Exit Strategy for Sign Business

[Ginger]

After owning my own sign business for 5 years we are looking to move on to other things. My question is where do I begin with selling the business? I am pretty open to options/advise/suggestions. It is a two-to-three person vinyl shop located in a mid-sized town in west central Ohio.


Thanks!
Ginger

 

[Billct2]

Call a business broker

 

[signswi]

Good luck a vinyl shop is generally only worth the customer base + staff, if you're splitting up the staff you don't have a lot. Call a business broker. You'll need a complete inventory, gross and profit for the entire time you've been open, overhead costs, customer lists, the whole 9-yards.

This should probably be in the business forum.

 

[SignTech]

Not worth much unfortunately .... I ended up selling for about 5 grand total. Mostly in pieces.

 

[Mosh]

5 years? If you don't mind me asking is why after only 5 years are you done? It took me
8-10 years to get were I thought I had something.

 

[TyrantDesigner]

Unfortunately after 5 years you're pretty much just selling the equipment.

like others have said, brokers will work. otherwise find someone looking to start up, sell them the whole package of what you have in equipment.

 

[houseofgrafix]

list of stuff for sale?

 

[Gino]

Most people will ask why you're selling if things are going well.

You should get in touch with your accountant and go over what your business is worth in income and inventory and work up some numbers.


Personally, I don't think I'd buy a business..... especially if you're looking to sell. Those customers are going to have to go somewhere, and if I'm starting up a business, why should I pay you for them when I can probably get a small percentage of them for free. Unless you stay on with the new buyer, most customers will look for someone else anyway. You'd need to make a slow transition to make it look legit for the new buyer and don't announce what took place. Let them slowly work themselves into the picture and the take-over will be smooth and easy.

 

[Letterbox Mike]

Unfortunately after 5 years you're pretty much just selling the equipment.

like others have said, brokers will work. otherwise find someone looking to start up, sell them the whole package of what you have in equipment.

+1. In reality, the value of your business is probably only what the equipment is worth, you personally are responsible for most of it's value. When you leave, so does most of the value. If you have managers and department heads and a sales force in place that makes the place run like a well oiled machine with or without you that's another story. To get decent money, you need to be structured so you can leave the company one day and a new owner can come in the next and business never skips a beat. This isn't the case with most smaller shops, unfortunately.

 

[Pat Whatley]

Good luck a vinyl shop is generally only worth the customer base + staff, if you're splitting up the staff you don't have a lot.

Customer list is worthless unless there are some iron-clad contracts in place for future work, something most sign shops won't have.

 

[bayshorecreations]

Unfortunately the value is in the equipment these days. Around here it doesn't matter if you have been in business 5 years or 15 years.

 

[signswi]

Customer list is worthless unless there are some iron-clad contracts in place for future work, something most sign shops won't have.

That's kind of the point . A 3 person shop is going to have a really tough time selling, as pointed out above it needs to be a place where one owner can step in as the last steps out and not much changes. Same goes for any business exit. I didn't mention the equipment as if all you're doing is selling used equipment...you're selling used equipment, not a business. If you don't have value beyond that...there isn't anything to sell.

 

[Pat Whatley]

Just from personal experience your best bet may be to sell it to a current employee. I bought my shop from the previous owners for more than anyone in their right mind would have given them. I worked in it 16 years, I knew it's potential, all the customers were used to dealing with me, and I knew exactly how the finances worked out.

 

[signswi]

That is probably the best bet other than parting it out into equipment only, good suggestion.

 

[threeputt]

We just recently purchased a business in December. Lock, stock and barrel.

It was an awards, trophy and engraving business. Fifteen years old.

Really nice fit for our existing sign shop.

I'll tell you what I had an eye on when I bought it.... if that'll help you sell your operation.

Accounts: I was interested in the quality of the account. (tons of schools, coaches, small and large businesses, how much they did annually, etc.)

Records: I was shown how the business keeps track of things. The awards and trophy business is a huge "you did it for us last year, here we are again type of business". So I wanted to see how things were archived, and of course the paper invoices, job orders, etc.

Inventory: How much of it, how current it is. (styles change and this kind of inventory can grow stale)

Equipment: Age and general condition. Is it top of the line or some obscure manufacturer?

Software: Wished I would have looked closer at this part. We ended up having to spend to upgrade everything. Some compatibility issues, too.

Displays: I purchased all of the counters and displays. It was all good and I didn't change a whole lot there. It's definetly a consideration.

Of course the legals were all taken care of by professionals. (lawyers, accountants, insurance guy) No unknowns.

I paid more for it than the sum total of the equipment and inventory, sure, but it's nice to have fifteen to twenty people coming in the door everyday asking for additional work since "last year". That part is nice.

On balance, have your stuff together. Be able to answer, and be prepared to verify all statements made by you in response to a buyer's question.

Don't lie, you can get yourself in a world of hurt by mis-representing things.

Just my advice, hope it helps. Good luck.

 

[GypsyGraphics]

ginger, don't have anything better to offer, advice wise, than the posters above.... just wanted to wish you luck in whatever the next venture or adventure is for you. do you already have something else in mind?

wishing the best for you,
xoxo gg

 

[brush1]

Ginger
I sold in 2005 (I know....5 years ago) 6 years old business with not expensive eqipment (Epson 9600, Graphtec 30", Daige laminator, panel saw, Gerber software, CorelDraw and all small tools what we need, not much furniture in this small space). Lease for 645 sqft was around $2500 month. In this shop I was only emplyee (not native English spiker) for six digit number. Buyer paid extra for inventory (around $10K). I hired broker. I put it on market in January and deal was closed in June. I had all records....buyer was checking it with his own accountant.
I moved to another state and opened existing business in September.
Don't give up. You never know. Try sell first and follow all threeputt advices......The most important.....never lie. Good luck.

 

[TyrantDesigner]

if I'm starting up a business, why should I pay you for them when I can probably get a small percentage of them for free.

If it were me and I was buying a company as a start up ... it's not for the name or previous business, it's for the equipment. most employees will leave when a company sells, and if you buy a place for it's name ... you buy it's reputation (good ... AND bad) Sure the client list would be nice, but really it's not the important part.

 

[Just Another Sign Guy]

There simply isn't enough information here to give a real good reply.

if your business is profitable this is a whole different scenario than coming up with an exit strategy than if you are operating at a loss.

if it is profitable...how profitable is it (please, don't answer that here..it isn't necessary) if you have a self sufficient, profit generating machine on your hands...there are people that will buy your business, QUICKLY.

if it is not profitable this is a whole other scenario.

there simply is not enough information here to give a good answer.

what is a business worth? whatever someone will pay for it. however, there are some general 'rules of thumb'

i have seen businesses that have never turned a profit sell for amounts of money that still make my head spin..and i've seen people sell very profitable businesses for much less than they should have for a variety of reasons. get your books in order. make a detailed list of your assets and liabilities.

good luck

 

[Mosh]

Customers are not loyal in the day of the internet. I have a hard time keeping the most loyal customers happy. So customer lists are a thing of the past.
all but the ones I do custom stuff for, and they won't feed the beast, you need the bread and butter customer for that. AND if you are only doing the custom stuff, they are coming for "your" work, not the jabroni you get to buy to out.