Buying a Dimensional Sign Business

[rossmosh]

If you're going to be a dimensional sign shop, you need to get out of the idea that you're going to throw stuff on the CNC, cut it out, and someone else is going to do the finishing. You can get a 4x8 CNC machine for $10-20k. A lot of substrate suppliers offer CNC cutting. A lot of shops make relationships with cabinet shops and CNC shops that will do that sort of work for them.

If you're a dimensional sign shop, you need to be prepared to offer finished, ready to install, signs and letters. You also need to determine whether you're going to be B2B or retail. B2B is less money but you can cut an employee or two. Retail, you'll likely need 1 or 2 extra employees.

 

[letterworks]

If you're going to be a dimensional sign shop, you need to get out of the idea that you're going to throw stuff on the CNC, cut it out, and someone else is going to do the finishing. You can get a 4x8 CNC machine for $10-20k. A lot of substrate suppliers offer CNC cutting. A lot of shops make relationships with cabinet shops and CNC shops that will do that sort of work for them.

If you're a dimensional sign shop, you need to be prepared to offer finished, ready to install, signs and letters. You also need to determine whether you're going to be B2B or retail. B2B is less money but you can cut an employee or two. Retail, you'll likely need 1 or 2 extra employees.

I get that. I hope to get more stuff on the CNC / laser that is ready to install without extra finishing work and price it more aggressively. Trading inventory variety and dollars for labour to some extent. Why paint a matte black if you can cut a matt black acrylic? Yes, sometimes architects or designers or franchise guys are going to spec an exact color and that is what the painting will always be for, but sometimes shops will be looking for the "ready in 3 days" stuff that gets them the rush job and looks good. That's probably my short term plan in a nutshell: continue the painting product work as is and add on good quality and faster turnaround options for the shops that are hustling.

I am that DIY finishing CNC shop now for local shops (cabinet guys generally just make cabinets around here). In my opinion a CNC and a sign shop, at least without a separate room, is not a great fit. Signs and dust don't go together and a CNC is practically a dust factory. I may leave that business with my main plastic fab shop so that I don't mix the higher end sign work with the "slap of exterior latex and 30ft up the wall" work.

Buying this is definitely jumping into finished, ready to install work.

To answer the other part, the business is B2B now. If I do retail it would be online orders only and later if at all.

 

[letterworks]

Also, thanks to all for the questions and Gino in particular for your feedback on what you buy and where.

 

[letterworks]

I visited the shop for sale today. There is probably a path forward to have the woman working there remain in some capacity. No promises made or given, but it was a definite maybe with myself getting to better understand what would work for her.

No word from the broker yet and (going back to one comment here) my gut would like to mention that it thinks a sale probably won't happen as I don't value it high and they might cling to a false hope.

Rent is also a little higher than I'd like but month to month so can see what my options are after 6-12 months if I need to.

 

[Medina Signs]

if you are purchasing the assets - I assume that you are not buying the company name, so essentially you can be a new company (maybe with a new company name) and won't have to rely on their slipping reputation.
The advise you got on the value of the assets seems like a key factor - Do the assets include the property as well? Don't overpay for old worn out assets.

 

[letterworks]

if you are purchasing the assets - I assume that you are not buying the company name, so essentially you can be a new company (maybe with a new company name) and won't have to rely on their slipping reputation.
The advise you got on the value of the assets seems like a key factor - Do the assets include the property as well? Don't overpay for old worn out assets.

Name would be changing as it's meaningless right now, but obviously if I bought the place the transition would be more gradual. No word back from the broker yet anyways, although I know the managing partner is out of town so that could be part of the issue (but I doubt it).

I have seen the "shutdown" email, and the cutoff date for accepting new work is already past and I am getting enquiries from their customers (still mutual customers also at this point) already. Apparently they were cutting faces and backs for guys looking to wrap their own channel letters, something I can do but haven't been asked to do for years.

I am now seeing how key estimating is.....not for making sure you are profitable, but because these prices are the basis of the customers estimate....to the point feeling like I am estimating the job and not them. Not true of course as there is a lot more too it, but if a good % of the quotes don't convert, I could see this getting tiresome and probably not something my current pricing allows for.

My current pricing model is "get cut file / cut / bill" over 50% of the time. Occasionally I will quote but usually my existing customers have a decent idea of the cost and their sell price and trust me to be fair about it....ends up less time consuming for me and cheaper for them.

So, 1st step is to tighten up my estimation procedures on the work I can do right now. I have a custom finishing shop down the street that I might want to touch base with too. We have used before for some high end store signage (with decent volume of pcs), but small random letter painting I suspect they will not want to do.

Called the broker just to see what is what.

 

[letterworks]

Reviving this thread of mine as the purchase is going to happen.... eventually. The whole process has been slower than paint drying on a foggy day.

The price is asset value only as the one and only employee has left and isn't coming back. That may be ok given the sales volume and her apparent tendency to stick to old methods perhaps a little too much.

So, instead of her approval of the necessary quality, I have started experimenting and painting at my shop. Not with the solvent based "good stuff" I will have access to soon but something that's water based.

Since nice styrofoam is a niche of theirs I have been focusing on that. Fortunately, their pricing for that work seems ok too. Not priced ideally for how they where doing it perhaps but ok for my methods.

The waterborne paint I'm testing of course is a great option for the styrofoam as you can't use the good stuff anyways. I've done testing for quality, testing for time, and a little torture testing for heat and adhesion and the paint seems great. The foam was distorting under the paint without peeling or blistering and the paint mfg reps say it's as good as the previous method for fading.

Their pricing on acrylic letters wasn't good but it seems totally doable to be more competitive and of course cutting acrylic is what I do now so I'm quite good at it.

I have also gotten their method for edge filling sintra / komacel which they offered alongside acrylic letters. This pricing also isn't competitive with Gemini acrylic letters.

So while I have been practicing the technique I still don't really see the point for anything that acrylic is cheaper (ie anything smaller than 24-30" high letters there seems to be no point).

The filling is fine, it's the sanding it smooth doesn't make sense until a) the price of the komacel makes up the labour time and b) power tools reduce the labour time. Regardless, I can do it if any there is legacy customer demand for it and for larger letters acrylic starts having some

I guess that the good news for me is that the painting is going best case. My equipment, while not as good as the place I'm buying, seems to be good enough to practice and maybe good enough period. Feedback from a few fast signs locations has been good.

I have a hunch that I should get good at aluminum letters too, but I'm leaving that until after the sale completes.

The plan to offer more "cut and ready quick" options will remain, but some options maybe be easier / cheaper to paint that stocking special materials, even if they would not quite be as quick.

Anyways, that's the update. Still curious to know what the most common dimensional letter jobs might be (size wise / material wise). Also curious as to what the audience here might think would be good samples to send out to the local shops.

 

[kcollinsdesign]

I have dozens of sources for routed dimensional letters. Gemini has been the most reliable for acrylic, composite, and metal with high quality and consistently good service. I use other sources for HDU foam and cedar (yes, cedar is still very popular in the midwest). Most of my clients give me plenty of lead time for dimensional signs and letters; if they want them instantly I will usually decline the job (a big red flag for me).

Routers for signmaking were oversold with promises of huge profits and untapped markets. You can pick them up used for a tenth of their original cost. Routing on a CNC machine is easy; painting is the hard part. I can't have a painting facility (acrylic polyurethane) in my town without spending un-godly sums for ventilation and air exhaust quality controls (I don't want to breathe the stuff either). Modern painting facilities that do high volume are safer and are far more efficient. I don't have the business to build a $1.5M plant and make it profitable in my city of 100,000. It makes more sense for me just to order dimensional sign components from trusted, established fabricators.

Another thing to consider is that if your market is not local, you will be shipping letters. If shipping is a hassle for buyers, it is much more of a hassle for shippers! It will be hard to negotiate competitive shipping rates if you are not doing at least $2M - $3M in shipable product. The big players will eat you up on shipping!

If these kinds of production numbers scare you off, you might want to scale back your plans. If you have the skills and knowhow to run a large fabrication facility, you could probably find a job with one of the big boys that pays well into six figures without investing a cent. If you still want to be the your own boss, and have the money to buy in, then who am I to spoil your dreams? Good luck!

 

[letterworks]

Well, they have the paint booth set up, that's #1 reason I'm buying them and not just growing organically into doing painting. If you didn't read earlier, we already do letter work and so I'm not new to business nor new to this business.

And now that I've tried painting I'm not finding in as hard or intimidating as it might have been. Of course if I grow this (back to being) big enough to hire people that's a different test.

Shipping should be in my favor, to a point. Western Canada sucks to get product to quickly or cheaply. The feedback from customers is that Gemini (Canada) free shipping (Canpar in Canada) isn't reliable and is best shipped FedEx or UPS

At least for the local market being local myself will help. It does limit the market area though but that's not any immediate problem, this place was always serving the local market anyway.

You are exactly right that lots of options exist, even if fewer out this way. So, the goal is simply to get pricing tighter, production tighter, and try and get back the business that's been lost. Eventually we can see what type of work might be competitive for customers further away.

Quoted the first "real" job today even though I still need to complete the sale. This was after I dropped off a sample of my work to a regular customer on Friday. The product got an enthusiastic reception for the quality, so to me that's a good start.

 

[rjssigns]

Well, they have the paint booth set up, that's #1 reason I'm buying them and not just growing organically into doing painting. If you didn't read earlier, we already do letter work and so I'm not new to business nor new to this business.

And now that I've tried painting I'm not finding in as hard or intimidating as it might have been. Of course if I grow this (back to being) big enough to hire people that's a different test.

Shipping should be in my favor, to a point. Western Canada sucks to get product to quickly or cheaply. The feedback from customers is that Gemini (Canada) free shipping (Canpar in Canada) isn't reliable and is best shipped FedEx or UPS

At least for the local market being local myself will help. It does limit the market area though but that's not any immediate problem, this place was always serving the local market anyway.

You are exactly right that lots of options exist, even if fewer out this way. So, the goal is simply to get pricing tighter, production tighter, and try and get back the business that's been lost. Eventually we can see what type of work might be competitive for customers further away.

Quoted the first "real" job today even though I still need to complete the sale. This was after I dropped off a sample of my work to a regular customer on Friday. The product got an enthusiastic reception for the quality, so to me that's a good start.

Nice. Please keep posting on your progress. I find it interesting, especially the paint part. What type of booth? Whose paint system? Is there an existing mixing bank and scales?

 

[letterworks]

Nice. Please keep posting on your progress. I find it interesting, especially the paint part. What type of booth? Whose paint system? Is there an existing mixing bank and scales?

I think it's a cross draft style booth, car sized, fairly simple I guess but licenced, and has fire suppression equipment.

Air compressor is (I think) a screw driven unit with built in air dryer ....a heck of a better unit that my fab shop has. There is a reason I'm practicing painting with a turbine hvlp unit, my compressor isn't up to do painting!

Mathews paint system (polyurethane) with paint stand (bank) and mixing scale. Most if not all satin if I recall.

Gun cleaner rig, multiple guns too.

 

[rjssigns]

I think it's a cross draft style booth, car sized, fairly simple I guess but licenced, and has fire suppression equipment.

Air compressor is (I think) a screw driven unit with built in air dryer ....a heck of a better unit that my fab shop has. There is a reason I'm practicing painting with a turbine hvlp unit, my compressor isn't up to do painting!

Mathews paint system (polyurethane) with paint stand (bank) and mixing scale. Most if not all satin if I recall.

Gun cleaner rig, multiple guns too.

Oooooh, sounds nice. We're looking for land to build our retirement barndo with huge shop. Wife gave me that look and said you're going to build a paint booth aren't you? Can't get anything past her anymore...

 

[Gino]

Oooooh, sounds nice. We're looking for land to build our retirement barndo with huge shop. Wife gave me that look and said you're going to build a paint booth aren't you? Can't get anything past her anymore...

You just look at her and say. . . . . . . . Booth ?? We aint got no booth. We don need no booth. We don hafta have no stinkin' booth.

 

[Boudica]

And Gino wonders why he gets looks with Daggers coming from his wife's eyes...

 

[Gino]

I know the look and totally understand it. It's the other fools that try to get away with it.......................

 

[Notarealsignguy]

I think it's a cross draft style booth, car sized, fairly simple I guess but licenced, and has fire suppression equipment.

Air compressor is (I think) a screw driven unit with built in air dryer ....a heck of a better unit that my fab shop has. There is a reason I'm practicing painting with a turbine hvlp unit, my compressor isn't up to do painting!

Mathews paint system (polyurethane) with paint stand (bank) and mixing scale. Most if not all satin if I recall.

Gun cleaner rig, multiple guns too.

We have 2 crossdraft booths. One 30' one 50'. If you have multiple colors, spread them out a little and throw a drop cloth over the stuff towards the front. Spray the back, then move forward. You'd be surprised but the over spray really doesn't hit the stuff on the backside and it lets you utilize the space better. We drop cloth the front parts so the overspray from the rear doesn't make the surface rough.
Sounds like you bought into a good setup to expand your business.

 

[letterworks]

This thing is crazy. Waiting on the landlord to agree to me taking over the lease.....now they want 33% increase and not month to month as current. 33% is above market and our market is crazy high as is. I can handle (mentally) half the increase if we stay month to month as it's a) the actual market rate even if it's high and b) I have no idea how much the booth will get used. But really, I could throw $1000/month at a body shop to use their booth 1 day a week (bring my own gun and paint) and still be ahead at the current level of business.

It's insane. Not as insane as some other new build units around here that are trying to rent for almost 10K per month for less space I am in right (4800sqft with mezz), but still pretty insane for what is by all accounts a non-convenient location.

I've only be talking to one customer I already knew about the pending sale....he just went ahead with 4 orders and I still don't know if I can take over the actual space! I'm sure I can get the current guy to paint them one way or the other, but I did start quoting on the assumption I could actually complete the deal.

I seriously may have to buy the assets, pay the current owner the rent money for however long I need to / can get away with that, and plan on moving or selling everything quickly. Not what I was thinking even yesterday!

Is it worth the hassle.....I hope so!

 

[letterworks]

Well, after mulling over the problem for too long. I've decided on plan B. Pay the sellers enough to cover the rent so as to keep the deal alive but gain full access to the shop to learn the equipment better (learn the ins and outs of the axyz routers and the Mathews paint system in particular). They don't loose money on rent and the deal stays on hold until a proper plan of either staying or leaving comes into place.

Plan C is buying two sea cans and stuffing them with the shop and storming them behind my shop, then using my own equipment / find some paint booth time. But plan C sort of sucks.

 

[Johnny Best]

This has been some journey for you. I wish you great succes.

 

[garyroy]

The landlord might realize that moving a paint booth your size is super expensive, so he's socking it to you on the rent.
4800 sq ft where I'm from, north of Atlanta, would be about $4800/month. ($12/sq ft)
Rent can kill you if it gets too high. The landlord becomes your partner.
Search out some other locations as a contingency.