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    2 Replies Latest reply on Jun 10, 2012 8:00 PM by trevburdett

    Purchase a local business

    trevburdett Wayfarer

      This is like my previous post from several months back.

       

      I have been in the IT industry for the past 10 years. I currently have my own business and have several clients and contracts bringing in a steady income. It isn't much, 30k or so. I am currently also working as an employee for another IT business. With this plus my wifes income, we net about 120k a year.

       

      I have an opportunity to purchase a business that is a local PC repair shop. I know the business very well (used to work part-time there) and I know the owner also. He has another venture he wants to follow and leave the store behind. Currently the business GROSSES about 350k in sales and services a year. After his expenses, he has net 30-40k a yeah for the past 7 years.

       

      A year or so ago when I first spoke with him about purchase, he wanted 200k. Now he has told me he is ready to settle for 100k.

       

      The business includes a vehicle and everything inside the store including tools, inventory and equipment.

       

      He has  a steady flow of customers (prime retail location) and has been in that location for the past 7 years.

       

      I want to combine his current setup with my managed services to be able to take care of both residential and commercial customers. I have been told by previous sales appointments that with me working from my home, they do not feel comfortable doing business with me and if I had a storefront or office, I would be able to not only bring in more business, but also appear more stable.

       

      Ultimately, I am looking at an investor to help with the purchase. Before, when the price was 200k, the owner was willing to finance some. Now he is wanting the whole amount.

       

      I have a guy I am working with that has the money to invest. but I am wondering what if any possibility there would be into getting a loan using th ebusiness as collateral. There is about 40k of tools, inventory and equipment, but can the bank take the current financials into account. I figured with the past year averaging about 16k of net income monthly, with 4k in expenses (rent, utilities, software, and insurance etc), and (if I buy the place I will change the current payroll status) 8k in payroll, that would give me 4k (roughly) of wiggle room. I could easily pay off a 100k loan in 5 years or so.

       

      Any ideas????

        • Re: Purchase a local business
          Uncle Leon Tracker

          In my opiinion, a business that yields only 30-40 k profit per year (the amount a person would earn in a fairly common job) has no value, with the possible exception of the assets (but then, only if those assets would be a benefit to you). 

           

          Why pay someone to have a job ???

            • Re: Purchase a local business
              trevburdett Wayfarer

              The 30-40k profit isn't what I am buying the business for. I currently have a business that will grow significantly being in that storefront. Also my business accents his residential computer repair really well. Basically I am looking at either getting my startup in a store and building my customer base or buying 7 years of customers... the later is a lot more stable and worth it.