Cnc Router Business

[craigmel1@optus]

Hi everyone,
I am looking at buying a CNC business in Australia.
The company has been around for 20 years and has two machines.
One is Multicam SR with rotary tool change and is about 1 year old.
The second machine is older Multicam manual tool change.
Just wondering if someone can tell me the potential of a business like this.
Thanks

[thkoutsidthebox]

Sounds like you have a lot of research to do!

The viability of the business will be dependent upon your particular area. You'll have to look over all the tax returns for the past few years and any profit and loss account statements to see what type of state the business is in.

What competition is in the area, and what overall demand is there for the products you can produce?

What products has the company been producing, and are these the best products for the area that they could have been producing, or is there a demand for something else which you could switch production to?

What type of customer list has the company on their books, and what kind of relationship does the company have with these customers?
Is their continued business guaranteed after a change of ownership? Visit them maybe...

Check the condition of all the machinery, and check the licences for all the software.

Look at the employees, how skilled they are, their overall attitudes, their wages, and whether you'll need to hire/fire people.

Will the employees stay on or want to leave with a change of ownership?
If they leave might they set up a competitive business. Consider doing up a non-compete writ for departing employees. Its not worth much in court, but can deter average joe from starting up a competing company 5mins down the road and taking all your customers with him.

Are you going to be buying a profitable business or trying to turn around a loss?...big difference...

What are your personal current costs of living/wages and do the profit & loss accounts show enough of a profit to pay yourself an equal or greater wage than your on now?

20yrs of account statements is quite a bit, analyze them! Has the company being going up or down for the past 5 years, and whichever it is, why?

Are you prepared to work 60hr weeks for the first year or more?

Is the current owner drawing down a steady wage which is included in the business costs, or is he taking the profit?
- If he's drawing a regular wage you can minus that before calculating the profit for the business (I presume he wont be there anymore) and seeing how much money you'll be left with after expenses.
- If he's just been skimming the profits, then after adding in the cost of a regular wage for one more person (You) the annual profits for the business may look decidedly bleak.

What is the current owner going to do after selling?...its unlikely but maybe he screwed up the business he's selling you and wants to start new in the same type of business, leaving you with the old companies problems.

How well known is the company name, after buying a name change can have advantages to help starting fresh and looking for new customers, and it can have disadvantages if the company name is already well known and respected?

Lastly, as I read somewhere before, have you worn out your calculator yet?

Good luck with whatever happens, please keep us informed.

[craigmel1@optus]

Hi There,
Thanks so much for your reply.
You have given me alot to think about.
I will start from the beginning.
Profit and loss for the past few years is not bad.
The business is growing slowly. (due to attitude of current owner). He is retiring and moving away from the area.
All machines and equipment seem to be in good condition.
The new machine you can see at http://www.multicam.com.au/sr%20series.html
Not many competitors in area, and there is alot of potential!!
He is not even scratching the surface.
One current employee that will need to be fired due to current P&L not being able to retain mine + his income.
It seems to look ok on paper but i see alot more potential.
Thanks again.