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How to valuate shop equipment for retirement sale

Except carbidebob. I'm pretty sure my whole shop is worth more than 3 dollars. :D

I feel like a big spender today, I'll offer you double. $6 cash.

I'm no finance guy by a long shot, and I don't really want to get in the weeds with this until my super secret plan either works or fails spectacularly, but based on the last 3 years average NET income, ROI on 4MM would be 8 years. More like 7 years if you ignore buying and paying off 2 machines. Somebody with people skills and a good work ethic (adding some easier parts with lights out automation would be pretty easy) could grow my business substantially, making ROI quite a bit faster.

Again, these are incredibly rough numbers, but I think for the right person or company it will be hard to ignore a small shop with a profit margin above 60%. :)

I know I said earlier that my business wouldn't look great to sell as a whole since we've just got the one big customer, but damn, the more I look at numbers and stare off in to space... We've absolutely killed the last 3 years, and our big customer continues to grow. The reason I keep mentioning 3 years is because 2020 was complete shit (we had a couple major covid shutdowns, etc.), and 2019 was a learning year for me (quoting wise), and we were still recovering from our wildfire in late 2018.
If you're clearing over $600k a year, after paying salaries and for pretty new equipment, you are in a pretty good situation. If you sell your equipment, you'll get less than 1/2 of a year's profit, so why not run out the clock as long as you can. Figure out what you don't like, i.e. dealing with employees, and hire someone to deal with the pain point for you. You could easily pay an operations manager a very nice salary to deal with everything you don't want to and still come out ahead versus selling the machines. Worst case scenario, it doesn't work out and you sell the machines. It would be very hard for you to be worse off than just pulling the plug at the beginning.

With the amount you're netting annually, you can pay someone very well to spare you the pain points that will make you close up shop.
 
With the amount you're netting annually, you can pay someone very well to spare you the pain points that will make you close up shop.
Food for thought. Thank you!

Maybe one of the guys that have mentioned wanting to step in to a larger / different business would want to be my manager and work in to buying the place over time... That would be a great way to go if personalities meshed. I actually had that employee once, but he couldn't come back after the fire.
 
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Pictures (in random order, thanks imgur :rolleyes5: : mattatrfr.imgur.com/all
(Copy/Paste the link. It works, but the practicalmachinist software wants to automatically format the full link to the point that it doesn't work.)
I can't get that link to open, is it working for others? Tried a couple different browsers and it's always the same error.
 
Food for thought. Thank you!

Maybe one of the guys that have mentioned wanting to step in to a larger / different business would want to be my manager and work in to buying the place over time... That would be a great way to go if personalities meshed. I actually had that employee once, but he couldn't come back after the fire.
Keep us posted, I am definitely intrigued.
 
Sorry about the imgur link. All the picture hosting sites I tried were essentially worthless. I get the feeling they would work great for a teenage girl taking pictures of her food or some shit though. :rolleyes5:

I took some general pictures for you, and going through some older pictures I thought maybe I'd share those too.

RFR in our garage in 2011. Compare my first air compressor to our current compressor setup. :D
RFR 2011.JPG

RFR in the same garage in 2016, very much needing more space and equipment.
RFR 2016.JPG

RFR in 2018, new shop, new Brother.
RFR 2018.jpg

The new mezzanine is 300 sqft bigger than the entire old garage. Bliss.
20230718_115855.jpg

RFR today. Built a small metal building to house the forklift outside.
RFR 2023.1.jpg
Compressed air. There are two 200 gallon storage tanks in the room where the backup piston compressor is.
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A sea of RegoFix goodness. See how all the drive dog slots are aligned? That's my awesome, awesome wife. She does all the tool building and most of the physical setups in the machines, plus runs the saw.
20230718_115509.jpg

Setup cart. It's got everything to setup and measure jobs. Dual sets of gage pins.
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Warning sticker that is wholly ineffective.
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Two robots at most. The biggest mistake you make with robots is trying to have the robots do everything, and one in front of each machine leaves few options. Put the easy-for-robots parts (first ops, small parts, parts with round features) on robots, and hand load the weird stuff, the tight stuff, the fragile stuff etc.

All robots means you need a robot plan for everything. Some robots means you can use it like a fancy bar feeder.
 
Have you seen the automation guys are doing with their brothers using schunk grippers?

Brother also has their FLEX setups.

I couldn't imagine selling everything. I'd slowly rehome customers and keep a skeleton of jobs to keep a little cash flow to pay for my toys and hobbies and the wife's garden.

That said, my experience with machinery dealers (a really good one in my opinion) will pay you 1/5 - 1/2 sale price.

I pretty much already share your viewpoint of people... and I'm probably half your age. That doesn't bode well :bawling:
 
Have you seen the automation guys are doing with their brothers using schunk grippers?

Brother also has their FLEX setups.

I couldn't imagine selling everything. I'd slowly rehome customers and keep a skeleton of jobs to keep a little cash flow to pay for my toys and hobbies and the wife's garden.

That said, my experience with machinery dealers (a really good one in my opinion) will pay you 1/5 - 1/2 sale price.
Yes sir, I had Yamazen quote a full 4ax-Schunk spindle gripper-Schunk part flipper-2nd pallet blank/finished part storage turn key upgrade. Call it $80k per machine. I'd be happy to go that route if it were flexible enough to work on a large portion of our parts, but it just isn't. Our parts are just too small, too delicate and too large a mix of parts to pencil out. Which is why robots are really out of the question for us. We do mainly repeat production work, but my definition of production is something that lasts more than a day or two. Most of our jobs are between 3 or 4 days and maybe 3 weeks or so to complete. And a lot of our parts require special attention on how to grip, how to clamp, tapping down after clamping, etc. More than a few of our parts require clamping pressures of "throw the wrench over softly". That's it. Torque wrenches don't go that low, and pneumatic vises sure as hell don't work in that range.

One hangup I have that may get in the way of rational thought is that I can't stand work in progress. My parts come off the machine complete in one program, or I don't take the job. The only thing we've got in the shop, outside the machines, is raw blanks or finished parts. Period. WIP just makes my skin crawl. We also make a lot of parts that are made in pairs. I insist on making one part on one pallet and the other on the other pallet, so every other cycle we have a complete pair of parts. That way, no matter what happens during a job (phone call... we need whatever you have RIGHT NOW!), we are even-steven.

I pretty much already share your viewpoint of people... and I'm probably half your age. That doesn't bode well
:bawling:

I'm 46. I started my grumpy old man transformation very early in life. My callsign in the military was Eeyore.
 
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To update everything, all you guys who correctly say that diversification = security... Get your I-Told-You-So's out.

I waited too long to enact my super secret plan. Our big customer was bought by some giant company last year, and will be closed at the end of this year. Not the biggest of surprises, but goddamnit just the same.

Among their current jobs, some of it will be going to Malaysia, and some of it will be going to a sister company in the States. Sister company has their own local machinists, but I'm told they really only work on smaller jobs. So this could be a disaster for us (in which case, we'll figure out how to retire with what we have), or it could be a massive opportunity to focus solely on the larger jobs that are more automation friendly, but now with an expanded reach. Either way, the words "shit show" come to mind when I imagine the next year or two.

Or maybe we'll be homeless for awhile. I hear it's pretty popular these days.
 
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