On Saturday 20th August 2016 Matthews Yard launched its latest #crowdfunding drive. MYnd the Gap. For many, it will seem to come out of the blue. Matthews Yard is the busiest it has ever been. We have more events, more visitors and more pounds spent in the premises than ever before. Why then, are we turning to crowdfunding to survive once again?
Our last major crowdfunding push was launched in December 2014. The Matthews Yard loan fund was designed to stabilise the business while we made the fundamental changes needed to adopt the concession based business model which started with Brgr&Beer opening in April 2015.They were followed by Hoodoo´s in August and Theatre Utopia in September. Since then our customer experience has improved exponentially. With MY busier than ever and an extensive and highly visible programme of upgrades to the premises, it`s easy to jump to the wrong conclusion on our financial position.
The concession model has brought more stability to the business and reduced our risk. We no longer handle cash or stock, nor do we employ people directly. On the one hand, the model reduces the amount of money coming into the business significantly, while on the other it increases the potential for profits. Adapting spending and payment cycles from a business which had cash coming in every day, to one which receives fixed amounts each month, has not been without its challenges.
Soon after signing 12-month, fixed fee agreements with each of our concessions, we were landed with a significant bill for more than 14k from our landlord. Most of this was to cover electricity usage for a meter which had never been read by our landlord. While this set us back we were prepared for it and had built in contingencies such as this into the fees we charged to concessions.
In January this year after meeting with the local authority and fire brigade safety officers we set to work on a 6-month rolling programme of safety and security upgrades to the premises. 8 months later and Matthews Yard is not only the busiest it has ever been, but it is now also the safest, thanks to a strong shove in the right direction by the local authority and the Fire Brigade, combined with an investment of more than 25k.
All doors and door frames have been upgraded to fire-safe doors, the alarm system has been upgraded, emergency signage and lighting improved, several internal walls were upgraded to provide longer periods of fire protection (following the introduction of commercial fryers by one of the concessions).
We also invested significantly in upgrading the electrical safety systems in place at the premises, upgrading all circuits to ensure compliance with the very latest electrical safety guidelines. While some of the items that needed to be addressed were a result of oversights in the original premises construction, the vast majority came out of the new business model and changes which needed to be made in order to adapt to it.
I knew the costs involved couldn’t be met from the money that would be coming into the business and set about cutting costs wherever possible. I was already in talks with a couple of potential major investors in the business and at this point was confident at least one would get involved. As is often the case, many hundreds of hours of work and meetings amounted to nothing at all. At this point, we turned to our concessions and I offered each concession the ability to buy shares in the business. One of them purchased a significant number of shares at a favourable rate. The money raised was reinvested in the business and paid for the lion’s share of the fire safety works.
We were still coming up short on cash flow, electricians and fire safety professionals aren’t cheap. I reached out to some of the people that loaned money under the original loan fund, to arrange a temporary deferment of repayments. I also set about applying for conventional loan funding once again but, I knew we had slim pickings.
In the peak of our financial troubles, I prioritised paying employees and individual creditors over paying major corporations, HMRC and myself. This meant I fell behind on a number of personal financial obligations and ended up with a CCJ and default notices on my credit file. This makes it almost impossible for me or for Matthews Yard to borrow from conventional lenders and will take several years to be resolved.
Funding Circle seemed like the next best option and one of our last remaining prospects of a significant lump sum to get us fully back on track. Unfortunately, we were rejected by Funding Circle as I have no UK address. Earlier in the year, to help reduce living expenses and cut my salary, I relocated from Croydon to Spain. Choosing to work remotely, I have been able to improve my quality of life and significantly reduce my outgoings. Within a few months, the benefits will materialise and I will be in a position to reduce my salary from 24k pa to 18k pa until the business is in a stronger financial position.
At the same time, we have taken additional measures to renew contracts for concessions, unfortunately, this has also meant increasing the fees for each of the independent businesses operating from the space to more realistic levels.
By June next year, our projections, based on contracted income allow for us to rebuild our capital reserves and turn a profit for the first time. Unfortunately, due to the urgency of all the unforeseen costs we have had to absorb, we are now faced with negative cash flow projections for the next 4 months.
Because of this and to ensure we do more than scrape by we are turning to those with disposable income and asking for help in raising money for a bridging loan. To ensure only those who can afford to lend do, the minimum loan amount has been set at 1,000. Repayments will be made over 3 years and a 20% premium will be added to any amount loaned.