# Opinions on sale of business



## INKJESS (May 28, 2011)

We are in an interesting position at the moment. 

Ever heard of someone getting out of the business because they are too busy? LOL

As crazy as that may sound, that's where we're at. It was an insane year for us. Extremely busy, but this whole process has destroyed our credit so we haven't been able to upgrade equipment to speed up and improve our process. By most peoples standards we are a small business, but with what seems like quite large potential. The problem is we just can't keep up anymore and it's become pretty stressful at times given what we have to work with.

We live in a small community, with large communities within the hour. Our one true competitor has done well also. He seems to have scored very large corporate accounts, where we have landed much of the schools and local business', etc... He has the autos, embroidery machines and such, where we run older manual printers here. Everything we have is a bit dated now.

We're thinking about joining forces, but his business would obviously take the lead. I don't believe we could ask for much of a profits percentage since his accounts are much larger. Would probably have to settle on wages, and bonus percentages based on performance. My main question would be what to do with my business since it's by no means unsuccessful. If we could sell for a fair price I think we could live with letting go of our part of the dream and be satisfied with decent wages going forward. Letting go sucks but the thought of not killing myself sounds good too.

What would you do, and how would you value your business based on what I've described?

Thanks everyone for the help, as always,


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## SpiritGirl (Feb 24, 2011)

Have you ever thought of getting investors to help you with upgrading? Then offer them a percentage of the business. Thinking like Shark Tank here.


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## INKJESS (May 28, 2011)

SpiritGirl said:


> Have you ever thought of getting investors to help you with upgrading? Then offer them a percentage of the business. Thinking like Shark Tank here.


Thanks Nicole

Yes we have. I personally know more than one millionaire, but it scares the crap out of me to ask them because I don't know what we could offer that's any type of guarantee, no promises. Plus they are "kind of" friends, really friends of friends. Could be an extremely awkward situation.

Aside from that I wouldn't know where to look. I've googled such but haven't seen anything that we'd really qualify for.


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## SpiritGirl (Feb 24, 2011)

Could always start a GoFund me campaign.. maybe talk to some of your friends of friends and see if they might match a certain dollar amount if you reach that goal. 
Our local theater started a campaign for new digital movie projectors. They had certain levels of investing.. for $200 you get a piece of film strip and 20 movie tickets, for $300 you get the $200 price stuff plus extra and so on. They only had to dish out the free stuff if they collected a certain amount (I think it was $18,000)
You could always modify that type of thing for your own business.

Just kicking out ideas.
Good Luck!!


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## INKJESS (May 28, 2011)

SpiritGirl said:


> Could always start a GoFund me campaign.. maybe talk to some of your friends of friends and see if they might match a certain dollar amount if you reach that goal.
> Our local theater started a campaign for new digital movie projectors. They had certain levels of investing.. for $200 you get a piece of film strip and 20 movie tickets, for $300 you get the $200 price stuff plus extra and so on. They only had to dish out the free stuff if they collected a certain amount (I think it was $18,000)
> You could always modify that type of thing for your own business.
> 
> ...


That's an interesting option for sure. Sounds like it could be an option if presented right, a disaster if not, lol.

In my head I just keep thinking "Auto!!!". But then people tell me that won't solve all of our problems. I know that, but if we could even print only twice as fast, let alone several times faster, I can't help but think of the extra time it would allow for marketing and smoother transitions between jobs. That's honestly where we lose a lot of time is because I have to print, help print, graphics, expose screens, etc... Then we have to stop everything so I can get caught up again getting the next jobs ready.

It's a gigantic pickle. Keep plugging away and look for options like you mentioned, or pull the plug and make a decent living as an hourly employee again. I'm troubled.


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## rippetm1 (Jan 14, 2011)

Where are you located. Have you thought of subbing out some of the work. Make less per job but could handle more. 

Sent from my SCH-I545 using T-Shirt Forums


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## SpiritGirl (Feb 24, 2011)

Could always take on a few apprentices from the local schools to help out. Give them a few free t-shirts while they learn the business. Might make for some slower times at first, but if you find the right student .. you never know.


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## caseimpress (Jan 8, 2015)

Maybe act as a distributor? Instead of selling your business as a whole, sell the services of what you actually do to SMEs or young entrepreneurs. Package them in like a "how to start your ___ business". Provide training manuals, the necessary equipment needed etc. Yes, you might be thinking that they can go to China to get the equipments at a cheaper price but usually they provide little to no customer service at all. That's where you can provide value. So you don't work FOR the business. You work ON the business. 

Hope this helps.


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## garagegirl (Sep 19, 2010)

I've tossed this around for a couple days. If you sold to someone and you went to work for another local printer, wouldn't the person you sold to then become your competitor?
Have you considered piecemealing out you stuff to people that (hopefully) are from out of your area to avoid having that competition?
Maybe if there was only the one shop, together you could be an empire. Kicking the tires here. Good luck.


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## INKJESS (May 28, 2011)

Thanks everyone for the responses.

We have sub'd out maybe 3 jobs in the last few years. One was done great, and the other 2 were just so so. The real problem is we, and probably like you all, get a lot of short order pains that you can't sub out really because we probably wouldn't make a dime on them yet risk eating one completely if it came back wrong. Which I can tell from the sub's we have done is completely possible.


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## INKJESS (May 28, 2011)

I think I left a some info out about our dilemma that could be confusing. The reason we're contemplating this decision is mainly because even after a great year all we were able to do is pay the bills.

Paying the bills is a good thing, but we built no capital at all and that's the scary part.


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## crazymike (Aug 18, 2008)

What you may want to do is go through all of
your invoices from last year and chart them out.
The four things you need to put on the chart are
the number of pieces printed, dollars collected,
the cost of goods printed and then your gross profit
for each job. The gross profit is the total price of the
job minus the cost of garments printed. 

This way you can see which jobs are profitable and
go after more of these and the low profit jobs raise
prices or don't do.

This is only a place to start from but you have to
know these numbers before you can make a good
decision on what direction to take.


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## PatWibble (Mar 7, 2014)

INKJESS said:


> I think I left a some info out about our dilemma that could be confusing. The reason we're contemplating this decision is mainly because even after a great year all we were able to do is pay the bills.
> 
> Paying the bills is a good thing, but we built no capital at all and that's the scary part.


It sounds like either your margin is too low, or your overheads are too high.
How long have you been trading? In the early years it is quite easy for profits to get 'lost' within the business - the increase in the value of open pots of ink, that extra dozen screens you ordered, etc, can all add up to a sizable amount of 'invisible' capital.
Are you keeping on top of your personal expenses? At the end of a busy day, do you phone out for take away food, because you are too tired to cook? Perfectly acceptable use of your profits ( been there myself!), but over the course of a year it can add up to a lot of money, with nothing visable to show for it. If that is coming out of the takings, as opposed to your wages, then it has a direct effect on what is in the bank at the end of the year.

How is your pricing structure? You say your competitor is getting most of the big accounts. Sales and set-up time is the same (within reason) regardless of the size of the job. Are you being busy fools?
You need to earn well on the smaller orders, but you need to price competitively enough to win a few big jobs. Even if you only earn a dollar a shirt, a couple of easy 500 shirt jobs a month can add up. At the end of a year, an extra $1000 dollars a month might be all the capital you need.


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## SunEmbroidery (Oct 18, 2007)

I agree. It sounds like you need to increase at least some of your prices so you can be more profitable for less work. You need to pay yourself, hire help and put aside money for an automatic machine. Initially you'll loose some customers but that's okay because you'll less likely to fall behind and you have time to market for better paying customers. Are you able to talk with a financial person? How about someone from SBA or Score?


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## Posylane (Mar 3, 2011)

On selling the business. You can sell profitable businesses. I have purchased two in the last year that are posted on sites like

BizBuySell - The Internet's Largest Business for Sale & Franchise for Sale Marketplace

You can sell yourself, or use a broker. There are pros and cons to both.

Have you worked on your (financial) efficiency? For example, do you know what % of the sale your credit card company eats? Do you have a list of all your fixed costs, and have you visited them all to cut or eliminate them?

If you are swamped with work, and not making any money, that is a good starting point to fix the situation. We raised some prices this last year ourselves. 

If you can't making money doing XYZ, it is time to raise prices, or stop doing it.

In buying businesses, I love it when I find a busy business that makes less money because the owners don't know to run it. I pay money based on the business as it is, go in and fix issues, and pocket the extra cash.

I will give a couple of examples.

One business I purchased shipped everything UPS. We turned that on it's head and ship most things via the post office, and pocketed the substantial savings.

Another business I purchased shipped everything priority flat rate. We changed to shipping USPS first class mail (light packages) and then we saved $2-$3 on every package.

I find many, many small business owners will trip over a $1 to get to 5 cents.


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## jeannekay (Mar 19, 2012)

Have you considered doing some jobs as transfers? I've done that in the past b/c I know that I can do them quicker, or I can have a friend or someone w/ no experience come and do them w/ little risk of them not coming out correctly. They look as good (sometimes better) than they would have if I'd screened them. No I don't make as much money on those jobs but I don't have to do anything but close a heat press every 30 seconds.


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## SunEmbroidery (Oct 18, 2007)

I would either eliminate or increase the price of your time-consuming jobs.


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## binki (Jul 16, 2006)

To value your biz take the profit, multiply by 2 and add FFE + inventory and that is your sales price. 

Otherwise, raise your prices. As an example, if you sell an item for 50 cents and raise the price to a dollar you only have to sell 33.3% of what you previously sold to make the same amount.


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## Posylane (Mar 3, 2011)

In my opinion, inventory sells for a discount to wholesale because typically there is a lot of undesirable inventory buildup in many businesses. You have to look at the street value of assets. Some assets with high replacement cost are not worth much to anyone else.

I looked at company a few months back that had molds for plastic parts as part of the business property. The replacement cost on the molds was $100k, and they tried to put that into the value of the company.

Sorry Charlie! The molds are a required part of making the company money, not an asset you can go the street and sell for $100k. 

I had to explain to them that the high replacement cost of the molds was a net negative - if they got lost or damaged, I would have to pony up $100k again.

The street value of many things in a business are not nearly as high as the replacement cost.


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## binki (Jul 16, 2006)

I don't disagree but there is a value to it even if it is sold as scrap.


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## Posylane (Mar 3, 2011)

In terms of revenue and selling price, generally small businesses sell for between 1X profit, and 3X profit. A 1X type business are ones that sell stuff with lead paint, or depend on today's fashion, or have no barrier to entry by a competitor. Basically, undesirable businesses.

3X businesses don't have inventory, have high barriers to entry for competitors, are long term stable, and are desirable for reasons like can be done from anywhere, are very flexible with when the work needs to be done, or have a proven high growth trajectory.

Most businesses fall in the middle. The most I have ever paid was 2.4X, and the least I paid was 1.7X. I also base my decision to buy a business on how much I can improve the business. If the business is fully optimized, I don't desire it as much as a business where a little investment or change in processes can make a lot more money.


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## CUSALAN6262 (Jan 15, 2015)

Actually, you are in a great position - Do you have a banking relationship? This is where banks are a necessity in order for a business to grow. Hopefully, you have some financial records , and generally a local banker in a small bank is looking for businesses like yours. 

You may have to secure your borrowing needs with the assets of your company and even get a personal guarantee, but most banks ( and you need to look for one by calling and asking questions) participate in loans underwritten by the SBA ( Small Busineess Administration). The SBA was created for successful businesses like yours who have capital requirements to fund expansion. We are in a LOW INTEREST RATE environment right now, so you may have to drop your squeegee for some mornings and find a bank- Remember BANKS NEED to LEND money...that's how they make money.

They also can offer some solid financial advice along with the bank that provides the SBA loan. You have a GOOD PROBLEM and are the perfect kind of business to start a banking relationship. GOOD LUCK


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## INKJESS (May 28, 2011)

Thanks everyone for the advice.

A couple of you hit the nail on the head. One person even said I sound a little burnt out at the moment, and that's very true I think. It's just been a grind. I think about punching a clock again somewhere else and it re-motivates me to an extent.

We are definitely not running at our full potential, and a lot of that has to do with me just being run ragged and not utilizing any free time I might have to work on fixes. I don't even do the honey-doo's around the house anymore hardly. The wife is not very happy, lol.

We did raise our prices a bit, we were really low in comparison on hoodies especially.

Haven't spoke with any financial person just yet. I've inquired but haven't pulled the trigger there.

Like I said, we are so busy I'm going to have to force myself to find the time. It seems like if I spend an hour outside the shop I loose 2 at it though, it's tough.


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## Posylane (Mar 3, 2011)

Sadly, I think you will find the bank load process to be a lot of work, and difficult to get. We went through the SBA process about 5 years ago, and you would think the loans being government backed would make it easy, but the banks treat you like they are loaning their own money.

We have periods of high workloads, and I can picture a little of how you feel. 

I think for sure you need to raise prices on things that aren't very profitable, or you don't like doing. If you worked 20% less for 20% more money, your mental outlook would probably change. It is tough to work your butt off and not have anything to show for it at the end of the month.

Change that, and other things might change for you.


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## Inspired Buffalo (Nov 10, 2013)

I would not sell just yet.

First, do you have an offer or is it just a thought at this point?

Second, it seems to me just by reading this and reading some of the responses that you need to sit down and go thru your books. To be crazy busy and have 0 profit at the end of the year something way off with that.
You mentioned older equipment? It seems to work? otherwise you would not be printing anything. Someone above mentioned ordering take out? Hope your not just grabbing money out of the business for this. 
Do you pay yourself? If so that is what you should be ordering take out with. Not business money. It needs to stay seperate. 

I would start there. I have done this. I payed someone to come in and consult with me on everything. Go through all my financials and how I was ordering, Printing, etc, etc
It helped a great deal. I am profitable after two years. It's a small profit but I have built this from the ground up with 0 debt so it takes much longer to build.

Anyway,
I don't want tp lecture. I would start with this first. If your too bust then bring someone in to help you with this. I think it would help a great deal.

Selling and becoming an hourly employee again is a dead end road. Been there done that. I am not or hope to never again make money for someone else.


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## INKJESS (May 28, 2011)

Inspired Buffalo said:


> I would not sell just yet.
> 
> First, do you have an offer or is it just a thought at this point?
> 
> ...


I have been offered a spot with my main competitor. He's growing like crazy because he's good at landing large corporate accounts around the country. So his prices are higher than ours because he's not too worried about landing every local job he can.

This is good for us because we get a lot of the local business because of it, we're just not very fast. Our prints are very good and our prices pretty fair, if you compare with internet pricing and places like Custom Ink (which advertises all over the tv here in California). 

So, go work for my competitor and atleast be doing what I like and have some potential for decent pay, or keep grinding it out here till we can acquire an auto, get faster, and realize our own dream which seems completely possible. I just have to not have a heart attack by then, lol. My stressed out days I'm ready to sell, and the good days when we're caught up I feel great and the sky seems to be the limit.

I'm just thinking out loud I guess. Thanks for everyone's input though. Lots of good stuff to consider.


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## BidsMaven (Sep 23, 2011)

Being burned out is an awful, awful feeling. Having a business is great for some folks and not for others. Sounds like getting rid of the stress of being a business owner will free you up to enjoy your screen printing work again. There's real value in that. My only concern is that the business you're thinking of working for may ask for a no-compete clause, which could prevent you from taking on side jobs from time to time and from starting your business again in the same town.


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## valleyboy_1 (Jan 23, 2010)

Here's some encouraging words for you, you are the business owner so why not position your business to where YOU like it. Allow your passion to consume your business. I have a part time business, I focus on family reunions in the summer. My local communities have about 500-600 reunions every year. I have constructed a business plans to go after these leads in the off months, and when the summer gets here, I'm usually pretty busy just doing reunions on top of my day job. It works out for me and I make pretty decent money from it.


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## customapparelpro (May 2, 2014)

If your still thinking about selling it, how about letting me do the printing for you  I'm a 23 year old screen printer with about 8+ years in experience and provide TOP QUALITY prints...you would make less money but you would have to pull/push a squeegee...instead you could be fishing!  while the young guy pays his dues.


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## PatWibble (Mar 7, 2014)

Try to organise your workfllow to your advantage. Small batch screen printing can be very time consuming - particularly regarding set-up/breakdown time.

I am a one man shop, with occasional help from Mrs Wibble when busy. I condense all of my screen printing into one or two days a week ( I work until I'm finished). 
Monday is dedicated to screen making and ordering blanks. I print back to back jobs on a Tuesday, and Wednesday when needed. The rest of the week is dedicated to running the business, dealing with next weeks customers, and non screen printed jobs. All of the messy work is done in two/three days. Screens are made, and cleaned, in batches - saving time. 
Most customers are happy with a seven day turn around. In reality, the only guy who has to wait seven days is the one who walks in on a Tuesday - the rest of the week the lead time progressively decreases. I have had customers come in on a Monday morning, with artwork ready, and get the goods next day.

You seem to be getting preoccupied with your competitor having automatic presses and embroidery machines. But that means he also has overheads. As a small shop, assuming that you have a usable multi platen press and a working conveyor, you can compete with most competition. The only place he has a real advantage over you is with large multi coloured jobs. Simple one/two colour jobs you can still produce plenty of product, even printing one day a week. Worse case scenario, if you only earn a dollar _profit_ per shirt, you have the capacity to produce up to 1000 garments in one (long) days printing. In reality, most of your work will be more profitable than that.

Mid sized companies are the least competitive, and most vulnerable to competition. There is always someone larger to undercut them, or out market them. They are just as susceptible to smaller, 'one man band', competition, who generaly don't have large overheads.
If you weren't a thorn in your competitors side he wouldn't be interested in taking you over.


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## Screen Medics (Feb 23, 2015)

Before you proceed to selling your business I would like to know if you have explored outsourcing some of your screen printing orders through another shop in your area?

We have had success outsourcing larger orders for over two years. 

If the outsource company is well run and has automatic presses they may print for you for less than you can print the same orders in-house. This is especially true during the slow time of year for screen printing.

That could give you time to rebuild your operating capital base and help smooth our your credit situation without any capital outlays when you are thin on cash.

One important caution: Always have a signed confidentiality and non-compete agreement in place with the outsource company before proceeding.


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