The Big Mistake That Led To My Bankruptcy

This week we present a series of three articles that provide a first hand account of what is it like to experience personal bankruptcy. Sophie Boyko found herself in financial problems after the failure of her first business endeavour. In the full series, she talks about the mistakes that lead up to her bankruptcy, how she felt during the bankruptcy process and how she recovered. We hope you gain some understanding that you are not alone in the process and that there is hope after hearing Sophie’s story.

Sophie’s Personal Bankruptcy Story – Part 1

My name is Sophie Boyko. I am a former spa owner and would like to share my personal story of bankruptcy – the mistakes that led to the failure of my business, the bankruptcy process and the emotional recovery. I hope my story will help others who are going through a similar experience.

When I graduated from university, the last thing I wanted to do was climb the corporate ladder. I knew in my heart that I was an entrepreneur and could make a difference in the lives of others.

I had prior experience working in the health and fitness industry and was very passionate about wellness and beauty. Since I saw a growing demand for these services, I decided to open an anti-aging spa.

I thought I did everything you’re supposed to do when you start a business.

  • I found a partner who was equally passionate about beauty and anti-aging.
  • We wrote a business plan.
  • We found a great location.
  • We secured a line of credit.
  • We hired an interior designer and bought top-of-the-line equipment.

However, there was one thing that we overlooked …


Most people work for someone else before they open their own spa. They build up a client base and take their clientele with them.

I didn’t do this. I had never worked at a spa before and had no clients to ensure my spa’s opening would be successful.

We knew that we needed to get clients fast, so we hired a marketing company to approach women on the street and give them discounts on our mini services. Once they tested our services, we sold them on larger packages. This initially brought us a lot of business and allowed us to quickly grow.

However, things started to change …

After a few years, business slowed. It got harder and harder to sell big-ticket packages. Our clients saw how slow the spa was and were reluctant to buy expensive packages, as they didn’t know if we would go out of business.

Soon, our cash flow dried up, and I was bringing in zero dollars a month. Here’s what went wrong:

  1. We didn’t take our overhead into account. When we launched the spa, we took out a $250K line of credit. Between the monthly loan payments and the high costs of rent, we couldn’t afford any slow times.
  2. We went too big. We took out the large line of credit so we could buy new equipment and have a large facility with eight treatment rooms. We would have done better with a smaller loan and fewer treatment rooms.
  3. We didn’t have a shareholders agreement. My partner and I had fundamental disagreements on what to do with the spa when business slowed. Since our partnership was a 50/50 verbal agreement, we couldn’t come to consensus when we disagreed.

Since my chances of reviving the business alone were slim, my best course of action was to declare bankruptcy. While I was crushed at first, I eventually learned that bankruptcy is a tool that can help you close one chapter in your life so you can start another.

Stay tuned for the next two posts in my series, where I’ll discuss how to survive the emotional impacts of bankruptcy, as well as how to recover after filing for bankruptcy.

Sophie Boyko is a Sales & Leadership strategist in the Greater Toronto Area. Sophie coaches and trains sales leaders and their teams on how to deepen communications skills, change behaviours in others and drive higher sales performance. Nominated by The Women’s Post as one of “The Women to Watch in 2013,” Sophie has worked with many of North America’s top producing companies including BMO, CIBC, RBC, Bell, Manulife Financial, First Canadian Title, Pfizer, Meridian and US Cellular to name a few.

Watch Sophie’s bankruptcy story on YouTube

Similar Posts:

  1. Surviving the Emotional Impact of Bankruptcy
  2. How to Rebuild Your Life and Thrive After Bankruptcy
  3. From Employee to Consultant Leads to Personal Debts
  4. When A Tax Shelter Sounds Too Good To Be True
  5. The Scariest Part Of Filing Bankruptcy

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