# Is $75,000 too much to pay for a DTG print shop/store?



## YashBoone (Nov 13, 2011)

So, ill start off with this basic question, preferably for anyone who owns/has owned/knows anything about print shops.

I have recently had the opportunity come up to buy a retail store/print shop, that is owned by a screen printing company.

The person that owns the screen printing company has 3 stores. he has one main store that is the business head quarters bascially. He has the whole big screen printing operation there as well as many other things....

One store is just retail. He fills the store with independent/local brands that he prints, and also his own line of tshirts. 

The last store, and the one that is for sale, is the same concept, retail, but he also has his dtg printing going on there. 

Now, let me first say, I in no way think he is trying to rip me off. I like this dude, and I already work with him designing tshirts for his own personal line.

Also, my ultimate dream, is to have my own graphic tshirt line, and also own the means of production ie a screen printing shop.

I already design tshirts now freelance. 

So down to the question at hand. 
The store he is selling is priced at about $75,000......
I would be getting the store, with dtg printer, and everything is ready to rock and roll bascially. But, I have no real knowledge of if the one is too much. I have no experience with this kind of ****......All I know is that it would be perfect....I could still stock the store with his line, other independents, and also have a space to sell my own stuff, and I could be printing too with the dtg...that and he would still have the screen printing operation, so although I wouldnt own that, im sure we would work some deal out......

Anyway, lets start there.....Is $75 g's too much?


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## treefox2118 (Sep 23, 2010)

*Re: Is $75,000 too much?*

I assume you don't get a customer list, right?


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## LYFE9 (Jul 21, 2010)

*Re: Is $75,000 too much?*

I am no expert but without looking at the costs, revenues, cash flow statements etc you cannot really determine if buying the business will be worthwhile for you. You need to take a look at the numbers.


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## YashBoone (Nov 13, 2011)

*Re: Is $75,000 too much?*

Its complicated.....

I havent gone into detail with him really about that, but he doesnt have another dtg, and he has alot of customers that want it. So, ill most likely continue to those customers that want dtg. 

Also, the store already has a pretty solid following and he wants it to keep his name. So ill be buying an already established brand around here. Almost like a franchise but without all the big corporate franchise rules i guess. 

I look at that as one of the only pitfalls, because I wont have my own true spot, it would still be his company name, but its a small down side to me because thats not neccessarily what I want. With this store I will still be able to freelance still, design my own stuff, and be able to print and sell there.
I know he mentioned that one of the stipulations is that I have to use him for screen printing, but i assume that down the road I could do it myself right there. 


He is selling the store cause he is just one dude running 3 spots and he cant do it anymore. He already has to spend alot of time at the oher two stores, and his tshirt line is continuing to grow.


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## treefox2118 (Sep 23, 2010)

*Re: Is $75,000 too much?*

I've bought both failed and successful businesses to merge into existing ones.

A common (yet very short sighted) rule of thumb is to pay 3x annual volume or so.

$75,000 means $25,000 annual volume. You'd need more than that to pay rent, so he's probably offering a good deal.

Here's what I would look at:

1. How long has that particular location been around?
2. Does he have a good reputation in the community? Reputation follows business ownership sales.
3. How long is the lease you'd be assuming?
4. Can you afford to pay the lease, utilities, insurance and other costs for a period of 12-18 months with little income?
5. Can you pay your own living costs including any debt, with little to no income for 12-18 months?
6. Are you planning on buying it outright, over a period of time? Do you have that cash available or will you get a loan?
7. How far away are his other stores, or competitors?

In my area, failed print shops sell for $250,000 with a ton of equipment and vendor accounts. Successful ones sell for $1.25 million quickly. $75,000 seems very low, I'd almost consider buying it sight unseen with just a few questions to be answered.

Remember, you can supplement DTG revenue by offering offset resale, making a screen print agreement with his other store, etc. During busy seasons you can bring in after hours contract labor to supplement your hours -- I frequently hire my competitors employees to moonlight for me at night or on weekends (for better hourly wages) when we get too busy for our own labor time.


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## YashBoone (Nov 13, 2011)

*Re: Is $75,000 too much?*

Damn that was a helpful answer. 

I appreciate it. He mentioned me and him going out for dinner and talking about it. 

One thing I do know is that he has a great repuation in the area. 

He started the business in his basement in '04 '05 and grew ito what it is now....

And he offers deals with local independent brands to sell their items in his store if he likes them.

Its just nerve racking for me because im just not business savy I guess you could say. All I have is a dream and a passion. I dont know much about running my own business at all.


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## treefox2118 (Sep 23, 2010)

*Re: Is $75,000 too much?*

I'm the opposite. I've never had a dream nor a passion. I just love high risk startups. Once they make money, I get bored and roll the profits into other risky ventures. I succeed, I fail, I keep on keeping on.

Being your own boss is a hairy life. Learning to save cash when everything seems perfect is something I see few business owners learn -- even those in business for decades. Bei patient and not jumping at opportunities you can't reach -- learn that. Accepting tiny profits for goodwill, but knowing when to boot a regular customer you always lose on -- valuable.

Are you at a stage in your life where you can afford to lose a few years and $75,000?

Me, I'd do it in a heartbeat, but I know the questions to ask. If you're hesitant, skip it, save funds, start out from scratch in a few years. There's a lot of unknowns here and it's hard for me to dole out advice without reward -- too much liability!


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## Riderz Ready (Sep 18, 2008)

*Re: Is $75,000 too much?*

If you have no experience in this then send me $25,000 and drop the idea and it will save you $50K. This has so many hidden land mines that are too many to count. If he had so many customers that needed DTG he would hire a retail person at next to nothing to mange the shop. 

DTG in itself is an art form and a risky business. Watch the classifieds and over time you will see more used DTG machines for sale than all other forms of decorating combined? Why? Because people are sold fairy tale dreams.

If you were more educated on the sales, marketing and business side of this saturated market than great you could determine the true value. Without that your odds are very slim.


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## YashBoone (Nov 13, 2011)

Thanx for the vote of confidence, but whether or not it is possible for me to do wasn't the question. 

I've seen plenty of people succeed in business despite all the odds and everyone telling them they shouldn't do it.... I'm fully aware of the risk. 

If it weren't for people taking risks, then no one would ever do anything. 

But, again Thanx for the input.


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## beanie357 (Mar 27, 2011)

*Re: Is $75,000 too much?*

I'd be worried with the operating under hs name part.
What if he is seized for taxes?
Are thei various non compete clauses?
Can you do your own screen printing and embroidery?
Who has the lease or owns the real estate?

Without seeing numbers and contracts can't say yea or nay.

Get a business attorney at least or a CPA firm to consult.


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## Louie2010 (Feb 26, 2010)

*Re: Is $75,000 too much?*

Without knowing specifics, my first gut feeling is it is too much.

First of all I doubt he kept a separate set of books for each location, so you really don't know how profitable the "business' is (or isn't). Sure he probably has sales numbers for the location, but he likely conducted business from all three under one corporation, so hard bottom line numbers will be impossible to determine.

Second red flag. He still has the two other stores. You said he has a good reputation, so what is stopping many of the customers from this location from taking their business to him anyway?

Plus you are not really getting a store, as you first said, you are assuming a lease and buying some equipment and inventory. Have you priced up what a fair market value is for those things?

What about the name? Are you keeping the name and working almost like some quasi franchise, or do you have to change the name?

The lease: This could be the single most important unknown. Is it a good lease or bad lease? What are you responsible for? For example many commercial leases you would be responsible for the heat and air units? What kind of shape are they in? You don't want to be six months into it and have to come up with five grand to replace a unit. Is the rent high or low for comparable locations? Is their a CAM added on top of the base rent and if so how much? How long is the lease? Do you have any options to renew? You might be still be in debt for the $75000 and find out your lease is coming to an end and you are forced to renegotiate at a higher price?

These are just a few things that come to mind. You need to really do your homework. You may find that you could buy new equipment and rent a comparable place and end up spending much less. Compare what it would cost if you instead did a start up all on your own and see how much of a premium you are paying for this deal.

Good luck.


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## Riderz Ready (Sep 18, 2008)

*Re: Is $75,000 too much?*



YashBoone said:


> Thanx for the vote of confidence, but whether or not it is possible for me to do wasn't the question.
> 
> I've seen plenty of people succeed in business despite all the odds and everyone telling them they shouldn't do it.... I'm fully aware of the risk.
> 
> ...


There is a calculated risk and someone taking a risk blindly. With zero experience in this industry you are taking a blind risk. If you have $75K to blow then have at it. The t-shirt industry is probably one of the most saturated businesses. If you look at the failure rate on any new standard business it is very high. Add to that you are starting a new business in a saturated market with zero experience. 

As stated - just look in the classifieds. Almost daily there are new post for used DTG machines. There is a reason.

Most people who post this kind of thread are looking for the answer, "great price, buy it now". 

The simple fact is if this store was making money he would not be selling it and keeping the others. Just common sense regardless of his made up excuses.


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## jfish (Feb 26, 2010)

*Re: Is $75,000 too much?*

There's definitely a reason why he wants to sell the business beyond what he will lead on no matter how nice a guy he may be. 

What do you do now for work?

What kind of DTG machine is it? If its a Kornit then sure I bet you could do alright, if its an old T-Jet based off a 2200 then I would be wondering what the other $74,000 is covering.. 

more details.


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## YashBoone (Nov 13, 2011)

Riderz Ready said:


> There is a calculated risk and someone taking a risk blindly. With zero experience in this industry you are taking a blind risk. If you have $75K to blow then have at it. The t-shirt industry is probably one of the most saturated businesses. If you look at the failure rate on any new standard business it is very high. Add to that you are starting a new business in a saturated market with zero experience.
> 
> As stated - just look in the classifieds. Almost daily there are new post for used DTG machines. There is a reason.
> 
> ...


I don't necessarily disagree at all.
I just know that regardless of the situation, starting a business is risky in itself ALWAYS.

I think the tshirt biz in general is a failure for so many because people think its a get rich quick scheme or something... Something that's cheap an easy to start from home, but not too many people actually have the passion for it. I can name countless people I know through friends and family that have always said "yeah, I want to print tees also" and they go out and purchase a book of stock vector art and a iron press and never do anything but print as a hobbie.

I have wanted to have my own graphic tshirt line since I was 15. I'm 28 now. I have been designing tees freelance for the past 5 years. And I have always wanted to jump into printing the tees as well.


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## YashBoone (Nov 13, 2011)

So, a part of me does want this to just be for real, because it would be an opportunity for me to really break into the bus....

But I do realize the risk. 

Also, at this point in my life, it's put up or shut up.

I quit my job in january to pursue graphic design full time, and everything has grown until the point where it seems like things are falling into place. I have a steady stream of clients for tshirts. I am working with a line that is about to explode. But the money isn't coming in like I want.


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## YashBoone (Nov 13, 2011)

jfish said:


> There's definitely a reason why he wants to sell the business beyond what he will lead on no matter how nice a guy he may be.
> 
> What do you do now for work?
> 
> ...


I'm a freelance graphic designer. With most of my work coming from tshirt designs.
The guy that is selling his shop is actually my biggest client right now. He keeps me busy designing shirts for his own personal line which is blowing up right now.


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## Louie2010 (Feb 26, 2010)

*Re: Is $75,000 too much?*

I learned many years ago something very important, that has served me well throughout the years. Don't make business decisions based on emotions. Try and separate your emotions from the decisions and just use logic.

It sounds like you are letting your emotions sway your thinking.

Absolutely nothing wrong with enthusiasm and emotion, those are powerful driving forces towards success. Just separate them from your goal setting and planning stages.

Why not just start your own business from scratch? You seem to have the proper drive and motivation. Trust me doing so is a lot more satisfying and rewarding then buying someone else's dream and vision. Start small and build from there instead of giving someone $75000.


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## binki (Jul 16, 2006)

*Re: Is $75,000 too much?*

first off you have to ask why he is selling the dtg biz part. 

after that a premium price for this type of biz is 2.5X net plus FFE.

You will also need a hold harmless that leaves all liabilities with the previous owner, proof of clear ownership of all equipment, a non-compete for a number of years in a specified mile radius, all phone numbers (think cell phones here), a period of hand holding (maybe 2 months) to meet all the customers, a non-disparagement agreement, a non-disclosure agreement and a performance agreement that says that if your sales fall below a certain % over a period of time (2 years maybe) that the previous owner will not get payment for that time (remember, he brought up good will) and make him carry paper on it. 

Otherwise you are good to go. BTW, aside from the fair market value of the FFE the customer list is the only other value here. 

Remember, this is a business, not a friendship. Friendships don't do business and businesses end friendships. 

Good luck


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## dazzabling (Sep 21, 2011)

Riderz Ready said:


> There is a calculated risk and someone taking a risk blindly. With zero experience in this industry you are taking a blind risk. If you have $75K to blow then have at it. The t-shirt industry is probably one of the most saturated businesses. If you look at the failure rate on any new standard business it is very high. Add to that you are starting a new business in a saturated market with zero experience.
> 
> As stated - just look in the classifieds. Almost daily there are new post for used DTG machines. There is a reason.
> 
> ...


I second this.. 

too many red flags for me.. training and education alone can run into the thousands of dollars. I doubt he is gonna wanna properly train you and be at your becking call whenever the machine goes down 

what type of printer is it? how many? does it come with several heat presses and pretreatment machine or at least two?


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## YashBoone (Nov 13, 2011)

I appreciate all the great advise.
I will keep people updated as I get more info. 

I'm going on my own today to check out the store and the location.

My original hunch is that he is selling because of a bad location.


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## Riderz Ready (Sep 18, 2008)

YashBoone said:


> I appreciate all the great advise.
> I will keep people updated as I get more info.
> 
> I'm going on my own today to check out the store and the location.
> ...


Your hunch has you thinking in the right direction. He is not selling a business for no reason as who sells a profitable business to what should be a direct competitor. If it is a bad location how are you going to draw in business?

Here is the ugly truth. There are thousands of very talented designers that are always looking to start a business. The unfortunate part is the days of putting up a web site, doing a little SEO and having people find your site are long gone. It is virtually impossible for small/med sized shirt company to land on the first 25 pages of a Google search as the big boys spend considerable resources to maintain their position.

So what next? This comes down to one simple thing most people with your background leave to last - how am I really going to sell my products? Finding professional sales/marketing people is like finding a needle in a haystack. Without finding such a person, possibly a partner, your in trouble. You can have the greatests design in the world but so do another 1000 designers. 

I would take an average design and a top sales person over a top design with no professional sales person any day of the week.


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## atigerwanabee (Sep 30, 2011)

First off! Congrats on doing something you wanted to so since you where 15 or so. Second Contrary to what you have just heard in here some or most of it is true. The business side is not for some, for others it is great. With that said. A good DTG Printer and someone who has knowledge on how to use that machine would be really help you. Contrary to some folks beliefs is this DTG machine will one day if now sooner replace Screen Printing. With that said, I would really cultivate the DTG side of this business. The very first thing I would do is start doing samples for people with your DTG Machine Use It! You can charge just $3.00 each. If you offered a Hanes Tagless T-shirt(samples) you could get anywhere from $5.00 to 7.00 each. There really is a market for one-offs, low runs that a Screen Printer can't do. Again, Do Samples! Get New Business Cards advertising We Do Samples of your artwork for only....One day turn around! NO SET UP CHARGE! You would be amazed at the traffic in your store if you really offer the DTG Printing. That Is The Future. If it is a good DTG Machine which you never mention what Brand it is. I truly hope it is one of 3 kinds. Brother, FREEJET 330 TX or Kornit Breeze. More than likely it is none of the above. With that said, Cultivate the DTG Market. There is tons of work for you. You can "Contract" For Screen Printers. Offer them your Unique Service' We Now Offer DTG Printing. I"m really harping on DTG Here. It Truly Is The Future. So, Your ROI Could be great if you do it right and advertise the DTG Printing side. Like I Stated will be very busy once you Cultivate the DTG Printing. Just think of Cafe Press. Look what they are getting. It is unreal what folks will pay just to have CUSTOM. As Micheal Douglas Famously said" Custom Is Good" or did he say Greed! I think he said Custom Is Good! If he didn't say it then You Say It.


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## YashBoone (Nov 13, 2011)

The printer is an m&r dk2 idot .
I saw the store today and it's nice. Nice location. Lots of people walking around by the river. 

I would be getting the access to the entire client list that uses the store..... 

He is supposed to send me a formal proposal with everything outlined in it.


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## Louie2010 (Feb 26, 2010)

Don't neglect to thoroughly read through the lease.


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