Someone wants to buy me out and I need some advice.

[knight_toolworks]

First here is the company http://www.inkwellgroup.com/#/home/
I did a small job for them an emergency job. They are the ones I posted about doing the roofing boards.
Well anyway when I talked to one of the main guys today he came to my shop. They have been thinking of buying a cnc machine themselves. But they want to buy my business. Now first of all my business is dirt small. Been doing it two years and it is slow going. I am terrible about selling my services. I know this and it has hampered things
I made about 30k or so gross last year. . it comes out to maybe at most 18k left over after expenses.
No medical or anything else.
So they want to make me a offer of 35k a year and full benefits. I will also sell them my business.
I have never made that much so that is good income. I can bring in outside work still. But I would be mostly doing their jobs.
All I have to sell are my tools in my shop I don’t have vehicles or property that goes along with it. My shop space is 900sf.
I don’t mind working for someone. I am not good at the business end. I just want to keep busy and be able to pay my bills. To have some income to buy something if I want or need it.
What I don’t want to do is get stuck with nothing if it does not work out. I want to have enough money out of it to buy another machine and get going again.
I need to do more research on the company of course.
It’s a pretty big step for me.

[ken]

Steve,
In addition to you becoming their employee at the salary you have indicated they should be paying you for all the assets of your business. That includes your machine, all your tools that you’ll sell them along with any inventory. You should also include in your list of assets (inventory) all of your cutting files and any proprietary or copyrighted products that you may have. Do not forget to add in the money you spent on your web site. Additionally, if you are selling them your business you should expect to get compensated for the volume of business that you are currently doing. After all, I am sure you spent a great deal of time and energy to get the customers you have and build the business to the point that it is now. I would also insist on a royalty predicated on future sales of any of the products that you have designed.

Good luck!!!

Ken

[bob_s]

Steve;
just from the practical point of view I would do the following;
Decide if you want to make this change - it seems that you do?
make a list of what you have now - equipment wise
price that list with realistic prices for replacement
be sure your buyout check brings you a realistic amount for your inventory, too much kills the deal, too little puts you at risk if it does not work out long term. Taxes need to be an important part of this calculation - get pro help.
Get an employment contract with an early termination payout amount. If the "big boss" decides you are not really needed after X months you get Y dollars to go on your way. This is standard stuff - BUT do it in writing - if it doesn't work out nobody remembers the verbal agreements.
Have someone pull a credit report on your future employer - you are not snooping - just do not get involved with a poorly run company & this is the easiest way to tell - check their references - many people spend more time checking which cell phone to buy than who to do business with.
If the parts add up then it sounds like you may enjoy the lower stress - good luck

[dakers]

We bought a one man shop company in the 70's. He wanted a 5 year contract which was renewable after 5 years.
the contract stipulated salary, etc.
it was good for him. We did not renew after 5 years but we did find him a better paying easier job locally doing more of what he liked to do. I was in my 20's and he about 50.
It worked out good for both of us for 5 years.
The selling price of his business was low but the salary was high so in 5 years he got what he really wanted for the business anyway.

Probably good idea to have an accountant and attorney advise you on selling cost and other things.
If you have to sign a non compete agreement there should be a time limit on it that you are comfortable with. Best not to sign one unless you have a employment contract that guarantees you income.

[knight_toolworks]

I brother recommends a higher wage and I keep my tools and their upkeep.
that's the part I don't like selling my tools. even if I get enough I would have to refit my shop that's hard to do. my tools are not worth that much my shop is only 900sf.
I will also make sure they pay my legal expenses. I sure can't afford them right now.
I was pretty clueless about this so I need all the advice I can get.
insurance is a big deal my wife is blind so she is on medicare but the prescription part is running out already and her pills are 550.00 a month she found some state help but it will cost me 100.00 a month. More bills I can't afford.
but one fellow said 35k a year is not much. it seems a lot to me but I guess in the real world it is not much.

[myxpykalix]

You say they want to buy you out but i didn't see you mention what they will give you as a lump sum for the business and assets?

If you aren't getting at least the price of the equipment UP FRONT then you are essentially making them money with your equipment that they in turn pay you with and that's not logical.

If they aren't willing to give you the price for the equipment and a salary then i would suggest that you look into just creating an exclusive contract for them and the work they want done with them paying you an upfront fee and you retain the ownership right to the equipment.

This way you won't be giving your ownership of the equipment away and depending on their expertese to make you money with your machine.

Unless they have a monetary stake in this by buying your equipment YOU are the only one who stands to lose it all.
I have seen people who have gotten in to these types of deals and walked away losing all their equipment and business because they got deperate.

I suggest you go and have a lawyer go over any legal arrangement you make. There are legal aid societys or AARP chapters that will give free advice if you can't afford it. Just don't let yourself get suckered.
"If it sounds too good to be true it probably isn't". Good luck and give us more details.

[GlenP]

Hey Steve, tough call you have to make. It does sound like you prefer working for someone instead of yourself. I would advise to be careful about who you will end up working for. Is he the type that treats employees well or does he yell and degrade his employees. I worked for a friend for a few years back only to help him out after he and his business partner split ways. Man you think you know a guy...yell, complain, talk down to you. I told him I didn't need this and left him to tough it out on his own. If someone walked into my shop and offered to buy me out and offer me a job they just might have a deal providing the $$ are right. Get a fair deal for all your existing customers and the doors you have banged on in the past. You may have pitched a deal to a guy and he is sitting on the fence and after you sell the new owner will reap YOUR rewards. Be careful if he wants a competition clause in the deal and get your own lawyer not his.Good luck and keep us posted.

[knight_toolworks]

I don't mind working for someone. sometimes I know I am not good with pushing myself. I am terrible about records and such.
I do like the idea on how it would be to work for someone. not sure who would be the boss.
more things to find out.

[knight_toolworks]

This is scary for sure. But I do know I will never be able to sell myself. I have known that for years. I am slowly gotten word of mouth out and I get referrals from local woodworking stores. But will it ever be enough? That’s hard to tell. I am the one they come running too for fast or emergency jobs. That’s how this company found me.
They were fine with me bringing in work too. I only have one steady customer so far.
I will make them pay the legal fees.
It’s hard to give up your tools even if you can buy more. My shopbot was bought with my inheritance from my grandma. She saved the money from my grandpa the carpenter.
She invested something like 1200.00 and got 60k out of it. That’s hard to do these days.

[bruce_taylor]

Steve,
If they are a secure company and you ant some security it may work well for both of you. To have access to a cnc and operaor at that rate is a good deal for them.,Sounds like you are open to it as well. Many great things can come from things like this.My humble advice is o get to know the people you want to involve yourself with,and then work out the best deal you can. Always have an exit strategy incase things don't work out so you are in at least as good a shape as you are now if you need to start over.
One last thing,Make sure you pick your attorney and you pay him.The money can come from them,but your attorney needs to
really understand your situation and represent YOU. Talk to several to find one you feel comfortable with and is good at this sort of thing.That can make all the difference. Good luck