I'm no expert, but I think I once worked for your bosses long lost brother or cousin or something. LOL Even if he GAVE you the place (which he won't) he will want to be in control of it. No matter what he says or promises, until he dies, the business will never be yours and yours alone. Take what you have learned from him, and strike out on your own if you want to be a machinery dealer. You said nobody knows he's there anyway, so what would you be buying from him other than a building and some overpriced inventory? You sound smart enough to find a cheaper building and buy some profitable machines to sell.

From the sounds of it, if he wants out, he should either: 1) hire you to run it and let you buy him out over time using profits you make or: 2) Sell it to you at an affordable price with him financing you. Either way he would need to leave you alone and let you do your thing.

If you do buy his 600 machine inventory, how are you going to value it? I wouldn't want to pay more than 50% on the stuff that I thought I could sell in the next year, 25% of what I thought I could maybe sell in the next 3 years, and I would pay 0% on what I thought I had little hope of selling ever. Out of those 600 machines, I'll bet there are some real dinosaurs that he is going to tell you: "See that over there? You find the right buyer someday, that's a $10,000 machine easy! But I'll sell it to you right now for $6,000."

The truth of the matter is I dont want to be a machinery dealer its just that he keeps asking me to take over the business someday so I thought I would see what every one thought, He would give the business to me and let me run it and pay him what he has in the machines and I get the profit and then I would use that money to buy new inventory and then start paying rent on whatever amount of the building I was using I could have the fork lifts and and support equipment like trucks and trailers for hauling. It is a generous offer but I am nearly 40 years old and if he sticks around for another ten forget it. I cant predict the future but if current trends continue there will not be much demand for manual machines. I would really need to know cnc since that is the future, or better yet the present and future.

By your own admission your hearts not in it. It'll never work out for you.

Craig Donges

The best advice is always to do what you know, or what you reasonably can learn, unless that doesn't pay.

if you hate your job, you can eventually leave and go elsewhere. If you hate your business, you are in tief Scheiss.

if you are not really pleased with it, but need it to eat, that's something you can deal with. but if you do not want to even do it, it won't work, and may make you sick.

I don't agree that all HSMs are interested in irrelevant historical detail. maybe some are. but there are enough folks selling machines that more aren't so needed, unless you can think up an angle that gives you an edge.

if you could manage to corner and sell only smaller stuff, you'd have a chance at a living right there. But its dollars to rusty bolts that the inventory is large industrial machines that HSMs can't use effectively, and that have already been sold off by their 5th industrial owner..

"...its just that he keeps asking me to take over the business someday..."

Define "taking over."

Does this mean you buy him out, on his terms? Watch out my friend. You know
what this man is about. He pulls his own teeth, won't go to a dentist. If
you try to pay anything other than full freight (on his terms, no less) for every
scrap of metal in the place.

You say you don't really want to do this. Listen to your instincts. They are good.

Sobel - I would be interested to know when (month, year) that toolpost
grinder deal was consumated. My theory is it would be near around the time
he closed down, and probably dave did not do the dirty work on the packing.

Just a guess though.

Jim

Don't remember the year, probably 7-8 years ago or so. Before he was seriously going out of business.

I was told at the time that was his trademark...... newspaper balls. Others told stories of bent and broken stuff that he had sent. The general comment was that he really didn't understand how UPS worked in terms of package handling.

I do. I had to do a project for my former employer to upgrade our packaging division-wide. UPS will actually tell you to expect some packages to drop 14 feet to concrete. They told us that, and that their employees jump on jams to clear them. My cousin was fired for not throwing packages into the trucks when loading.

Newspaper balls don't remotely cover it.

Holy Moley....even with all your doors open that has to be unpleasant at times. I once had to use a nearly new* Toyota diesel forklift in a closed building and it was awful. I owned a Cat 12.5K diesel forklift once and liked it but rarely used it inside the building...the few times I did, all doors open and exhaust fans on....but usually I would bring machines to the door via pallet jack or skates and pick them up from the outside at the door entrance. I presume he bought gas and diesel because no one else wanted them and therefore they were dirt cheap..

======================

*I mention the "nearly new" part because some years ago, about 2000 I think, I was looking at new forklifts and the dealer had a screamin deal on a Komatsu diesel and I lameted what a shame, if only it was propane, and he says something like "well, these new design diesels are so clean you can use them inside for short periods" Well, that Toyota was a 2005 with probably 50 hours on it and it was just as smokey and stinky as my 1990's CAT was..no improvement whatsoever. So the dealer was FOS.

A bit off topic, but I've found that whenever I meet 'old men' who are that frugal they also extend the savings to things like shower/bath/soap/toothpaste exepnses.

In additon to the various already well stated negative aspects of the machinery dealer "opportunity", I just have to wonder if the HSM market is really viable as a business opportunity?

My personal observations across a number of traditional hobbyist fields/interests has revealed a continually shrinking number of participants and related groups.

I have see it first hand in these areas (with demise or noticable shrinkage in membership/participation): hunting, photography clubs, amateur radio, service groups like Lions and Rotary International, veterans groups (VFW and Amer. Legion), private pilots (general aviation), Boy Scouts, coin/stamp collecting, telescope making, competitive shooting........and likely others.

According to one published source, the culprit has been TV and now Internet.

What is the trend for HSM's? I suspect it is downward. Thus, probably not a good business plan. I note that my local machinery dealer is branching out a bit into retail (i.e. HSM) sales, reluctantly, as a stop-gap measure against declining industrial sales. That means just more competition from non-traditional sources.

Why not imitate business models that are already working. I would start with reliable on ebay. Why not clean these machines and get good looking pictures of them, work out good shipping abilities and start offloading them slowly on eBay. The other thing this will help you do is establish market rates with which to buy and sell machinery at.

I have found can make a lot of money slowly on tooling. If you have piles of it start putting that on eBay. Start your auctions on Sunday afternoon so they end the following Sunday and ship Monday morning. I would try to get the stuff moving via the internet and step into the new millennium.

By the way can you post pictures here of this place and some of the stuff for our enjoyment?

I would think the help of eBay you could generate a lot of cash which would also help in strategically buying what you know you can sell, as well as determinining the prices that such merchandise brings when you are on the buying side of the business. If Reliable can make millions doing it why can't you?

Adam

If you want to get in the machine tool business I can get you a deal in Vegas.
The guy I work with pretty much matches the description of the guy you work for. He is married and does go out occasionally but the age and business description is pretty much the same.
He is a good friend and I help him with his web page and computer problems. I am currently trying to get his equipment inventory computerized so the business can be sold.
I am retired and do it mostly for amusement and a machine now and then. I think in this climate taking over would be difficult.
How is the moving part of the business and can it be grown?

Whaaa ?? I have a little more 'inside' knowledge of Reliable than the average person and I don't know that Reliable has made "millions"...so I'm curious how you have come to that conclusion ? Wouldn't surprise me if they are loosing money at the moment in fact. We had a confirmed case here on PM where they lost around $2,000 on a CNC turning center they bought at auction in Florida recently.

Odd phenomonen going on at the moment where machines, and possibly tooling, are selling higher at live auction than they are on eBay. The theory behind Reliable was that at live auction you have limited audience of maybe 100 buyers, so things go cheap....but on eBay you have the whole world as potential buyer so things go higher. The other theory is that at live auction you often can't see machines run, so you are taking big risk, plus there are loading fees and time constraints to get things out. On eBay you have some backup on condition, free loading and less time constraints.

But with Bidspotter thrown in the mix and more and more folks "excited" at live auctions that theory is being questioned now.

Yeah, I had exactly the same reaction. We don't get to look at Reliable's books since they are a private company but take a look at their overall operation. Down from 3 buildings to 1, they've closed their walk in store, almost no one there. Another thing not mentioned above is that now anyone surplusing anything knows about ebay and loads it on themselves. No reason to blow it out at auction and allow Reliable to do it.

I am not optimistic about Kpotter's opportunity. It works for the present owner because he has no investment in the property, maybe he bought it in 1952 for $12K or whatever but there's no way the business can support what the property is worth today. The owner's heirs will ultimately want the cash and that will be curtains for the machinery business. Unless kpotter can convince the owner to will him the property there's just no way to make it work.

Alan

This just doesnt pencil out from any standpoint.

IF, and its a big IF, the building and land is really worth a half million, then rent OR mortgage payments on it should run around 5 grand a month.

In most urban areas in the Western USA, .50/month/sq foot is a pretty good deal for a rough warehouse building.
Thats 5 grand a month.

If you bought a building like that, reasonable terms would be 20% down, owner carries balance for ten years at 8%. Thats 5 grand a month. Its virtually impossible to get a bank loan for a property like this unless you are already rich, or a huge company. So owner terms are pretty necessary. And nobody but a huge company would pay cash- If Sunbelt Rentals or Grainger was buying it, yeah- but realistically, owner terms.

Then, you would need to figure utilities, business taxes, insurance- at least another grand or two a month.

Pay yourself a bit more than you could earn at McDonalds, hire a helper- pretty quick, you hit a hundred grand a year.

figure you need to sell double that, gross, to float a $100k Net.

$200k a year in machines whose average price is low- I would think, you would need to sell 200 a year, realistically, to take home maybe 30 grand, for a LOT of work.

and that would be assuming you had that hundred grand upfront, plus whatever he got for the machines.

If your aunt tilly died, and left you a few million, maybe.

Right now, its not a business, its a hobby.
And many of the tools probably have negative worth.

For instance, a mechanical Buffalo 2 1/2 ironworker is worth LESS than scrap value- same with many older mechanical shears and brakes.
Horizontal mills, the same.
Lots of older manual machine tools that are industrial sized, ie 8000 to 20,000lbs in weight, are just not saleable.

I would agree that, IF you didnt have to pay rent, and you got the machines basically for free, you could pay yourself to liquidate them, by being computer saavy, and arranging packing and shipping. But not much more than that.

Look at George Washington Machinery- a similar situation, basically free real estate, a similar "hoarder" style mentality in their buying decisions- they have been trying to go out of business for over 2 years now- NOBODY, but NOBODY, wants to even pay scrap for 35 year old NC (not CNC) 30' bed routers, or mechanical ironworkers, or parts of 1900 era lathes that have sat outside for 20 years. The fuel alone to get this stuff to the nearest mill (nucor in Seattle) outweighs the going scrap price.

I saw the guy from reliable about to have a heart attack when bidding 25K on a hass. If he was making millions, 25K would have been nothing to him. I thought he was really going to fall over, he was huffing, glassy eyes, etc.

One of the kids that work there said that they do the 3 day auctions when they need to turn the inventory becuase they are short on cash. It doesnt sound to be all that grand there. I have also seen other incidents of items going for less than they paid at los angeles auctions.

I imagine back their first years with eBay they were doing pretty good..not "millions" but good income. But now it's become a sort of runaway train that needs constant diesel fuel to keep going. Frankly I'd hate being in that sort of business where you are always in "chicken with head cut off" mode just to fuel the train, esp as the train's wheel bearings are starting to go and putting more and more friction on the situation.

K
I was just scanning this thread while on hold for 10 minutes. Anyways, I would in no way shape or form buy or take over this business, you will be screwing yourself in every way. If you are interested in the machinery business, here is a way of getting into it. Tell him you are now his independent rep. Take a piece of machinery on spec, and clean it up etc, all the things you are doing now, and do it in his place, when it is ready, you sell it. and pay him a fixed amount or a percentage when the money clears. THis way if it works out you can draw from his inventory and "investment" and if you make out then you can keep going, if not, you are out some time. either way, get out of that place, before you know it you will be pulling your own teeth and proud of it!
I can 100% guarentee that if you do any sort of a buy out with this guy, you will regret it. If I felt like typing I would come up with 29 reasons why, at least. BTW, I have 20 years expereince as a machinery dealer

Plus one on what Ries and Surplus John say. Ries' fine penciling seems correct to me. This guy has no overhead, practically speaking. And if JST is correct--that these are industrial-sized manual machines that are not going to get more valuable--then where can this go really?

Should you decide to follow kimfab's advice you could bring one of the Laguns down here for me and pay for the trip. Also check your pm.
thanks
ed