SHALO

Hi every body,
I like to start my own screen printing and embroidery Business in California(LA or Orange).I have done screen printing for about 6 years and embroidery about 3 years and embroidery digitizing about 1.5 years.and on and off art work for screen printing. my question is :
1- Is that better to buy a business which already is making money ?( if so how much money do the customers worth? one time of the yearly income or what?)
2-or start from the scratch so you can pick your own place to work and live?
Thank you all for your help.

Allen

 

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ino

If you're buying a ready made business you might have to pay quite a sum for the goodwill of the business. If yoiu go that way make sure you see the last 5 years of his audited accounts. Just my thoughts.

 

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SHALO

Quote: Originally Posted by ino If you're buying a ready made business you might have to pay quite a sum for the goodwill of the business. If yoiu go that way make sure you see the last 5 years of his audited accounts. Just my thoughts.

Thank you so much Ino.
I would like to know what would you do if you were in my shoes.( I am 10.5 by the way)(Just a Joke!!)

Thanks

 

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ffokazak

I always see guys selling all the gear for business', and it seems like a good deal. Put it this way, if a fellow was getting out of the business, he wouldn't be getting EXACTLY what he paid for everything. I think about my shop, and all of the accumulated stuff i have bought over the years that helps make my workload easier. {Paper cutters, Sign vinyl supplies, Inkjet Films, extra inkjet carts for my 3000 etc. } All of this stuff is valuble as individual items, but when they are part of a "Shop for sale" would be almost thrown in.

My Two cents. I think buying the equipment from a closing business would be a very smart idea. Not sure about buying a website, business name, client list etc. That would be a bit dicey, as the question pops up of Why is he selling? If it was that very profitable, he would keep it.

Good luck!

 

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Solmu

Quote: Originally Posted by ffokazak That would be a bit dicey, as the question pops up of Why is he selling? If it was that very profitable, he would keep it.

People retire, or move on to other business ventures, or their personal life intrudes, or they want to move to a different location (like overseas). Or they barely made a profit, but looking at their books you have reason to believe you could manage their assets better.

There are legitimate reasons to sell a business. Absolutely agree that it's an important question - but there are some good answers as well as the lousy ones.

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TMPP

I definitely agree with you on buying from someone selling their wares. No sense on learning with brand new equipment. We purchased used, made our mistakes and some money and are now moving up. I like buying used in the beginning.

Also we tried buying someones existing domain name and it didn't work. BUT what it did do was give us great ideas for a future line that is coming out this summer!

Good Luck in your search.

 

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SHALO

Thank you all for your input.
My main challenge with myself is lets say a business is for sale for $200,000 and their net income(before taxes) is $120,000. and I would say they have around $80,000 worth of equipment and inventory and supply.
ok...Is it better to get a $200,000 and buy the Business which is already making money or buy $80,000 worth of equipment and supply and open my own place from the scratch?

Thanks again

 

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ffokazak

Man if you had 80,000$ to start a printing business, YOu would be in pretty good shape as far as equipment goes.

I started with 2000$ i think!

 

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SHALO

Quote: Originally Posted by ffokazak Man if you had 80,000$ to start a printing business, YOu would be in pretty good shape as far as equipment goes. I started with 2000$ i think!

dear ffokazak I wish I had $80K .that was just an example.i am trying to figure out which is the best to go for.

 

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TshirtGuru

Quote: Originally Posted by SHALO dear ffokazak I wish I had $80K .that was just an example.i am trying to figure out which is the best to go for.

If the business is already making money, then I would personally go with that. (Just because you are buying an exsisting business does not mean you have to work at that location. Most businesses lease their storefronts/warehouse anyhow so either you would have a choice to renew the lease under your name or you choose to relocate to where you want. Screen printing isn't really a storefront type of business in my opinion. Most customers will not walk by a screen print shop and say, "oh yeah, I need custom t-shirts.." Storefronts are beneficial to any business, however it is not crucial in this business (it is however crucial for an ice cream shop to have a store front).

The benefits are to buying an exsisting business:

They already have customers.
They already have the equipment.
They already have the trained employees.
They will most likely train you for a good length of time.

Basically buying an exsisting business is a HUGE jump start compared to trying to start fresh on your own.

 

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TimeWithoutTheE

buy used
start everything on your own.
so many people think it is so easy to screenprint that they invest 5k and cant do it and end up selling all there stuff for 1k just to get some of the money back

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ino

Maybe I misunderstood the question, just buying the previous owner's equipment is one thing and buying up his brick and mortar business as a ongoing concern is completely different.

 

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SHALO

Quote: Originally Posted by ino Maybe I misunderstood the question, just buying the previous owner's equipment is one thing and buying up his brick and mortar business as a ongoing concern is completely different.

This is the actual business (which already making money)not just the equipment.

 

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DTFuqua

If it were me, I'ld be sure to find the true reason for the sale. If the present owner will not show his books as well as bank records, then consider all the reasons he/she gives as false. Its easy to make a set of books look like a business is profitable when it truly isn't . I'm not saying everyone is out to rip you off (everyone doesn't know you exist LOL) but there are enough that you should be real carefull buying something whose value could be different according to who is looking at it. A lot of businesses have been either failing outright or on the brink of failure in the present economy and may not be able to recover for any number of reason including the possibility of the customer base going out of business. Buyer be VERY AWARE. Good luck.
Terry

 

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Rob

Shalo, You pose a good question, we started in business 8 years ago on a New Years Eve party drunk. A friend of mine was bailing out after 10 years of business. We bought 2-6 head embroidery machines(very old), plus all the stock, materials and name for $10,000 at 2 in the morning. He left town the next day due to personal reasons. This was literlly a fire sale! I came in to the shop two days later and found a 5000 hat contract was arriving, which was worth $10,000. Yes I was lucky, but it has been a huge learning experince. I lost one of the machines 6 months later to a bank that had a lien on it. But in the end it was a great way to start.
We have since upgraded the embroidery machines, added silk screening and DTG printing. We have 3 clothing lines that we just signed to produce and market.
For what it's worth, I would value our business now at around $300,000. After 8 years. Based mainly on the profits and actual resale value of the equipment. Which is about one years worth of gross sales average for the last three years. If it was to be sold for that value, it would take about 2.5 years for the new owner to produce that in profits, if they did not take a wage.
And that also requires the new owner to maintane the current level of customer service, quality and purchasing capabilities.
Hope that helps.

 

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