Take over a business?

[RC Mech]

A job shop is great when you are young,and was a source of great pride to me that I could do just about anything,and customers appreciated it... *snip* ..... ......
Working all night to get jobs out begins to suck,especially when the customer drags out payment ,and then questions the price.

Doesn’t sound like an appreciative customer.

 

[Guest]

I don't think anyone has asked the question about your finances. Do you have plenty of cash squirreled away to pay the bills for the next 6 months plus if you don't make a dime?

 

[gustafson]

Have you seen the books?

Ask to go over them, preferably with an accountant

Your dad can probably live on a fraction of what you do.

 

[awake]

One other question that has not been asked: are there any other siblings? No mention of other siblings in the various posts, so I'm guessing not ... but if there are, this potentially gets a whole lot messier.

 

[Radar987]

Oh if this were to pan out it would not be part time. It’d be full time and then some. I’d be dropping my badge on my current boss’ desk...

Then I'd give it a hard pass.

The machines aren't worth much and the customer list can be written on a post-it note.

If you can somehow manage to part-time the top two customers for side money, then maybe.

12 years as an FTE in engineering, with a wife and kids... now is not the time to be bootstrapping again. Not for a 1990s VMC and a bunch of even older manual machines.

 

[john.k]

Id be betting you havent told "her indoors" about the plan.Dont think she will be best pleased.

 

[jobshopblog.com]

"At this point there is no debt."

Given the rest of your post, I chose this to focus on. If there is *any* thought of going in to debt to purchase the company, my first thought is that it's a mistake. If the situation is one where continuation of operations would happen with Dad staying on in a paid consulting role as a just reward for his hard work, vision and sacrifice building a business over the years, then it sounds like it could be a great opportunity for all involved.

I do think some money should be spent - on a tax attorney/CPA. There are ways to properly structure these things to minimize tax liability (think of the "call BDO commercials). Dad can be set for life and still keep his hand in things as an advisory/sales/figurehead capacity. It is entirely possible that he can be compensated through the rent of the building he owns to minimize tax liability. I'm sure a professional can help you both strategize and highly recommend making that investment.

It also depends on two other things. First, do you have a vision for the company? Once the idea was presented, did you find yourself strategizing and daydreaming about the possibilities? If so, maybe this is for you? Maybe the company as it exists today provides you a perfect foundation on which to build though Customer diversification, modernization of equipment, software and communications? There are a lot of changes happening now in the industry with Industry 4.0 technologies. There are also a lot of opportunities on the horizon with active reshoring initiatives.

Another consideration is the implication that there is other family involved (you referred to cutting family member's pay during lean times). If that is true, handle that aspect of it UP FRONT. The worst thing in the world for business and family is having to deal with conflict due to misaligned vision and poorly defined roles and responsibilities.

Best of luck in your decision and congratulations to Dad!

 

[Jashley73]

Man, I would have to think about that too...

First, no need to burn the bridge at work, even if you do leave. If you're a good employee to them now, then they'd be happy to take you back. I've done it twice, with no regrets really.

Second, you're not buying into much of a business just based on the couple posts so far. Good that there's no debt, and good that he owns the building.



Can you keep him on, to help with existing customers' sales, and help transition the operations over to you? If so, can you two get along?

Can you go part time at your current job?

Does your wife have health insurance through her work?



If you've answered "YES" to any/all of those, then I might consider it, pending that YOU could go out and sell for new business.



I can see & sympathize with all of the 1,000 red flags already & not yet mentioned, but at 33 with a wife & 2 kids myself, I'd be thinking hard about this too...

 

[Oldwrench]

"At this point there is no debt."

Given the rest of your post, I chose this to focus on. If there is *any* thought of going in to debt to purchase the company, my first thought is that it's a mistake. If the situation is one where continuation of operations would happen with Dad staying on in a paid consulting role as a just reward for his hard work, vision and sacrifice building a business over the years, then it sounds like it could be a great opportunity for all involved.

I do think some money should be spent - on a tax attorney/CPA. There are ways to properly structure these things to minimize tax liability (think of the "call BDO commercials). Dad can be set for life and still keep his hand in things as an advisory/sales/figurehead capacity. It is entirely possible that he can be compensated through the rent of the building he owns to minimize tax liability. I'm sure a professional can help you both strategize and highly recommend making that investment.

It also depends on two other things. First, do you have a vision for the company? Once the idea was presented, did you find yourself strategizing and daydreaming about the possibilities? If so, maybe this is for you? Maybe the company as it exists today provides you a perfect foundation on which to build though Customer diversification, modernization of equipment, software and communications? There are a lot of changes happening now in the industry with Industry 4.0 technologies. There are also a lot of opportunities on the horizon with active reshoring initiatives.

Another consideration is the implication that there is other family involved (you referred to cutting family member's pay during lean times). If that is true, handle that aspect of it UP FRONT. The worst thing in the world for business and family is having to deal with conflict due to misaligned vision and poorly defined roles and responsibilities.

Sorry, but this ^^^ vision, structure, etc. is a lot of management-meeting blather and not relevant to the OP. All an experienced shop owner needs to read is "Cincinnati Sabre" and the fact there's one customer who doesn't pay. Sorry, but the only value left is a leasable building. Auction or yard-sale the rest of it. You already have a job where somebody else makes the payroll and payroll taxes.

 

[gustafson]

OW might be harsh but he isn't wrong

 

[gwelo62]

Your job may disappear tomorrow. You may be found surplus to requirement, or your employer may go out of business. If I had the opportunity you have been offered I would take it. I see myself and whole lot of pension-less 65 year-olds fighting for Walmart greeter jobs, waiting on those people with nice fat government pensions.

 

[HappyWyo]

Running your own business is a decision for your heart not your pocket book. If you get rich at it you are one of the lucky ones.

 

[PocoLoco]

Dad wanted me to to take over his business. I told him no, but only because i did not have a deep burning passion for it. There is a reason they call it busy- ness. You will work harder, for less, than you ever thought posible. I have my own business now, and im glad for it. Like HappyWyo said, its a decision of the heart.

 

[EmGo]

The question essentially boils down to whether or not the industry can continue to support a two to four man job shop anymore or if disposable culture and the big boys are going to end up running those shops out of business. Can a small job shop even get in the door of a big Corp who wants to offload spares to their supply base, and pay on net 90 terms from the first of the month after invoicing is complete. Seems like the industry is also moving towards the supply base acting as a bank on top of warehousing goods on their behalf.

I think you just answered your own question. If you are happy where you are .... and on the banking, you forgot the "interest-free" part.

 

[jobshopblog.com]

OW might be harsh but he isn't wrong

Sure he is. The OP is established in a career with a family to support and is considering a huge change. It was implied that he is considering taking on new debt to take over a company that has none currently. There are structures for the transaction that could avoid new debt. It isn't "management meeting blather" to say so and to suggest getting professional advice on the subject.

Vision isn't "management meeting blather," either. It matters if the OP has goals and plans to meet them and it matters if the company as it exists today provides the foundation to be a launching pad for the vision. The guy's got a huge risk/opportunity decision to make, for pete's sake.

"Harsh?" Hardly. "Crotchety" is more like it. I get "old school" and all that is good about it. I was raised on it and still am old school in many ways. There is a difference between old "school" and old "and angry."

 

[Oldwrench]

Running your own business is a decision for your heart not your pocket book. If you get rich at it you are one of the lucky ones.

Luck has nothing to do with it. Brute, dogged persistence, if carried on long enough, will look like luck to other people.

 

[Toms Wheels]

Almost a year since OP started this thread. Interested in hearing what if anything he did. My guess is dads still there working, and OP is at the job he had for 12 years. If ever there was a year not to start a business this is it.

 

[Oldwrench]

Almost a year since OP started this thread. Interested in hearing what if anything he did. My guess is dads still there working, and OP is at the job he had for 12 years. If ever there was a year not to start a business this is it.

Thing is, somebody who has dreamed about starting a factory doesn't know or even care about timing. The timing's never good anyway. You just persevere and overcome. But a job shop is not the stuff of dreams, it's servitude. One hopes the OP listened to the naysayers.

They say, you never know until you try—but there's an equally valid school of thought that goes, "Wish I didn't know now what I didn't know then..."

 

[Jashley73]

But a job shop is not the stuff of dreams, it's servitude.

Could it be said that a "job shop" is the equivalent to the scrap-yard of the automotive world? Right, wrong or irrelevant, the thought did cross my mind re-reading this thread....

 

[Oldwrench]

Could it be said that a "job shop" is the equivalent to the scrap-yard of the automotive world? Right, wrong or irrelevant, the thought did cross my mind re-reading this thread....

Well, a repair shop out on a dirt road where you never know whether you're going to be welding stove lids or repairing hammer-mushroomed threads may not be as elegant as a landscaped-industrial-park job shop with a row of CNCs on a gleaming floor, but making the nut is the killer either way. Bidding work via email or waiting next to the anvil for it to walk in the door are two sides of the same coin. The coin is called uncertainty, and the question is, how much of it is one prepared to stomach? And "stomach" isn't just metaphor when you find you have an ulcer. Production work may be boring, but the constantly changing "challenge" of job work is another term for PITA. And then there's getting paid, fodder for a hundred threads...