There are some on this board who are very business savvy. It is my hope someone could perhaps offer some advice for my situation in reguards to building my own business or buying small shops. I will first give you a bit of back ground as seeing it would help with the question.
I live in Nassau County Long Island NY. I am 28, not married, no children, and do not own a home. I been in the HVAC/R industry for nine years, the last two of which I have been running my own business. I was always a loyal employee and at no point kept a customer list of my employer’s accounts to take with me when I left the company. Being I had missed the yellow book, my only resort was to engage in subcontracting for Fuel Oil companies (which is a story for another day). I was lucky enough to get 8 to 12 calls a day, and being the condition of the equipment, most of these calls would lead to burner, boiler or oil tank replacements. Needless to say it was difficult to make any real money at 45-50 dollars a call, when I was a legitimate sub. I carry the proper license, insurance and workers comp. After “suffering” throughout the spring (cleanings on accounts that haven’t been maintained since they were installed) and “suffering” throughout the winter (Fixing equipment that should have been condemned, and running out at 2:30 in the morning for a $50 call). It was now spring again. I couldn’t in my heart do “commission based” calls for the air conditioning company I had been a sub for this past spring (again a story for another day). It was also difficult to continue running calls for various fuel oil companies at 45 dollars a call. I was tired and felt beaten, but amazing as it were had enough funds do finally advertise. Close to $30,000 to advertise to be exact (please realize this money is paid over the course of a year, however through forecasting it would be no problem to recover).
So advertise I did! Quarter page business to business, half page 3 rd position County, and the 15 book buy in various North Shore towns which include 1/8 page ads under Heating, Air Conditioning, Fuel Oil, and Refrigeration. (Not sure what this will mean in terms of money to other owners in different states, however here in NY it’s a pretty penny). For those “New” owners out there scratching there heads wondering how to get more business, I have one word “ADVERTISE”. I went from doing one call every two weeks from the penny saver (the one call was not including the various sub calls) to hiring my brother (who was a local 638 B side mechanic) as a lead installer and two helpers to handle the 2 to 3 installations a week. I had to also hire someone to field my calls and run my office (happens to be my gf) while I handle the service calls, sell jobs, and get material together. In asking around I am doing better than most here on the island. Currently the nights are rather cool, which is a factor for service and most replacement installs are coming from long time customers ready to upgrade, which in my case, don’t exist. One set back about the book is I normally get the “problem “customer that was abused by the competition, and at ever turn is ready for you to screw them over one way or another. However, all in all we are doing well.
I am not sure if it a growing epidemic, or if I notice it now because I am an owner and in touch with others who operate their own business. Many of the one man operations are folding, and under the same circumstances. Their wife is leaving them, their children are now 13 and they can’t remember seeing them since they were born, haven’t been on vacation since they have gone into business, and well, I am sure you get the idea. So what does this mean for me? I have been approached by several owners who are ready to sell off their business and one as of late who is ready to sell his house, business, and anything that is tying him here to NY.
So what’s my question!!
Well let me tell you a bit about the business. The business was incorporated before I was born (early 70’s) It was sold to the current owner close to 14 years ago. It is recently a one man shop being after personal problems he had to let 4 employees go and is basically dwindling down the business. The business is service orientated, with approximately X or so LONG TERM active accounts (mainly a/c and refrigeration).
Now it’s not what the owner is asking for the business that bothers me (because the figure is peanuts), It’s the fact that his base of operations is 2 ˝ to 3 hours away from my current customer base. There would be no way I could keep my current customers happy, while expanding on his business, I also have the fact that my brother and helpers would have a 2 hr or so commute each morning, so I am not sure how long they would last. My gf currently lives in the city, and stays with me during the week in order to do paper work; the commute for her would be that much longer. I also have all that advertising that I had taken out there on the street, I would still be able to cover it, but if that far away it would be difficult/ impossible to cover the calls.(In NY customers want it, and they want it NOW!!, so waiting for me to get there would be unacceptable). This company is seasonal in that they have done no heating of any kind in the past, and it would have to be marketed to current customers in order to grow. When considering the density of the population, this county is half or less of the one that I currently reside in (which is less potential customers). When I mention the fact of expanding in the supply house, most the “old timers” laugh so hard they almost fall down, and tell me that I am out of my mind and should stay a one man shop. I was told by several people that advertising takes 3 to 5 years to take off being most homeowners keep their old listings around. After investing the money I already have into the area where I am currently located. I figure it would take no time at all to build up a decent following.
On the plus side, the company is located on a part of the island I would like to some day move to. The houses are on big lots, and the county as a whole is growing (New installations and potential long term customers). Here in Nassau County your neighbor can pretty much look out his window and see into yours. I would also be dealing with customers that feel comfortable with the company they have been using for years (makes a big difference in selling new equipment, and customer relations).The customer base is ofcourse more extensive then mine.
To end this off, the price of the company would probably cost me a bit more then what I was going to spending in advertising for this coming year, however as we know advertising really gaurentees nothing. But in essence buying this company would change my life(being i would mostlikely have to move). So I ask, is it better to take over a business that has been running for years, however relocate? Or to try and run one from scratch? Remeber to take into consideration, my business is still new and the service work/start ups that we did this year may not be there next year. We are still too young to tell who is going to be a loyal customer.
(I am sure I am leaving a bit out, but this is long and boring enough)
Any advice is welcome.