Texas_Signmaker
Very Active Signmaker
No mention of Tex and my BIG squeegee all the ladies like to hold in their hand?
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Buying A Sign Business
- Thread starter Westbound31
- Start date
Westbound31
New Member
Had another training session yesterday. We went to the shop so he could show me a full job start to finish. It was small job of printing and cutting some vinyls that were going onto a pickup truck that a client had dropped off in the parking lot. For the vinyl side of things, he has a Roland Soljet Pro III XC-540. He also has a smaller thermal printer that he doesn't really use much. He got plenty of calls during the day from returning customers and a few from new customers so I took that as a good sign. He has been meeting with his CPA to come up with numbers so we can have a sit down soon and discuss the financials. He bought the Roland brand new and I will get service records on that as well.
SGC
New Member
It was always the church clients or the old favors/special deals from the old owner that drove me bonkers haha.
Westbound31
New Member
So things are progressing, we are going to merge my current business with his business and then the process of completely buying him out will begin. We're working on a deal that will work well for his retirement as obviously it will be a pretty large cut in income for him to go from this business to social security. He unfortunately didn't plan very well for retirement but we will be working out that deal in the merger/buy out. Actually works out pretty well this way as he'll stick around for at least a year and I'll be taking over all of the smaller CNC signs that he currently outsources. Which is part of the plan for me going forward anyways, to bring back manufacturing to the business with my CNC background. Anything thats too large for my CNC will be outsourced for now but the plan is to invest in a larger machine and remove the need for much of the outsourcing.
SGC
New Member
Just don’t let feelings and emotions cloud the judgement of what it’s actually worth.
Have you gotten a breakdown of age of client base? These legacy businesses can sometimes be a real struggle when the millennial who knows how to use the internet takes over the buying position at the various businesses he deals with. If the age group is mostly gen x / bb, they still operate on the “I know a guy” mantra. Millennials and gen z do not.
Something to take into account.
TopFliteGraphics
New Member
Sounds like you've got a good plan there Westbound31. Congrats
Westbound31
New Member
Definitely a great consideration and I'll get a detailed breakdown on that soon. Right now his CPA is putting together a massive financial company file for me to go over with an accountant of my own. I have already looked at gross revenues and I'm happy with the business performance at the cursory level but will be going over everything in depth with a professional before making any final decisions. He has spent a lot of time working with independent marketing companies on getting his website top rated locally on Google. One of the biggest factors it seems in getting new customers is the location of the building which is right in downtown on a main street. Only issue is he doesn't own the building... so there's a lot of moving parts and a lot of considerations to make. He's been in business for 53 years so locally his business is well known and frequented by towns in the surrounding area. Getting those same people in the door while changing ownership will be key as well as taking into consideration that I should be looking for a permanent location sooner than later.
Westbound31
New Member
The buying price will still be the same but the timeline for complete purchase will be different. What I'm working on is finding a way to make it work for both of us. He just turned 70 and is ready to slow down. He doesn't want to see his business have to close once he leaves as he spent a lifetime building it which I completely understand. He's willing to stay on for a full year once I take ownership which should help retain current customers. Like I said, the buying price will be the same but the timeline to complete ownership will be adjusted. In the meantime, merging my business with this one will give me an immediate uptick in work and shift things over from small signs to large ones while also easing me into ownership.
White Haus
Not a Newbie
How's everything going with the transition? Hope everything worked out well and you guys are moving things along.
Westbound31
New Member
Thanks for reaching out White Haus. Unfortunately, things have not progressed. I think I may have mentioned that we had a discussion back in January/February after he took a trip and during that trip, took a good look at his personal financial situation. Admittedly, he discovered that he really does not have much in personal assets or in a retirement fund. That's when he mentioned that he didn't want to lose me in this deal and we should work on a way to combine his business with mine.
I gave that some effort after looking at the gross revenues he gave me for the last 3 years. But, it seems he is more of an absentee owner and has been a little hard to get a hold of this year. And that's fine, its his business which he started over 50 years ago and has grown it into a successful one. If he wants to be in the shop only as needed and then take off to the lakes or the golf course, he's earned that right. His business provides him a comfortable living and he didn't plan well for what comes after that.
But the absentee aspect is what started to make me question things a bit. Because I got several larger jobs during this time and I definitely needed help. I turned to him with all the experience he has but again, it was difficult to get in touch with him or to get responses. In turn, I ended up reaching out to another sign shop, this one half an hour away from me. I needed help on a job that I was taking on so I reached out in the hopes the owner of this other shop would answer some questions. Turns out, this guy has also been in business for over 50 years and is more than willing to share his knowledge with me as he reaches retirement having just reached his mid 60s.
We've been discussing my projects ever since, hes been extremely helpful and has helped me to land a $7k+ job that is getting signed off on this Wednesday. He has been eager to show me his shop and discuss his business situation, all the equipment he owns and the space he has leased for the last 30 years. Got me thinking that I may have an opportunity here to see if he might be interested in selling his business. And as it turns out, this is something he would like to discuss with me. Of the two businesses, on the surface level, I do like this second one better. It is not a job shop where everything gets outsourced as this first business is. This guy still does hand carving (in addition to CNC signage) and his shop just looked like a much larger scale of what I have. Lots of in progress signs, paint, supplies, etc. Whereas the first business shop looked more like a space to get vinyls printed. Nothing wrong with that, I just have much more interest in dimensional signs.
So so summarize... I have been working very hard to grow my modest sign business. And why am I looking to purchase an established business rather than try to get mine to the point of theirs? Two reasons; the first is simply the fact that purchasing an established business will be a more effective method at scaling than trying to go at this completely on my own. I get to leverage the experience of these old time sign makers while incorporating newer technologies and marketing strategies. I'm in the mindset of not making any drastic changes to a business that is performing well. The revenues for the last 3 years of the first sign shop average around $200k/year whereas this second sign shop averages around $500k. That's a big leap from where I'm at presently. And I understand I will probably not be able to retain some of the clients of the previous owner. But I hope to retain as much as I can by working with the present owner, meeting his clients, being present in the shop and not changing every single aspect of a business that is cashflowing.
The second reason for wanting to purchase a business rather than scale mine (though I will do everything I can to scale mine and am doing so now in case neither of these businesses work out for me) is that my wife and I are expecting our first baby in just a month now. My mindset has shifted heavily to "provider" mode and as I'm sure those of you here who are fathers know, it can be stressful in the beginning when you're doing your best to provide for your growing family.
Happy to answer any questions that anyone has regarding these two businesses and also my own situation. It's been a process to say the least. It was not my intention to own and operate a sign business. I built my first CNC and started taking orders just to provide some spare cash on the side. I never imagined it growing to the point of providing an income and I have really grown to love the dimensional signage industry. I have chosen to pursue this business full-time and I'm just looking to grow now and do the best I can for my family.
Matt
I gave that some effort after looking at the gross revenues he gave me for the last 3 years. But, it seems he is more of an absentee owner and has been a little hard to get a hold of this year. And that's fine, its his business which he started over 50 years ago and has grown it into a successful one. If he wants to be in the shop only as needed and then take off to the lakes or the golf course, he's earned that right. His business provides him a comfortable living and he didn't plan well for what comes after that.
But the absentee aspect is what started to make me question things a bit. Because I got several larger jobs during this time and I definitely needed help. I turned to him with all the experience he has but again, it was difficult to get in touch with him or to get responses. In turn, I ended up reaching out to another sign shop, this one half an hour away from me. I needed help on a job that I was taking on so I reached out in the hopes the owner of this other shop would answer some questions. Turns out, this guy has also been in business for over 50 years and is more than willing to share his knowledge with me as he reaches retirement having just reached his mid 60s.
We've been discussing my projects ever since, hes been extremely helpful and has helped me to land a $7k+ job that is getting signed off on this Wednesday. He has been eager to show me his shop and discuss his business situation, all the equipment he owns and the space he has leased for the last 30 years. Got me thinking that I may have an opportunity here to see if he might be interested in selling his business. And as it turns out, this is something he would like to discuss with me. Of the two businesses, on the surface level, I do like this second one better. It is not a job shop where everything gets outsourced as this first business is. This guy still does hand carving (in addition to CNC signage) and his shop just looked like a much larger scale of what I have. Lots of in progress signs, paint, supplies, etc. Whereas the first business shop looked more like a space to get vinyls printed. Nothing wrong with that, I just have much more interest in dimensional signs.
So so summarize... I have been working very hard to grow my modest sign business. And why am I looking to purchase an established business rather than try to get mine to the point of theirs? Two reasons; the first is simply the fact that purchasing an established business will be a more effective method at scaling than trying to go at this completely on my own. I get to leverage the experience of these old time sign makers while incorporating newer technologies and marketing strategies. I'm in the mindset of not making any drastic changes to a business that is performing well. The revenues for the last 3 years of the first sign shop average around $200k/year whereas this second sign shop averages around $500k. That's a big leap from where I'm at presently. And I understand I will probably not be able to retain some of the clients of the previous owner. But I hope to retain as much as I can by working with the present owner, meeting his clients, being present in the shop and not changing every single aspect of a business that is cashflowing.
The second reason for wanting to purchase a business rather than scale mine (though I will do everything I can to scale mine and am doing so now in case neither of these businesses work out for me) is that my wife and I are expecting our first baby in just a month now. My mindset has shifted heavily to "provider" mode and as I'm sure those of you here who are fathers know, it can be stressful in the beginning when you're doing your best to provide for your growing family.
Happy to answer any questions that anyone has regarding these two businesses and also my own situation. It's been a process to say the least. It was not my intention to own and operate a sign business. I built my first CNC and started taking orders just to provide some spare cash on the side. I never imagined it growing to the point of providing an income and I have really grown to love the dimensional signage industry. I have chosen to pursue this business full-time and I'm just looking to grow now and do the best I can for my family.
Matt
caribmike
Retired with a Side Hustle
I bought a print shop from a old timer who, at 70, had had enough after 30 years in the business. He had no kids and just wanted to get rid of it. My wife and I bought his business for about $100K twenty years ago. We've never once regretted it and continue to profit from it everyday. Today we're semi retired and run it as an outsource/drop ship business from our home office. Its still crazy profitable and super easy to run.
Westbound31
New Member
That's awesome Mike! Was hoping that would be the case in my situation. We'll see on this other shop. I haven't given up on the first business either, that could still be a potential purchase some years down the road. For now I'm looking for something to purchase sooner with the kiddo on the way.
Stacey K
I like making signs
Gosh, I feel bad for you! However - everything happens for a reason.
I'm a little concerned about the first business. The revenue is only 200k? How many employees does that include? I'm only one person and I will exceed that this year. And if I worked more hours I could certainly exceed it by a good chunk.
The second business seems more stable. If you work with the current owner and he introduces you to his clients, you should be able to retain a good amount of customers. It sounds like you have some new ideas and he has the knowledge of the business. He appears willing to work with you. I would work on buying business 2. Business 1 - when you buy it - he's going to be adios. This second guy would probably continue working for you possibly for years to come as something to puts around with.
I see no issue with you buying a business vs. starting from scratch IF as you state, they seller is willing to help you and YOU are a good worker (which I think you are). No need for drastic changes but I would certainly think plenty of small changes might be helpful. Small things like cleaning, organizing, labeling, etc. can make a big difference with efficiency. Take some time to figure out what you are best at and what you enjoy doing the most. That will lead your business in probably a slightly different direction than the current owner. We all enjoy something a bit different. Upgrading websites, FB, cleaning, organizing, scheduling software - all that stuff will take A LOT of time but it might be a good place to start until you know what aspects of the sign business you like best. Sometimes the customer interactions sway your likes and dislikes for certain things.
IE: Race cars
you might love designing them but dealing with those drivers isn't worth it!
I'm a little concerned about the first business. The revenue is only 200k? How many employees does that include? I'm only one person and I will exceed that this year. And if I worked more hours I could certainly exceed it by a good chunk.
The second business seems more stable. If you work with the current owner and he introduces you to his clients, you should be able to retain a good amount of customers. It sounds like you have some new ideas and he has the knowledge of the business. He appears willing to work with you. I would work on buying business 2. Business 1 - when you buy it - he's going to be adios. This second guy would probably continue working for you possibly for years to come as something to puts around with.
I see no issue with you buying a business vs. starting from scratch IF as you state, they seller is willing to help you and YOU are a good worker (which I think you are). No need for drastic changes but I would certainly think plenty of small changes might be helpful. Small things like cleaning, organizing, labeling, etc. can make a big difference with efficiency. Take some time to figure out what you are best at and what you enjoy doing the most. That will lead your business in probably a slightly different direction than the current owner. We all enjoy something a bit different. Upgrading websites, FB, cleaning, organizing, scheduling software - all that stuff will take A LOT of time but it might be a good place to start until you know what aspects of the sign business you like best. Sometimes the customer interactions sway your likes and dislikes for certain things.
IE: Race cars
you might love designing them but dealing with those drivers isn't worth it!
Westbound31
New Member
Things will work out but it can definitely be a little stressful at times.Gosh, I feel bad for you! However - everything happens for a reason.
I'm a little concerned about the first business. The revenue is only 200k? How many employees does that include? I'm only one person and I will exceed that this year. And if I worked more hours I could certainly exceed it by a good chunk.
The second business seems more stable. If you work with the current owner and he introduces you to his clients, you should be able to retain a good amount of customers. It sounds like you have some new ideas and he has the knowledge of the business. He appears willing to work with you. I would work on buying business 2. Business 1 - when you buy it - he's going to be adios. This second guy would probably continue working for you possibly for years to come as something to puts around with.
I see no issue with you buying a business vs. starting from scratch IF as you state, they seller is willing to help you and YOU are a good worker (which I think you are). No need for drastic changes but I would certainly think plenty of small changes might be helpful. Small things like cleaning, organizing, labeling, etc. can make a big difference with efficiency. Take some time to figure out what you are best at and what you enjoy doing the most. That will lead your business in probably a slightly different direction than the current owner. We all enjoy something a bit different. Upgrading websites, FB, cleaning, organizing, scheduling software - all that stuff will take A LOT of time but it might be a good place to start until you know what aspects of the sign business you like best. Sometimes the customer interactions sway your likes and dislikes for certain things.
IE: Race cars
I agree on the revenue numbers for the first business. The numbers he gave me (granted the economy and covid in 2020) were
2021.........$224,726.00
2022.........$198,853.00
2023.........$237,394.00
Based on the research I've done and the conversations I've had with people in the industry, the numbers definitely seemed low to me. No employees, just him. And my gut has been telling me that maybe I should look elsewhere while continuing to grow my business. I just happened to get lucky and contacted business 2 who is interested in discussing selling.
Agree wholeheartedly with your last statement about making lots of small changes. This is exactly how I would like to do things and I've experienced finding what I like in this industry by just being in it for the past 4 years as a small startup. Dimensional carved signage is definitely my main interest. I love designing signs and then making them a reality. Small changes will definitely benefit the business. I've seen too many businesses get sold to new owners who get a bit overzealous and changes everything drastically all at once and tank the business in just a year, sometimes less. This actually happened to a railroad I used to work for. The place ran flawlessly for 45 years, new ownership comes in and ran things status quo for the first two years and then made massive changes to everything. Seems like nothing there can go right anymore, all the old experienced employees left and the place is an absolute mess. Sad to see. But these are discussions I'd like to have with the owner when it comes to selling. I really would like to keep things as they are if they're working well and just make small changes here and there as needed, bring new marketing tactics to the business as well as updated equipment etc. I already own a CNC which would definitely streamline a lot of the smaller sign jobs he gets. There's room to grow without the business losing the identity its established over the last 50 years.
Texas_Signmaker
Very Active Signmaker
Those numbers seem low to me too. Excluding my project management business which is the primary money maker... my regular "sign shop" is just under $500k. That's me spending about 15-20 hours a week on it with some part time help. The second business at $500k seems more in line with what one person could max out with before needing to add employees. $500k means you should be bringing home $150-200k working by yourself.
I started my sign business while working full time and had a newborn as well. It's hard the first few years but after the third year I quit my day job, and by the 5th year I was living comfortably. Takes some serious grinding and money discipline. The baby years are overrated...they aint going to remember anyway.
I started my sign business while working full time and had a newborn as well. It's hard the first few years but after the third year I quit my day job, and by the 5th year I was living comfortably. Takes some serious grinding and money discipline. The baby years are overrated...they aint going to remember anyway.
Westbound31
New Member
Hey Tex. Yeah that's exactly what I've been shifting focus over to this second business. Is your project management business in the sign industry or something else? And these numbers you're giving me are right on track with the numbers I've gotten research wise so it's good to know I have a solid idea of what to expect.
I started 4 years ago, never meant it to be fulltime as it is now so I'm lucky I guess that I've gotten a bit of a head start but it is definitely a grind. My wife and I are very good savers and highly disciplined with money. We've managed to save a very good amount which we have in a high interest account. Very reassuring to have that account there, we hope we never need to dig into it but its there if we ever need it.
I will be working with this second business owner on my first large sign job. He helped me a ton along the way and has asked for nothing in return and I've offered. I expect conversations will happen as we work together on this job and he sees my work ethic and willingness to learn. I will keep you all posted as things progress with that.
I started 4 years ago, never meant it to be fulltime as it is now so I'm lucky I guess that I've gotten a bit of a head start but it is definitely a grind. My wife and I are very good savers and highly disciplined with money. We've managed to save a very good amount which we have in a high interest account. Very reassuring to have that account there, we hope we never need to dig into it but its there if we ever need it.
I will be working with this second business owner on my first large sign job. He helped me a ton along the way and has asked for nothing in return and I've offered. I expect conversations will happen as we work together on this job and he sees my work ethic and willingness to learn. I will keep you all posted as things progress with that.