Just In Might have to sell the business...

[visualeyez]

I have been in business for myself for 6 years now. My father was recently diagnosed with lung cancer so my family is relocating to a bigger city with better medical facilities. I am selling my business so I can also relocate. Would it be reasonable to ask 75K for everything below?

2,000 sq,ft, shop grandfathered in at $525/month with water, sewer.
HP Latex 110 54" printer with lots of media
Roland GX-300 plotter with optical registration & lots of Oracal 651
60" Laminator from USTech in florida
Riley Hopkins 6 color 4 station silkscreen carousel
Flash Dryer, Conveyor Dryer, 100 aluminum screens, exposure unit, etc.
5x20 work table
4 more 4x8 work tables
T-shirt Press, Hat Press, Saws, Sanders
4x16 Front Desk plus multiple display cases, computers, (newly rebuilt 500 sq.ft. showroom new carpet, lighting, paint, etc.)
30+ full sheets of substrate
Boatloads of clients, estimated 30-40% of local market.

I work 12 hour days, it's a lot of equipment and stress for one person, lol.

 

[visual800]

First off sorry for your misfortune and hope all ends well. Your a dedicated family man to do this.

Now for the brutal truth (dont take this personal and this is my opinion). Your equipment is used and as we all know used equipments value sucks. Basically what your selling is an established business in an established location THE ONLY thing right now that matters is how much money do you generate per month THAT will be your selling point. I do not expect you to post what you make per month or year but that will be the most important information for the sale of your shop. IF your shop brings over $100k per year than I would say $75k is a great price

The days of selling a business based on clients and equipment are over. Its all about your records and what your company makes and its growth over the last few years. Good Luck

 

[visualeyez]

Info available upon request, but I will say I generate over 100K in sales annually with basically no help. Could be double that with a single trained employee. Multiple contracts already in place, etc.

Would pay itself off in 2 years with a bit of skill and knowledge. On the Beautiful Oregon Coast, Literally a quarter mile from the beach, just off HWY 101.

 

[visual800]

than sir you might good to go! Best of luck to you

 

[Billct2]

You generate 100k in SALES? That may be good, but it's how much you keep in your pocket that will determine the value.

 

[billsines]

So yes, Billct2 is correct in his assessment, I once heard a businessman tell me he did 1,000,000 in sales in a certain year, then tell me his expenses were 950,000. That's a lot of cash you get to touch for a brief time.

But what I've heard other businessmen tell me is you take your cash at the end of the year, after you've paid your own salary, multiply it by 4-6, add your equipment and inventory back in, and that's what you can expect for a business. So if at the end of the year you have $10,000 and say, $20,000 in equipment and inventory, then you could reasonably expect to ask $60,000-$80,000. But I would ask a CPA, but you will have to pay for a business valuation.

What will help your multiplier is whether you can show growth over the last 6 years. I've heard typically a business valuation is more solid the more years you have under your belt, and if you have 3 or less years of sales information, good luck trying to find someone to buy your business. You see, the buyer is buying business potential. If you can show potential, you can maybe ask 6x your free cash rather than 4x. If your business is trending down, unfortunately you will not be able to ask for much.

 

[Gino]

I feel for your situation and like mentioned, it takes a mighty big person to keep family first. I commend you on that.

Anyway, there are a lotta variables.

First one...... what will keep all your present customers loyal to someone new they don't know, trust or have any information about ??

• That very thing, just happened to a local sign shop near to us and within 6 months, the new guy proved himself to be a schmuck. Didn't know diddly about business, signs or how to deal with people.

Next, nothing has a real re-sale value after a few years, especially your used equipment.
Next, what is your take home, not gross ??

• That one entails all of your expenses, overhead, proper insurances and whatnot.

Next, anyone in their right mind is gonna lowball that price and try to get you to drop..... considerably.

Good luck with your business venture and hope everything works out for your father.​

 

[Christian @ 2CT Media]

I'm sorry to hear about your father, Cancer is a indescriminate beast and I wish one day it would be eradicated.

As for your business me and my brother were in that position in 2015 after our father passed away from cancer. We ultimately decided to not sell after what we felt was a very unfortunate waste of our time. Basically it came down to people are buying your potential and your contracts. If they don't like your potential or feel your contracts aren't worth much they will either not offer or basically you end up having to pay them to take it.

I wish you luck on both fronts and in the end I hope you are your family are happy and healthy!

 

[Johnny Best]

Sounds like you have a good deal for someone who has always dreamed of starting their own business. You need to get an accountant to show good books and maybe you will have to train the new owners and show them the ropes for awhile as part of the deal. $75 k sounds reasonable for what you have, A husband and wife team could produce a good income along with SS.
Good luck with your sale and the health of your father.

 

[FireSprint.com]

Your equipment, layout, brand etc probably won't fetch more than about $15,000 at market without a profitable business behind it. If you think I'm wrong, then use whatever number you think is more accurate. Again this would be the eBay/Craigslist value of your equipment sold off piece by piece. Hold onto that number for now.

Do you work 60 hours a week? If so, you need to figure someone to replace you (Pay of maybe $50,000 a year, depending on your market, so that would cost closer to $75k after taxes and benefits).

Figure out how much take home pay you averaged over the last 3 years. If you have grown significantly, you can lean a little more towards recent years. You can include kickbacks like the cost of a vehicle, cell phones, business lunches, whatever you expensed that an employee generally wouldn't.

Now here's a basic formula for valuation of a company in this industry:

(Annual Take Home Pay - Manager's Wage) x 4 + Equipment Value = General Valuation

So if you took home $100,000 last year in pay and perks, I would figure you evaluation at $115,000.
But, If you only took home $45,000 last year in pay and perks, I would only figure your business to be worth the liquidated earnings on the assets ($15,000 in my example).

The trouble is that you are looking for an investor. Someone with $75,000 to invest is looking for a business with a system in place that makes money for themselves. No one wants to spend $75,000 just to plant themselves in a 60 hour per week job. It has to be making money before they put the 60 hours a week in.

I hope for the best both with your father and your business. These are just rough numbers and concepts from my experience. I could be, and often am wrong.

 

[BIG EASY DOES IT]

The trouble is that you are looking for an investor. Someone with $75,000 to invest is looking for a business with a system in place that makes money for themselves. No one wants to spend $75,000 just to plant themselves in a 60 hour per week job. It has to be making money before they put the 60 hours a week in.

What you could do is broker your customers to different shops and make a little side money.

 

[ddarlak]

It is going to be hard to come to grips that your not going to get anywhere near what you think it's worth. I would guess that 30K is about what you could expect to walk away with. maybe more if you can find an eager buyer.

100k in sales and old equipment isn't going to attract someone with 75k to invest.

just watch a few episodes of shark tank....I get that your not trying to get a shark, but even a minnow wants to make real money with a 75k investment...

 

[rossmosh]

Valuing a business is hard both from a buyer and seller's perspective. A business isn't all that different than a sign. If you break down the individual components (board, vinyl, hardware, etc) they don't have much value. But when you combine everything, it has value. So the value in the business is the package (equipment, location, reputation, files, etc).

The biggest problem your business has is simple. It's a one man operation. So if I'm buying your business, I have to think "can I do what this guy is doing?" That means can I work the hours but also produce the work. You might find someone that's competent at running the equipment and working in the shop, but can't design. Or can design but can't run the equipment. Even if you find someone that can do it all, can they do it to match your aesthetic? Because if your customers like your designs, coming in and offering something completely different may not go over well.

Anyway, be prepared to have a P&L report for the last 3-4 years and I'd also say you should have 3-4 years of W-2s. The W-2 really tells the story in an operation like this.

 

[visualeyez]

Thank you all for the fine comments.
I merely mentioned that I do over 100K in sales, and your responses are based off that as the maximum value, even though I offered real numbers upon request.
I started the business in 2011 with $2,500 on a credit card and bought out a bankrupt sign shop at auction.
Business went straight up from there, I took over and make all signs for the city, parks and rec,, furniture stores, marijuana shops, etc. The elite signmaker in town. The majority of my income is marijuana dispensaries. I have 6 years of quickbooks showing the growth from nothing to well over 100K in annual sales. The growth is there because we are in a Legal marijuana market. We are also located on the California/Oregon border.
We do a lot of phone, email,, and text orders so I only open the doors from 12-5pm.
Take home was well over 50K last year plus a vegas vacation.
I feel like the right shop might want to expand into this beautiful region.

 

[BobM]

Take a few minutes and google Ted Burbank, Business Broker, Business Valuations. His book will provide you with a very solid basis to put a value on your business. Very much worth the effort. You may find you own a valuable business or you may find the opposite. Make an informed decision and be with your Dad. Good luck.