My first answer is no Work at the Co until the end If someone else buys it you will most likely have the job you like If the business is closed, go to the auction and by, piecemeal the equipment you want for pennies on the dollar JIM
If you enjoy being a machinist but despise being a businessman, be ready to change your mindset. I own my shop now, but stayed in front of a machine far too long until the light came on. I wasted some of my best years thinking I could run a machine and a business at the same time.
I kick myself from time to time. I could and should've pull the trigger 2-3 years earlier on opening my shop. 18 years later still glad I did open it up.
Shark Tank for machine shop owners. I think we would all like to get the shop owner to present this "great opportunity "for us to buy into the business and explain why he thinks it is worth the asking price. So many questions...
Bro this exactly whats happening to me. Like exactly. Researching sba loans now but debating ownership. Im the right hand guy for 23 years. Owner doesnt touch machines at all. I do 100%
Your distinction between "buying a job" vs "buying a business" is what it's all about. Very astute. Good video. I mean to watch RUclips more but I never seem to get around to it. Good stuff.
I get the mail for my employer and i see all the bills every day. Health insurance, CA regulatory forms and questionnaires, environmental fees, electric, phone, alarm, business insurance, worker comp insurance material bills you name it. Juggling that and payroll taxes, regular taxes and payroll(quickbooks) is i think what the back end is.
I guess in this scenario I'd look for equipment and tools I'd be interested in and offered to buy those and just work out of the home shop when the businesses shut downs tell a new opportunity comes along.
Until later in the post summation, I could’ve SWORE my other half hacked my account and posted about MY situation🤣🤣🤣my advice based on where I’m at in this process, get an outside account to look at the books and try to compromise on a number. It may come down to a 3rd party business appraisal, but according to my lawyer, it’s usually not necessary. I’ll have to dig through the forum and find this post!
That’s fantastic advice! Third-party appraisals are nice because they take the ‘personal’ feelings out of it and drill down to the actual numbers you’re dealing with. Best of luck in your acquisition!
The biggest thing I found was if he already has similar capacity at his home shop, it would likely be better just to keep his job at the shop until the owner was ready to close - then try to transition the existing customers to his own shop - it would certainly save a good bit of scratch!
Last week I closed the purchase on my employer, 10+ full time employees, Great diverse business. With that being said we have challenges just like any trade right now, top of that list is finding skilled employees. The biggest advice I can give someone looking at a shop is hire a hood accountant, hire a good lawyer, and really look yourself in the mirror and ask yourself if you want to do it, and if you do and the numbers make sense, then go after that dream!
Pass. In this case, there is nothing of any value in this business except the client list. With 2 clients and only 1 that is reliable, I'd take the $250k asking price and divide it by how much RELIABLE revenue the clients are bring in. That's your timetable. Now: What is your cost schedule going to be for the duration of the time you have? Building repairs aren't an issue but there is Rent, Utilities, What happens when the computer goes up in smoke in your machine? Will you be able to afford a replacement based SOLELY on the business income? For $250K can you setup a better shop with a lower cost schedule or a higher profit margin?
Id say overvaluation is my concern. Boss had the shop for 45 years, last 3 have been trash after biden. Previously really lucrative. Machines completely lack any PM and im thinking 70k for and okuma 4020 mill, haas vf2ss ok, old sl20 bar pusher ok shape, and newer ST20 good shape. He hasnt gave me a number yet
If the machinery is worth say $10K that means you are paying $250K - 10K = $240K for two customers. That's $120K per customer. You're buying customers. That's a lot of money to buy a customer.
When buying any type of machining equiptment.... How much abuse has the machine received..? 2. Myself, I would never pay more than 33% of the original purchase price, for used equiptment...
Its exactly my situation. Buying into a failing shop but it has potential. But is it worth my blood sweat and tears? Im already 51 and my wife says no way
My first answer is no
Work at the Co until the end
If someone else buys it you will most likely have the job you like
If the business is closed, go to the auction and by, piecemeal the equipment you want for pennies on the dollar
JIM
If you enjoy being a machinist but despise being a businessman, be ready to change your mindset. I own my shop now, but stayed in front of a machine far too long until the light came on. I wasted some of my best years thinking I could run a machine and a business at the same time.
I kick myself from time to time. I could and should've pull the trigger 2-3 years earlier on opening my shop. 18 years later still glad I did open it up.
Shark Tank for machine shop owners. I think we would all like to get the shop owner to present this "great opportunity "for us to buy into the business and explain why he thinks it is worth the asking price. So many questions...
Man I would 10000% watch that!
Bro this exactly whats happening to me. Like exactly. Researching sba loans now but debating ownership. Im the right hand guy for 23 years. Owner doesnt touch machines at all. I do 100%
Your distinction between "buying a job" vs "buying a business" is what it's all about. Very astute. Good video. I mean to watch RUclips more but I never seem to get around to it. Good stuff.
Great Ian as always, good to hear from you , full of wisdom. Huge machining experience.
Thank you very much for checking it out!
What does it mean to be responsible for the backend in a machine shop? What does backend entail?
I get the mail for my employer and i see all the bills every day. Health insurance, CA regulatory forms and questionnaires, environmental fees, electric, phone, alarm, business insurance, worker comp insurance material bills you name it. Juggling that and payroll taxes, regular taxes and payroll(quickbooks) is i think what the back end is.
I guess in this scenario I'd look for equipment and tools I'd be interested in and offered to buy those and just work out of the home shop when the businesses shut downs tell a new opportunity comes along.
That was very much my thought as well - no sense in burning a ton of capital for the package deal if it’s not really necessary!
Until later in the post summation, I could’ve SWORE my other half hacked my account and posted about MY situation🤣🤣🤣my advice based on where I’m at in this process, get an outside account to look at the books and try to compromise on a number. It may come down to a 3rd party business appraisal, but according to my lawyer, it’s usually not necessary. I’ll have to dig through the forum and find this post!
That’s fantastic advice! Third-party appraisals are nice because they take the ‘personal’ feelings out of it and drill down to the actual numbers you’re dealing with. Best of luck in your acquisition!
Totally agree with the summary. The OP could buy a couple really nice used machines for $50k and get in for a lot less
The biggest thing I found was if he already has similar capacity at his home shop, it would likely be better just to keep his job at the shop until the owner was ready to close - then try to transition the existing customers to his own shop - it would certainly save a good bit of scratch!
The most valuable assets of any company, are the customers. If you buy machines for $50k, you still have no customers.
What advice would YOU give to someone looking to buy the shop they work at? What red flags would you watch out for?
Last week I closed the purchase on my employer, 10+ full time employees, Great diverse business. With that being said we have challenges just like any trade right now, top of that list is finding skilled employees. The biggest advice I can give someone looking at a shop is hire a hood accountant, hire a good lawyer, and really look yourself in the mirror and ask yourself if you want to do it, and if you do and the numbers make sense, then go after that dream!
Pass. In this case, there is nothing of any value in this business except the client list. With 2 clients and only 1 that is reliable, I'd take the $250k asking price and divide it by how much RELIABLE revenue the clients are bring in. That's your timetable. Now: What is your cost schedule going to be for the duration of the time you have? Building repairs aren't an issue but there is Rent, Utilities, What happens when the computer goes up in smoke in your machine? Will you be able to afford a replacement based SOLELY on the business income? For $250K can you setup a better shop with a lower cost schedule or a higher profit margin?
Id say overvaluation is my concern. Boss had the shop for 45 years, last 3 have been trash after biden. Previously really lucrative. Machines completely lack any PM and im thinking 70k for and okuma 4020 mill, haas vf2ss ok, old sl20 bar pusher ok shape, and newer ST20 good shape. He hasnt gave me a number yet
If the machinery is worth say $10K that means you are paying $250K - 10K = $240K for two customers. That's $120K per customer. You're buying customers. That's a lot of money to buy a customer.
I know you are trying your best not to clap :) Your early videos were unwatchable because of that. I'm loyal though!
When buying any type of machining equiptment.... How much abuse has the machine received..? 2. Myself, I would never pay more than 33% of the original purchase
price, for used equiptment...
didn't watch it all got to point i thought don't buy it .
That was my thought as well!
Its exactly my situation. Buying into a failing shop but it has potential. But is it worth my blood sweat and tears? Im already 51 and my wife says no way