Leasing?

[JAMEY]

I have around $5000 for startup. Right now I have nothing and no experience.
I've played with a lot of photo programs over the years and people say I have a good eye for logo design. I've never worked with vector images and such before though.

I was considering leasing equipment for startup instead of just going with a basic cutter and having one service. Not sure if it's a good idea or not....but I do want to have a serious go at the business. I would like to be able to do wraps, cuts, atv/motorcycle graphics kits, and more. By leasing...I may be able to do this equipment wise.

I would also attend a vehicle wrap class and maybe some others for signing too if they are out there. I seen Fellers' wrap class and it looks interesting.

I don't want to over whelm myself...but want good business.

I would like to know if there are any horrible leasing programs to stay away from.

 

[Pro Image]

www.gogenevacapital.com...................

I have a Valuejet leased thought them.................

I think (my business) that leasing a printer is the way to go............3 years is what mine is on with 10% buyout........With the way technology is going it will be out of date in 3 years anyway..........

 

[quikseps]

IMO...try to avoid leasing if at all possible. They'll kill you on the rate unless your credit is A1+. Plus, equipment such as wide-format inkjets sometimes don't qualify for the best rates since their considered a riskier lease due to a very accelerated rate of depreciation when compared to other equipment.

Leasing is great with large capital equipment of $100K+ but if your credit is really good and you're only looking at maybe $25K or so...most major banks offer unsecured business lines of credit at very low interest rates...sometimes as-low-as 0% for a year or more and when that intro period expires, most likely you can flip the balance to another card(s). And even if you can't get a 0% deal on a big credit line, paying a credit card 12% on is better than leasing....especially since if business gets good, "You Can Pay The Loan Off"...much unlike a lease where you're obligated to make EVERY PAYMENT....no such animal as an early payoff.

Leasing had a big tax advantage years ago but now, with the new tax structure allowing a full 100% write-off of capital equipment, etc. up to $100,000 in a single tax year, most, if not all of leasing's advantages are now gone.

 

[weaselboogie]

I started up my business with $4000. I bought a roland cutter an inexpensive refurbished dell and vinyl. No, lease, no debt.
I worked out of my house for 3 months, rented for 2 years and now am closing on a 2400 sq ft building next week. So yes its doable. ....

BUT what I had when I started and what you don't is experience and that could very well be your downfall.

 

[iSign]

Weasel is right about the benefits of experience. Even business experience could be helpful, but I think a lot of sign employees turned to signshop owners without any business experience, and still did ok, if we learned that the business side is as well worth an intentional effort at self-education as the sign making side of things.

I think you have a narrow vision of what appeals to you about this industry, & I think it is unrealistic to hope to situate your self in that specialty market with your budget. By narrow, I don't mean uninformed, I mean the specialized focus on auto-graphics and wraps, as opposed to alll signs in general.

Wraps are not easy to do, so starting a business without any vinyl application experience, no money for equipment to produce wrap graphics, and virtually no existing customer base (like you'd have if you were buying an existing business) ...you are looking at a serious uphill battle.

Sure, being an entrepreneur is always a challenge, and no one would tell you to become one if you were hoping for a walk in the park... but at the same time, I think you could build your way to that goal by persuing smaller goals first.

If you dont want to go work as an employee in this industry first (which would be wise in my opinion) then at least study the design aspects of the sign business as it demands considerations that are uniquely different from graphic design in general. Then get top quality vinyl & a vinyl plotter, and take on all signs jobs that walk in the door.

You could design a wrap for yourself, & purchase prints from sources here or elsewhere & see what it's all about on your own vehicle.

You may not want to specialize in wraps after doing one.. OR... you may want to, but not be able to pull in the work... either way, building a strong foundation of a business based on the broader SIGNS category may help you stay in the black while you build experience, brand recognition & the reputation that goes with it, and a ever expanding loyal market share helping promote your business.

 

[JAMEY]

Thanks...of course I will look for all sign business. I guess I could do like you said and design the wrap or print, then order it from a reputable printer. As a matter of fact, I could order any printed material from a reputable printer.

Start off with just a good cutter and work on my experience. I also plan to take a wrapping class to become Fellers Certified.

And yes...my love will be for the vehicle graphics bar none...but will do anything I can regardless.

 

[iSign]

As a matter of fact, I could order any printed material from a reputable printer.

That's what I did, 10 years ago, I started subbing out all my printing work (edge printing at that time) and I built up my demand, & my reputation in my market, as a digital printing provider, as well as making the adjustment in my design style, to take advantage of print graphic capabilities after years of designing for cut vinyl... so by the time i decided to pull the trigger on $25K worth of equipment, I already had an existing client base ordering those products from me. It worked out well for me in that the demand just grew and grew when I began printing in house... but had I bought the printer 3 years earlier, there might have been some lean months trying to make the lease payment.

 

[Mikew]

We looked into getting a lease for a $20,0000 piece of equipment. At the end of the lease we would have paid back $32,000. Way too expensive for our blood. Without a great business credit rating you're gonna pay alot of interest.
Make friends with local sign businesses and use them to do the work you don't have the equipment for.
Good luck in your new business!

 

[KR3signguy]

Before you jump into a business, I would work in the environment for a while & soak up the knowlege. Plus, you can pretty much forget about ever designing a logo in photoshop. Good luck.

 

[JAMEY]

Easier said than done...finding a job in the business in upstate NY.

 

[geb]

I can't think of the name, but there is a good wrapping company in Vermont.

Also, check out www.graphitek.com, probably your closest supplier, and a good one in my book.

George

 

[Pro Signs & Graphix]

It is obvious that you have the enthusiasm, and I do not think anybody will question that. It is also obvious that you are serious. What is not clear is if you truly have a clear understanding of the trade. This is not meant to discourage you by any means.

You admit that you have never worked with any vector-based software. That is "almost-must" in this business. I use the word almost because there are many many avenues than just signs, but that is where it predominantly starts.

You also mention that there is a lack of work, or sign shops within close proximity, or at least any busy enough to hire help. You must ask yourself why that is. It cannot be because nobody has not already thought of opening a shop. Another business point is that unless you have some other type of financial backing/source, $5k can leave you severely under capitalized - the number one reason of start-up failures.

My suggestions would be:

1. Keep your money in the bank (as much as you can because there are sorts of miscellaneous items/tools/supplies that will be needed for various jobs that come up.)

2. Purchase Corel or Illustrator and familiarize yourself with the operation of the software.

3. Purchase a copy of Mike Stevens book.

4. Purchase a name-brand plotter, and start learning.

5. Keep your overhead as low as possible.

There is no need to go out on the line for $20k or better, for something you know nothing of (not an insult). That could be a recipe for disaster. If you are successful, which there is very good possibility, you may very well be able to purchase you equipment for cash, or at least have a substantial down-stroke. Some leases and leasing companies can be nasty. Very often it costs an arm, or two, to even buy one out - if they allow you to.

Truth be known, a person CAN actually be in the sign business and never actually own one piece of equipment (there are literally hundreds of people lining up for "next to nothing" sublet work.

Keep researching. Take it sloooow. Do not get over-zealous, and do not allow desperation to creep up.

Good luck!

 

[high impact]

My recommendation - Slow down!

build your business. You have a lot more to learn than you may realize - sign sales - must know numerous techniques and materials, sign design - not as easy as it looks, sign production - learning how to, business aspect - utterly important or you will not last two years.

Take your time and build your business slowly but solid. Start out with die cut vinyl and a brand name cutter. Sub out prints if you need to. Equipment and inventory will cost more than you realize - ask me how I know. ;-)

Even if you get a part-time job in a sign shop and start out part-time on your own you will be far ahead in your education. I like Fellers but I haven't seen anything their certification accomplishes yet other than some training. I wouldn't recommend it YET anyway.

 

[ChicagoGraphics]

If you can afford buying your equipment out right, do it. Leasing will only having you pay much more then the actual cost. Or get a line of credit from a bank, if you have great credit, you can apply for a no doc. line of credit. Plus with having a line of credit, you will allways have money there if you need to expand even futher plus the banks will add to your line.

 

[tamiya]

Might just chip in a little...

Have you got a Business Plan all written out?
Complete with budgets & cashflow forecasts for the next 3/5/10 yrs?
Long list lined up for work available?

If no... umm, good luck with getting any financing.

Was a Relationship Business Banker so I see it on that side of the fence too.
Unlike some other bankers, i've also done my time in the Credit department,
assessing leasing deals for signoff with a scarily-large sole credit discretion.

With only $5k to your name and assume no other real estate or substantial assets backing,
you'll need to be very lucky to find a sympathetic banker that will takeon a startup risk.

And i believe things have tightend up substantially in the past 6mths, what with current these subprime homeloan fiascos (essentially they circumvented the credit assessment dept).

 

[tamiya]

I would like to know if there are any horrible leasing programs to stay away from.

things to watch out for specifically...


1) check early repayment penalties.

The good coys charge nil or a token 'service' amt for early payout,
payout amt being the amortised loan balance at that day.

The bad coys can have charged entire year's interest on Day 1 and if you
payout early, you have to pay the whole term's interest even if paidout Day 2.


2) who owns the item at the end of term?

If the coy owns it, it doesn't necessarily have to agree to sell it to You.
They can sell it to anybody they want, at the going market value.

Best contracts have an assured payout eg 10% residual, pay & you own it.

The scummier coys might offer to 'continue' renting it to you indefinitely.


3) what happens if the equipment doesn't work or you can't make your payments??

sorry matey, that one's your headache. The Bank doesn't care, honestly.



Alternatives to leasing?

- lots of small biz now startup with creditcards, but careful not to
overencumber yourself. Here we effectively pay MINIMUM about 24-36%
of your outstanding balance every year, so factor that into your cashflow.

- find a biz partner with $$

etc etc

 

[JAMEY]

thanks

 

[ChicagoGraphics]

Never buy equipment on a credit card, unless you can pay it back within that first month. Before you know it the intrest will be more then the original price. If I knew you personaly I'd give you 3 year loan.

 

[weaselboogie]

Hey, we're all family here. I just got an investment tip that can't go wrong. Send a couple of bones my way.

:Big Laugh

 

[JAMEY]

Thanks for all the info. Another deal came to the table recently. 120K for a Franchise of Yipes. That would include training, all kinds of startup stuff, support, the auto accessories side and bedliners included. I could take a cheaper route too and only do the graphics part...with their full support. At 120k...I'd need a partner or two though.

Still tossing around all my options. I can learn Illustrator and Corel fast. I'll learn the tricks also...from reading. I don't mean to toot my own horn...but I taught myself many programs by reading reading reading. For example...learned Autocad 2007 over the summer to have a job offer in TX on a huge oil rig relocation project. And no...not moving to TX. I want to take some serious pride in my work.

Still tossing around just starting with a cutter too...those are around 5k for a good one though.