resrfglc wrote:
The business of business is business - not woodworking.

If you want to explore a potential business opportunity purchase, find and
accountant business opportunity agent and maybe a good book on buying an
existing business.

Don't ask craftsmen on the wreck!

You need to determine what your motivation(s) is/are. Then if the
opportunity will supply what you desire emotionally, and economically in
exchange for the commitment(s) demanded.

Sometimes, its simpler to work for another to earn money for your expertise
in wood working.

But, if you're a businessman(person) the thrill of the markup may prove more
satisfying than the sound of the saw and the aroma of freshly cut Oak or
Hickory.

Purchasing an existing operation offers an existing customer base and "good
will" that can save you the long (sometimes five years or so) startup
agonies.

The difference between the Fair Market Value of the stock, supplies and
hardware offered and the purchase price demanded equates to the charge for
this intangible aspect of a business venture.

Yu want to figure in a salary for the "owner" commensurate with the time
demanded of him/her as part of the operational cost PAY YOURSELF FIRST.

The remaining net is divided by the purchase price to determine the Return
on Invested Capital.

If you can do better buying a CD, adjust your offer downward accordingly to
reach the return (on a risky venture as all business' are) you demand.






A starting point for the price is 5x EBITDA less Outstanding Debt plus
Cash, which will be -0- at acquisition, because there is little need to
buy cash. EBIDTA should be adjusted to reflect a proper salary for
yourself. That's an implied irr of 20%, which depending on your growth
assumptions may provide an adequate risk adjusted return. If you don't
understand what I just said, hire someone who does.

As for a written agreement with the owner to "train you." That's a
good idea. A better idea however is three payouts to the owner in 1, 2
and 3 years down the road based on profits/ebitda/cash flow. Having
his payout based on your performance is a much better motivation than
an agreement to "train" you.

Having said all that, I think you're making a mistake, but hope I'm
wrong.

A.M. Wood