29 1989 – 1991: In Business on our own after Woolworths
29 <> 1989 – 1991: In Business on our own after Woolworths
Before Timothy left home, we had sold the house in Marina da Gama and moved to the cottage in Wynberg, anticipating retirement from Woolworths. In April 1989, I was pensioned off at age 55. I was immediately offered a position with the Financial Consultancy with whom I had been connected during my last position with Woolworths. It would have meant that I continue running management and executive remuneration packages for companies in the Group, but I felt I had had enough of that sort of involvement and I declined. My pension itself would not have been adequate because I had had only 17 years pensionable service but I calculated that we would be comfortably off with the retirement lump-sum payments properly invested, especially with interest rates at the time running at an unbelievable 29% and the stock market powering ahead at over 35%. (In retrospect, that should have been the warning sign of a meltdown to come but I was inexperienced in the ways of the market.)
I also planned to start some sort of small business to supplement our pension so as not to draw on our capital in the period before our investments had time to grow and provide an annual supplement to our pension. DorothyAnne would have liked a second-hand collectibles china shop for which she had a name in mind — ‘Victoria Rose’. She had designed a nice Logo for it as well. However, I thought it would take too long before starting to produce any income for us so I opted to buy a small business which was already up and running as a more viable way for us.
But first we had planned a month-long trip to England.
That excursion should have been a holiday of a life-time but it proved to be a disaster for both of us in one way and another which I will not spell out here. However, there were good experiences as well, one for me being a visit to Lindisfarne (Holy Island) in Northumbria where St. Aidan, coming from Iona, established his church and monastery in the year 635. From those beginnings, England, Scotland and Wales were converted to Christ. It is a lovely place with an amazing history.
On that trip to England, DorothyAnne and I visited each of her two sisters, her brother and her cousins.
On our return I registered a Close Corporation called Jessop’s Studio CC., with DorothyAnne and me as 20% and 80% members respectively. With an urgent need to get productive, we scanned the ‘Business For Sale’ columns in the papers and found one for a Paint And Hardware Shop in Paarden Eiland Industrial Suburb of Cape Town for R25,000 — “Target Paint And Hardware”. Hardware was something that did interest us and the price was attractive. All we wanted was a small business that we could handle ourselves without any employees. The Agent turned out to be a man who had worked with me in the Woolworths store in Durban. He described the business as something ‘an uncle could buy for a favourite nephew’. We arranged to meet him at the shop in Paarden Eiland. It was not a great looking shop and the stock was ‘bitty’ and mostly old-looking, but the evidence was that it produced an adequate turnover. The bulk of the business was done on credit sales of paint to several main customers. The paint-mixing equipment was old and partly broken but it worked and accounted for a good proportion of the paint sales. In addition to the hardware and paint the shop also served as an Agency for a Dry-Cleaning business.
The seller, whom we shall refer to as Mr V, was a retired Medical Rep and plausible enough so we drew a deep breath and took the plunge paying an initial R2,000 deposit which covered the Agents’ fees. We arranged to spend two weeks with Mr V to learn the ropes and during which time we also needed to sign a new lease for the premises. On several occasions a man dressed in business clothes arrived and he and Mr V were huddled in conversation. In response to my raised eyebrows, Mr V said it was his Tax Advisor, information which I had no reason to doubt, but before the two weeks were up we grew a little uneasy about the deal. The landlord with whom we had to sign the lease also suggested, without giving too much away, that we were taking a risk. He hinted that he could abort the sale by refusing to issue a new lease. We would have lost the R2,000 deposit that the Agent had already appropriated and banked, and the Invoice Books Mr V kept did show a sufficient monthly turnover to make it work for us so we went ahead with the purchase. Mr V in the meantime said he had bought another business in another area. So the deal was concluded and the shop was ours.
It was then that we discovered that, though the turnover and profit margins were good enough, Mr V had cash-flow problems and owed the main suppliers more than the debtors owed him. The mysterious visitor seems to have been, not a Tax Advisor, but a debt collector. We had agreed to hand over to Mr V the outstanding receipts from the Debtors and he, of course, should have paid what was owing to the Creditors. We held to our part of the deal but it soon became clear that he simply was not able to pay the creditors and we were faced with the threat of having the stock and equipment ‘attached’. We then had to engage the services of an attorney to protect our interest — but it turned out that what we had to pay the attorney was probably more than the stock was worth! We would have done better to have just handed the stock over and restocked the shop afresh. In the end the two main suppliers wrote off the debt and we entered into a good relationship with them.
We soon encountered the main draw-back in supplying goods on credit to other businesses — they were universally reluctant to pay on our thirty-day terms and generally ran to 90 days — and even then parted with their money only with great reluctance. DorothyAnne became the debt-collector, visiting the offices to collect the cheques. There she became very familiar with the standard excuses — “The cheque is in the post”; “The cheque has been made out but the other partner has to sign as well — he is away. Will be back next week”; “Oh, but we haven’t received your Statement!”
Then we got it from another side as well — the men who bought goods knowing full-well that they were not going to be able to pay for them.
The man who owned the Butcher Shop next door to us, and who normally used to pay regularly, had a fire in the insulation of the large fridge. We supplied him with the goods required to affect the repairs and he asked if we would like payment in cash or could we wait till the end of the month? He and his wife were likable people so we said “Don’t worry — the end of the month will do”. A couple of days later we were commiserating with his wife in the shop! — her husband had disappeared and was presumed to have committed suicide by drowning in the harbour where his car was found abandoned on the dock. The story then came out that he was bankrupt, having lent money to a friend who owned a restaurant who himself had gone under. However, he hadn’t drowned! He turned up alive and well several months later, but our money was lost.
Not that it affected us by this stage, but not long after that incident, Mr V was also missing and presumed to have drowned himself in the sea off Fishhoek. His car was found parked there at the beach with a farewell note. But he also emerged again some weeks later alive and well at Gordon’s Bay! His new shop hadn’t provided him with a solution to his financial problems so he had apparently tried to take another way out, not by committing suicide but by quietly disappearing.
Another significant account customer ordered some paint — and the very next day went into voluntary liquidation! We put in our claim with the Master of the Court but got nothing — in fact we were told that we could be considered a concurrent creditor having technically ‘lent’ money to the company enabling them to increase debt to other suppliers!
These were not large sums but that, together with the hassles in collecting money from other account customers, decided us to close all accounts and operate as a cash business. That didn’t go down well with our main customer-base. The dry-cleaning agency still brought in some money but the writing was on the wall for the paint and hardware sales. We had to make a change. When I left Woolworths, we had in mind to do picture framing, for which purpose DorothyAnne and I had bought some books while in England. With the last of the paint and hardware going out, I bought a length of moulding and some rudimentary framing tools and framed a print of a donkey as my first attempt. I proudly produced that to show to the children at Christmas-lunch at a restaurant in Lakeside! In January DorothyAnne and I set to work in earnest to master the art of picture framing. We painted out the “Target Paint And Hardware” sign over the front of the shop and replaced it with a sign reading “Jessop’s Studio CC, Picture Framers”. Then we invested in a lot of sophisticated equipment for framing, and started to build up a business.
