ideadirect
Plastic
- Joined
- Dec 14, 2019
After spending some time on these forums I almost feel that everyone believes Machine shops are the worst type of business and no one should get into this business. If you take a step back, you could almost apply many of the negatives to any business.
I've been in the corporate world for about 20 years, mostly in marketing and looking to move to a different state. A machine shop became available that I am intrigued with and happens to be where our family wants to move to.
It's about 30 years old and real estate is available as well. They focus on more higher end machining.
I have zero machining experience but have always been fascinated by the industry. I am the type that would immerse myself and learn a lot... learn CAD software, equipment, techniques, etc. I would focus on business operations, marketing (they don't even have a website), building up sales capabilities and possibly expanding into new industries. They have a highly skilled foreman and 3 operators/fabricators that would stay on.
Here is a basic annual financial profile (consistent last 4 years based on tax returns):
Revenue = $1 million
Owner cash flow (net income + owner salary) = $250k
Asking price $750k (3x cash flow)
Top customer is 20% of revenue. Top 10 customers are 65% of revenue. Concentration is a bit high but not horrible.
What I like:
- long history of operations and reputation
- lack of sales & marketing (I feel I can really add value here)
- good team in place
- location
Concerns:
- I know nothing about machining or even the industry.
- Industry seems somewhat a commodity business (but so are restaurants, retail stores, etc.)
Am I crazy even thinking about this business? I love the idea of machining and turning ideas into physical goods and making something tangible. I would never consider starting this from scratch but a stable 30 year business with good operators that would benefit from my marketing background might make sense.
Thoughts? Any advice on what to look out for?
Thanks.
I've been in the corporate world for about 20 years, mostly in marketing and looking to move to a different state. A machine shop became available that I am intrigued with and happens to be where our family wants to move to.
It's about 30 years old and real estate is available as well. They focus on more higher end machining.
I have zero machining experience but have always been fascinated by the industry. I am the type that would immerse myself and learn a lot... learn CAD software, equipment, techniques, etc. I would focus on business operations, marketing (they don't even have a website), building up sales capabilities and possibly expanding into new industries. They have a highly skilled foreman and 3 operators/fabricators that would stay on.
Here is a basic annual financial profile (consistent last 4 years based on tax returns):
Revenue = $1 million
Owner cash flow (net income + owner salary) = $250k
Asking price $750k (3x cash flow)
Top customer is 20% of revenue. Top 10 customers are 65% of revenue. Concentration is a bit high but not horrible.
What I like:
- long history of operations and reputation
- lack of sales & marketing (I feel I can really add value here)
- good team in place
- location
Concerns:
- I know nothing about machining or even the industry.
- Industry seems somewhat a commodity business (but so are restaurants, retail stores, etc.)
Am I crazy even thinking about this business? I love the idea of machining and turning ideas into physical goods and making something tangible. I would never consider starting this from scratch but a stable 30 year business with good operators that would benefit from my marketing background might make sense.
Thoughts? Any advice on what to look out for?
Thanks.