Buying A Sign Business

[Westbound31]

Hey everyone, my names Matt, I'm new to the forum. I've joined this site as the owner of a sign business that I have been doing CNC contracting work for has asked me if I wanted to buy his business. He was been in business for over 50 years, is well established in the area and surrounding areas and does not have kids of his own who are interested in buying his business. He figured he would just run this business until he retired but then I came along and he would rather see the business continue on rather than close up once he leaves.

I started a very small CNC sign business in 2020 just before covid as a source of side income. My business grew to the point of buying a larger and more professional CNC and quickly replaced my main income. I've been constantly looking for ways to expand my business and that's when I reached out to larger sign shops in my area to see if they needed any contract work done. I am very interested in buying his business. He does vinyl, large business signs and a little bit of everything in between. He has clients such as Ryder where he installs the vinyl decals on their new box trucks. I would be looking to grow the business to the point where I can hire a manager to run the shop and employees to do the work. Right now he basically outsources all of his sign making but I would be interested in bringing back in house manufacturing.

I'm posting this thread to get some input from the more experiences business owners in this industry as to what types of questions I should be asking this owner. Anything will be helpful especially from those who have experience buying a sign making business. I'm looking to learn as much as I possibly can and exhaust every resource available for learning what I can about this industry. My little business has served me well but I just got married last July, the wife and I are looking to buy our first home and have kids and a major growth like this is exactly what we need. Plus I'm really excited about the opportunity. Thanks in advance for your input!

 

[Billct2]

Have someone experienced in business evaluation put a number on it's worth.

 

[2B]

Get his books and have your CPA or a CPA with business knowledge review the numbers
ideally 5+ years,

How many of his customers are active?
Do any of his customers have a contract that only he can be used for products / services?
Is his primary income returning orders or new orders?
Is his customer base growing, static, or declining?
Do his customers know he is currently outsourcing and who he is outsourcing to?
Do they know he is looking to retire?
Why are they currently using him? customer service or price?
Do you have enough time to run 2 businesses, be newly married, and start a family?
How long would he stay to train and show how he operates?

 

[Westbound31]

Thanks for the reply 2B! Some great questions to ask there that I haven't thought to ask yet. For the last two questions, the business I currently run should easily be absorbed into this business as the two are very similar, his is just well established and on a larger scale. He has said that he would stay one for a full year to help me out with the transition. He has already started training me and we've been working together between our two businesses for over a year now.

 

[ADVANCED DISPLAY]

sounds like a good guy. Even so, I'd get an official time-table on paper to sign, as well as a 5 year non compete. Don't let him fuck you over on inventory either (happened to me)

 

[Westbound31]

Thanks for the response. I plan on getting an attorney to make sure everything is written up and is in order once we have all the details worked out. I hadn't thought of a 5 year non-compete but definitely will consider that. What are some precautions I can take to make sure I don't get screwed over on inventory?

 

[ADVANCED DISPLAY]

Just make him do inventory and get a number for you to agree to before you sign the closing documents.

 

[Stacey K]

Sounds like a great opportunity if the price is right!

I'm curious what he does in-house and what he outsources. Some of the guys on here outsource all their printed goods but do all the installations. Some outsource installations but do the prep work. Is he more of a one-man operation or does he already have full-time employees that would stay on? I'm only asking because I hate to see you buy 50 years of junk that isn't relevant in today's sign world. If it's a one-man operation then a computer, a vinyl printer, cutter, laminator and a few rolls of vinyl is all you need to get started. You certainly don't need 100 rolls of colored calendared vinyl, banner blanks, etc. Of course there's a lot of other small equipment that is needed and the customers etc. Just make sure the inventory you buy is something that is actually used in 2023. I'm picturing one guy surrounded by 50 years of paint, banner blanks, rolls of calendared vinyl and all sorts of stuff that isn't used anymore - hopefully that's not the case LOL!!!

 

[gnubler]

You certainly don't need 100 rolls of colored calendared vinyl, banner blanks, etc. Of course there's a lot of other small equipment that is needed and the customers etc. Just make sure the inventory you buy is something that is actually used in 2023. I'm picturing one guy surrounded by 50 years of paint, banner blanks, rolls of calendared vinyl and all sorts of stuff that isn't used anymore - hopefully that's not the case LOL!!!

This happened to me last year - a woman's dad died and apparently he had been in the sign business. She had loaded a bunch of stuff in the back of her car and went around to all the sign shops to see if they wanted to buy it...old unbranded rolls of 24" vinyl, banner & Coro blanks, etc. She wanted something like $1500 for everything and I said 'no thanks'.

 

[greysquirrel]

Just because you are buying his business, doesn't necessarily translate to retaining his clients. Are any of them under contract? If so you want to speak with them to see if they will honor the transfer of the contract to you. It does not sound like he has any printing equipment if outsourcing. But I would have a local service company evaluate any equipment you are planning on purchasing. they will give you an accurate assessment and value. Don't allow him or her to hire the inspector, you need them to be working for you. Does he own or lease his facility? Adding that to the mix could help with retaining clients.

 

[Stacey K]

OP - don't let us discourage you, we just don't know as much information as you do. Feel free to post more info or the specifics about equipment etc. Many on here would be happy to help you via PM about specifics.

Gnubler and myself are one-lady shops so we might not be as much help as others on here that have larger shops.

This could be an excellent opportunity for you!

 

[LarryB]

Make sure you buying it as an asset sale only and you are not responsible for any of his old debts or obligations.

 

[Westbound31]

I really appreciate all these responses from everyone! The seller has stayed up to date in the business. He outsources CNC stuff and labor for sign installations. Running the CNC business I have now, I might consider doing more in house CNC manufacturing and only outsourcing the really big stuff. All the in house stuff he does now is vinyl. One job hes been training me on the past few weeks has been for the company Ryder. He cuts out the vinyl in house and installs them on the box trucks on site. There isn't any prehistoric equipment or material inside his shop. As far as clients, I can definitely understand that some or possibly many may not stay with the company once its sold. This is part of the reason why he will be staying on for a full year. He said it would be to help with jobs and questions as well as introduce me to all of his clients. I'm hoping that being well established in our local area will help clients stay on. Nearly every single business in the town I live in and the surrounding towns have used him to make their signs. He has even done signs for the state for highways.

So to summarize, yes he does own vinyl printers/cutters and does not outsource this type of work. Larger CNC work is outsourced. The building is leased and not owned which is probably my biggest concern as the location itself has gotten him a lot of business. But being at the will of the building owner is definitely not a comfortable thing. Again, thank you everyone for the responses. He has started the process of meeting with his CPA to go over numbers and we will be meeting to discuss this together in the next few weeks so I will have more info for you all soon.

 

[Stacey K]

That sounds great! Please do keep us updated, sounds very exciting!

 

[DChorbowski]

I really appreciate all these responses from everyone! The seller has stayed up to date in the business. He outsources CNC stuff and labor for sign installations. Running the CNC business I have now, I might consider doing more in house CNC manufacturing and only outsourcing the really big stuff. All the in house stuff he does now is vinyl. One job hes been training me on the past few weeks has been for the company Ryder. He cuts out the vinyl in house and installs them on the box trucks on site. There isn't any prehistoric equipment or material inside his shop. As far as clients, I can definitely understand that some or possibly many may not stay with the company once its sold. This is part of the reason why he will be staying on for a full year. He said it would be to help with jobs and questions as well as introduce me to all of his clients. I'm hoping that being well established in our local area will help clients stay on. Nearly every single business in the town I live in and the surrounding towns have used him to make their signs. He has even done signs for the state for highways.

So to summarize, yes he does own vinyl printers/cutters and does not outsource this type of work. Larger CNC work is outsourced. The building is leased and not owned which is probably my biggest concern as the location itself has gotten him a lot of business. But being at the will of the building owner is definitely not a comfortable thing. Again, thank you everyone for the responses. He has started the process of meeting with his CPA to go over numbers and we will be meeting to discuss this together in the next few weeks so I will have more info for you all soon.

What equipment is part of the deal? How old is it? Is any of it leased? Has it been maintained and in good working order? Id personaly be wary of any machines more than 4-5 yrs old. If possible have a tech check out the machines and see where they stand.

 

[ProSignTN]

Sounds like you are in a great situation. First: it's not just print. It sounds closer to a real sign shop. Second: existing customers. (I've been doing this a long time, I don't bid anymore). Third: a full year of mentorship, priceless.

 

[TopFliteGraphics]

Sounds like the owner must be a good guy. I got into the sign business over 20 years ago when a source of mine offered to sell me his business and made me a offer I could not refuse (I was a print broker at the time and was one of his biggest clients). He trained me for several weeks on the equipment and software and then was available whenever I had a question - he bought his Father's business which was located right next door. 20+ years later, we are still friends and I love what I do

 

[Westbound31]

To DChorbowski, I will get all of that information at our next meeting coming up next week.

To ProSignTN, you are correct, it is not just a print shop but a sign focused shop. He has been running this business for 53 years so his clients are well established. The goal is to keep as many on as possible during the changeover which is why him staying on for a full year is completely priceless.

To TopFliteGraphics, I've been doing contract work for the owner for about two years and have gotten to know him. He is a very good guy, well known in the area and everyone speaks highly of him. That's one of the reasons why the name of the business will be staying the same. I don't plan on going into this with crazy new ideas and systems. It has been working well for him for 53 years and its not broken, theres not much sense at fixing it. I would like to eventually start doing CNC work in shop but for the first year or two, it will be status quo. I already own a CNC so it will really just be another added option. Happy to hear you had a similar situation and it worked out so well for you! If you had told me 4 years ago when I started my CNC business (which was just supposed to be a source of side income) that I would be buying this business, I wouldn't have believed it. I've definitely come to grow passionate about this industry.

 

[Johnny Best]

Westbound31, you seem like a smart guy and you will be fine running your new sign shop. Being a good business person and talented is a rarity in the sign business.

 

[gnubler]

Sounds like you are in a great situation. First: it's not just print. It sounds closer to a real sign shop. Second: existing customers. (I've been doing this a long time, I don't bid anymore). Third: a full year of mentorship, priceless.

100% agree. Boy I wish I could have had some hands-on help when I first started operations. I was in a similar situation where the previous owners were ready to retire and they wanted OUT, completely. Up until a couple months ago I hadn't heard a word from them for almost 3 years. Then one of them stopped by one day out of the blue and visited my shop for the first time...for about ten minutes before bolting. Sometimes retired means retired. So consider yourself lucky if the current/former owner is willing to help you get launched.

I have to rely on Gino and his gang here at Signs101 for tutelage, which comes with some abuse but I just brush it off. I've learned a lot from Youtube videos as well, mostly install and wrap techniques.