Acquiring bussines

[alex242]

First of all, I'm not an english speak, I'm from Chile, I'll try to explain as clear as I could.

I run an Advertising Agency; our main customer is a bakery shop with 80 locations on city. He buy from us mostly inkjet laminated printing, thus representing around 50% of our incomes.

We have a chance to acquire our main print supplier. He have a Mimaki JV33 160, around 3 years old with ink bulk; a 165cm laminator, some big tables and a mimaki cutting plotter (we have the same cutter). One employee, big space to work (around $1.000 monthly rent) a pc to run the plotter and some office parafernalia will be included also.

His first approach for pricing is: $12.000 for the printer and $4.000 for the laminator. I guess the printer needs to get new heads. Don't know if laminators need to get any maintenance.
He also included the brand and legal terms, which I'm also evaluating.

I know I have to do some research market and analyse the financial situation of the shop, but at first sight it seems a great
opportunity to expand the business. I always wanted to go that way.

 

[henryz]

Hello Alex242, is $12.000 pesos Chilenos or US dollars? Is dollars you should not put a period but a comma. If you are the person that operates the equipment on a daily base you should get a good idea if it will last a couple more for it to payoff. Can you buy a new printer if you wanted to start your own shop?

 

[Gino]

Remember, you're basing this on 50% of your income of one customer. Up here, that's called putting all your eggs in one basket. If something goes wrong for whatever reason, you just lost 1/2 your business.

Are you getting equipment only.... or does anyone who knows how to run it come along ??

That'll be one heck of a learning curve, if you hafta learn all kinds new things instantly.

 

[alex242]

Hello Alex242, is $12.000 pesos Chilenos or US dollars? Is dollars you should not put a period but a comma. If you are the person that operates the equipment on a daily base you should get a good idea if it will last a couple more for it to payoff. Can you buy a new printer if you wanted to start your own shop?

Sorry Henryz, I meant Dollars. With $12.000 chilenos you may buy a bottle of good red wine...

I'm not the operator, he's included with the shop. I know a lot about printers and the process it carries.

The same new printer will be about 22,000 dollars here in Chile. Just the printer itself. Besides that, this shop is full operative. (Eventually, I will move my actual office to the shop)

 

[Billct2]

So you will get all their other existing business along with a trained employee for the cost of the equipment? Sounds like it may work and also give you a more diverse income stream.

 

[alex242]

So you will get all their other existing business along with a trained employee for the cost of the equipment? Sounds like it may work and also give you a more diverse income stream.

Yes Bill, sounds promising!
I've just talked to the owner, he calls me about an hour ago. He was sincerely: he's not making money, but mostly because he can't take care of the shop (he have a regular job) and no time to get customers.

By the way, the same day, earlier, I got a call from Florida for a Signarama representative telling me about the franchise system and blablablah. I guess you all already knows how much this kind of franchise cost. This shop is about 10% of the initial Signarama entry costs. That thing took my attention: the same day I got two interesting opportunities of business...

 

[equippaint]

The question you need to ask yourself is: am I better off buying a printer and going about this on my own or is their value in what he is selling you beyond the equipment (which is not working) that you could not go out and purchase. It is hard to understand the cost of what he is selling since you are in another country but it seems high to me.

Is his employee valuable to you? You may find out that the guy is really inefficient and doesn't know enough to do anything but cost you money. What has this employee been doing while the printer is not working? How did the print heads go bad in 3 years in a low volume environment? My hang up is with this worker he has. You will be worse off if you rely on someone to train you that doesn't know what they are doing.

Another thing to think about, if you purchase this you are doing him a favor, he is not doing you a favor. If you do not buy this package from him, he will be forced to break his lease and sell each machine by itself which takes time. He will have to continue paying rent and losing money until the equipment is gone unless he has somewhere to store it. Consider that you are only buying a package of used equipment and don't pay more than what its worth as a group in the condition that it is in. The business is not making money, has few clients and is virtually worthless except for the asset value.

 

[alex242]

The question you need to ask yourself is: am I better off buying a printer and going about this on my own or is their value in what he is selling you beyond the equipment (which is not working) that you could not go out and purchase. It is hard to understand the cost of what he is selling since you are in another country but it seems high to me.

Is his employee valuable to you? You may find out that the guy is really inefficient and doesn't know enough to do anything but cost you money. What has this employee been doing while the printer is not working? How did the print heads go bad in 3 years in a low volume environment? My hang up is with this worker he has. You will be worse off if you rely on someone to train you that doesn't know what they are doing.

Another thing to think about, if you purchase this you are doing him a favor, he is not doing you a favor. If you do not buy this package from him, he will be forced to break his lease and sell each machine by itself which takes time. He will have to continue paying rent and losing money until the equipment is gone unless he has somewhere to store it. Consider that you are only buying a package of used equipment and don't pay more than what its worth as a group in the condition that it is in. The business is not making money, has few clients and is virtually worthless except for the asset value.

Very good points, helpful!

I can get another printing service and keep my business as today. But what I got with these guys is timing. I can get the printing done in less than 24 hs. While if I go to another shop there are no less schedule than 4 days with luck. That's something my client appreciates. That's my main motto to stay with them. Good service.

The employee is good. He can resolve almost anything concern to printing process. I know him.

I didn't meant the print head was faulty. It's just an idea.

Your last point is what I liked the most. You're right about doing him a favor. I need to get things printed fast and accurate, and I don't have the time nor money to buy new equipment, get a bigger office, new employee and get everything working in a week. Client has around 15 new stores to opening this year and I can't leave the space for another actor to be around. I see a win-win position, but I might be dumbfounded.


Enviado desde mi iPhone utilizando Tapatalk

 

[equippaint]

I think it's a good idea as long as it makes sense on paper. It provides you the opportunity to offer other products to more people which is very important. 50% of your business is from 1 customer, this may help you diversify which you need to do. That is a dangerous place to be in business when 1 customer can put you out of business. I do not like outsourcing anything. If it is something that is a part of my business, I will buy the equipment and do it in house. Too many headaches relying on other people.
You mentioned a franchise in an earlier post. Don't do it unless the name is one that is highly recognized and will bring you instant business. Without that, it is overpriced and under delivered training. If no one knows the franchise, you're better off studying their theme and creating your own idea very similar to theirs. With most franchises, you are purchasing a giant/expensive marketing & business plan which is great for people with no business sense whatsoever.

 

[alex242]

Yes, I know I must make some numbers to see more clearly. Need to focus on that next.

I thought the same about the print franchise, its meant for people who knows nothing about this business.