buying busness vs. starting own

[hvacdr]

I have talked to local one man operation about possible buyout. he is 60+ and wants to slow down. we have not yet come up with a value but he has said he realizes that he can't ask much if i am going to make it. However he only charges 35 per hour(in city 15 miles away that is half of going rate) and is turning away work. I already have most tools of my own and am very agressive, service guy with good feedback from customers. I also have thought about starting from scratch.. I am getting calls with out tring. what would you do?

[baub]

If he is only charging $35/hr, you would have to raise your prices at least 80%. That would drive away all the freeloaders who have been on his personal welfare list for all those years.

If you buy his business, pay 50-60% for the useful tools and equipment, same for inventory YOU CAN USE, (not the old crap).

Pay NOTHING for good will. It's a strainer full of hopes.

As Bruce Williams (business talk show host) would say, he owns a job, not a business.

I can speak from experience... I have hired, and now I'm a one man shop. It can be a very lucrative job, but still a job. He is selling a job, not a business. JMO. Good Luck!

[absrbrtek]

Im with baub. The customers this guy has will bail if you raise the rates. The only reason hes turning work down is becuase hes giving it away. Welfare turns people down everyday!!

[condenseddave]

Actually, it doesn't really sound like he's got much at all to sell, sad to say.

[i_got_ideas]

I'd have to agree with the fellas.

I am buying a 92 year old company though it has what the one you have been offered doesn't: A long, good standing repuation, a well structured/established workforce, and 3 seperate locations with full inventory, vehicles, techs, it's all in place.

With him being a one man shop here's what I would do. Pay him what you feel his tools are worth if you need them. I would then give him an offer, a very small number, to buy a customer list from him. All in all the customer list is the best thing he has going, and keep in mind they are used to his "low-ball" prices.

Since you are already getting calls it shows that you are already doing something right. Keep doing things as you are and start fresh.

[heat411]

i would be very careful with this purchase , he didnt charge enough and you dont know the level of service he was offering. go with owner on calls one day to experience how he works or performs

[Green Mountain]

Okay this guy still has some juice left. He said he just wanted to slow down he didn't want to die.

I would suggest a merger. Unfortunately this guy didn't charge enough all these years. Between the 2 of you, you can makes some pretty good bucks. Buy him out with the profits.

First thing you do is get your hourly rate into the $60's pre hour. Let the old guy work the jobs he wants to and pay him 35 bucks a hour for the jobs he does. You do the billing and bill him out for the above mentioned figure. He can just explain to his old customers that his company in sold out and under new management. You can be the pric_.

DO NOT worry about losing customers. Where are they going to go ? They may call you a son of a beech for raising your price but ---sticks and stones!!!! The few you do lose you can afford to lose. What his little operation needs is new blood. Your it.

[Edited by benncool on 06-07-2004 at 03:57 PM]

[heat411]

give him a flat rate book at at least a100 dollars an hour to start but dont tell him your rate

[hvacdr]

i am interested in the merger idea. has anyone done such a idea and how did it work

[lakeerie]

Originally posted by benncool
Okay this guy still has some juice left. He said he just wanted to slow down he didn't want to die.

I would suggest a merger. Unfortunately this guy didn't charge enough all these years. Between the 2 of you, you can makes some pretty good bucks. Buy him out with the profits.

First thing you do is get your hourly rate into the $60's pre hour. Let the old guy work the jobs he wants to and pay him 35 bucks a hour for the jobs he does. You do the billing and bill him out for the above mentioned figure. He can just explain to his old customers that his company in sold out and under new management. You can be the pric_.

DO NOT worry about losing customers. Where are they going to go ? They may call you a son of a beech for raising your price but ---sticks and stones!!!! The few you do lose you can afford to lose. What his little operation needs is new blood. Your it.

[Edited by benncool on 06-07-2004 at 03:57 PM]

I like B-C'S idea. take it from me if you buy have him sign a non compete agreement,you got his customers not him, you do the bossing your the owner not him. I made the biggest mistake in my life when I sold out. Have plans in the works to own again. SOON!!!!!!! As they say buyer beware, and as you stated he just wants to slow down but how does he slow down when he sold to you? Will you let him pick and choose the customers ?/ He will keep the ones he been nickle and dimin all these years. Look into it further,look at his books, look at his stock,look at what he bought over the last 5 years etc etc etc. Good Luck

[sarge]

Originally posted by lakeerie
I made the biggest mistake in my life when I sold out. [/B]

I know many who made the same mistake, felt the same way, and eventually re-opened. Live and learn.

[Green Mountain]

dr, This is not GE merging with RCA. First thing you got to ask yourself. Is this guy a likeable guy that you could work with? If there is any question in your mind that you couldn't work with this guy for 2-3 years than forget about any of what I said.

You hold all the cards. If you think that there is something salvageable in this company then go for it. If not then you can start your own business and his will wiethier and die.

But it sounds like this guy has some experience that could benefit you.

[Green Mountain]

Originally posted by sarge

Originally posted by lakeerie
I made the biggest mistake in my life when I sold out.

I know many who made the same mistake, felt the same way, and eventually re-opened. Live and learn. [/B]

me.

[hvac45]

Be careful on the non-compete, I wasn't, he had a brother start a so called business, then he tried to raid my customers. He knew our rates and pricing, luckily he got the tightwads that just wanted to go cheap. He got a couple of good ones.

[xpertser]

At $35.00 per hour I would be asking how much is under the table the IRS does not see. I know a couple of guys here that take upwards of 50% under the table. At the rate he is charging after taxes and overhead he is only taking $10.00 - $12.00 an hour home.