aware that he had signed for a company loan necessary for growth, which exceeded $120,000. Moreover, Emilio refused to help with any debts owed. He was now domiciled in another country making Abigale’s situation even more desperate.
However, the financial problems of SBJ do not stem solely from Emilio. A nationwide client, found in many malls across the country, who had worked with SBJ since almost day one, cut orders all together in December 2014. SBJ lost over 100K of operating revenue. Abigale tried to save the business relationship with this client, but other larger competitors known for big discounts and a large mall presence were commanding and controlling the whole industry with their collective buying power. This once strong client relationship was totally over and ended with the merchant filing for Chapter 11. To compound problems, the orders stopped immediately. Abigale had already purchased and was in possession of fabric slated for their pending orders. She was stuck with about 10,000 units of fabric with a retail value of $200,000 and a wholesale value of $70,000. The vender that filed for Chapter 11 bankruptcy apologized for what happened but made no effort to remedy the situation.
Another client of SBJ located in FL filed Chapter 11 toward the end of 2014 and they had just received merchandise from SBJ but refused to pay her. They owed $7000 to SBJ before their bankruptcy filing.
The writing was on the wall and SBJ sustained too many big hits to stay in business. The issues stemmed from a bad business partner that absolved all of his responsibilities, the losses of merchant relationships, and the ever increasing competitive advantage that larger cost-cutting stores had and their unwillingness to pay the price of working with domestic clothing producers such as SBJ.
Her business loan, which was personally guaranteed, totaled $121,995.06. She needed help and contacted us yet again to resolve her issues.
Her results speak volumes.