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Buying a "customer's" project.

Bob E

Hot Rolled
Joined
Sep 25, 2006
Location
Middletown, PA
I have an elderly "customer" (in quotes because I like the guy and am honored to be associated with someone with his past achievements...but I make no money from him). I charge him very little for the design and development for a project he's going full speed ahead on and he now has shown there is ample interest in to start generating a return. I have no doubt that the interest is real. The sales from what he wants to do would maybe be $20k/yr. His family has had no interest in his activity for years. I would like to offer a bid to buy this project from him for any further development fees (for which there will be a significant sum). Any advice on entering into a deal such as this? On edit: he's in his 70's, in good health.
 
The sales from what he wants to do would maybe be $20k/yr.

Given: 20K Gross sales, net income of around $500 to $2,000 /yr then?

Q1)

There any upside to this?

Or just a potential legal swamp downside if he clocks-out and the family suddenly decides you took unfair advantage in his dotage of his million-dollar-plus potential revenue stream?

Q2) Would you risk it if he was 25 years old and convinced he had a "good idea"?

Q3) You already know the right sort of Contract Law specialists and/or "Angel Investors" who do this sort of stuff all week, every week, all year as their "Day Job"?

Or "not yet?"

And how familiar are you, personally, with assessing a "J curve" in a business Plan?

Disclosure: "Grounding Influence" AKA "Professional Naysayer"" was part of MY "Day Job". More than one Big Corp.

So don't be discouraged!

Just more ALERT to potential landmines as you tease-through the deterministic AND probabilistic risk/reward equations, multiple.

:D
 
You can calculate present value of estimated future payouts using several calculators on the web for free if you want to avoid the math. The value should include any revenue growth percentage you reasonably expect you might generate yourself, N number of years or periods, and the estimated value annually.

Present Value Formula (with Calculator)

You need then compare the calculated present value to what you might have done with that money instead. Ex. 10% ROI for this project vs 8% on some other idea you have.

The interest compounds year over year like any other investment.

If you’ve generated sound and complete estimates for all figures and whatnot it’s a simple project A or B solution. Whichever provides a greater return on investment. No “feels” allowed.
 
Many years ago a wise person told me don't do any work for inventors. They never have any money and they always want to do things over and over again and almost never is there any ultimate payout. Over the decades this advice has stood true time after time. YMMV
 
Many years ago a wise person told me don't do any work for inventors. They never have any money and they always want to do things over and over again and almost never is there any ultimate payout. Over the decades this advice has stood true time after time. YMMV

[SpaceX and Tesla intensify]

In general I agree with you. But on rare occasions, you get a winning ticket.
 
IMO, I'd only buy into a project/invention/etc. if I had a personal interest in it separate from it's business possibilities. Not saying to ignore those possibilities, but if you're looking to make a buck and have no opinions or warm-fuzzy feelings about the gadget or widget, then it would be best to stay away from it. I say that because it takes a lot of said interest to get something off the ground and to see it's future in the crystal ball. Inventions can be terrible business opportunities, IMO. The ones that succeed start out as net-losses considering all the time and capital that goes into it, before it can even get into the world as a viable product and then pay for itself.

IMO, the best inventions in the machining world are made by Machinists. Some guy who already has a job and experience out in the shop that he can keep the bills paid with while he fleshes out the "dream." If some guy needs to purchase your machinist services to get his project off the ground, It's not a guarantee that it will fail, but one of you is going to loose money and resources before it does succeed and typically the inventor doesn't have the foresight or honesty to take all the risk.
 
I have an elderly "customer" (in quotes because I like the guy and am honored to be associated with someone with his past achievements...but I make no money from him). I charge him very little for the design and development for a project he's going full speed ahead on and he now has shown there is ample interest in to start generating a return. I have no doubt that the interest is real. The sales from what he wants to do would maybe be $20k/yr. His family has had no interest in his activity for years. I would like to offer a bid to buy this project from him for any further development fees (for which there will be a significant sum). Any advice on entering into a deal such as this? On edit: he's in his 70's, in good health.

Why not just form a new joint venture, with the two of you partnered in some fair way? If things are going well, he gets to stay active in the project, you get to see some financial reward for your troubles. If it all goes sideways, you work out an "exit" settlement where one buys out the other, and you both go on, happy with life.

As long as neither of you are depending on this for a full-time income, I can't really see things going nuclear - especially if you respect him, and you two have enjoyed working together thus far.
 
Don't worry about it, its not going to happen. He will not LET you buy it. (But might not honestly know he won't until he is faced with the actual logistics of the deal) Just enjoy his company, help best you can, get paid for it, but do yourself a service and don't get your hopes up or spend mental effort extrapolating possibilities.

Doesn't matter how nice, generous, honorable, reasonable, analytical he is. He will not relinquish ownership. I know four examples first hand of this and none the other way. Only death or necessity will part him from it.

I'm sorry to be so opinionated, and I wish you best of luck. I hope your case will be different. But my experience with this age group is reflected in my response.

How old are you by the way?
 
I know four examples first hand of this and none the other way. Only death or necessity will part him from it.

Experienced. NOT "opinionated".

Easily as many examples, my own watch.

And several more where "Big Corp" HAD ALREADY waved so much silly-money the HEIRS .. and their greedy Lawsters.. grabbed it. And moaned all the way to the bank.

Getting RID of those mistakes was often part of MY job. Titmus Optical not the first.

But it paid ME well. Not just in money or stock options, either.

:)
 
$20k in sales. Like, that's it? Is there some massive growth potential you left out?

What would be your net from that?

How much do you need to have tied up into inventory (worst case scenario)?


Unless you were really netting like $15k+ from 20K gross it is a waste of time. In addition, a speculation of the potential to do $20k in annual sales is pretty laughable.

Sounds like something to keep busy with in retirement.

I have some real easy simple shit I do about $40k annual sales and net about $35k/year from. It amounts to putting a sticker on a part, placing it in a box and applying a shipping label. Like I spend $5k a year and make $35k. Maybe 20 minutes a day.
 
I bought out a customer something along those lines some years back, the owner passed, his wife was struggling and we wern't getting paid. I offered her 20% of what was profit for a term of 5 years with the provision that she stayed on board to help with the transition of her customers to us and assist in outside sales, I believe it worked out good for all parties.
 
I have some real easy simple shit I do about $40k annual sales and net about $35k/year from. It amounts to putting a sticker on a part, placing it in a box and applying a shipping label. Like I spend $5k a year and make $35k. Maybe 20 minutes a day.

Not easy to find, but ANY biz NEEDS at least a few of those.

Too many OTHERS that barely cover their fully-burdened cost. If-even.

Asi es la vida
 
OK...seems I left out too many details.
No inventions involved. My friend has decided to reproduce an obsolete engine manifold that is much desired for. He has the blessing of the original manufacturer to proceed. The vintage racing market is driving the interest. My involvement is providing 3D models, casting patterns and core molds, as well as designing the machining fixtures (which will be more involved than he thinks).
All I want to own are the casting patterns. I would make my own machining fixtures to my standards.
Only looking to not lose money here.
 
Only looking to not lose money here.

Sell disposable face masks, then.

If the market finally goes to Hell, at least you can use them to wipe yerazz.

In "Demand" so long as hard to get, but what happens when the last of all 20 guys in America who can still even USE one AND can afford it, AND actually have the drive to BUY, not just whimper "if only it was closer..".. actually gets HIS manifold?

He'll need the replacement then.... as it gets used-up. Like laundry soap, yah?

But how soon?
 
OK...seems I left out too many details.
No inventions involved. My friend has decided to reproduce an obsolete engine manifold that is much desired for. He has the blessing of the original manufacturer to proceed. The vintage racing market is driving the interest. My involvement is providing 3D models, casting patterns and core molds, as well as designing the machining fixtures (which will be more involved than he thinks).
All I want to own are the casting patterns. I would make my own machining fixtures to my standards.
Only looking to not lose money here.

Our whole life is little projects that on their own most folks would walk away from, however a few sell every day, we send them all over the world and like your ptoject, nobody needs anything we make yet we are 6+ months behind making them.

Find a way to make a deal that you both can live with and find a few more old guys like him, they are all over, fact is I will be one myself one day.
 
We do, we get old and start neglecting our work and we forget to care, many of us would like to see someone with the talent and drive to pick up where we leave off.
 
We do, we get old and start neglecting our work and we forget to care, many of us would like to see someone with the talent and drive to pick up where we leave off.

Seen so much of that that the best answer is that those who actually DO have that talent and drive cannot for the LIFE of them fathom WHY - of ALL people - the very ones who HAD "showed there is always a way" with THEIR talent and drive would EVER be "the ones" who expected the next rota of self-starters to NOT make entirely their OWN way in their OWN choice of life's many flavours!

Why would they "pick up" what they are the very best equipped to not NEED, instead of making a NEW way.... all on their OWN initiative?

So "Catch 22"

The person I could least expect to find willing to work for me, or even carry-on when I left?

My own self.

No fear.

Never did want to join any club as would HAVE me as a member!
We'd BOTH have to lower our standards below any reasonable threshold, yah?

:D

Actual quote, my maternal grandmother, around age 80, about a year after her husband of a long lifetime had died, responding to a query from a Daughter of around fifty years of age: .

"Mom? Would you ever consider marrying again?"

"Dotter? There's only one reason I would want to be married."
"Any man who could serve that need would have to be a YOUNG man!"
"Any YOUNG man that would marry a woman my age and condition would HAVE to be an IDIOT!"

"As I cannot see myself married to an idiot?"
"No, I shall not marry again!"

Stayed a Widow to age 96.

The rest?

Women and cats will do as they please.
Dogs and men shall adapt.

:D
 
You can calculate present value of estimated future payouts using several calculators on the web for free if you want to avoid the math. The value should include any revenue growth percentage you reasonably expect you might generate yourself, N number of years or periods, and the estimated value annually.

Present Value Formula (with Calculator)

You need then compare the calculated present value to what you might have done with that money instead. Ex. 10% ROI for this project vs 8% on some other idea you have.

The interest compounds year over year like any other investment.

If you’ve generated sound and complete estimates for all figures and whatnot it’s a simple project A or B solution. Whichever provides a greater return on investment. No “feels” allowed.

It's nice when REALITY is not one of the variables. Because "anybody has a plan until gets punched in the mouth".
 








 
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