posted
I have been contacted by my main compitition in town and he wants to get out of the sign part of his business, he will still have his embroidery half. He has asked me if I would like to buy him out, lock stock and barrel. Our trading area is about 30,000 and there is in total 3 full sign shops. Him leaving would make for 2. Business has been and will continue to be good but by doing this I bet I could increase my sales by 30%. My question is..... should I take advantage of the offer? I do know staffing will be a concern, because they are hard enough to find now, but maybe some staff could move over at the same time. If I just let him die on the hook, I will get some of the business anyway, but what if he finds a buyer to continue on with the business? I would love to hear your opinions
Thanx
-------------------- Glenn Thompson Tell-Tale Signs Williams Lake, BC sign@telus.net (250)398-7446 Posts: 201 | From: Williams Lake, BC | Registered: Dec 2000
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I'd let his business die. I don't worry about the competition... just my own business. As you say business has been and is good... continue on.
If you did want to buy his business I would pay for current equipment (depreciated) value alone and then absorb it into your current business.
-grampa dan
-------------------- Dan Sawatzky Imagination Corporation Yarrow, British Columbia dan@imaginationcorporation.com http://www.imaginationcorporation.com
Being a grampa is one of the the most wonderful things in the world!!! Posts: 8738 | From: Yarrow, B.C. Canada | Registered: Nov 1998
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Why is he selling? I mean, if it's more headache than he wants or it's not profitable enough for him to keep up with it, why would YOU want it?
If he was selling the whole business including the embroidery stuff that's one thing, but selling off just a portion of the business sounds like he's bailing out on something that's just not working out well.
Don't worry about what happens if someone else buys the business. There's nothing keeping 20 other shops from opening up in the next year. Maybe their customers won't like the new owner and they'll come to you anyway.
-------------------- "If I share all my wisdom I won't have any left for myself."
Mike Pipes stickerpimp.com Lake Havasu, AZ mike@stickerpimp.com Posts: 8746 | From: Lake Havasu, AZ USA | Registered: Jun 2000
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I'm with Grampa Dan.... let it die, you'll probably get at least 30% of his business anyway, and won't inherit any of the headaches.
When I had a shop in Brewton, AL, a similar thing happened, but there were only 2 of us making signs... the other guy came by and wanted to sell out to me for $50,000...
I turned it down. My equipment was newer than his, I didn't want his inventory, and when he closed his doors I figured all his customers would come to me anyway. And that's exactly how it happened... in my case it would have been a big waste of money.
-------------------- Jon Jantz Snappysign.com jjantz21@gmail.com http://www.allcw.com Posts: 3395 | From: Atmore, AL | Registered: Nov 2005
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My first thought is to let it die... but one always has to wonder... what if... :-) He says that he is burned out, for his reason for selling. I do know that it does a decent business ($)
-------------------- Glenn Thompson Tell-Tale Signs Williams Lake, BC sign@telus.net (250)398-7446 Posts: 201 | From: Williams Lake, BC | Registered: Dec 2000
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2 years ago, one local competitor of mine was out on the fringes of my area, geographically... and was sort of heading for that die-on-the-hook concept from all appearances. I talked to his business broker & filled out an inquiry form that weeded out the curious tire kickers & qualified me for a better look at the offering, while also allowing my interest to remain confidential. I saw that there was not much valuable equipment, but it was also priced very low. I knew this competitor was too old to want to go on with it much more, but he had been the first guy doing signs here & had kept up some pretty good accounts.
I really considered it but even $35K is a lot of money mostly for accounts.
Later it was bought by a younger, experienced sign shop owner from the mainland & was moved from the boonies to a prime location a few blocks from me, & injected with lots of fresh ambition & energy. This made me feel like I might have under valued the portion of that investment that could have been applied to preventing a new competitor from showing up under the familiar name & "Since 1967" tagline of that seemingly dieing business.
No real new points that you're not already evaluating, but in my situation, I still feel like my business is growing at the right pace for me, and a sudden aquisition might have offered more theoretical potential then I would have had the ability to maintain. And in my case, the new "threat" does not seem to be holding me back in any way.
My thoughts as I type, are that the price is a very important part of the puzzle. I think his business will have more immediate value to someone with no business... but the right stuff to take what he has & run with it. For you, it may be less valuable in the immediate sales increases... but worthwhile only for protecting your potential growth in your market. Especially with so few shops, this seems much more significant then in my case with at least 8 shops right here & several more nearby.
If you end up paying for a bunch of redundant equipment & inventory that you already have, I could see that skewing the cost/benefit ratio out of your favor, but if it's not too expensive & the money goes to "blue sky" and some "stuff" you can really use... I'd agree that you can expect the act of keeping a third player from entering the scene with that much momentum would justifiably be worth a fair part of the asking price.
Do you want to share the price & the equipment/inventory list?
Are you going to get a good long look at the books?
Most importantly, was increasing your sales by 30% (at the price of staffing issues etc.) already on your short to mid-term goals list?
posted
when I get the equipment list, I will share it along with the price when I get it. The 30% increase is not in my projections, as I sit now. But I am capable of the 30% as I sit now, without his equipment. The only hold back would be, is the business out there and I would need another, hard to find, staff member. I actually do alot of router work for the shop as well. Damn, I'm not sure if I want to go back to working full-time :-)
-------------------- Glenn Thompson Tell-Tale Signs Williams Lake, BC sign@telus.net (250)398-7446 Posts: 201 | From: Williams Lake, BC | Registered: Dec 2000
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if he gooona fade away let him go. There is no value in a client list that is actually just a list of people who bought from him.
-------------------- Leaper of Tall buildings.. If you find my posts divisive or otherwise snarky please ignore them. If you do not know how then PM me about it and I will demonstrate. Posts: 5274 | From: Im a nowhere man | Registered: Jul 2001
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Glenn, You are your only competiton. Let the others worry about you, not the other way around. If he stops doing signs, the customers will find you and you won't have the out of pocket money buying used equipment, customer list, aging materials, etc.
I wouldn't even consider buying another sign business unless they were established for over 20 years and have an "excellent" customer service reputation. Sounds like this guy tried to do too many things under one roof and found out how difficult making signs can be.
Stick to making your business more efficent with what you have and let the customers come to you. I think you'll be happier in the long run.
Just my 3 cents.
Sign-cerely, Steve
-------------------- Steve Luck Sign Magic Inc. 2718-b Grovelin Godfrey, Illinois 62035 (618)466-9120 signmagic@sbcglobal.net Posts: 870 | From: 2718-b Grovelin Godfrey, Illinois 62035 | Registered: Dec 2004
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The old timer in our town , the man who I worked under when I started was shutting down his shop for his golden years. I had my own thing going already for a few years and he came to me and want to sell out his shop. Client list, design files, tools... you name it. He wanted 120,000. for it all. I thought about it for a week and turned him down. I did get most of the clients he dealt in time. I even had to deal with a new shop that sprang up in town when he shut his doors. I guess what I am saying is that if you have a good thing why do you need his shop to make yours better.
If you buy out his shop, you have to cover the intial expenses. Given that, getting all of his clients should cover that...or maybe not...maybe that's why he's getting out of the sign stuff.
If you don't buy him out, he still goes out and you pick up the PAYING customers he had, not the non paying ones. Even if it's only half of his customers, it's still a 15% increase for you at no additional cost.
Let the chips fall as they may. It might be better than putting them on the table (buying him out). Rapid
-------------------- Ray Rheaume Rapidfire Design 543 Brushwood Road North Haverhill, NH 03774 rapidfiredesign@hotmail.com 603-787-6803
I like my paint shaken, not stirred. Posts: 5648 | From: North Haverhill, New Hampshire | Registered: Apr 2003
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My son has asked me to move to alberta and start a sign shop close to Coldlake.I told him it would have to wait until I have talked to a couple of sign shops in the area.I would probably stay with truck lettering and squiggly lines.Don't need new equipment for that.
-------------------- Randall Campbell Randy's Graphics, 420 Fairfield N. Hamilton Ontario Canada Posts: 2857 | From: Hamilton Ontario Canada | Registered: Jan 2002
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Hi Glenn, I'm happy to hear things are well with you.
I would not make this purchase....if you are happy with what you do, and can naturally increase your sales when he is gone...why buy his problems. The shelf life of his vinyl has probably expired. You already have great equipment. You will have a 50% chance that his past customers will find you when they need you anyway. I have viewed several sign shops locally that were selling ....I signed the confidentiality sheet to view their status.....and bottom line is...they were asking way too much to flog off thier old junky, useless stuff. The files were old and not done properly, therefore unusable by me. A large portion of the logos they had were obsolete, many businesses they had done work for were now 'out-of-business'. There was NO VALUE for me. I would not have benefitted by buying anything they had...yet the seller thought it had great value. New shops can pop up around town at any given moment. If it were me...I would use your money to upgrade your own equipment or buy new product and stock. Let his sign business fade into the sunset. (Besides if someone else buys it....chances are they won't have your knowledge and experience....so there is no real threat there!) I wish you well whatever you choose do to.
-------------------- Susan Banasky Source Signs Nanaimo, British Columbia sourcesigns@shaw.ca
When in need....go directly to the "Source"!
Proud Supporter of this "Knowledge Network"! Posts: 1323 | From: Nanaimo, B.C. Canada | Registered: Oct 1999
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Glenn, I question the general consensus here.
If this guy was successful... he'd have a huge & valuable client base. In turn, a failing businesses' client base is not enough to support itself & is forced to fold with no apparent value.
You would obviously like to be busier & more profitable or you wouldn't have considered this offer. There's absolutely nothing wrong with exploring your options.
If done right, consolidating two businesses can be an instantaneous boost to your existing business.
What the heck... There's no harm in checking him out.
Check out the guys' tax returns & make sure the profits are still there.
Call a few of his clients also, to see how his service was.
I do advise you to be VERY careful & if you like what you see... hire a GOOD business attorney & accountant to look it all over. Have the business attorney write up the offer as well.
Don't be deterred from checking out interesting offers that come your way in life. You could live to regret it.
I wish you much luck in your future ventures.
-------------------- Michael R. Bendel Bendel Sign Co,. Inc. Sauk Rapids, MN Posts: 913 | From: Sauk Rapids, MN | Registered: Jul 2005
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Glenn, I'm glad to see Michael weigh in with a more balanced view.
Obviously there are many important considerations... & nobody is gonna give you armchair investor advice to just grab it sight unseen... but the vast majority here seem to be making it sound like a dumb idea to even consider & a no brainer to walk away from it.
It's simply not that simple because in some cases it could be a good opportunity.
The most successful business man I know owns one of 2 companies that combined have 90% share of the market in his foeld on this island. Many years ago he had an opportunity to aquire that competitor when both of them were smaller. He has told me how much he would have benefitted if he had.
Of course there are many reasons to walk away from it, just don't let being afraid to examine it thoroughly be the reason you do... because if you do that, you may regret it...
...but if you make an educated decision... it's always easier to go forward confident in your situation without looking backwards second guessing yourself.
posted
I am leaning the way of the general opinion of you guys. But I am still going to get an equipment list ( he promised it for Sat. )and some numbers. I don't want to just close the door. I do know that competition is a good thing, but if a new guy starts up I wouldn't want him/her starting up with a wack of files that could be used. I have been in business for 9 years now and he (he bought it out about 7 years ago) has been in business for about 16 years. I already have the VersaCamm 54" with a laminater, a 4x8 router table (nothing like Dans :-) ) a summa 750 pro and a roland cx 300, and all of the other stuff like a shear and corner rounder and stuff. Guess my point is, is that I do not need his equipment. That being said my staff and I have already talked about expanding to the part of the shop where I just store my toys, could separate the digital output from the cut vinyl. This way we would be more than ready to take up the customers that he drops. It is a waiting game now to see who flinches first :-)
-------------------- Glenn Thompson Tell-Tale Signs Williams Lake, BC sign@telus.net (250)398-7446 Posts: 201 | From: Williams Lake, BC | Registered: Dec 2000
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I mentioned this on another board where a similar thread is running...it's interesting that most people's opinion is that a sign business has little or no value to another shop. Something to think about as you bust your butt to grow a business.
posted
I'm sure this has been said before, but here's how I see it...
So often in the sign industry, the business revolves around the owner and/or maybe one key person. He is the person that knows how to quote, has the expertise to build a sign, approves/corrects the designs, and controls many other aspects of the business...
This makes the business worth a LOT of money. But when the years of experience, customer confidence, and design skills walks out the door what are you left with that is worth so much money?
Basically, a client list of customers that WILL NOT automatically buy from you, unless you are the only show within driving distance, a bunch of logo and sign files, (of which I have CDs full that I seldom go back and use) and some most likely outdated equipment (if he's been moving towards selling out)...
There are exceptions to this, which makes it a good idea to not automatically write the deal off and to check it out at least. If he has 3 boom trucks, a contract to replace all the Holiday Inn signs nation-wide, and wants a $100G for the business, because he's retiring, it could be a killer deal...
But again, the main point is this: I am not of the opinion that a sign business has little or no value to another shop, but that a LARGE part of a sign business's worth is contained in a small area atop the owner's shoulders...
-------------------- Jon Jantz Snappysign.com jjantz21@gmail.com http://www.allcw.com Posts: 3395 | From: Atmore, AL | Registered: Nov 2005
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I wouldn't pay more for his business than his equipment is worth. Even if you did buy his business and try to staff it as if it were another entity, in a small town everyone would figure out pretty quick that it's just another storefront of your business. So it wouldn't help you any more than just letting it die. In fact, it could actually cost you more because you'd have the added overhead of another location.
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