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Thinking about moving my shop to my new building at home.

A.Delaney

Aluminum
Joined
Nov 23, 2015
Long story short. I bought my business 4 years ago from a guy I have known for over 10 years. He had his own shop in a building outside his house. He retired and I wanted my own shop so I bought it on contract from him. Now since I had never ran my own business before, had no money , and no place to go. I have been renting his building from him. Needless to say. I have felt pretty well chained to him for the past 4 years. Recently I have been in the process of grading my yard in preparation for Cleary to put up a building at my house. Originally it was for my personal things, but lately I have been thinking more about moving my business into it. It would save me from paying rent, and the business would feel more like my own instead of his. Right now it kinda feels like his place still because it's exactly the same as he left it. It's all still his setup. I never changed it because there's no room in there to add any additional machines and my main focus was just working to keep the bills paid. I know I am disciplined enough to go to work out there everyday. That's no question. My only concern is my house is 12 miles away just outside of the next town over from where my business and customers are. I'm not sure how I feel about moving it away from my customers. They don't come to my shop though. I deliver the parts at the end of the week every week. I also have a small hurdle getting material delivered to my house, but I think I have a way around that. Ultimately I would want a nice new building in the town my business is in now that's easily accessible from the interstate. I just can't afford it right now. I just want some relief.
 
Long story short. I bought my business 4 years ago from a guy I have known for over 10 years. He had his own shop in a building outside his house. He retired and I wanted my own shop so I bought it on contract from him. Now since I had never ran my own business before, had no money , and no place to go. I have been renting his building from him. Needless to say. I have felt pretty well chained to him for the past 4 years. Recently I have been in the process of grading my yard in preparation for Cleary to put up a building at my house. Originally it was for my personal things, but lately I have been thinking more about moving my business into it. It would save me from paying rent, and the business would feel more like my own instead of his. Right now it kinda feels like his place still because it's exactly the same as he left it. It's all still his setup. I never changed it because there's no room in there to add any additional machines and my main focus was just working to keep the bills paid. I know I am disciplined enough to go to work out there everyday. That's no question. My only concern is my house is 12 miles away just outside of the next town over from where my business and customers are. I'm not sure how I feel about moving it away from my customers. They don't come to my shop though. I deliver the parts at the end of the week every week. I also have a small hurdle getting material delivered to my house, but I think I have a way around that. Ultimately I would want a nice new building in the town my business is in now that's easily accessible from the interstate. I just can't afford it right now. I just want some relief.

Move!

It will save you 100 miles of driving a week, let you make improvements to your machines, workflow and save you money in rent.

My shop is 25 feet from my home ( out in the country on 25 acres) and lets me work whenever I want.
 
If you have the space and zoning allows it, go for it.
Everything has pro's and con's, but right now the business isn't "yours" at least it doesn't feel like it to you.
 
It does not matter where your customers are, I have customers all over the world. That is what shipping companies are for. So driving 12 miles once a week is better than driving every day. Move.
 
If you have the space and zoning allows it, go for it.
Everything has pro's and con's, but right now the business isn't "yours" at least it doesn't feel like it to you.

That's how I feel. Plus I feel like I am being watched. Since I owe him money. Every financial decision I make whether its business or personal can be an issue. He can look out his winndow and see when I'm there or not. We even have to share the same mailbox so if he gets the mail. He sees what's in there for me. The whole thing is stressful.
 
So how much money do you owe him? What is he going to say when he sees you loading up machines that you owe him money on?

If I were him I would be pretty happy as you would be right where I could keep an eye you and my money.
 
That's how I feel. Plus I feel like I am being watched. Since I owe him money. Every financial decision I make whether its business or personal can be an issue. He can look out his winndow and see when I'm there or not. We even have to share the same mailbox so if he gets the mail. He sees what's in there for me. The whole thing is stressful.

Four years in, you still owe him money, and personal choices are entangled as well?

Will the coming year see that paid-off?

And/or is the business already on a sound enough footing to earn approval of a Bank loan to get clear?

Have you a good "Plan B" if demand declines for the parts you make now? How about if customer(s) leave - or have their own problems and go tits-up- worse, while owing you serious money?

If not, putting machinery under a different roof may not be your most important priority.

Bill
 
So how much money do you owe him? What is he going to say when he sees you loading up machines that you owe him money on?

If I were him I would be pretty happy as you would be right where I could keep an eye you and my money.

He is happy I am right outside his door for that reason. Plus if he needs to drill a hole ,saw something or is looking for a little piece of material for whatever he's doing in the house. He just comes out there.
 
Four years in, you still owe him money, and personal choices are entangled as well?

Will the coming year see that paid-off?

And/or is the business already on a sound enough footing to earn approval of a Bank loan to get clear?

Have you a good "Plan B" if demand declines for the parts you make now? How about if customer(s) leave - or have their own problems and go tits-up- worse, while owing you serious money?

If not, putting machinery under a different roof may not be your most important priority.

Bill

Unfortunately yes I still owe him money. Started at 250k. I have it knocked down to 130k. The shop has been there for 25 years. He and now I do maintenance machine work. It would be decent money if wasn't still paying for the purchase. I usually do between 250-300k in gross sales for the year. Im maxed out there. With my machines being manual other than an ez trak Bridgeport. I can't bump it up to the next level by myself. Not enough hours in the day to run the place and make more parts. You guys know what it's like. I am getting a website done and going to head out to try and get some more customers. Then I should have enough to hire a guy full time to work for me. Then hopefully I can get him paid off faster. That is if I can't get the money from the bank to just pay him off.
 
Unfortunately yes I still owe him money. Started at 250k. I have it knocked down to 130k. The shop has been there for 25 years. He and now I do maintenance machine work. It would be decent money if wasn't still paying for the purchase. I usually do between 250-300k in gross sales for the year. Im maxed out there. With my machines being manual other than an ez trak Bridgeport. I can't bump it up to the next level by myself. Not enough hours in the day to run the place and make more parts. You guys know what it's like. I am getting a website done and going to head out to try and get some more customers. Then I should have enough to hire a guy full time to work for me. Then hopefully I can get him paid off faster. That is if I can't get the money from the bank to just pay him off.

See post #4. Bank is isn't likely to be an option. Too small and uncertain a free cash flow, near-zero collateral.

Ez-Trak sounds as if it is the newest machine of any consequence, which as 'collateral' ain't much consequence even were to be brand-new. Which it prolly very much ain't.

"He and I" implies he is still at least part-time help. Advising, perhaps assisting hands-on in a pinch or at round-up time prepping for those Friday deliveries, making & taking phone calls, chatting up customers to keep them sweet, etc.

If there are not costs associated with that coverage, there will be if/as/when you move.

It dasn't sound as if you are extravagant or have expensive habits. Other than deferring that outbuilding - even selling your residence, doubtful there is much you can cut in your own lifestyle that you have not already cut that would fund a higher rate of buyout.

Your rate of payout to-date indicates you have another three to five years of it ahead of you. Meanwhile, customer and their needs change, machinery of production gets older-yet, reliability drops, maintenance costs go up, tooling and materials are on-track to become more costly, not less-so.

Productivity/competitiveness/flexibility to take on new work? Already behind the power-curve as shop equipment goes.

Not the worst of boxes to be in, but you have little/no reserve for misfortune, nought to invest in upgrading capabilities.

There is a need to find a way to improve the gross margin on the operation.

Debt of 130K may not seem like it, but is small enough money that EXTENDING the payback time is low-enough risk to the former owner he might consider it... IF, IF, IF.. the money "borrowed" were to go towards at least one machine-tool that could significantly improve your capability AND he/you knew where to take advantage of that, agreed it could work, and with a high degree of confidence.

If done and proven-out, improved gross margin could see you could go back to a faster payout within a year.

Actually a 'one-year payback' is your hard criteria on the decision. Most always.

Bottom line is that you need a 'future'. A viable 'breakout' strategy - and a means to fund it - that gets you up out of a 'static' defensive trench and earning on a higher level.

Otherwise, perhaps you could marry the guy and make the mutual dependency formal so you have a shot at inheriting whatever dregs are left when the day comes?

Bill
 
I usually do between 250-300k in gross sales for the year. Im maxed out there. With my machines being manual other than an ez trak Bridgeport.

That's some pretty solid revenue for a one-man shop with mostly manual equipment.

You should be bankrolling some serious cash grossing that kind of money, with no payroll except your own pay, and with little overhead.

Definitely move. And I would pay the guy off, borrow the money somewhere else. Shouldn't have any trouble with those kind of dollars in an established 25-year business.

ToolCat
 
That's some pretty solid revenue for a one-man shop with mostly manual equipment.

You should be bankrolling some serious cash grossing that kind of money, with no payroll except your own pay, and with little overhead.

Definitely move. And I would pay the guy off, borrow the money somewhere else. Shouldn't have any trouble with those kind of dollars in an established 25-year business.

ToolCat

I am an optimist. I love optimism in others.

But the numbers here? "Should be"...

Gross margin, and net revenue are what matters, not 'only' gross sales.

Let's say he is paying-off at $40K/year. If you are right, he is also able to take $60-80K/year as his own compensation and drive a 2-yr old or less uber-pickup.

If I am right - and finance, not chip-making WAS my patch - he has been struggling to take even $40k for his share and does his own maintenance on an older and more modest set of wheels.

Were it MORE? He'd have already been paying-off at a higher rate, 'coz he DOES want his independence.

Break-even analysis and a bunch of other basic, not complicated, financial tools need to be run to sess-out where the money is going / must go / COULD go to sustain the biz as it "has-been/still is" vs what it "could-be, maybe, someday".

You don't prosper just by 'following the money'. Better to get ahead and LEAD it in a more favourable direction.


Bill
 
Grossing 250k as a one man is pretty impressive.

Does to deal allow for an early payoff?
 
Grossing 250k as a one man is pretty impressive.

Real Estate agent moving half-million to million-plus dollar homes in Metro DC shruburbs can rack up an impressive 'gross' as well.

Their cut is probably a higher percentage than seen here, even.

Either number is a long ways below the gross, though.

Bill
 
That's how I feel. Plus I feel like I am being watched. Since I owe him money. Every financial decision I make whether its business or personal can be an issue. He can look out his winndow and see when I'm there or not. We even have to share the same mailbox so if he gets the mail. He sees what's in there for me. The whole thing is stressful.

You need to change your businesses mailing address to your home at the very least. As to moving the shop, if zoning allows it and there are no other major obstacles I say go for it. My shop is about 50 feet from my house.
 








 
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