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Book work francise for machine shop?

partsproduction

Titanium
Joined
Aug 22, 2011
Location
Oregon coast
Both my wife and I are very near 70, and we both want to move to nother state. I want let younger people run the shop, most of the work now is done by one employee and today a young guy came by to learn the trade, I have a good feeling about his attitude.
My wife wants to sell the shop but that means we lose the income (Obviously). She hates the book work for the one employee we have now.
All we have is the billings which go out by both mailed invoices and email, the payables and recievables and employee payroll.
My wife says she would never trust anyone to take it on but I don't think that's as much of a problem as she thinks it is.
So, my question is, do any of you run your books through a francise? Does such a franchise exist? Also, if they do exist, have any of you been ripped off by one?
Thanks
parts
 
A guy I know who does flat work and concrete stamping has H&R Block do EVERYTHING business related. The workers even go to the H&R office to get their check.
 
I think you have to be very careful when choosing a book keeping/accounting firm. Many years ago I had a franchise company do book keeping for a business I owned. It wasn't a machine shop, but I did have several employees, and the standard payables and receivables. The company was good at the payroll, and payables, but sucked when it came to inventory count and value.

Even though I would do a weekly inventory, and all the work orders contained the part numbers and cost of the products sold, the accounting firm seemed to have the inventory growing rather than staying within the established parameters. I even used an order point and quantity inventory system to make things simple. When inventory of a particular part was lowered to a preset point I would automatically order a preset quantity. I believe I spent more time explaining the system and correcting the inventory than the company was spending attempting to reconcile the books. In the end I had to part company with them.

I believe rather than looking at the actual sales, purchases, and inventory they were attempting to use a generic off the shelf accounting program that didn't accommodate a fluid inventory.
 
I'd be inclined to listen to your wife about selling.

Your shop will be likely worth the most with you still in it and a robust economy. Lots of things that can go wrong with distant absentee ownership. Maybe that one employee screws up, gets sick or just gets tired of doing all the work of a sole proprietor with the profits in your pocket? Maybe that new guy doesn't work out, customers leave, the economy tanks, or your new accountant screws up?

Perhaps the money you take out of the business could buy both a home and a rental unit in the new state you hope to move to??
 
I'd be inclined to listen to your wife about selling.

I've thought about that, the equipment, though it cost us plenty, is older and not worth much, plus the market is flush with machine tools. The property is worth a few hundred thousand, but that wouldn't allow the purchase of a rental and when we had a rental people actually wanted me to change their friggin lightbulbs and the 9V batteries in the smoke detectors, it got old fast.
But we are getting old fast too, today is the wife's 70th birthday, and mine is coming in a few months.
We had an offer of $400K for it all a few years ago but the guy wanted to cart off the tools and start a production business for his own product line, and that would mean all our customers would be high and dry, and my good employee out of a job. I told him he could run the shop after we leave and that still sounds to me like the best way all around.

We have one big customer, and I should ask him to buy it, as he already uses us forn most of his products.
 
I think the headaches/stress of trying to manage it from another state would not be worth it. I'd say cash out and go have some fun in retirement. Or maybe just sell the business, keep the real estate, but turn it over to a property manager, that way you still get a monthly check.
 
Some things just need boots on the ground. If your employee was capable of making you money if you only see him once a month, he is capable of owing the shop himself. Sell it to him.

I am not in your shoes yet, but I am beginning to understand them. I do know plenty of people who have been or are in your shoes. Do you really want to be the grouchy old guy who goes to his shop every day, getting grouchier and grouchier, and driving off customers? Or would you like to exit the business while it is still a going concern, and pass the baton to someone else?

Its hard decision time.
 
The property is worth a few hundred thousand, but that wouldn't allow the purchase of a rental

Consider selling the business but not the property. Do a NNN lease and keep a small amount of cash flow while retaining the land for your portfolio. Selling the business can be creative too. If your big customer doesn't want to write a check and your employee is the entrepreneur type (be careful there, they have to be the right type). You can sell it at a reduced price and retain part ownership in the business for future cash flow. That decreases your taxable income in year 1 and gives you cash flow. It also aligns you and the employee-now-business-owner. He/she is reassured that you will continue to give advice and train them on owning/running a business because it will mean you get more cash flow. They employee gets a business at a reduced price. If you decide to put in a buyout clause and it's exercised, it will be in a different year than the original sale -- reduced tax burden. You could also consider seller financing, etc etc. You are at a cross roads with many, many different roads that you could take to happiness in retirement. Congrats!!
 








 
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