Making tough decisions

When tough decisions need to be made, there’s no point messing around. When Emanuele suggest that he needs to look elsewhere for work with more income, I understood immediately. We had had similar conversations in the past when, as I was paying him much more than the other staff, even he suggested that I cut his wage bill and get other more cheaper people in to run the place. Previously I had rejected the idea as I thought his managerial expertise and commitment were crucial (and he was VERY committed) . However now with J&P doing a lot of the day-to-day work as well as pushing forward the change initiatives suggested by Mandy, Emanuele was quickly started to feel like an old-school manager who was holding the business back. At the same time, he could be earning more money, even by moving back to his old friends at P. Express. So this time I agreed with him and I think both of us felt a bit gutted, but both also agreed it was the right decision. By letting J&P run the place, it would also be a significant cost saving, and they could get in one part time person. Given the amount that we would save, it was only right to also increase J&P’s wages a bit as they would not effectively be running the place. We implemented this change fairly quickly as Emanuele already had a standing invitation to rejoin his old gang.

I had already haemorrhaged a lot of money in this business, but things were started to look a bit better. Assuming the rent negotiation came down to the level we needed, we would just about be breaking even soon. But until then I was still putting more money into this business. I had a lot of faith that eventually it would work so I didn’t mind, however it was becoming a problem. I realised at this time that another investment had gone bad and I may have lost some good money in that. Will talk more about this later but suffice to say that trusted someone that I didn’t know very well with an investment, and while I insisted on a personal guarantee on the money, he turned out to be more crooked than I could have imagined and basically I lost the lot. However I learnt two lessons in that: 1. Always be in full control of a deal, ie. if investing in property via someone else, always make sure it is transferred into my name or joint names rather than just theirs. If they don’t like that, then walk away. 2: Always use lawyers to seal the agreement with proper contracts. While you may trust someone, things can always go wrong and change the dynamics. I used a contract and did background checks, but I should have done it all properly through a lawyer. As this was my mistake, I honoured the investment in this deal made by all the partners and I paid out of my own pocket to recompense everyone. It was important for my reputation that I did that. When you make a mistake, put your hands up and own up to it, people respect you more for it. However this also meant that in on go, I’d lost a lot of my savings/capital. So i needed to do something.

At the same time, my old love started popping its head up again – property. My good friend Sandy and I decided to look into potential property investments – either buying blocks of well-priced new-build flats from struggling developers or renovation projects. Several potential deals came up and we found there was a lot of interest from investors. However a lot of them fell through for one reason or another. Finally however, while looking for a new apartment for myself and my wife, I came across a great renovation project in St John’s wood which, by our calculation, had anywhere from £250k to £400k of untapped profit potential. My role in our partnership was the preliminary work – as well as sourcing, due-diligence, raising funds, arranging finance, dealing with agents, lawyers, etc. Sandy’s role was to initially determine the level of work required, and then to oversee the actual renovation work. We both focused on our strengths. Unfortunately the world of property is VERY slow moving and progress on this purchase was no exception. At the same time Tonic was also starting to get boring because all I was doing was constantly streamlining the operation to save a few pounds here and there. Each day was becoming a bit boring. I was now starting to really miss banking: the routine of going to work, the fast paced environment where things happen quickly, working with really sharp people that understand what you’re talking about, the challenge of the work you do and the general buzz of the banking environment. I always did enjoy it, and I was pretty good at what I did, maybe I just needed some time out. But now I was really keen to go back. Of course, having the income would be good as well and I could put the money into more projects. But the best part was that the property ventures and Tonic could both be run on the side, in evenings and weekends, more as a hobby. That was the way it could work, so I’d have enough to keep me busy during the day, with a hobby that I really loved working on and that would be very lucrative. So I started looking at my options and in the end decided to take a contract role with my old group at UBS, where things were not starting to pick up after the worst of the crises.