What to look for in a boat company

Hey guys, I have just recently been givin the opportunity to purshase
A small 5 mold fiberglass boat company.
The company is currently building and selling boats, and is willing to stay on after the sale to make sure I keep up with the quaility of boat they are currently building. The owner is very passionate In building and wants to see the company
Grow. I guess my question is... if there are any tips, advice or question I should be looking into before I make the move would be great. I have been out of the business for awhile but thinking this is a great way to get back in.
Thanks

 

There is no substitute for a history of sales.

The biggest indicator of what an owner truly thinks about his company is whether he'll carry a note. A note for even 90 days is significant vs. wanting all cash up front.

The biggest differences between small companies tend to be people. A passionate owner is only an asset as long as that passionate owner is the owner. He could be the glue holding everything together. Many, many small businesses are dependent on one person, whether that person provides technical knowledge, drive, energy or passion. Lose that person, and there's nothing but molds and a handful of tools left.

Personally, I wouldn't buy a small business that wasn't a franchise.

 

Why are they selling ? Have you seen the books ? Are there any orders in hand ? Talk to your accountant if you have doubts.

 

Hey thanks for the reply owner is getting old and wants out,
He currently has orders, but really is not trying to sell boats because of his age( more of a hobby for him now )
No marketing at all and still gets orders they mainly make custom skiffs
At a low price.

 

You don't give any info to go on. 5 hull molds, or 5 molds counting deck, console, etc molds? Any other equipment like chopper guns, sprayers, pumps etc? All the equipment and molds should be thoroughly inspected as to condition. Does a building and building site go with it? Does the operation conform with any type of OSHA, EPA or any other regulatory agencies you might have up there? Down here, the last guy caught holding the bag is responsible for any environmental damages or pollution that others may have caused, and whatever the cost for clean up is. What type of resins are used, epoxy or polyester? Emissions are becoming unacceptable, not only for regulatory air quality, but worker safety and because of complaining 'neighbors'. Open mold laminating is becoming questionable, conversion to infusion or some other technical system might be required, along with more expensive people that know how to do it and expensive equipment and materials that are specific to the various systems. Once the Saudis run most others out and oil prices rebound to wherever they want them to be, the material cost of producing fiberglass boats will be double or triple what they are now. Luxuries like boats are the first things people quit buying when money is scarce. Do you have any idea how much the various insurances will be? You should insure your buildings and equipment, your employees, and then there's liability insurance for the boats if anyone gets hurt and wants to sue. Do you have a good business sense as far operating a business goes? You have to incorporate or whatever to separate the business from all your other assets, or risk losing everything. How many people are employed there? Do you know all the hidden costs of employing people? There's more, but that's a start to the things you should wonder about.

 

Well good advice been given so far.
My bit, if you need to ask this question on this forum, it would be best not to buy it.

Poida

 

I disagree.

I see starting, running or buying a business as very different from designing or building boats.

He may not have phrased his questions well, (many, many questions answer themselves after doing the work to phrase them correctly.) but a little apprehension is a good sign.

 

Why would building boats for profit not be a business? Why is it not a very risky business, with heavy competition, low profit margins, having very cyclic markets, being more or less the canary in the mine shaft as regards recession, plus strict regulatory restrictions that get more and more restrictive and costly?

I guess if the OP just wants to do it as a hobby and doesn't care about how much money it costs him....but if that's the case why ask about tips and advice or things he should look out for, before getting back into the business?

 

I think if you're 100% ready to take over such an operation, you already know all the pitfalls. It has to be assessed strictly along business lines, and consulting a good accountant would be a wise precaution, to double check it ticks the necessary boxes.

 

Making a (bad) metaphor, an attorney is like the referee. He can tell you if the play is legal or will incur a penalty. An accountant is like the scorekeeper. He can tell you who is winning.

Neither of them are quarterbacks. If you want to win, talk to other quarterbacks. Quarterbacks who win.

Neither accountants or lawyers can tell you how to win your game, anymore than the mechanic who fixes your truck can tell you if it's the right truck for you.

 

So if you are a quarterback who doesn't know how to play properly, you consult one that does ? Not so sure, he may not want to give you any tips that make you into unwanted competition, for him. You need someone that has no stake in the game, imo, but understands the principles of it, nevertheless.

 

Exactly. Well put. That would be S.C.O.R.E. (Service Corps Of Retired Executives.) www.score.com.

Taught me everything that business school didn't, including what to do with my competition's heart after I had ripped it out, and how to do it before it quit beating.

Business school taught me to read a balance sheet and a P&L. S.C.O.R.E. taught me what to do about it.

Incidentally, that's where I first heard the quarterback analogy.

 

score.com is giving me a big scary warning from Firefox.

Its Score.org.

What part of SCORE did you mostly use?

 

Sorry about the link.

I used Score about 30 years ago for about five years, when I was launching my business. I went in first to talk over the best use of my (meager) capital, and was so impressed with the advice I got and the amount of resources they threw at my questions (they had me talk to three different people in one day) that I went back with other questions, and finally I just set a standing appointment for every two weeks. I always had something I wanted to talk about.

I actually asked them "when should I stop coming here?" once, and he said "oh, you'll know. You'll be too busy to mess with coming to see us." He was right. I was.

It looks to me like Score has evolved with the times. When I used it, there weren't all those choices, you just walked in, described your business and your question, and they found a guy and you walked back to his cubicle and started wailing about your problem. I think it would be what they called the "mentoring" now.

It got so I ran most major, life-and-death-of-my-business decisions past them before executing them, and they frequently had things to say I hadn't thought of.

It was very comforting to talk about my products in my business in my city as recorded in my numbers with someone who was a stomp-down expert in those things, and had been through the fire himself.

 

Best way to make a small fortune in the boat biz?

Start with a large fortune.