Hi Dennis,

Just interested in a couple of things here as I run a couple of businesses myself and margins are an interest of mine

You intimate in one of your posts that you employ about 250 staff and would not want to let them go - a point which I would be in full agreement with. However let's make some assumptions here (dangerous I know!) but if you employ 250 staff on let's say an average wage of £25,000 per annum that is an annual wage bill £6.25 million (assuming you don't take any earnings from the business). Let's also assume that you have no overheads whatsoever other than wages which would of course not be the case for a business employing 250 staff. Let's also forget about employer NI contributions so basically taking the lowest possible numbers.

If you are working on a -15% margin factoring only wages into the equation - not turnover which one would assume would be higher you are effectively running on losses of £937,500 per annum. Let's round that up to £1 million per annum of losses. Now I know and I'm sure most people out there know that no bank / private equity firm / rich father would support a situation like that, so one must assume you have enough capital employed to ride the rough times.

For a company with such a high negative gearing you would need to have at least £3 million in the bank available purely for cashflow and a capitalisation of say £6 million purely to keep going and keep credit lines open from suppliers.

Where I am going with this is, surely a company that has obviously seen good success in the past to be as well capitalised as it is would be far better off downsizing and for the sake of argument maybe losing 125 jobs but also keeping 125 jobs rather than waiting until your hand is forced and all 250 jobs have to go and you have lost millions not only causing yourself and your employees a great deal of distress but also limiting your ability to be a significant employer in the future?

Is the company you own a Limited company?