Client profile: Treacle & Ginger
- Used pension to fund lifestyle change
- 'Using my pension meant that we could move quicker, we could buy quicker, we could invest properly in refurbishing the cafe and it removed the worry'
- Existing savings transferred into a SIPP
- Accessed £105,000 from pension pot
- Pension bought preference shares in the business
When Michael Green was looking to put a name over the door of his family’s new arts café the answer was staring him in the face.
He had also found the perfect way to finance his lifestyle change from corporate community to café counter equally close to home – and without putting his house on the line.
“When we bought the business, it was called Treacle and Co, but since the previous owner had let the trading name lapse at Companies House that name had been taken by a construction company in Scotland,” Michael said.
“So, we sat down with the kids for a bit of a brainstorming. Lisa, my wife, is a redhead, two of my kids are redheads, we’ve got a ginger dog, and I love eating ginger. We just thought Treacle & Ginger! It just sounds great and is quite cafe-like as well. And it means something to us.”
Michael was 52 and wanted to spend more time with Lisa, an artist and former retail buyer for Dorothy Perkins and Top Man, and his three children. International and national travel was taking him away from home two or three nights a week after a successful 30-year career in orthopaedics. It was time for a change.
“I wanted to do something different. Now my commute is four minutes – I time it every day!”
Michael and artist Lisa got a taste for running their own business from the café culture of Sydney and west coast USA, and by running an Open House art event as part of the Brighton Festival in Brighton – when over 200 houses turn into galleries every weekend for a month with up to 300 people a day coming through the door.
“Although we didn’t have much experience in catering we have strong commercial customer-facing backgrounds. Importantly, Lisa also ran the Open House event. We had decided to start serving teas and coffees for a charity we support, with the artists making cakes and found that we were serving over 100 people a day. We were actually effectively running a café. We thought we could do this for a living,” he remembers.
Funding the launch of Treacle & Ginger, in Hove on the Sussex coast, was taking on the feel of a choice between your least-favourite cake – remortgage the house or look to traditional bank funding with high interest rates – until he discovered Pension-led funding.
“I had never heard of Pension-led funding. I knew vaguely what SIPPs could do but I had no idea you could fund a business using your pension,” Michael said.
“Using my pension meant that we could move quicker, we could buy quicker, we could invest properly in refurbishing the cafe and it removed the worry. We may have to live off savings for a while but the business can wash its own face early on. It is a help for cashflow, which is huge.”
Michael accessed £105,000 from his pension pot after his existing savings were transferred into a Self-Invested Personal Pension (SIPP). His pension bought preference shares in the business to be paid back in five years, with Michael himself setting the coupon rate at 17%.
“If we get an eight per cent return I’d be happy, that is probably twice we would get anywhere else,” Michael said. “Seventeen per cent and I’d be over the moon.”
Michael and Lisa have a vision to make the café “aspirational”. Michael said: “We want people to sit here and say, ‘I want this look’,” which fits perfectly with their passionate support for localism and using local suppliers for the café’s food and drink and supporting local talented artists and makers.
Visitors can buy the paintings, sculptures and ceramics on show as well as T&G coffee cups, light shades made from recycled milk bottles and even the tables you sit at to eat brunch or their best-selling cake Chocolate and Guinness cake.
“The art has helped the business,” said Michael. “We have sold around £1,000 of art each month since we opened. We have two revenue streams from our art, one is the wall art and the ceramics and the other is the Treacle & Ginger specific items.”
Looking to the future Michael would like to spread the Treacle & Ginger name by opening three or four more cafes in the Brighton and Hove areas.
Would that dream have been possible if he had not dipped into his pension pot?
“In practical terms it was easier access to the money and, importantly, it was my money,” Michael said. “If we fail I will have a slightly worse retirement than I thought, if we succeed then I have a great retirement!”