Two recent news items from the forecourt sector have caused a degree of concern among operators. First, Shell announced its Global Retailer Business Agreement (Cluster) proposals, quickly followed by Fuelforce announcing the disposal of a large part of its retail network to other groups. In both cases, the existing retailers suddenly realised they may not be offered a role in the new management scheme affecting their sites. The reality is there are likely to be more such changes of ownership and management in the future, as the industry continues to evolve. Where we have been used to seeing individual operators running one or maybe two sites, the future may well consist of a single operator or ‘mini-group’ running multiple sites. In both cases there will be existing operators facing a career change.
In itself, such a career change need not always be traumatic; what trauma there is usually arises from the fact the change is sudden and unplanned. Typically, those forced to leave a business at short notice have not given much thought to tidying-up their finances, let alone to having an exit strategy that prepares them for their next venture. In some cases there’s a problem concerning the solvency of their present business – for example, they have too much cash tied up in stock or in slow-paying customers to make a smooth exit. Sometimes the problem is more fundamental, in that they have been running a business which is simply not profitable and are now so deeply in debt they simply cannot get out without raising some cash or being declared bankrupt.
At EKW, we have always been realistic: the purpose of having detailed management information sometimes comes down to making an operator acknowledge that they have no real hope of improving the results of a failing business. The sooner we identify such a scenario, the sooner we can advise our client to stop flogging a dead horse.
We often speak to our clients in such circumstances of preparing for a ‘soft landing’. This can mean planning a gradual wind-down of the business, keeping the bank, the Revenue and suppliers informed that the operator is doing everything possible to honour existing liabilities without incurring new ones.
The cynical may find it hard to believe but we generally find that so long as the creditors are kept fully in the picture, they can be remarkably
co-operative in ensuring that soft landing. After all, from their point of view, it’s ultimately self interest: they would rather obtain 90p in the pound from an operator trading out of business than have to go through a bankruptcy process and end up with less from someone forced out of business at short notice.
Our experience also tells us that few individuals used to running their own business are ever very happy working as ‘managers’ for someone else, at least in the longer term. Their entrepreneurial spirit is simply too great and there are many other business opportunities available out there for experienced, hard-headed retailers.
Our clients leaving the petrol retail industry have gone into a variety of new business ventures, often under one of the many franchise opportunities backed by the major High Street banks. How do we know? Simple – they’ve taken our wide range of support services with them.
Starting a new career is not as daunting a prospect as it might seem. With a clear and realistic business plan, perhaps some assistance in raising finance and reliable information systems in place from day one, the chances of securing a viable franchise are very good. After all, many of the people with whom you’ll be competing for such an opportunity will be totally unprepared and may not even have any retail experience. Show the prospective franchisor that you have experience, and with a professional partner to provide the management controls and systems, you’ll be well on your way to securing a fresh start.
So, for those about to depart the petrol retailing life, we salute you. But life and business don’t stop at the petrol forecourt and neither do we. If you’re looking at what you need to do to make that soft landing, or are already on the next step to starting afresh in a new business venture, we’ll be pleased to help. Give us a call. But don’t wait too long.
DATA SUPPLIED BY EKW GROUP