Re: Question for you successful types...
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: hankpac</div><div class="ubbcode-body">the place may be making money now, but will it support paying out twice as much? </div></div>
Won't really be paying out twice as much, I just work part time there, and the current boss doesn't really do work there. I would come in as a working boss, therefore increasing productivity and decreasing payroll.
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: hankpac</div><div class="ubbcode-body">Here is what I mean. Right now he is making enough to pay him a living, you a living, and pay other costs like materials, rent, utilities, licenses, and memberships as well as all overhead (taxes, unemployment, and other government burdens).
will there still be enough of a profit margin to support, you and service the new debt? </div></div>
I think so. The business is very profitable for it's size. Grossed $300k last year in a recession, owner collected a salary of $100k and recently got rid of a guy who was pulling in $60k/yr who wasn't working out.
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: hankpac</div><div class="ubbcode-body"> Because essentially what you will be paying is his retirement. And if I was retiring, I want to make a million dollars out of a business.
You could probably (in that case that is) set up shop down the street, for less overhead, and only have startup costs to finance, and not the sale price as well. if you have been there 14 years, YOU are a major part of the "goodwill". </div></div>
Here is where it gets tricky. He's pretty successful, made some pretty good investments, and just wants out. It's very hard to sell a tint business b/c of the fact I can take $15k, buy up a bunch of tint, lease a building, and start my own. This makes it hard to sell b/c most in the tint industry are flakey and cannot buy a business, but they can come up with $15k... I tried this ten years ago, opened my own shop, then closed it a year and a half later. I just didn't have the finances or mustard to make it through the "building years", plus I was young and made a lot of mistakes. Purchasing this shop would bypass the "building years", and let me walk right in to a money maker. It already has established relationships with all the major car dealers, Federal, and local city government.
Also, the amount I can buy it for, while substantially larger than what I can open my own for, could easily be repaid in 2 years if I were to hunker down and put the bulk of the money back in the business, which is easier to do since I have a steady pay check coming in from the FD.
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: hankpac</div><div class="ubbcode-body">say the company is generating 500,000 a year, out of which you pay salaries, including yours, and overhead as mentioned above.
maybe the business owner now takes home around 150,000 per year.
He sells it to you, for 1.5 mill (around three times what it generated per year).
the bank wants at least 20 % down, so unless you have that kind of cash lying around unecumbered, you are dead from the start.
Secondly, figure at least between 3-5k per month to service JUST the debt. Put that on top of normal overhead.
Now this is just off the top of my head, so I may be somewhat inaccurate on some points or the math. the bank will explain what is entailed in a business loan, and what you need, to get one, and what it will cost you to pay off that sort of loan.
You will need a business plan with profit and loss statements, and a prospectus of what you expect the business to make.
Money is tight, so called government aid to small business owners is not out there, and banks are really reluctant.
My son tried as a Veteran to get assistance, and found absolutely nothing out there to start his business. The SBA was worthless. He finally came up with private money, but at a loss of part of the business (taking in a partner he didn't want, although he is still in control).
It can be done, but don't go into it blindly. </div></div>
Thanks for the info! This might be a pipe dream, I don't know if I will be able to get a loan or not, my credit is good, and I MIGHT be able to come up with 20%, but it would be tough.
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: hankpac</div><div class="ubbcode-body">One reason he may be getting out now, is the onerous federal requirements that are coming down the pike.
Good luck. </div></div>
This is a VERY good point that I have not thought of... I will look into that. Thanks Hank.
