# Business costs



## jws1 (Nov 29, 2009)

Hello: I really need some quick help. I am looking at buying an established printing business. They print T- shirts, hats, uniforms etc. and have 2 Toshima Embroidery machines. All t shirts are done on 2 heat presses. They do not have a screen press.
They did $210,000 in gross sales this year. Their rent for building is $880.00 a month. Employees cost is around $26,000. a year( both employees are part time.)
They have no other overhead costs except electricity which is about $3500.00 A YEAR.
Right now they have around $42,000 tied up in inventory.
If you were me what would you offer them for this business? Also what do you think their yearly take home is ?
Thank you So much for your help.... Have lost lots of sleep over this, not knowing much about this business.... thank you so much jws1


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## pukingdeserthobo (Jun 3, 2008)

well how much are they selling it for?


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## jws1 (Nov 29, 2009)

jws1 said:


> Hello: I really need some quick help. I am looking at buying an established printing business. They print T- shirts, hats, uniforms etc. and have 2 Toshima Embroidery machines. All t shirts are done on 2 heat presses. They do not have a screen press.
> They did $210,000 in gross sales this year. Their rent for building is $880.00 a month. Employees cost is around $26,000. a year( both employees are part time.)
> They have no other overhead costs except electricity which is about $3500.00 A YEAR.
> Right now they have around $82,000 tied up in inventory.
> ...


Sorry.. they are asking $160,000.00 Plez answer the 2 questions above. Any quick replies are very much appreciated. thank you So Much


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## FredericDesign (Apr 28, 2008)

The cost for employees -- does that figure include the employer share of taxes, worker's comp, etc. How about insurance on the business? The inventory figure -- is that their cost or is that at retail?

I would ask to see their income tax return or financial statement for the past three years. If you're serious about buying, they should be willing to provide it to you.


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## Pwear (Mar 7, 2008)

You also should hire an accountant to go over their financial information if you're not familiar with the process, and a lawyer to make sure you're not taking on any bad debt from that company and to ensure all of your legal bases are covered.


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## jws1 (Nov 29, 2009)

1 employee is part time the other is contracted out. So their is no insurance or workmens comp. involved. Also No oustanding debts. On the above criteria i have mentioned.. how much is the business worth? Also what do you think their take home is per year , given the criteria above? Thank you


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## gearbranders (Oct 16, 2009)

My suggestion would be to not rush into this, especially If you don't know much about this business. The most important thing at this point is learning all you can about this business before you spend $160k. If you're losing sleep already, I bet it will be harder to sleep after you buy the business. I don't think anyone can give you a magic answer to your question. Only you can judge for yourself whether this is a good business for you to buy. I'm concerned about your business skills if you can't determine what the company is worth for yourself. I'm not saying that to be mean, I'm saying that to help you. Be confident you understand the business enough to make the company valuation yourself. Best of luck to you.


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## jws1 (Nov 29, 2009)

I have ran other business. I do not know anything about printing business, but I learn fast. Please please, need some one to answer my 2 questions. That is all I need. 1.) Based on the criteria set forth above 1.) How much would you offer for this business?
2.) What would be a good guesstimate of what they are taking home ( net profit per year)? Please just answer questions..Thank you


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## Pwear (Mar 7, 2008)

Without knowing exactly what type of business they do, it's almost impossible to determine what their material costs are. Are they making 50% on all work? 75%? 10%? You need to have an accountant look over their financial information and balance sheet. That is the only way you'll know what their take-home is. The balance sheet will tell you EXACTLY what their net profits are.

Don't even consider buying a business without all of the financials in-hand - you can't make a real offer until you know what their cash flow is.


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## Girlzndollz (Oct 3, 2007)

Um, jws1, this is really "not" how you go about buying a business. 

This forum is a free "T-shirtforum". You really need an accountant to look over the numbers. You also need to become "familiar" with the industry you are looking to become a part of. 

You seem more like a financial investor, being as you have no experience in the biz. That's what Financial Investors are like. They put their money in, but don't really know, or need to know, anything about the biz, but one thing is for sure, they consult someone who does know about the biz to be sure it's good and sound financial move and decision before they plunk "any" amount of money down. 

Also, look at your economy. You really must be prudent these days.

This is almost crazy to me that you would ask us what you should "Offer" them based on your information provided. There are also regional variations to consider, who is the local competition, if any, and what type of market saturation are you looking at.

You have no idea if half of this guys customers were family members and part of large schools, etc, that generated revenue that will either move with him or away from you in some other way.

You really can't and Shouldn't ask this question here. It's nearly foolish to do, and foolish to try to answer.

That's be like me asking you what I should offer someone on a used car, without turning the key on, looking under the hood, at a Carfax and giving it a test drive.

Too blind. This won't help you, only hurt you. Jmho. Best wishes.


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## Girlzndollz (Oct 3, 2007)

Pwear said:


> Without knowing exactly what type of business they do, it's almost impossible to determine what their material costs are. Are they making 50% on all work? 75%? 10%? You need to have an accountant look over their financial information and balance sheet. That is the only way you'll know what their take-home is. The balance sheet will tell you EXACTLY what their net profits are.
> 
> Don't even consider buying a business without all of the financials in-hand - you can't make a real offer until you know what their cash flow is.


Aaron, you are right on. And those numbers are served up when requested. That *is* what the accountant does.


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## mrbigjack50 (Jun 9, 2008)

If it is such a lucrative business why are they selling?
How much are machines valued at minus depreciated value? Inventory they have is the value based on retail value or wholesale value?
My aine concern would be what the hell are they putting on table? You gotta pay 200k for 40k worth of consumables which in reality can be 20k and you get older used machines depreciated in value greatly??
For all that just said, your not even getting a building and people who work "part time" which means those kinda people come and go.

For 200k you can put a nice down payment for a building you can "buy" than sell in future buy "new" machines and not have issue that a used machine break down and buy "inventory" that you want not something based on it is what it is...

I say screw it based on you aint getting building, you aint getting reliable workers & main fact that your getting into a pain in arse biz


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## jws1 (Nov 29, 2009)

Sean: Are you really that unhappy in this business? Im just trying to get a "Feel" for this business from you professionals.Yes, my accountants can help me but they cannot give me the insights to this biz like you people can....


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## mrbigjack50 (Jun 9, 2008)

I dont hate business : )
T Shirt printing is not main aspect of my business but it is part of it and I do enjoy doing it.
What I don't enjoy at times which you will see a tendancy of down the road is, clients being under appreciate for jobs you and assume they should get a T Shirt printed with something custom cheaper than a crappy shirt from a shop.
Not saying all clients are like that but ones who are just drive me insane, sure economy is not at its best but come on.

That being said garment customization is a lucrative businesses but my best suggestion to you is, go at the shop while operating, be an apprentice and see if you can see your self doing it on a regular basis.
Dont do into a room in dark and not no what to expect hands on, apply yourself in real world experience than make a final judgment on whether it something you will like or not


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## jws1 (Nov 29, 2009)

Thanks: Im sure I will like it.


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## mrbigjack50 (Jun 9, 2008)

No problem : )

Best of luck to a new venture, it can be fun but sometimes can make you say to yourself, why do I do this?


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## Girlzndollz (Oct 3, 2007)

Looking thru the Screen printing section of the forum will help give you a good insight into the day to day operations, challenges, thoughts, of the screen printing world.

Those folks in that section do a great job of sharing "shop talk", problems they have, and resolutions to common screen print problems alot of them face.

Sean gave you great advice, seriously. And you should especially be going into this shop, if it is the one you are considering purchasing.


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## Just In (Nov 27, 2008)

If you were me what would you offer them for this business? Depends on what your buying
#1 what is the true value of equipment and assets (low-end)
#2 the customer base you "think" your getting are their any contracts for big jobs? -- or is is just casual work that happens to float through the door.
#3 what type of reputation is there to require you to "buy " the business 
#4 Marketing & Advertising (don't forget to add that into you yearly budget)

I know your looking for some of us to give you a nice clean answer, but too many variables to simply give you a thumbs up or down.

You have to answer the question yourself can you do what they are doing for $160,000 or less?
We don't know the market in the area you are in ... $210,000 yearly gross could be a HUGE piece of it or could be a drop in the bucket....

based on all the above and the many questions posed by others my answer would be:

"No Offer at all" because of lack of information


Also what do you think their yearly take home is ?
Could be anywhere from Nothing to over $100,000 ... I joke, but seriously again like someone else said depends on their margin. That is something only they can tell you and you should require them to prove to you.

I also agree with sean ..research the business first... and it sounds like its not a printing business at all but an embroidery one

consider hiring someone to do a real deal assessment of the "true value" of their business 

Please don't misunderstand myself or many of the others you could be getting a great deal here or a great big pile of steaming **** to many missing pieces to even come close to being able to make a judgement.

Sincerely wish you the best in whatever you decide to do.


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## wetkiwi (Dec 5, 2009)

If you have to ask people on a forum if it's worth buying or not I would suggest not buying it.
Like everyones said you need a lawyer and an accountant to look over it.
It almost seems like you own the business and you want to sell it but your not sure how much to sell it for.


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## jws1 (Nov 29, 2009)

No Andy. I do not own the business.I wouldn't be on here asking for help if I owned the business. lol.. I thank the rest of you for your answers. You have been very helpful.


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