View Full Version : Buying Sign Shop?

Jeff Hartung
04-28-2008, 3:45 PM
Hello everyone, this is a great forum. Ive been lurking here for a while researching and learning everything i could about laser engravers and was looking into purchasing one in the very near future.
A few days after discussing my plans with my mother, whos a realtor, she called me up and told me one of the top sign companies in her area was for sale. One that she has done business with several times.
There are only 3 sign companies in her imediate area. This company is probably the #1 vinyl sign maker in the area, with many repeat customers including repeat work with the two close cities doing vehicle graphics.
I dont have all the details yet but my mom stopped by and spoke with the owner, he told her that he was selling because his young son has Autism and wants to spend more time at home with him. He works alone from 6am till 10pm just keep up with the work, while meeting customers and collecting during normal business hours.
He said he has about 25k in equipment, all the graphics programs to do the work, even a cost estimating program, along with all the materials needed. He said 40k in programs but that sounds crazy to me.
Anyways, from the sounds of it, it looks like a very productive company, with many established customers and he is wanting to sell for 70k. We think a little high but we will work out numbers later.
We are having him put together a list of all the equipment and material he has, along with a list of repeat customers and copies of his books from the last year or so, if he kept good enough records.
He also said he would work for/with us for a month or two, whatever was needed, to show us all the tricks of the trade that he knows.
After establishing a good customer relationship once we become the new owners we want to then start pushing laser engraved items and eventually purchase one or two laser engravers depending on the demand, which i believe will be very high in that area.
My origianl plan was to just purchase a laser engraver and market it mostly to all the (1 mill+) custom home/condo builders in the area, along with the condo and hotels in the area in hopes of getting some customers. Now we think buying into an established sign company, showing the existing customers we are a reliable affordable sign maker, we could expand with the laser much easier.

So what do you Creekers think? I would really like to have your input on this matter. Anything we need to ask and look out and be prepared for?
Thanks in Advance
Jeff H.

Joe Pelonio
04-28-2008, 4:24 PM
I did that in 1993. They were selling due to a divorce, and splitting the money. I'll give you a few things to look out for.

First, I have over $30,000 in software too, but much of it is outdated, won't run on Vista or even XP and to upgrade would cost a lot. Good vinyl sign design software is expensive, but see how old it is.

It used to be a rule of thumb to charge 2.5 x the annual sales for a business, yet only 30% of them up for sale got sold, the rest just go out of business for lack of a buyer. I managed to get this one for 1/3 of the annual sales which I verified by seeing all books and tax records.

Your customer base may or may not remain for a new owner, especially if they sense "inexperience". I was lucky in that many of the customers were happy to see a new owner due to a recent decline in service there and told me so, and I did have good graphics experience.

Take a good close look at his profit. I determined that my seller was making a profit of 37% which is very low and if you suddenly raise prices you may scare off the old customers. I was able to charge more as I acquired new ones but the process of increasing the others to a decent level took a long time.

Builders are a great source of business in good times. I have many of them and do vehicle and equipment lettering, job site signs, entry monument signs, door and parking space and directional signage and more. Just don't depend on them too much. When the real estate market slows down so will their sign needs, some may even go under owing you $.

Here that market is still strong compared to much of the country, but even so sign orders for builders have been dropping off the last year.

Other than that your plan is good, learn the vinyl side well and then add the laser to supplement.

Jeff Hartung
04-28-2008, 5:31 PM
Joe, thats great information. Thanks a lot.

The owner did say the 40k in software he has, he just bought, so hopefully its new versions of what we would be using.

I agree about customers possible going elseware with a new owner. Thats one things that worries me. But i have heard that the other sign companies in the area are not that reliable. I do not have a great amount of graphics experience but i do know someone who is currently unemployed that does. But i have to look at his books closely to see if i can afford to hire someone to do that. Im a civil designer right now and have been using autocad for the past 5 years and im very good at it and i catch onto programs very quickly. I know those are two different area of design but hopfully it will work out. The current owner is willing to help out for a couple months till we are comfortable with everything. Hopfully things will go pretty smooth and he can also take me around and introduce me to his regular customers so they get a warm and fuzzy feeling about me taking over.

As for profits we were told he normaly charges 5x material cost per job.
We plan on taking a real close look at all his books and records before we make a decision to buy.

For the builders, my original plan was to talk to them about doing custom laser etched tile work for them. Also on the island, there are 2 very large condo towers going in and i thought about placing bids to do the signage for the whole building with the laser along with doing custom tile work in those condos also.

Thanks again for the input Joe.

Scott Shepherd
04-28-2008, 5:51 PM
For pricing, there's a manual I recently bought that has paid for itself several times already and it's the "Commercial Sign Pricing Guide" and it's available from www.stmediagroup.com . It's a blue book cost about $60-65 I think. It's got pricing information for all kinds of the signs you're talking about getting into. It includes installation charges as well.

If you're considering it, I'd serious consider buying that book.

Mike Null
04-28-2008, 9:52 PM
Buying a laser to do tile work will take your eye off the ball as far as the primary business is concerned not to mention requirig a significant capital investment on what is likely to be a slow return.

There may be some people making a living on lasered tile but I can't think of any.

Jeff Hartung
04-30-2008, 2:57 PM
Thanks guys for all the info.
I was by no means going to try and make a living just off the laser. That would be almost impossible. I work from home doing contract civil design work exclusivly for a civil engineer friend of mine. I was going to use the laser for extra income. When i have a job for the laser, i would spend an hour or two doing the design for it, then while the laser is doing its thing i would go back to the civil work i have making 25 an hour. So it would almost be like making double time while the laser is running. But im trying to decide what i want to do now.

Jeff Hartung
04-30-2008, 3:02 PM
If i was interested in learning about all the aspects of general sign making, espcially vinyl and eventually starting my own company, are there books or websites out there, other than this one, i could read that would gave me that kind of info? Also what programs are out there specificly for vinyl sign making?
Thanks again guys for the help.

Joe Pelonio
04-30-2008, 3:16 PM
I haven't seen any substitute for doing it. Maybe you can find someone who's not a competitor in another area that would let you hang around and help out a few days to learn.

I'd go as far as to suggest that you try that with the seller, prior to buying. Do a lot of weeding of small vinyl lettering, and try applying lettering to a vehicle with rivets or compound curves to see if you like the work and can acquire the skills quickly.

Laser work is fun, though you may sometimes get big production runs that are a little monotonous. With vinyl you may spend days just weeding and taping and it can get old fast.

Jeff Hartung
04-30-2008, 3:31 PM
Thanks Joe. Thats what i was thinking. The company we are looking at buying, the current owner said he would stick around and train us for a couple of months but working for him for a few weeks may be an idea to see if thats what i really want to do. I can be a pretty impatient person sometimes and weeding letters doesnt sound fun AT ALL. lol.
The laser sounds fun and could be worked into my current job which is pretty relaxed and if i have a big production run to do I can put off my civil work to get that done.
Lots of thinking to do still.
Thanks for all your input. It has really helped out a lot.

Doug Bergstrom
05-02-2008, 7:56 AM
Don't forget that you will be trading a job that ends when you go home for a life that is 24/7. Owning your own business definitely has its rewards but remember there are for many of us sleepless nights wondering how to pay bills, worrying about a job, employee issues etc. Make sure it is really what you want to do before jumping in.

Also the fun jobs are not typically common, the tedious weeding, painting , installing jobs that pay the bills are.

I am not trying to downplay anything just throwing out a reality check!