It is currently Thu Mar 28, 2024 4:36 am




Reply to topic  [ 32 posts ] 
 Need some advice 
Author Message
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Need some advice
So I'm turning 32 soon, and decided that it's time to start working for myself. My problem is I don't know shit about buying a business. I've been a shop foreman and have somewhat of an idea how day to day ops work. But as far as buying an already established business I'm clueless. Any advice, help, or what not to would be appreciated. I've narrowed down 5 different established businesses, but not sure what may make one better than the other.


Tue Apr 25, 2017 6:39 pm
Profile
MMT Elite Member
User avatar

Joined: Fri Oct 09, 2009 1:50 pm
Posts: 9673
Location: New Iberia, La.
Post Re: Need some advice
Make sure to get a lawyer and a CPA involved. The CPA will be able to give you an accurate value and be able to tell you just how profitable it is.


Tue Apr 25, 2017 9:25 pm
Profile
MMT 1000 Club

Joined: Thu May 23, 2013 4:24 pm
Posts: 2912
Location: Thibodaux, La
Post Re: Need some advice
What he said ^^^

_________________
1850 Predator Series Stick Steer Option
40HP Gatortail


Wed Apr 26, 2017 1:17 am
Profile WWW
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
What about a business broker?


Wed Apr 26, 2017 3:20 am
Profile
MMT Pro Member

Joined: Sat Nov 09, 2013 6:44 pm
Posts: 335
Post Re: Need some advice
If it's a small business, take time to meet the employees or at least the managers and foremen. Learn the company's culture and what they expect out of the boss. The last thing you want is to buy a company and have everyone drag on you because your personalities don't jive. Then all the planning in the world to walk into a fully operational business goes out the window if no ones around to man the work or know how to keep things operational.


Sent from my iPhone using Tapatalk

_________________
"There's nothing a duck hunter hates more than another duck hunter."


Wed Apr 26, 2017 4:14 am
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
Honestly the businesses I've looked at have no employees. Figured it would be easier that way since I'm new to the whole thing.


Wed Apr 26, 2017 5:06 am
Profile
MMT Pro Member

Joined: Sat Nov 09, 2013 6:44 pm
Posts: 335
Post Re: Need some advice
So are you looking for clientele or operational equipment? Or just a name and all the legal stuff pre-setup.


Sent from my iPhone using Tapatalk

_________________
"There's nothing a duck hunter hates more than another duck hunter."


Wed Apr 26, 2017 5:35 am
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
Something pre setup, that I can expand.


Wed Apr 26, 2017 7:45 am
Profile
MMT Pro Member

Joined: Sat Nov 09, 2013 6:44 pm
Posts: 335
Post Re: Need some advice
For sure, goes without saying, but sometimes those things are good to hear again, it's worth investigating a company's priors, to make sure there's a good reputation there. For me, if there was a shitty business, and heard they sold, I am still very unlikely to do business with them again just because of pre-existing notions or whatever. That may sound short sighted but I hear the same from other people too.


Sent from my iPhone using Tapatalk

_________________
"There's nothing a duck hunter hates more than another duck hunter."


Wed Apr 26, 2017 8:34 am
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
I hear ya, and it makes sense. Again I'm new to all this and experience is one thing I don't have. Some of this shit is misleading when you read about how great the business is, but they "just want out".


Wed Apr 26, 2017 9:24 am
Profile
MMT Pro Member

Joined: Wed Sep 16, 2015 11:50 am
Posts: 284
Post Re: Need some advice
why buy an established (and the problems that come with it) when you can just start ground level and develop your own?


Wed Apr 26, 2017 11:08 am
Profile
MMT Pro Member

Joined: Sat Dec 11, 2010 6:25 am
Posts: 493
Location: SWGA
Post Re: Need some advice
Simple acquisition rule to follow:

Take whatever they have - Cash, equipment, technology, receivables "Assets"

Then back out what they owe - notes on equipment, payables, "Liabilities"

That is theoretically what the business is worth. The intangibles - local reputation, client list, etc. are risky to value since there could be a risk of losing that with an ownership change. This is the premium that you would be willing to pay to buy somebody out. This is what the buyee is trying to sell you, all other things are essentially a transfer. You will pay cash for the equity + the intangible aspect.

Not knowing what industry or type of business your getting into - I usually agree with the build/develop it on your own, unless you are starting a franchised, name brand recognition type outfit.


Wed Apr 26, 2017 12:54 pm
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice


Wed Apr 26, 2017 3:35 pm
Profile
MMT Addict

Joined: Sun Aug 09, 2009 12:50 pm
Posts: 574
Location: Muscatine, Iowa
Post Re: Need some advice
Local Chamber of commerse might be able to help. Or courses at a community college in business accounting. I started my canvas fabrication business with the Chambers suggested options and built it into a six figure business inside of 5 yrs. Only back ground I had was being a Journeyman Millwright for 30 yrs. Still building custom fitted boat covers after being retired for 8 yrs. Old customers have a way of finding you.


Wed Apr 26, 2017 5:35 pm
Profile
MMT Pro Member

Joined: Wed Sep 16, 2015 11:50 am
Posts: 284
Post Re: Need some advice


Thu Apr 27, 2017 10:45 am
Profile
MMT 1000 Club
User avatar

Joined: Thu Jan 31, 2013 5:42 pm
Posts: 1913
Location: Conroe tx
Post Re: Need some advice

_________________
Ole black water keep on rolling

18x54 Uncle J -GTR - with the koolaid
Back H2o SWOMP 23 SS stage 2 15x36 GD Duck Skiff GATOR
GATOR GLIDE PROSTAFF
BACKWATER PROSTAFF
http://www.gatorglide.com

Coupe rest in peace brother


Thu Apr 27, 2017 12:21 pm
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice


Thu Apr 27, 2017 7:57 pm
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
I figured buying a up and running operation would allow me to somewhat shadow the current owner and get my feet wet. While still an option, I'm leaning more towards starting my operation now.


Thu Apr 27, 2017 8:02 pm
Profile
MMT Member

Joined: Tue Aug 09, 2016 9:06 pm
Posts: 37
Location: Dublin, GA
Post Re: Need some advice
I know you said that you are leaning more towards a startup now. If you do decide to go the buying out an established business route, make sure that you have the current owner sign a binding no compete clause. It would suck for you to drop all of you assets into a business only to find out that you just bought this other guys way out of the crapper and now he is your competition and has the confidence/loyalty of everyone that you were banking on being your prospective clients. Now essentially you paid a lot of money for clientele that he just walked with........Just something to think about


Thu Apr 27, 2017 10:15 pm
Profile
MMT Pro Member

Joined: Thu Jan 23, 2014 9:07 pm
Posts: 228
Post Re: Need some advice
This is a complicated subject with too many questions- If you are not overly interested in the accounting and "business" side of things, can you find a company that you can run for someone for great pay, benefits and the opportunity to buy them out?
I'd start here- https://www.amazon.com/E-Myth-Revisited ... 8&qid=&sr=
and get a clear understanding of the common pitfalls of a great technician turning businessman.
The SBA has a ton of great resources and can get you started. https://www.sba.gov/starting-managing-business
If you are going to need financing, you'll need to get things in order as well as purchase a life/disability policy payable to the lender. SBA loans are painfully long and many times the only option besides private fianancing for someone with no commercial credit history (not a good practice to leverage your personal - home, retirement etc.)
I'll ask this as a small business owner- I thought I saw auto body as the business so I'll use that as an example- So you're at the top of the game as a bodyman; frame straightneing, sheetmetal, paint, you name it noone comes close. Now you're the business owner with a never ending desk full of non-value added activities like payroll, rent, insurance, hiring/firing, sales/marketing, customer service, managing permits, working on the big picture of the company, NOT working in the shop very much. How will you handle employees who are less skilled and far less productive than yourself? What's the pay off in the end and what's it going to take to get there wroking backwards from the day you plan to retire and hopefully sell your company for more than auction value of the assets?
The most successful companies are often not run by people who are or were the best in the shop, but rather people who run by facts and numbers and ask a lot of dumb questions. They are typically very systemized and have processes and procedures documented, often becoming franchises as they are scaleaable unlike many small businesses. Not a bad way to go if you wan to get in quick, but don't mind paying a premium. I'd ask yourself why you want to do this and you'll find clarity in how to do it. https://www.youtube.com/watch?v=sioZd3AxmnE
PM me if you want to chat more over the phone. Good luck

_________________
35 Swomp on a 17-52 Alweld on a crusty old trailer you probably shouldn't follow too close
10hp Swomp lite 14-36 alumacraft


Tue May 02, 2017 7:23 am
Profile
MMT Pro Member

Joined: Thu Jan 23, 2014 9:07 pm
Posts: 228
Post Re: Need some advice
Just re-read the original post. When looking at purchasing an existing business, I look at the financials first, with my accountant and my insurance guy for objective opinions and to get started. Then, I look a systems and procedures, employee retention, reputation, reviews, sales process. The biggest positive I'm looking for once the minimum financials are met is the owner's day to day involvement in the business and also what to expect as a loss of customers who are loyal to that person not the business, also that no single account makes up more than 15% of the companies sales (varies by industry).
I'd speak to their accountant with yours and I'd interview their insurance company separately- they can tell you a lot about the company- Mod rating for work comp, claims history and financials (these are audited numbers and cannot be easily manipulated- also save this as a surprise deal and their insurance guy will meet with you in hopes of continuing a relationship- ok). Insurers have a valuation on everything, as they are the ones paying for it should there be a flood fire etc. These are good numbers in my opinion.
Be cautious, business owners paint a pretty picture and are getting out for a reason, really good businesses can run with minimum involvement from the owner. Average business owner thinks their business is worth ffar more than it actually is. Time is usually on the side of the buyer not seller and these transactions can take upwards of two years. I'd also caution you to look for outliers and see if you can get more than 5 years of financials in some cases. I'm familiar with a machine shop owner who cooked his numbers by working 80-90 hours per week himself, undocumented for several years. He made huge money not paying overtime or adding overhead thus increasing the sale price of the business. He sold the buisness for about a million more than it was really worth to an unsuspecting buyer without disclosing his excessive and undocumented hours correlating to the increased throughput and profit.
I've looked closely at purchasing several companies in my industry and have come to the realization that most all are very overpriced for what they are able to deliver and that I could grow my existing company by spending the same or less per month on sales and marketing until I reach the same revenue numbers provided by purchasing a competing business (used machines,customer list, possibly good employees) and be money ahead, or stop if need b
I would start by looking at a local trade association, supply houses and also find out who's insuring the types of business you are looking at and let them all know you're looking to buyout a quality company as they'll have a pulse on who, what and why. If there's a good company/customer ( a good sign) they are dealing with and feel compelled to help out you'd be surprised what good can come together.

_________________
35 Swomp on a 17-52 Alweld on a crusty old trailer you probably shouldn't follow too close
10hp Swomp lite 14-36 alumacraft


Tue May 02, 2017 11:12 am
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
Thanks for all the input, not looking to stay in the autobody trade rather run far far away from it. I've decided to start my own business, rather than purchasing someone else's possible abortion. It will be a 2 man operation doing flooring and remodeling. The other guy will be a partner not an employee. Friday I have to sit down and apply for my llc etc. From there it's registering with irs and licensing. I know it's not that easy but that's a few things before I can start working. Between the 2 of us we have all tools necessary just lookin for inclosed trailer. I'm trying not to take out a loan as that seems like I'm workin for free till it's paid off. Again, I know it's not just that simple, I just wanted to put a few things out there. Thanks again.


Wed May 03, 2017 10:30 am
Profile
MMT Sponsor
User avatar

Joined: Mon Jun 13, 2011 8:49 am
Posts: 3260
Post Re: Need some advice

_________________
http://www.gatorglide.com/

gatorheads@comcast.net


Wed May 03, 2017 11:01 am
Profile WWW
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice


Wed May 03, 2017 1:28 pm
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
So tomorrow I apply to get my llc. How does American Remodeling sound? Pretty sure this is what we're going to go with, but I figured a few last minute suggestions wouldn't hurt.


Thu May 04, 2017 4:54 pm
Profile
MMT 1000 Club
User avatar

Joined: Thu Jan 31, 2013 5:42 pm
Posts: 1913
Location: Conroe tx
Post Re: Need some advice
Why limit yourself to remodeling, make it American construction. , or contracters , same gist but if your business grows your not limited to just remodeling.

H Finn

_________________
Ole black water keep on rolling

18x54 Uncle J -GTR - with the koolaid
Back H2o SWOMP 23 SS stage 2 15x36 GD Duck Skiff GATOR
GATOR GLIDE PROSTAFF
BACKWATER PROSTAFF
http://www.gatorglide.com

Coupe rest in peace brother


Thu May 04, 2017 8:52 pm
Profile
MMT Sponsor
User avatar

Joined: Mon Jun 13, 2011 8:49 am
Posts: 3260
Post Re: Need some advice

_________________
http://www.gatorglide.com/

gatorheads@comcast.net


Fri May 05, 2017 6:41 am
Profile WWW
MMT Sponsor
User avatar

Joined: Mon Jun 13, 2011 8:49 am
Posts: 3260
Post Re: Need some advice
American Building Solutions

_________________
http://www.gatorglide.com/

gatorheads@comcast.net


Fri May 05, 2017 6:43 am
Profile WWW
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
Thanks, now I gotta tell the wife she was right. She said the same thing.


Fri May 05, 2017 9:26 am
Profile
MMT F.E.
User avatar

Joined: Tue Aug 26, 2014 10:36 am
Posts: 822
Location: Jefferson TX
Post Re: Need some advice
NO WAY!!!! Never ever let a woman know she was right!! Then you will always be wrong!!! :shock: :lol: :lol:

_________________
SEAARK FX 2472 CC Merc 150HP 4Stroke(CypressCadillac)
Uncle J Custom - 19x54 CC Skiff w/40XD GTR


Fri May 05, 2017 9:40 am
Profile
MMT Pro Member

Joined: Thu Jan 23, 2014 9:07 pm
Posts: 228
Post Re: Need some advice
I know It's not the most fun, exciting thing and you want to get down to it swinging a hammer makIng money, but take the time to write out a business plan and then follow it. It's easy and can be done on a Saturday morning with a decent template. Know who your company is and isn't , who your ideal customer is and isn't. The hardest thing is to say no, but it can be the best, as a bad job can keep you from getting several that better build your business and make you more profit. Don't be dashboard builder, or pick up truck chuck, they're a dime a dozen. Differentiate yourself based on service quality and other greatness and you'll never have to worry about being the lowest price and competing on anything but he merits of your work.
Tell us Why would I hire you? Work on a 20 second elevator pitch that tells us what you do and why we should remember you when we need something done!

I'm in high end cabinetry and architectural millwork and I see trades people and companies come and go all the time. They are all going to be different, better, more profitable etc. Be a businessman first and a tradesman second. What is your ideal job and customer? What's your project minimum? What's the break even sales number?
I guess the main point I'm trying to get across, is build a business not a company.
I'll also share that few get too far ahead in the trades and construction industry with a singular focus. In our case, rather than rent a shop space for the life of the company, we bought a building when we could get a loan. A big building, 150% more space than we occupy. Now we are in the commercial real estate business too.
So, you can make good wages as a small business, or you can make a lot of money and build your empire. Empire building requires family support, a ton of energy, massive personal growth and some homework.
I'd start with a reading list on steroids;
Rich dad poor dad. Robert Kyosaki.
Duct tape marketing. John Jansch
Traction -Gino wick man
Who- Geoff smart
https://www.markupandprofit.com/product ... -revisited
I'd also get heavily involved in a local and national trade association to save a ton of time and money learning from others mistakes rather than repeat them yourself.
Run your company by the numbers and you'll be a rich man. Don't, and you'll be a tired broken man.

_________________
35 Swomp on a 17-52 Alweld on a crusty old trailer you probably shouldn't follow too close
10hp Swomp lite 14-36 alumacraft


Fri May 05, 2017 8:25 pm
Profile
MMT Pro Member

Joined: Fri Aug 01, 2014 6:43 am
Posts: 208
Location: Port Saint Lucie FL
Post Re: Need some advice
So......now American Home Solutions llc. Is a licensed and insured remodeling flipping all around home fix er upper. Thanks to all that shared knowledge and advice.


Fri Jun 02, 2017 5:03 pm
Profile
Display posts from previous:  Sort by  
Reply to topic   [ 32 posts ] 

Who is online

Users browsing this forum: No registered users and 233 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Jump to: