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torker
01-29-2005, 09:56 AM
I had an interesting offer yesterday.The owner of an old established machine shop here offered me his business...he'd finance it with a small down payment and next to no interest. The equipment is really old. Two big Crowthorne (English) lathes, a good size Canadian made shaper, a nice old keyseat cutter(with up to 1" broaches), an old drill press that should be in a museum and some old welding equipment that I don't need. He also has a lot of inventory, most of it is heavy wall DOM and 4140 solid round stock. He wants $100,000 for the turn key deal. He rents the building. I laughed at him but I'm thinking now that I may be missing something. He knows that I'm interested in starting my own deal and knows that I can already do things he can't. I've spent a lot of time around his shop and have always been amazed at the simple jobs he turns down...if it isn't a driveshaft or a keyseat he isn't interested, if it's aluminum he'll show you the door. If I buy him out that does away with one established competitor and brings a steady clientelle. He has by far the best location in town. He'd be avaiable anytime I needed him in case I got baffled with the 50's technology. If I throw in my present machinery and get a decent mill this shop could do a lot more. Right now it's basically a repair only shop. What to do....give $100,000 for this or buy a Haas lathe and mill for the same money...double that probably by the time the dust has settled...and then what....hispeed cnc machinery built for a production shop in a repair world and hope I can invent something worth manufacturing...hmmm. Do any of you guys who own similar small shops have anything to add? I've checked out what I'd have to pay for slightly newer, used equipment but it all has to come from a long ways away...then there is the riggers etc. that I have no idea what would end up costing. Up here in the boonies of BC you sometimes have to take what you can get. Thanks!
Russ

wierdscience
01-29-2005, 10:13 AM
First let me say cnc is great,but it has to be justified.I have seen 2 cnc shops survive 5years and 50 go broke,so kind of a bad atrition rate.

If he is wanting to do a lease purchase I would check the agreement over legally and if it's good jump on it.With the skill you have you should have no trouble making it.

The old machinery,40's and 50's tech is fine,you can setup and make parts faster than you can write programs especially on singles.If there are any plants and or process industries in your local cater to them they will keep you busy.

Think it over and if you decide to do it good luck!

ibewgypsie
01-29-2005, 10:23 AM
On single parts, on my cnc. I find it runs just fine in manual using the joystick.

I wrote a program which wrote gcode following the joystick. I lost it with a computer crash.

Hard going into business, expect things unseen. Learn how to pinch pennies.

My buddy wired a few metal halide lights into the motorcycle shop, no heat. Electrical bill over $200 a month just for lights. My homeshop keeps on building things, no real income in a while thou. As you might have read I am going through some changes here, upgrades.

Check to see what the 4140 will sell for. Come back and offer about "that" much for his shop. Actually auctions are the way to equip up. We paid so little for some of the machines it'd piss you off to know. Ebay usually is a joke to try to buy from.

Especially in a rental building.

jlh28
01-29-2005, 10:31 AM
If it were me, I would look over the last several years of his business receipts. Try and get a feel for the "Value" of his established company name and reputation, because it seems that is what you would be buying. Also, consider you would get his advice anytime and its value. Not to mention the low financing rate he is offering. I have seen several small companies go under due to the debt burden from startup purchases. You also make a good point about eliminating a competitor. I think it sounds like an offer that should be seriously considered. I would also think twice about the price of that HAAS machinery you are considering. I don't know your financial position, but to go out and purchase that dollar amount of machinery for a start-up company could be disasterous. Start small and grow as your business does. Expensive machines need to be run a lot to generate profit. bla bla bla...I could keep going on. Good Luck on your future business.

mochinist
01-29-2005, 10:38 AM
I would say you are better off starting with that old machinery than going out and jumping directly into the CNC world. In our shop we have seven Bridgeports, one Devlieg jig bore, another big horizontal mill that has german writing(I think), four lathe's,two surface grinders, and a cincinatti radial arm drill. We also have a 90's era Hass VF-O mill and a Atrump mill with Centroid controls on it that were both paid for by all of the manual machines listed above. The CNC's definitely get used but we would have to close are doors if they were our only machines to make money with.

Tinkerer
01-29-2005, 10:48 AM
One thing to consider. He has the right to sell you the business, that is the name, tooling ect. But he may not be able to transfer the lease on the building. If I were in your shoes I'd look into the lease first. See if the owner is willing to deal with you. Also find out if any hiden fee's or increases are forthcoming... might be at the end of a sweetheart 20yr lease. Hate to buy his business only to find out you have to relocate it in 30 days... or have a big jump it the cost per month.

Sprague M
01-29-2005, 10:50 AM
Sounds like a solid oppurtunity. Find out what it's worth. Do a solid evaluation of inventory, equiptment and clientle. What is it worth, to you, to RISK everything you have to do this? Remember going into buisness is alot like gambling. And like gambling less than 15% of playing pays off.
Sit with the seller and find the daily operating costs, how long do accounts float before being paid ? Where are his ccredit lines? You have a huge advantage over starting out alone- this is where the monies that the seller is looking for above material(machines & inventory)is established.
Then be careful of getting rid of current customers and gaining new, maybe the reason for turning away certain work is not as apparent as you think. I have turned away easy work for liability,or knowing that I will not get paid.
Sometimes the work you hate is what pays the lighting bill.
Know every cost and all pitfalls, before changing what maybe the very thing keeping the doors open.
Matt

WJHartson
01-29-2005, 11:58 AM
Tinkerer is right, check out the lease agreement and make sure that you can still lease the building for a decent length of time. You said it was a prime location and that is worth something, probably a lot. Start with what you have and build a lot of additional debt until you know you have it covered.

Good luck,

Joe

Rustybolt
01-29-2005, 12:00 PM
28 is right. Find out what his cash flow has been for the last 3 or 4 years. Is it increasing or decreasing/ He might think his business is worth $100,000 but the books and inventory will tell you something else. The book value of 50s era shop equipment is virtually nil from a business point of view.

You're hot to go now, but take a step back and hire an accountant to look at his books. You'll be thankful you did.

egpace
01-29-2005, 12:10 PM
As you know, the owner of a one man shop is the business. You, taking his place, will be the business.

In reality, you’re purchasing a building full of machinery and if the value of the equipment and stock is 50k then you’re buying the rights, location, lease option?, & customer base for the other 50k.

Some questions to ask…

Is the name, location, customer base, etc worth the additional 50k?

By purchasing on time as proposed, will you have the option of selling off what you don’t need?

Is the landlord intending on keeping the building and is the lease, if any, transferable?

Your desire to expand diversify should be based on a sound business and marketing plan. As others have mentioned there’s a shrinking demand for machine shop services.

Ed

Tinker2
01-29-2005, 12:30 PM
Good advice above. See if he is willing to stay and work with
You for a year or so. If established bisiness is a one man thing .

Be Safe http://bbs.homeshopmachinist.net//smile.gif

toolmakerjim
01-29-2005, 01:04 PM
torker;
one other thing to consider in addition to whats already been said.
a key personnel insurance policy on the "business" partner that provides enough to pay off the business in case the gentleman passes. this is a policy that you own and the payment is made to you.
all you really are buying, as stated, is his reputation. while exploring this venture see what the purchase of the property is. if not too much the value of the policy could also cover that.
just dont knock the guy off to collect...jim

tattoomike68
01-29-2005, 01:08 PM
my friend wanted to buy all the machines at a shop that was going out of business he offered they guy $50,000 for everything and the owner thought my friend was trying to screw him.

So the owner had an auction company sell everything and he ended up getting olny $30,000 out of everything.

My friend ended up buying eveything he wanted for $12,000 at the auction.
He got 2 lathes and chucks, band saw, keyseater and cutters, big drill bits, a big drill press and all the hand reamers, some die heads and dies.

my point is he probably will never get $100,000 if he has an auction.

being the olny game in town might be the ticket living in the boonies, that is worth something.

I hope you go for it but can talk him down in price a little bit.

torker
01-29-2005, 01:18 PM
Thanks a lot you guys! I didn't expect this much input!!! You all bring up a good point about the lease/building. I was going to ask the owner what that would entail but now you have me thinking about hidden things...like is he planning on selling out in the near future etc. BTW...the main reason he turns down so much work is his welding skills. He can weld driveshafts as good as anyone but refuses to use a wire machine so can't do any light guage stuff and the rest of his welding leaves a lot to be desired...he admits this. It hurts him not having a mill also. I guess you have to be aware that he inherited the business from his father and a huge chunk of cash. He is in the stockmarket in a big way and is very successful. This has me worried about what his books will look like. It almost seems like this might be something to do for him...I'm sure if the place lost a few bucks it wouldn't bother him. Another thing I like..the building is heated with wood, there is a 2 year supply out back. The location is good and getting better. Most businesses are on the opposite side of the tracks, there is no overpass and the train traffic is growing every month. It is a huge plus to be on this side...people are getting sick of waiting 20 minutes to cross the tracks everytime they want to do business. Well I'm going to read all this again...get a list together along with some measuring tools to check out his machines. Thanks again!!!
Russ

G.A. Ewen
01-29-2005, 02:25 PM
There is a nice little machine shop for sale here to. (in the $200,000.00 range) The problem here is that the local economy is very unstable. Tembec is nearly finished thier super mill across the border and chances are that once it is up and running the mill here will be closed down. If that happens it is likely that more than one local buisness will go tits up.

Lots of good advice above but I think that your local economy will, in the end, be the deciding factor. You have control over customer relations, quality workmanship and the like but if the local economy goes south there is nothing that you can do about it.

Stanko
01-29-2005, 02:48 PM
The only advice I can offer is get it appraised by a professional, sure it may cost you, but he wont be wearing rose tinted spectacles and should ask the hard questions, the ones that you probably wouldnt. When I went into bought into a company 10 years ago I paid for advice, the advice I got saved me 20,000 and only cost 150. I still have the company altohugh the first 5 years were lean. Keep enough to live on for a while.
I personally belive there is a potential for jobbing shops as they are a communiy asset, they are directly good for the local community where a cnc manufacturing shop may be indirectly good for the community. Probably easier to sleep at night with simple projects and relativly low debt servicing.

snowman
01-29-2005, 02:50 PM
I know that you would be paying for the name...my question would be to the value of this "name".

Companies aren't stupid, and they'll recognize that it was sold. If he's the only game in town, it seems that anyone that could do his work should be able to pick it up from him.

He may have years of loyal customers, but are these loyal customers going to come to you once he's gone? They are used to dealing with him.

-Jacob

toolmakerjim
01-29-2005, 04:16 PM
snowman;
if the current owner is turning away work and torker is more capable why in the world would the current customers not want to stay?
a similar situation occurred in Huntington WVa a while back. Fred McCorkle had a very sucessful machine shop business which he sold. the buyer had Fred sign a no-compete agreement but didnt specify any distance requirement, so Fred moved 60 miles away to Charleston WVa. his customers flocked to the new business. after all the lawsuits were settled Fred learned what a non-compete agreement was...jim

Michael Moore
01-29-2005, 06:05 PM
<font face="Verdana, Arial" size="2">The equipment is really old. Two big Crowthorne (English) lathes, a good size Canadian made shaper, a nice old keyseat cutter(with up to 1" broaches), an old drill press that should be in a museum and some old welding equipment that I don't need. He also has a lot of inventory, most of it is heavy wall DOM and 4140 solid round stock. </font>

It sounds like the machine tools are probably worth a couple of thousand dollars max at auction, and from the general talk here and at PM a lot of that big old stuff ends up going for scrap as there really isn't any market for it. Value the 4140 and DOM at the current scrap value, as if you had to sell out that's probably all you could get for it.

$100K sounds extremely high. With a rental building you are at the mercy of the landlord who probably will be happy to raise the rents to current values if a change in occupant takes place.

How much business will you inherit from the former owner's customers? It had better be enough to pay off that portion of the purchase price within a couple of years or so, if not sooner, and that needs to be based on net profit, not gross receipts.

If he's turning down a lot of simple jobs, those people aren't his customers and why not buy your own tools that are what you'd actually want, and just go after that business? It sounds like you would have a lot more varied clientele and wouldn't be competing against him for 100% of your business.

This doesn't sound like much of a deal to me.

cheers,
Michael

chief
01-29-2005, 08:06 PM
First question is are you a businessman? Can you deal withcustomers? Many years ago I
worked for a small shop employing four people, the place was dump but fairly busy.
When I started I cleaned up my area, threw away the junk and repainted my equipment, after every job I cleaned my machine and restowed my tools. When a customer tlaked to me I told him the truth good and bad.
(much to the boss' chagrin).
After awhile I went back in the service people started asking my dad where I was and when would I be opening my own shop.
My dad asked why and people said your son was neat, professional and had good looking equipment unlike the rest of the shop. My point is you will gain or lose customers, succeed of fail because of one thing attitude. good luck.

shaque
01-29-2005, 08:27 PM
Hey man go for it or you will always wonder why you didn't, if all things look like a go! You sound like a young man with a lot of ambition and the will to work long hours if necessary. These are the ingredient for success. USE THEM!
Best of luck, whatever your decision.
JIM

spope14
01-29-2005, 09:18 PM
You may want to have an accountant/financial advisor and / or real estate agent look into this for you. I had what i thought was a great opportunity a few years back, did this as they offered for free. The normal charge would have been about $100.00 each. The business was found to be overvalued, the guy did not budge.

Best $200.00 I would have spent, the next owner got it for 40K less, and still the biz died out.

I have a chance again, for 20% of the original price. May take it.

zl1byz
01-29-2005, 10:43 PM
Hi Russ. Some real good advise in some of these posts. Only thing I can add is stay at arms length from it all. Pay for your advise and if they say it doesnt stack up, walk and never look back.
Personally from what you discribe I think you would be better to start up with what you have and build up your own bussiness. I don't think the guy has a lot to sell from the way you discribe it. I think you may actually realise this, but remain hopefull for a running start. Stay at arms length and don't get suckered.

Most of all best wishes with what ever you decide to do.

John.

torker
01-29-2005, 11:26 PM
Hey guys! Thought I better come up to the house and track some more chips onto the carpet http://bbs.homeshopmachinist.net//biggrin.gif Ho Boy...everybody is right! The pro's and the con's. I have had my own successful cabinet/furniture business before, for a little over 7 years. I'd still be doing that if the wood dust hadn't got the best of me. Right now we manage a 40 unit motel worth around $1 million, have 4 full time employees and in the busy season up to seven. Took the place over at a $60,000 a year loss and in 4 years we had it earning $50,000 to the good. I think I can deal with people being as how we run 5 to 6 thousand of them through there a year...lol! So many things to think about and so many good points. I've checked other buildings in the area for the past year. Most rent for $1500 to $2000 a month...all have NG heat...some are in the $1500 a month range to heat in the winter. This building is plenty big for $750 a month and costs $25 to $35 a month to heat. I got some quotes today....for me to buy used machines roughly the same size and get them shipped here...$5 to$7000 plus rigging costs...I'm guessing $1000 to $2000 depending. Most of the buildings I've looked at need to have all electrical installed for my needs...I know how to do it but it has to be done by an electrician with all the permits etc. Figure another $1000 or so. I'm already into this for $10,000 and haven't even bought a machine yet...oh I forgot...they require two months rent in advance...add another $3000 minimum. This is all cash money up front. Wow! The other deal...I give him a down payment, walk in and go to work....with him as my free helper. BTW...I know this guy really well...we've hunted and shot trap together for years. He can afford to retire really comfortably and is just plain sick of the same shop for 40 years.
How many of his customers will stay? I have no idea. A lot I suspect. His shop rate is half of the other two in town....though I doubt it could stay that way...He inherited the business and had no payments.
What is his machinery worth if the business goes broke and has to be auctioned off...probably about the same as the machines that I'd bring in from somewhere else...not a lot. I can only speculate for now...have to see the books and get the rental info. $100,000 ($76,000 USD) is a good chunk of change....geez...I could spend all that on booze and broads http://bbs.homeshopmachinist.net//biggrin.gif Time to think! Thanks again!
Russ

tattoomike68
01-30-2005, 12:09 AM
for $76,000 US you can buy 2 plastic pick-up trucks and some problems.

The more I think about it, the more I want to buy it. http://bbs.homeshopmachinist.net//smile.gif

hows the fishing this time of year?(canada is nice).
all jokeing a side, I dont think you can go wrong.
get a hoz. mill for long keys, a good vertical mill with dro,a shear and press brake, bring in the good welding machines you may have and you have a full working business.

loggers,farmers, ranchers, dairy farmers, public works and city workers,,,,,
from all of them you can get tons of work, give some of them a call before you do anything, they might realy have some work for you.

If you have a broken down city garbage truck you can charge $1,000 a day or more and thats the good jobs you want(welding,hydrolics,,,,).(we all like trash to go bye bye)
I know you can do it.

Endmill
01-30-2005, 12:35 AM
I taught business courses for about 5 years. I would think long and hard before I made any decision. Have you been actively seeking other machine businesses to buy out ? What were your business plans before this "bolt from the blue"

There is no real estate involved, and it is difficult to see any tangible asset value other than scrap metal. This leaves only cash flow, or net income. First, how many people does the business employ and how long have they been there ? The owner may want to retire, but can't get out from under. The first thing to do if you are at all serious is to get an accountant and later, a lawyer, and go over his books, for say the last 5 years. You must subtract a reasonable salary for the owner for his time and any other family members if they worked in the business. Money earns about 6% return. Take the net income and divide by .06. This is the the present value of the business.

There are two ways to examine the situation.
Start with the present value. Your offer would generally be some fraction of the calculated present value, usually 30-50% which reflects risk and stability.

The second way starts with the asking price.
100K is not much, and a present value of 100K would generate about $6000 in income per year.

The key question is how much money the business generated for the owner, after paying salaries, taxes lease etc. Who are the customers, and what do they buy. Are they likely to continue buying for the forseeable future, from a new owner. Will the business income remain stable for the life of the loan.

Paying off the loan in 5 years means annual payments on the order of 26K, which means that the owner profit should be on the order of $75K or more to justify this asking price.

What are the sellers other options? Are there other potential buyers. What would the owner get for the equipment and metal if he had an auction house come in and liquidate ? If he is offering to take back a loan, then this may indicate that bank financing on the venture would be difficult or impossible.

What you are essentially doing is buying overpriced obsolete equipment and materials, which you probably don't need and won't use, on an installment purchase plan. If you had $100,000 of your own money, cold cash, would you buy the business or do something else?

What happens if you default on your loan or note. Since there is no real estate The equipment etc, probably including your other possessions will be up as collateral. You may not be able to sell any of the equipment until the loan is paid.

Equipment in a business is usually purchased when there is an immediate need. (You have a contract, there is a spare machinist you could hire, and you need another Bridgeport.)
Your cash (or credit) should be in savings for just such a need. When the contract is over the B'port goes on E-bay.

Other considerations such as loosing a competitor, "good will" , possibly better business location, more toys to play with, or bigger business, are emotional factors.
Even if you feel that with your talents and hard work, you could double sales, this is something that you and not the seller does, and it should not greatly influence your counter offer if you decide to make one.

Finally, if you have or are anticipating family responsibilities, you need to consider the impact of the additional debt burden.

Buckshot
01-30-2005, 12:58 AM
.........I don't know running a real machine shop from beans. Also I'm not up to speed on who brings in things for a job shop type setup to stay busy. As far as individual people go, most people break it toss it and buy new.

I live in a community about 70 miles east of Los Angeles. There is a population within the city limits of about 60K. The area used to predominately be agricultural and the majority of that was citrus, with some other irrigated and dryland farming going on. This meant lots of ag type machinery, tractors and associated equipment, pumps and engines, valves, etc, etc.

There was one machine shop in town, Rettig Machine. About 20 years ago they moved into a new California 'Tip-Up'. I recall as a young kid going to their old greasy dim wooden building with my grandfather.

When I got my lathe in Jan 04 I needed the 5C collet drawtube shortened and re-threaded, so I went to Rettig Machine. Thier lobby area was nice and there were 3-4 ladies working up front. I was actually helped by the owner who startled me by saying that due to their being so busy it would be 10 days to 3 weeks before they could get my little dinky job done. I was also quoted $75 for the work (I was charged $50 :-).

I have no idea what they were so busy doing. I said that I was glad to see that they still had a couple manual machines avail for this kind of walk in type 'one-off' deal. Mr Rettig looked at me mildly startled and surprised me further by saying that ALL their machines were manual.

I have just assumed from the little I knew, that in this day and age CNC was king, and for them to be so busy they HAD to be doing some type of production? Maybe they were. I didn't feel comfortable asking what they were doing, as it was none of my business. I was pleasntly surprised and for some odd reason gratified that they WERE busy.

I explained that I was a hobbyist HSM and that I'd just gotten a 'real' lathe into my garage. Mr Rettig said that he was having a lathe and mill installed at his house. I asked if he liked doing hobby type machining too. He said he enjoyed it but the lathe and mill being installed was just so that he didn't have to come in to work everyday.

The above is my entire total experience with a real machine shop! I have a shooting buddy (Bob) who is a fully employed machinist. The company he worked for was bought by a much larger company and was moved to Los Angeles. The equipment that wasn't making the move was bought by one of my friend's co-workers, and Bob went to work for him, in the same building. They didn't want to make the move either :-)! In this case, all the machinery WAS CNC stuff with no manual equipment.

I don't know what all was left or what the guy had to buy to complete the shop (if anything). The last time I talked with Bob, he said that they were busy enough that they had to hire a 3rd guy. They were making somekind of doo-dad for hinges (or maybe the whole thing) for a French helicopter company. They concurrently had some impending deal to do a portion of some machining on titanium aftermarket Jap motorcycle accessories.

My whole point for even posting is that I guess there IS work out there to get. How you get it, how it works and everything else is beyond me. I envy you the possibilities that this opportunity presents. As others have said, don't let emotions and enthusiasm get in the way of making a good solid decision, to your benefit.

Best,
Rick

zl1byz
01-30-2005, 01:33 AM
<font face="Verdana, Arial" size="2">
If you were being realy synical these are possible replies to these statements.

[B]I had an interesting offer yesterday.The owner of an old established machine shop here offered me his business...he'd finance it with a small down payment and next to no interest.[B]

He's smooth. He made you feel good. Your the chosen one to take over his bussiness. He likes you so much he wants to make it easy. NO interest! Yea only about 60k of the price?

[B] The equipment is really old. Two big Crowthorne (English) lathes, a good size Canadian made shaper, a nice old keyseat cutter(with up to 1" broaches), an old drill press that should be in a museum and some old welding equipment that I don't need.[B]

He's been so keen at his bussiness, he probably hasn't spent a dime on it since the real interested party departed this world. Note: some of this gear you already don't need. Can you work 2 lathes at once?

[B] He also has a lot of inventory, most of it is heavy wall DOM and 4140 solid round stock.[B]

Probably stock inherited which either does not suit the type of work being done or he does so little work he hasn't managed to shift it since he took over. Unless you get it for a bargin why lumber yourself with too much stock. Remember the 60k interest your probably paying.

[B] He wants $100,000 for the turn key deal. He rents the building.[B]

Nice round figure. Suprised it wasn't 99k, would have sounded better. Nice little catch phrases in there, good patter. Renting the building? Who pays for that? Give you one guess, and so many other questions abut this one.

[B]I laughed at him but I'm thinking now that I may be missing something.[B]

Often your first responce is the best

[B] He knows that I'm interested in starting my own deal and knows that I can already do things he can't. I've spent a lot of time around his shop and have always been amazed at the simple jobs he turns down...if it isn't a driveshaft or a keyseat he isn't interested, if it's aluminum he'll show you the door. [B]

Your a threat to his slack atatudes. His bussiness is probably already struggling and a new keen bloke in town will probably be the last nail in the coffin.

[B]If I buy him out that does away with one established competitor and brings a steady clientelle. [B]

No! If you buy him out he doesn't have to worry about you being the competition. He's been shadow boxing for so long, put a real oponent in the ring and he will probably jump out in the first round.

[B]He has by far the best location in town.[B]

His opinion or yours? Best location in town wont pay the bills. Being the best to do the work in town will.

[B]He'd be avaiable anytime I needed him in case I got baffled with the 50's technology.[B]

Yea he's such a nice guy, all heart. Probably be on holiday spending some of that 100k most of the time, talk is cheap.

[B] If I throw in my present machinery and get a decent mill this shop could do a lot more.[B]

Ummm, so his old clapped out museam peices arn't that important/usefull after all?

[B] Right now it's basically a repair only shop. What to do....give $100,000 for this or buy a Haas lathe and mill for the same money...double that probably by the time the dust has settled...and then what....hispeed cnc machinery built for a production shop in a repair world and hope I can invent something worth manufacturing...hmmm. [B]

We lost the plot here! Come on it's a repair shop your buying. Is that what you want to do? I'm guessing here but your a welder right. So your probably used to fixing things, so you would fit into the repair senario a lot easier at present. Paying jobs from day one, thats what you need. Remember your now in bussiness, you have commitments and bills to pay.

[B]Do any of you guys who own similar small shops have anything to add? I've checked out what I'd have to pay for slightly newer, used equipment but it all has to come from a long ways away...then there is the riggers etc. that I have no idea what would end up costing.[B]

At least doig it this way you get to buy what your bussiness needs. Buying museam peices that you wont use isn't cheap.

[B] Up here in the boonies of BC you sometimes have to take what you can get. [B]

Hmm I don't agree as far as making purchases. As long as you keep your head the buyer has control of money and that is what talks.
On the other hand this statement could be the answer to your question "should be repairing or manufacturing" That distance from big markets and customers will be a pain in the butt. You will spend so much unproductive time trying to get work you wont make any money. On the other hand doing repairs for local customers they come to you and you charge your time doing there work. This is one of the big challenges for a small bussiness other than bad debts. Productive time! There is so much work that needs doing to keep a bussiness going, doing accounts, purchasing stock, new machinery, comunicating with customers and many other things that generally you cant charge out.

Just a few synical thoughts from the other side of the plannet.

John.
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[This message has been edited by zl1byz (edited 01-30-2005).]

[This message has been edited by zl1byz (edited 01-30-2005).]

Norman Atkinson
01-30-2005, 04:50 AM
Torker, it is time that you got to grips with reality.

This guy offers you a business for 100,000 dollars. Put it on the table and stare at it. Without batting an eyelid, you could cart it off and invest it. You could then have xxxx dollars interest! You could then sit at the table looking at your bank book and say that every hour you have earned xx
dollars- and you are still sitting on your ass.

You might get bored- most of us do. You probably have enough gear to relieve the boredom- and take this guy- or his successor, on. If you fall flat on your ass, you still have xxxx dollars per annum.

If you-as the Aussies say, go crook. You still have xxxx dollars. You ain't getting any younger- are you? You still have this 100, 000 dollars and you don't have to flog it- like this guy. All you have to do is to say- please can I have my 100,000 dollars- and bugger off!

It's a bit like Jewish prostitution.
" You like it and get paid for it"

My advice is free and comes with a money back guarantee.

Norman

klla
01-30-2005, 09:41 AM
torker,
I`m in the same boat as you.
been running a mobile fabshop/welding repair bizz in the port of tampa for about 6yrs..done pretty good...a friend/associate started a machine shop [as he is getting a little old for crawling around in the double bottoms of ships,etc]right down the street from another buddies machine shop who was fixing to retire.
well, when said buddie[charles] retired, we made a deal and i bought the machine shop,3 [lg zoned]lots, 2 bed concrete house and all the eqiup. for $150,000.$40,000 down owner finance@5%]friend [alfred] bought the BIUSNESS [all the existing contracts,referals, and some[most] of the tooling for $11,000...well, as most everybody here has pointed out, things rarely turn out as good as they look! alfred found that some of the customers didn't want to deal with him, some had the price down so low that you couldnt make any money on the work and some turned out to be such a PITA that you didn't want to even see them walk up! some turned out to be pretty good though! def NOT worth $11 grand![so i gave him one of the two turret lathes to help out, i didn't need it anyhow]
as for me, i bought based on property value and location ONLY! and still, found out that this property has a cell phone tower going up right BEHIND it![whether or not charley KNEW about it in advance is another story, i think he DID!]there goes my plan for 3 custom homes!now for a machine shop, this tower might not matter much, but with ALL the machine shops in the port of tampa, and friend alfred, there isn't much left! [ i turn all my machine shop work to him, and he sends me all his field fab. work]of course, i could rent the house out, cover my mortgage,and as this property is located just across sparkman channel from downtown tampa [where converted cigar factory lofts are going for $350.000+] i know it's just a matter of time until this property is worth 4 times what i paid[paying, i might add!]
bottom line? this is only worth what the eqiupment is worth! yea, you MIGHT factor in what the bizz is worth IF you can secure lease,but don't count on existing customers to pay the bills.....$100 grand sounds steep to me, but your in a better position to know what the potential is than we are!
joel

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it never hurts to look
unless i`m welding!!!!

http://community.webshots.com/album/51872821KYjlSY

[This message has been edited by klla (edited 01-30-2005).]

hoffman
01-30-2005, 10:07 AM
I work part time at a used machinery dealer to support my habit and can tell you that converted line shaft machines (Which is what you're talking about I think) aren't worth much and are often cut up for scrap. For $75000 US you could outfit a shop with some really nice 50's 60's vintage machines and still have a bunch of $$ left over. Maybe figure out your "dream shop" with every machine you anticipate using and check some used prices. That'll give you a base line.
Good luck! (I know almost nothing about these things but I do understand being excited about fulfilling a dream...)

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Hoffman in Warner Robins Ga

mattc
01-30-2005, 03:37 PM
another question you commented about mannaging a motel, I didn't catch wether you own it or not but does it give you enough time to take on a nother full time job or will you have to hire someone to do your part there, if you own the motel can you live off it if the shop strugles, also is the machine shop a hobby or a business you want to do for the next ? years

i have a (actually 2) small business, a janitorial business and a small repair shop the shop is actually more of a hobby but it made enough money to make it a business (besides better tax breaks) but I cant retire from eather business and at 35 I am starting to realiz that working till I die may not be too practile, what I am saying is even if you can live off it will it be worth enough to retire from someday or is it a hobby for now?

Michael Moore
01-30-2005, 04:18 PM
Russ,

Do you this see being a welding shop that does some machining, a machine shop that does some welding, or a "do whatever walks in the door" kind of place?

What is your strong suit - welding or machining? It seems like you'd want to capitalize on your strengths.

Just what size and vintage are the lathes? I couldn't find "Crowthorne" listed on the lathes.co.uk site nor could I turn up a Crowthorne lathe on Google. That might mean that if there is a major part that needs replacing you've got a heavy piece of scrap metal on your hands.

Do you have any idea of the actual condition of the lathes - bed wear, spindle runout, etc? Can you use a big old (and possibly loose) lathe to do the majority of the work that would be coming in, or would you find yourself also needing to purchase a smaller, faster and more precise lathe for most of the jobs?

US$25K could get you into a new import 3 axis CNC knee mill that can also be operated manually and a nice used reasonably big manual lathe like my Mori Seiki. I paid $5K for my Tree CNC kneemill in useable condition (less tooling) so if you shop around you could probably have both machines and all the tooling you need for $20K or less.

A combo CNC/manual mill lets you do quicky manual jobs (though it sounds like once you get used to using an MPG and a conversational control you can do those quicky jobs pretty quick through the control) and still do a bit of light production work, or you can automate a job that would be more complicated and time consuming if done manually. You can program a bolt circle drilling job through the conversational control in about 3-5 minutes and have the job run before you've got your rotary table put up on the mill, much less get your part centered on the table. If you get a repeat job on a regular basis just call up the program you did for the first time and let it run, while still charging the full "from scratch" price.

Even though shapers seem popular among the hobbyist crowd I'm not sure if they are of much general use in a commercial establishment these days, though they may be just the thing for some small niche job.

You'd want to see if the landlord is going to expect you to pony up that two-month deposit when the lease changes hands. I don't see why this landlord should be any different in his practices than at the other shops you might rent.

Figure out what YOU would buy if starting out fresh to do the business the way you'd want to do it. Then compare that to what you'd be getting in this deal. You might find that you are buying stuff that you don't really want because it is part of the package deal. There's no sense in spending a bunch of money on this package and then having to go and spend even more money to get everything you need to do business.

cheers,
Michael