Should I buy a 20 year old appliance repair business?

[tonyf7]

I sent you a private message but just so you know, there is a guy here in the north Dallas area that works from behind his house, no carport. His 2 guys deliver a minimum of 15 sets every day, 7 days a week. So don't have any shame about working under a carport.

Oh, no shame at all. I love telling people our story of how we got started under a carport. I take pride in it because of how far we've come. [emoji4]

Sent from my SM-G955U using Tapatalk

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[tonyf7]

With service businesses don't forget some % of customers are there because they know the guy in charge or somehow favor him. Once he's gone then so are they. Or at least they're back on the market shopping around which leaves you in the same spot you're already in.

I'm sure you could use a fraction of that dollar amount and generate the same revenue yourself.

I wouldn't buy it unless you're getting it for peanuts.

I also feel that along with losing some of "his" loyal customers, some of his employees may leave as well. It's risky at best.

Sent from my SM-G955U using Tapatalk

 

[tonyf7]

This. ^^^

Electricians.
Therapists.
Plumbers.
Appliance repair.
HVAC

Most all of these "by the hour" service businesses...

The owner IS the business.

Especially in a small town, with a guy only doing peanuts in revenue after 20 years. Likely he is one of these "knows everybody" type of guys, and that's why people use him.

He leaves and his customers leave. At that point whomever has the best marketing/reputation/convenience/service wins.

So...the exact same position you're in now. There is NOTHING that will turn his gross revenue into YOUR gross revenue, is there?

His gross sales, and his net profit mean NOTHING if you can't keep his customers.

Downsides:
"affordable" rent of this freshly paid off building (a liability you don't currently have)
Loss of his customers (could be 100% loss)
Debt service on the loan
Expenses related to employee's, vehicles, etc (would his employees stay on??)

Upsides:
One less competitor (although a guy only doing low revenue after 20 years is hardly competition haha)
???????

My opinion:

If you aren't saying "F*ck Yes!" to buying this, then DON'T.

Trust your gut.

I'm definitely not screaming F*ck yeah about it. I think a part of me wondered if could make this business into a great one. But when considering all the debt I'd be getting into and the fact that I can grow my current business into something great, it doesn't make sense.

Sent from my SM-G955U using Tapatalk

 

[tonyf7]

You're buying a job from a dude that bought himself one 20 years ago. Let that depression sink in for a second.

I'm watching my dad go through the process of trying to sell his job so he can retire. It's painful. You don't wanna be that guy.

I almost bought myself a job this week, and probably would have gone through with it if the business broker hadn't been a dick. Due to some temporary mental illness, I was going to buy a coin laundry and renovate it for "passive income". Except,... I would have spent at least a year driving 20 miles across the metroplex in work traffic every morning to spend time there before driving another 15 miles to another end of DFW to my 9-5.

Sometimes, when you're about to punish yourself with bad decisions, it's nice to have people here that point out that they are.... bad decisions.

Definitely grateful for everyone on here offering their input. Tons of clarity for me.

The fact is I already own a job in the business I created with my uncle. Buying a bigger job while getting into debt doing it sounds ridiculous now.

I'm better off putting my energy towards turning my job into an actually business.

Sent from my SM-G955U using Tapatalk

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Hyrum]

Yea, that's what bugs me the most. After 20 years he should be making more.

Sent from my SM-G955U using Tapatalk

My guess is he hasn't increased his prices in 20 years, which might be why a lot of people still use him. So you might want to factor in how market-adjusting your rates after a buy-out will affect customer retention.

 

[minivanman]

I don't really see the benefit in buying a non-scalable business with no recurring revenue, no unique product, and still would require tons of work on your part. (I mean, I guess you could start an appliance repair franchise model, but you don't need this guy's business to do it.)

If this guy closes up shop, wouldn't you be getting all of his customers anyway? And couldn't you just apply his autonomous system to your own business?

I never responded to this although I meant to. This type of business is VERY scalable. That's actually the question I'm thinking about on my upcoming vacation in 2 weeks. Do I want to scale it and go through the hassle or just enjoy what I have and continue with the easy life. I know the ins & outs and have connections and the marketing knowledge.... it's a tough choice. As for Tony, I left the door open for him to make it big time in the fast lane or learn the slow way in the slow lane. I have ALL the answers to this business, all he has to do is choose to listen. Once we message I might find that he also has the answers but is choosing not to utilize them or maybe he doesn't realize he already has the answers.

 

[Chazmania]

I worked as an appliance tech in the past and I was also thinking of starting up my own repair service. This was about 5 years ago and I decided against it to pursue current business concepts but it's actually a great business and lucrative if priced right. It serves a need and there's money in it for sure.

I think you should just utilize good marketing and fast-lane concepts and grow it yourself.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Camaro68]

Guy is asking $200K and you say it's worth around half that, so $100k.

If this guy retires and his business slows, answer me this.

If you take that $100k and invest it into your own business via marketing, new technology, space etc. What are the odds that you'll take all his business or significant market share? I'm always hesitant to buy someone elses business unless it's clearly worth it and saves me a tremendous amount of time. I would think that if you spent the $100k (probably actually less, you'd be surprised) and went on a marketing binge, website, flyers, billboards, radio ads, lettering on a panel truck, awesome website with ads on FB and Google search that you wouldn't put this old timer out to pasture. I would think that you could get better results by investing that money in your own business at your own pace, rather than buying another business that has some advantages but nothing you cant do yourself, and better. I'd look there first.

Most of these small businesses are terrible marketers. For instance look around at lawn care, appliance repair, towing etc any business like that in your area. The websites are pathetic if they even have one. Unprofessional marketing, poor appearance when they show up, unreliable etc. With a decent plan you could steal a majority of their market share in months, land one on their chin and get them on the run. The problem is many are slowlane and require a significant amount of time and energy devoted to do it, that's what I don't like about it, and the lack of competitive advantage over another guy. You're already in the business and assumed you know it well, so that part is done. I would blitz him in marketing with flyers (cheap) and invest in a quality website and ads to potential customers and I bet his numbers drop off. As already stated, if he has been in business for 20yrs and is doing similar numbers than IMO what he is doing isn't working and isn't worth buying. If he cant sell and is going to retire, his business will drop off anyway, wither and go away. Don't pay for anything you can TAKE by being smarter and hustling, if its what you want TAKE IT.

 

[tonyf7]

Guy is asking $200K and you say it's worth around half that, so $100k.

If this guy retires and his business slows, answer me this.

If you take that $100k and invest it into your own business via marketing, new technology, space etc. What are the odds that you'll take all his business or significant market share? I'm always hesitant to buy someone elses business unless it's clearly worth it and saves me a tremendous amount of time. I would think that if you spent the $100k (probably actually less, you'd be surprised) and went on a marketing binge, website, flyers, billboards, radio ads, lettering on a panel truck, awesome website with ads on FB and Google search that you wouldn't put this old timer out to pasture. I would think that you could get better results by investing that money in your own business at your own pace, rather than buying another business that has some advantages but nothing you cant do yourself, and better. I'd look there first.

Most of these small businesses are terrible marketers. For instance look around at lawn care, appliance repair, towing etc any business like that in your area. The websites are pathetic if they even have one. Unprofessional marketing, poor appearance when they show up, unreliable etc. With a decent plan you could steal a majority of their market share in months, land one on their chin and get them on the run. The problem is many are slowlane and require a significant amount of time and energy devoted to do it, that's what I don't like about it, and the lack of competitive advantage over another guy. You're already in the business and assumed you know it well, so that part is done. I would blitz him in marketing with flyers (cheap) and invest in a quality website and ads to potential customers and I bet his numbers drop off. As already stated, if he has been in business for 20yrs and is doing similar numbers than IMO what he is doing isn't working and isn't worth buying. If he cant sell and is going to retire, his business will drop off anyway, wither and go away. Don't pay for anything you can TAKE by being smarter and hustling, if its what you want TAKE IT.

Amazing insight. Thank you. You're right. That 100k can go towards taking what he hasn't been able to capitalize on. O my problem is I don't have 100k. How would you suggest I ramp up the marketing when we're making just a little more than enough to pay ourselves?

Sent from my SM-G955U using Tapatalk

 

[Camaro68]

Amazing insight. Thank you. You're right. That 100k can go towards taking what he hasn't been able to capitalize on. O my problem is I don't have 100k. How would you suggest I ramp up the marketing when we're making just a little more than enough to pay ourselves?

Sent from my SM-G955U using Tapatalk

I would bootstrap it man. Go on Facebook and find local pages (for instance my hometown, smaller than yours, has a page that locals share tips on or recommendations) post on the page offering services. Make sure your personal FB page is clean and professional, no drunk pictures, think like a gentlemen. Make a page for your business, post pictures, let all your friends know. Don't underestimate the power of flyers, print one up that looks professional and place them strategically throughout your area. Cold call realtors or landlords. Look at property management businesses that manage a ton of properties and offer your services. Offer discounts to customers who refer you to a friend, get involved in local clubs or organizations to network with others and spread the word. There are a TON of sweat equity methods to get your name out there, and at the end of the day, a satisfied customer is the best advertising. Letter your truck or print of signs and start to staple them on telephone poles, think outside the box.

There are more ways to market and spread the word than paying for a radio ad, or paying FB. If you do all this in your spare time the ROI is unbeatable. You should carry cards with you, drop them everywhere and on every bulletin board. Hand them out left and right, eat breathe and sleep it. If you read about numerous businesses that started from nothing, they all focused 100% on getting the people informed and making them happy. That's the name of the game. You should have the mindset that if the house is on fire, and the fire dept comes, someone on the dept is leaving with a new appliance....that much dedication. I remember reading about Ms. B, the 80 something yr old lady that Warren Buffet bought a furniture business from, she was unstoppable and had that level of dedication and determination. No reason why you cant beat the "other guy" because it obviously sounds like he isn't on that level and has never been. Beat him the old fashioned way, and once that starts working, you can afford to spend a couple bucks and beat him the new age technology route. If someone held a gun to your head today and said, if you don't put your business name in front of 20 new people today that didn't know about it yesterday, or I pull the trigger...you'd figure out a way right? Think like this EVERY DAY.

Mailman walks up to drop off envelopes at the house, "hey hows it going today? Yup another hot one! Hows your (washer/Dryer etc) doing?" He'll probably give you a funny look..."Just mentioning I operate an appliance servicing business, if you ever need anything or know anyone who does let me know, I'll take care of you, and I offer a full gaurentee (hand him your card)"...BOOM done

He now knows you exist and what you do, he'll think about it the next time one of his coworkers complains that the washer died, and he feels like you are going to give him personal service that he wouldn't get at "SUPER JUMBO EXPENSIVE APPLIANCE MART".

Now wash, rinse and repeat (pun intended)...seriously do that with everyone you meet. Your friends/girlfriend etc should be SICK of hearing you pitch your services to everyone you meet. View it as a personal vendetta to take the other guys business...if you want to win

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[tonyf7]

I would bootstrap it man. Go on Facebook and find local pages (for instance my hometown, smaller than yours, has a page that locals share tips on or recommendations) post on the page offering services. Make sure your personal FB page is clean and professional, no drunk pictures, think like a gentlemen. Make a page for your business, post pictures, let all your friends know. Don't underestimate the power of flyers, print one up that looks professional and place them strategically throughout your area. Cold call realtors or landlords. Look at property management businesses that manage a ton of properties and offer your services. Offer discounts to customers who refer you to a friend, get involved in local clubs or organizations to network with others and spread the word. There are a TON of sweat equity methods to get your name out there, and at the end of the day, a satisfied customer is the best advertising. Letter your truck or print of signs and start to staple them on telephone poles, think outside the box.

There are more ways to market and spread the word than paying for a radio ad, or paying FB. If you do all this in your spare time the ROI is unbeatable. You should carry cards with you, drop them everywhere and on every bulletin board. Hand them out left and right, eat breathe and sleep it. If you read about numerous businesses that started from nothing, they all focused 100% on getting the people informed and making them happy. That's the name of the game. You should have the mindset that if the house is on fire, and the fire dept comes, someone on the dept is leaving with a new appliance....that much dedication. I remember reading about Ms. B, the 80 something yr old lady that Warren Buffet bought a furniture business from, she was unstoppable and had that level of dedication and determination. No reason why you cant beat the "other guy" because it obviously sounds like he isn't on that level and has never been. Beat him the old fashioned way, and once that starts working, you can afford to spend a couple bucks and beat him the new age technology route. If someone held a gun to your head today and said, if you don't put your business name in front of 20 new people today that didn't know about it yesterday, or I pull the trigger...you'd figure out a way right? Think like this EVERY DAY.

Mailman walks up to drop off envelopes at the house, "hey hows it going today? Yup another hot one! Hows your (washer/Dryer etc) doing?" He'll probably give you a funny look..."Just mentioning I operate an appliance servicing business, if you ever need anything or know anyone who does let me know, I'll take care of you, and I offer a full gaurentee (hand him your card)"...BOOM done

He now knows you exist and what you do, he'll think about it the next time one of his coworkers complains that the washer died, and he feels like you are going to give him personal service that he wouldn't get at "SUPER JUMBO EXPENSIVE APPLIANCE MART".

Now wash, rinse and repeat (pun intended)...seriously do that with everyone you meet. Your friends/girlfriend etc should be SICK of hearing you pitch your services to everyone you meet. View it as a personal vendetta to take the other guys business...if you want to win

Wow, I think I finally really understand the meaning of bootstrapping. That was a new concept to me. Thank you. I've done a few of those things you mention but many I haven't.

Now that my kids are on summer break I think I'll have them help me walk through some neighborhoods and put out some door hangers that I designed but never printed a long time ago.

We're also getting our van stickered up next week to help increase our visibility.

But I think the most valuable advice here is the"always be selling" mentality. I do that, but usually only during business hours. Must increase my hustle.

Sent from my SM-G955U using Tapatalk

 

[ZCP]

What is the name and customer list worth?
Offer him an 'earn out' based on profit.
Make it worth your while.
Use it as the foot in the a$$ you need to go from 'working a JOB' to business owner. (this might be the most valuable $100k you ever spend!!)

 

[tonyf7]

UPDATE: I decided not to buy it. My business is growing quickly and I think we're hitting that S curve we're we need to step it up to the next level to keep up with demand. In addition to doing contract work for Sears, we just got signed up with Speed Queen and another home warranty company. Plus we're getting a steady flow of Google search, word of mouth, referral, etc. generated business

I like where we're headed and I'd like to grow it myself instead of taking over a business that in my opinion should be doing a lot better than it is after 20 years.

Appreciate all the input and advice.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[minivanman]

lol Yeah, I knew Mrs B from Nebraska Furniture Mart. After Mr. B died her kids pissed her off so she opened a carpet store right next door to Nebraska Furniture Mart... and that was all from her 3-wheeled Hover-Round. lol By that time she was like 100 years old. Buffett and her went back many years. They used to play bridge together at Sharon Gathman's house so it was a little more than just a business transaction. As much as you wouldn't think so, if you get him alone and being a normal 'Joe' Warren is just like the rest of us.

Customer list for something like this business isn't worth much at all. I'd offer a case of Dr. Pepper if you can find them on sale.

Home warranty on Speed Queen's? Isn't that about like the old Maytag guy? I've never even heard of a Speed Queen breaking down.... do they break much?

Keep me updated. If I can help just send me another private message of if you hear of anything that might help me let me know and I'll do the same.