Am I Nuts?

[BJVT]

I'm trying to evaluate a small sign business I'm considering buying. It's a one man shop where the owner has had health problems and the business is in decline. The price sounds good (under 50k) until you see he made under 10k the last few years but it sounds like he has a fairly substantial customer list and a dozen or so years of sign designs. The primary equipment is a Roland sp 300 v with sign lab 7 software, and a Graphtec 30" vinyl cutter with Gerber Omega software (not sure what version yet).

The other issue is that I have no sign making experience beyond buying some for a previous business and no formal graphic arts training. I did do most of the marketing for our previous business and know my way around page layout software fairly well. I've also worked as a craft artist and understand color reasonably well but that's as far as my qualifications go.

The owner said he would provide training for a few weeks and be on call for questions. It's a small town and rural clientel and not overly sophisticated overall. There are a few competitors but nothing very serious looking as far as I can tell. So, am I crazy for considering this or does this sound like a doable prospect?

 

[CP Signs]

Do you have a business plan setup? Do you have any idea on how you'll make money? A lot of us have been at it for many years and still learn everyday. You have a lot of reading and research to do now if you are really considering it. Or kiss your 50k goodbye. Get a part time job in a sign shop first. 2 things might happen,,,,, 1 you will be lucky and learn fast and buy the business and go at it or you will be totally lost and thank your lucky star that you still have that 50k. If you go for it, at least you have this forum to help you,,,,,,but please search before asking.
My .02 only. Oh, welcome to a great forum.

 

[401Graphics]

50 grand?! 30 printter and cutter?! hahahhahhahaha that better come with a never ending supply of vinyl!
For less money you could buy new (better) equipment plus vinyl stock

 

[James Burke]

If you have to ask, the answer is definitely NO! And given your current background, this could spell certain disaster.

Ditto on getting training in an established shop, and while you're there, also learn the "business side" of the trade.

JB

 

[HulkSmash]

Unless a business has hard contracts, it's only worth as much as the equipment.

in that list, i'd say about $1200

good luck.

10k a year? Please use logic.

 

[IGD]

you could get started for alot less than that, I mean I know it comes with clientel but how good is that clientel if he hasnt been active in the business due to sickness. GL either way im new to the business as well and I have already learned a great deal from this forum, although I researched over a yr and a had somewhat of a business plan set up. Best of luck what ever you decide.

 

[mudmedia]

Unless a business has hard contracts, it's only worth as much as the equipment.

in that list, i'd say about $1200

good luck.

10k a year? Please use logic.

i LOVE that you posted this. I see guys all day long saling 30" printers for 10-15k or printing business for 50-100k and they say that you get their customer list etc and how the equipment has made them x amount of dollars so they think its worth more than it actually is.

Unless you are going to give me the money that the equipment made you then its not worth that. When you can buy 1-2 year old latex machines for 10k why the FLIP would you spend 50k for a 30" setup?

It makes no sense. I understand people want to get as much as they can for used equipment but ripping people off only shows the type of individual you are and the type of shop you run. 10k a year makes sense for that guy in this case.

 

[Mosh]

My opinion, tell him you will work for him two months and see if you can do it...seeing how you have NO idea what you are getting into. Then decide. You might like it. BTW, my shop only made $7K last year, and I have been doing this since 1988..... Yes $7,000 Itried to do less but...

 

[BJVT]

OK guys, I'm not ENTIRELY dim. ;-) The asking price is well under 50 and that's not necessarily what I'd offer. This wouldn't be our first business. I agree a business plan is critical but I first saw the place yesterday so I'm not there yet.

I'm confident in our ability to run a business and my ability to do the physical part of making the signs. I've been a crafts person for 10 years and a mechanical designer before that. I may not be brilliant, but I think I could do a respectable job designing for a not too critical market in time but I don't know what to expect that time to be.

I'm trying to decide if there's anything worth buying here and if, being a fairly creative but untrained person, I could pick up enough in a few weeks to limp by until I could get things turned around. I can already tell he under prices his work pretty seriously and I don't think he does any advertising and has no web site. He seems to have a pretty good in with the local racing community and does allot of cars. Of course, not being a racer myself, I'm not sure if I can count on keeping that segment. I'm also somewhat concerned the local market could be pretty resistant to paying a reasonable price after being spoiled by this guy's low rates. I still have more homework to do, but at a glance, I'd guess the local competition probably does things the same way.

 

[Mosh]

I've been a crafts person for 10 years

That is funny...so what makes you think you can design, fabricate, and install signs. $50 K??? I have around $250K in equipment....What are you buying besides "blue sky". Just go buy a cri-cut for $400 and go to town since you are a "crafts person"....

Know anything about raster to vector conversion? Welding Aluminum retainers to a cabinet? Any idea what LED stands for???

BTW the "racing community" is the LAST customers you want. RACERS ARE THE WORST CUSTOMERS TO HAVE!!! at least in the top five with bars, poli, softball guy....LOL bunch of DEADBEATS with NO money!!! (trust me been dealing with them since 1988)

First thing out of a racers mouth "You want to sponsor me?" Translated: Can I get FREE lettering!!! DEADBEATS!!!!

 

[IGD]

lol subscribed

 

[CheapVehicleWrap]

Mosh may have only made 7k last year but he produced 700k in work.

 

[Pixels Are Bad Mmmkay?]

BTW the "racing community" is the LAST customers you want. RACERS ARE THE WORST CUSTOMERS TO HAVE!!! at least in the top five with bars, poli, softball guy....LOL bunch of DEADBEATS with NO money!!! (trust me been dealing with them since 1988)

First thing out of a racers mouth "You want to sponsor me?" Translated: Can I get FREE lettering!!! DEADBEATS!!!!

Hahaha! Isn't that the truth? That's been my experience almost to the word!

 

[nwsigns]

I sold my sign business 4 years ago which was self operating, well branded, lots of good equipment and client list - I got a good price but much less than you would want for all the work I put in building it (I started over with a home based shop and am much happie and make more money).

My point is that the equipment is worth pennies on the dollar and client lists are worth 1/2 their revenue at best. My biggest concern would be that he is a sole operator so he IS the business and his customers want him so if you take over your going to likely keep very few of those customers. I am not sure you can actually call 10k a year a business - more of a hobby.

 

[DizzyMarkus]

Used SP-300v -- 7995.00
Used lammy -- 1995.00
misc materials -- 1000.00


not knowing how to use them: PRICELESS lol

Serious, after starting up a year ago theres soooo much to learn. The best advice given was to work for someone and get your feet wet. How much vinyl will you go through trying to print something correctly? Lam? Types of ink and process', bubbles on cut vinyl etc -- How about what substrates to use etc. Lots of research Sir. Lots

Markus

 

[BobM]

I would suggest you go to Ted Burbank's web site (http://www.bizbooksoftware.com/home.htm) and do a little research on the buying and selling of a business. Best advice you can get comes from the guy who actually wrote the book on buying or selling a business.

 

[genericname]

...at least in the top five with bars, poli...

I dunno... I'd imagine the poly-amorous would have a lot of business connections.

 

[Jillbeans]

I would go to the bank and withdraw about $15,000 in assorted bills.
Then take it out back and burn it.
You will be better off doing that than trying to invest in a small-town sign shop.
Signs, which were a once viable career to an artist, are dead as we once knew them.
Unless you are a niche market doing hand carving or gilding, you're just not going to make it.
There is too much competition from clueless start up hacks who don't know how to design, fabricate, or what to charge.
Our market has been saturated for years.
It's just not worth it.
And this is coming from someone with 27 years in the biz, a genuine sign painter, whose best year (2007) was $60K in sales, and who made $10K less than the previous year.
So I brought in about $12K last year.
Yes, you're nuts...especially if you want to deal with the race crowd, most of whom eventually buy their own plotters and become new competition.
Love....Jill

 

[BJVT]

That is funny...so what makes you think you can design, fabricate, and install signs. $50 K??? I have around $250K in equipment....What are you buying besides "blue sky". Just go buy a cri-cut for $400 and go to town since you are a "crafts person"....

OK Mosh, or should I refer to as Your Holiness? I know I will never be as brilliant as you are without going back to childhood to start over and possibly selling my soul in the process, but is designing a sign such an impenetrable skill no one but an Einstein like you could ever hope to learn it? Nowhere in my post did I say "I can make stuff from yarn and construction paper, therefore I'll be a great sign maker!" I was just trying to show that even though I have no direct experience, I at least have at least enough aptitude to grasp the concept and be able to learn.

I know this is not the Apple Computers of sign companies. I also know I have almost zero experience. That's why I'm here. If this was in a major metro area I wouldn't even consider it. However, this is a rural area, probably without any strong competition and almost no signs in evidence that can't be made by this very basic sign shop. I also have enough business experience to know that buying a weakly run business has it's advantages.

Buying a depressed business is almost always better than starting from scratch. It would have at least SOME established clientele and cash flow and a basic working setup to use while I figure out which end is up. For less than the cost of a new printer, cutter and software, I hope to be able to get a minimally functioning and hopefully growable business.

BTW Mosh, did you know that Stone Brewing has a really good beer named after you? You must really be a special sign maker!

 

[CES020]

Offer him $1500 for his client list, go buy the equipment yourself.

 

[Jillbeans]

Buying a depressed business is almost always better than starting from scratch.

Not necessarily.
This guy may have a bad reputation that you don't know about.
And in a small town, when people hear that he has sold his business, they may think that the business is gone for good.
You are probably going to have to work hard to get any sales.
There will be a down time when you are trying to learn how to run all of his equipment.
You may be biting off more than you can chew.
I know some people like a challenge, and that's all well and good.
But I don't think anyone wants to try and save something not worth saving.
Even rats jump off a sinking ship.
If it were me, I would invest the money in a new Subway franchise or something.
And Pat, when was I ever known for beating around the bush?

 

[BJVT]

Thanks guys and gals, there is some good information here scattered among the sticks and stones. ;-) I like the idea of working the business for 2 months but I don't know if it would be practical. I doubt there's enough business to pay me anything so I'd be likely working for free. Don't think I'd do it in his place but in this market there may not be many other options for him. Maybe I could pay for the business by working free for a period of time instead of with cash.

My biggest hurdle besides learning to design and make signs, is to figure out if there will ever be a viable income waiting for me. I'd need at least 30K a year. Any ideas on how I might be able to figure this out beside questioning his competitors and believing their answers?