New to Sign Industry - Need Advice

[jeffpoit]

Screw the Attorneys and CPA's

I started in the sign business when we painted on plywood and put panels up for billboards. I might add, on ladders and a pickup.

Franchises serve there purpose for an uneducated sign person. They have a contract that allows 2 options to divorce them; death or sell.

I recommend that anybody that believes in Freedom and the Pursuit of Happiness ever consider a franchise. A better alternative is to invest in experts. Your staff will teach you. As far as CPA's and Attorneys.....they are the most negative advisers you can adopt. You need to find successful business owners to provide advice.

I've made some of these dumb *** mistakes, but I'm still on top and CEO of a global enterprise.

 

[John Butto]

You will have a perfect fit into the sign industry. You are already copying logos from Nineincenails.

 

[Sign Up Graphics]

Sign Up Graphics

 

[HulkSmash]

My first post - and it's a long one. I'm excited to be here. Bear with me please...

I have a background in Enterprise IT. Growing up my dad owned a sign company. He did the old way with 1-Shot and a brush and a boom truck. I was surrounded by the business and loved the creativity it afforded our family. I spent my youth beside my dad in his shop copying him and drawing while he painted beside me. As I grew up, my dad taught me hand lettering. As a teenager, I spent summers hand lettering shrimp boats and yachts for extra money. I would love to bring the family name back to my city. I still notice most every sign along the way and think about what it might have taken to create it. I know a lot has changed since then... but I still love it.

I have become bored with IT, and I'm interested in getting "back to my roots" and using my penchant for technology together with my love of the sign business.

I am looking at buying one of two existing sign companies. One is a locally started family operation - the other a franchise.

Family Company
Does around $400k a year in sales with about $300k of that profit after COGS.

However, it's overhead is around $275k per year. This is with 3 staff including the owner who is taking a salary. The other 2 are design and production respectively. The owner has pretty much checked out, and is unmotivated and not pulling his weight in my opinion.

Printing Equipment is Mimaki 2007 vintage (Printer, Laminator, and separate Cutter) (Mimaki also) and includes a pickup truck as well.

Franchise
Does around $250k a year in sales with about $160k of that profit after COGS

Overhead is around $120k with 2 staff (production and design).

Printing Equipment is Roland with integrated Printer/cutter that's newer 2010-ish? a new-ish laminator is included as well...

------------------------------
BOTH COMPANIES ARE OFFERED AT THE SAME PRICE
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One one hand, I like the local place because I would have the freedom of my own brand. The facility is also larger (over twice as large) with an air conditioned garage bay so I might be able to do vehicle wraps as well. But there are no real documented procedures, and it would be a steep learning curve. I would be at the mercy of the two employees and forums like this to help me along. I also worry about the high overhead they are showing on the books. I would need to slim down about $40k per year out of that to get to the same profit ratio of the franchise. But that cold be the owner padding some benefits in the books as well...

On the other hand, the franchise offers structure, processes, and a proven formula for success (I realize my mileage may vary and it's up to me to beat the street). But a facility half the size, that would require moving to expand. Obviously less branding freedom since I would be bound by the rules of the franchisee.


I'm torn... the numbers are better on the Franchise, but I don't know if I will enjoy being in the "box" of the franchise per say. I also wonder if I will be unsatisfied once I get the hang of it and yearn to be outside the box.

But the other has the sales if I can get the overhead down...

What are the questions I should be asking of these guys when I meet with them? Am I crazy for doing this? Will I be in over my head? Being from the technology field, I can learn things very quickly. I tend to "geek out" when I'm immersed in something and just absorb all the knowledge I can about something. I know I can learn this stuff. I just don't know which option to go with.

Any advice is greatly appreciated.

1st off welcome.

As for the companies you're looking to buy.

The family company that does 400k a year in sales. I can 100% promise you it's not 300k in profit. Trust me, i know first hand. Companies that do 1.2-1.5 million in sales profit about 300k in this industry, I know from first hand experience with numbers like that.

2nd. The franchise - the same thing with that. 250k a year, you'll have problems paying your bills. I don't care what the books say. Also i'd stay away from any type of franchise.. not worth it in my opinion.. no pun to those who have them

3rd. The company is worth as much as the equipment, and from what you're saying here it's not much. The customer book has some value, but not as much as you may think.

I'd take the money you're looking to invest in the company and start your own. Buy your own equipment, and build your own reputation. But before you do that get some experience.. Work in a big shop who does the graphics with the machines.

good luck

 

[dale911]

I have owned several businesses over the years and now am down to just my sign business (mostly vehicle wraps) and a mobile DJ business. I learned most of my lessons the expensive way. If it were me, I would take the family business in a heart beat. I would put the owner on a 4 week 40 hour per week schedule and taper down over the next 2 months with requirements that he introduce you to all major clients. I would offer a lot less than what he is asking and go from there. Signs are not rocket science. Some customers know what they want and some need led, but you already have that in place with an established business with your current employees and the knowledge you will get on the job with the old owner. One other piece of advice from someone who has done startups and bought businesses. Study the numbers closely and make a plan of attack and attack it on day one. I bought a business and attempted to make the changes gradually so as not to disrupt the apple cart and in doing so, it didn't make the impression I needed to make with my employees and it also cost me 10's of thousands of dollars over a few months. Good luck and welcome to this board. Some on here are very negative about everything and others will give you the info no matter what you are asking. I wish you the best.

 

[Joe Diaz]

Also, a lot of people in this industry like to pretend that there is some magical art to making your typical signage these days. But it's pretty damn simple, and don't let anyone tell you otherwise.

Building a "typical" sign should be the least of someone's worries, building a successful business around making typical signage is not so "damn simple". We've seen many sign shops come and go, I've even seen really talented sign makers and designers who can blow the doors off of most "typical" sign makers struggle in this industry. I think this mentality that it's "pretty damn simple" to make a sign is part of the problem. It's easy to get into the industry and it seems simple enough from the perspective of an outsider who has no experience. But there is a lot you need to know and be skilled at doing in order to make it long term. How many of us here have had clients who thought what we do is easy enough and our prices were too high for them, so they decide to get a budget plotter and some cheap vinyl and figure they can just do it themselves? You ever notice how their is always a huge amount of budget plotters for sale on ebay?:Big Laugh My guess is, they found out the hard way that it isn't that simple and so they need to try to recoup some of their money by selling that equipment to the next person who thinks it's easy... and the cycle continues.

All the while these flash in the pan, "it doesn't seem that difficult-I should be able to do it"-sign makers, typically have prices and quality that reflect their attitude towards what we do and how easy it seems to be, which in no time will come back and bite them. By the time they figure out it's not that easy, it will most likely be too late. The lasting effect is their devaluing of the products and services all of us in this industry sell and the common misconception that what we do is "pretty damn simple" within the general public... or in other words our customers.

So lets be honest with ourselves here. Not everyone is cut out to be a sign maker, or a business owner for that matter. Plenty of people can try and plenty of people have tried, but only a smaller percentage of those that do are at it 20 or more years later. Only a handful of that larger group that thinks they can, end up putting their kids through school, make a good living from sign making and retire knowing they ran a successful business. Anyone who tells you otherwise is missing something. So yeah it's hard work running a business, but it's rewarding work if you do it right. I'm telling you, if you go into this thing thinking it's easy, you are going to be sorry.

 

[Craig Sjoquist]

Welcome to a outstanding Signs 101 & people.

Best I can tell ya is...... Write all your likes & dislikes down. You be able to answer the direction.

 

[SignManiac]

Building a "typical" sign should be the least of someone's worries, building a successful business around making typical signage is not so "damn simple". We've seen many sign shops come and go, I've even seen really talented sign makers and designers who can blow the doors off of most "typical" sign makers struggle in this industry. I think this mentality that it's "pretty damn simple" to make a sign is part of the problem. It's easy to get into the industry and it seems simple enough from the perspective of an outsider who has no experience. But there is a lot you need to know and be skilled at doing in order to make it long term. How many of us here have had clients who thought what we do is easy enough and our prices were too high for them, so they decide to get a budget plotter and some cheap vinyl and figure they can just do it themselves? You ever notice how their is always a huge amount of budget plotters for sale on ebay?:Big Laugh My guess is, they found out the hard way that it isn't that simple and so they need to try to recoup some of their money by selling that equipment to the next person who thinks it's easy... and the cycle continues.

All the while these flash in the pan, "it doesn't seem that difficult-I should be able to do it"-sign makers, typically have prices and quality that reflect their attitude towards what we do and how easy it seems to be, which in no time will come back and bite them. By the time they figure out it's not that easy, it will most likely be too late. The lasting effect is their devaluing of the products and services all of us in this industry sell and the common misconception that what we do is "pretty damn simple" within the general public... or in other words our customers.

So lets be honest with ourselves here. Not everyone is cut out to be a sign maker, or a business owner for that matter. Plenty of people can try and plenty of people have tried, but only a smaller percentage of those that do are at it 20 or more years later. Only a handful of that larger group that thinks they can, end up putting their kids through school, make a good living from sign making and retire knowing they ran a successful business. Anyone who tells you otherwise is missing something. So yeah it's hard work running a business, but it's rewarding work if you do it right. I'm telling you, if you go into this thing thinking it's easy, you are going to be sorry.

100% correct assessment!

 

[round man]

1st question I would ask is why are both of these individuals trying to leave the business,...What are the local market factors that have these folks ready to sell out? That would dictate my business plan more than anything else,if they were making money hand over fist why do they want out?

 

[Rick]

Find an experienced sign guy to look over the shop, especially the family shop.

What kind of signs are you going to make? please be aware that you MIGHT be limited in the type of signage you can do. Almost every sign has some code/rule or law made for it... even wraps!
Here in California, as in many states, you are required to have a sign/contractors license, even for non-illuminated.

Odd you bring up "FOR SALE" signs... yeah, not artistic usually, but you will now be competing on price, (service does count) with companies with the same mentality and lower overhead. Shops with a printer are a dime a dozen. I chuckle a little bit because you are mentioning a 10-20 dollar sign that can be purchased for 5 at Home Depot when there are jobs in to 50-200k to get, but you might need a little talent and knowledge for that work.

Most, if not all franchise opportunities say, hire an experienced designer/production person to help start your business. I suggest the same thing, hire someone who knows the business, and learn from them. This family gig may not have the right people, thats why getting an experienced sign consultant would help.

There was some poll some years ago about how most were taught here... most were self taught. I was mentored and worked my way up. The type of work I do reflects that. I'm sure finding a good design/production person can help you a great deal on getting trained and you can offer more than your FOR SALE signs that everyone on this forum can make, quicker, faster and cheaper. Oh I read E-MYth, decent book... I would get SIGNCRAFT magazine, maybe Sign Business and Signs of the Times and join a wrap forum.

Good Luck, I think with the right combination, you can make a solid go of it... you have more experience than most people I know who started...but I would read Joe Diaz's post twice.. I did...

I forgot one option, maybe looking into the family sign shop option, and http://www.signbiz.com/ they have different training/procedure training options, and support without dues or taking a percentage of your gross and you have your own brand you can work.