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Decisions, decisions, decisions...


wbrisett

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This past week I was contacted by somebody who I use to work for back in the early 80's. He hired me to help him in his cassette duplication plant. My job was to do pretty much everything. When I could, I would go down to the studio and help out there too. It pretty much put me on my audio path. Later he sold the studio, but he kept doing the cassette duplication and pretty much owned the market for a long time in central Texas. He started a printing business to print the labels, and after a few years, I left to do other things. As cassettes faded, he moved into CD replication, but I don't think he really took things as seriously as he should have. In fact, he admitted that to me recently. The company that use to gross over a million a year, is now a mere shadow of itself with a handful of steady clients. He has asked me if I would be interested in buying the company. I've looked at the books (they aren't pretty... every year has been a little less), and now have to make a decision on what to do. I know I have to grow the company. I have lots of ideas, and at least there are some steady clients. I guess for me, I know CDs have maybe 10 years of life left, so the company has to do other things. It's also an emotional decision, for me, it would be like keeping the company in the family since I helped build the company. But, I'm so torn by how badly it has been ignored that I wonder if I really can compete with the other companies that have come in and dominated the market. I also wonder if I'm being realistic about being able to revive the company by expanding it into location recording.

Am I being unrealistic about buying a dying company and technology thinking I can expand it? (Especially in light of the current economic quagmire?)

Wayne

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"Am I being unrealistic about buying a dying company and technology thinking I can expand it? (Especially in light of the current economic quagmire?)"

Wayne

The only viable way to get involved in this would be if there is a large enough clientele and you can think of a way that your company could service them with whatever NEW needs they might have, now or in the future. I think it is an absolute that CDs are dead. Every single indication in all the areas that this optical media is used is that all are looking for new ways to provide what the CD has provided since 1984.

I wouldn't even consider it.

-  Jeff Wexler

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Am I being unrealistic about buying a dying company and technology thinking I can expand it? (Especially in light of the current economic quagmire?)

I can't assess the chances of success or failure in a venture of this sort. Obviously, continuing to make buggy whips is not a plan for the future but many companies contain the resources to transform themselves into something more valuable.

The question for you is not so much whether there is a genuine opportunity here - although you do need make an assessment of that - but rather whether you really want to be running a service company. Keeping in mind that all the hours of your workday will be consumed with the challenges of running this company, is that how you want to spend your professional life? If the answer is yes, if the time you spent developing the company was satisfying, if you see a potential to transform it into something in tune with today's markets, then go for it.

If you are not energized by the opportunities, then pass. As Charles Foster Kane said of taking over a small newspaper, "It'll be fun!" Actually running a small company may not prove to be fun but if you don't have that attitude going in, if it's just nostalgia for a youthful experience, you should probably not venture into it.

David Waelder

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Sadly, I agree with Jeff. I think the potential for new business in any kind of CD replication is nil. This is not a growing market.

I think we're seeing a transition away from all packaged media right now. Blu-ray is probably going to be the end of the road, and I bet it'll all be download-only within 10 years. Maybe a little longer, but not much.

--Marc W.

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Well, I do have ideas for growing the business. I would simply use the CD replication as a vehicle for moving things more in that direction. Part of it would be online distribution (something the local folks aren't currently doing), also moving into areas like audio/video conference/lecture recording and distribution. And I have some other ideas on how to expand the business using the established name and services and growing it into areas that the previous owner hadn't considered. But that's something that might take a little time to expand into... And yes, part of me wants to do it because I feel like a part of the company has always belonged to me, but I can't let that be the only reason I get involved in this venture.

Thanks for all the comments so far. It's really nice having a sounding board.

Wayne

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It sounds like the biz is ok for now, but as others have said I'd only go into this if you have some future plans that you are passionate about.  It sounds like you just might have those in which case there are some real advantages to taking over an existing infrastructure instead of building one from the ground up.  That said, you'd have to be sure that the company wasn't locked into over-priced deals on rent and supplies, that the employee compensation made sense and that the bene's, if any, won't swamp you later.  Running a company like that, esp one that needs both transitioning and growing is a full time job--are you ready to hang up your boompole to do this, at least for awhile?

Philip Perkins

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Running a company like that, esp one that needs both transitioning and growing is a full time job--are you ready to hang up your boompole to do this, at least for awhile?

I've pretty much already done that... that's one of the reasons I have been selling (or trying to sell) various parts of my kit recently.

Wayne

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hey, Wayne,  I think you are leaning toward doing it, and I wish you well, and applaud your move.

Other than selling your gear, you could always move back toward what you are doing now, but if there are still some solid clients, then you should grab it and grow!  yes, the replication will fade away, but you still have the time to make the transition.  and if you expand the services to offer the initial recording, you could build a little empire; recorded conference (meetings, etc. etc) proceedings should remain a viable market.  distributing content is sure to be a growing market!

All the very best!

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The first question I always ask myself when they are selling something is Why!

  Because this is a failing business.... 

Sometimes it is better to realize this simple fact....  and act accordingly..

Could you build it into something else? maybe.....  But as has been pointed out, this whole thing is in a state of flux.....  unless you have a concrete plan to move in a particular direction i would be hesitant....

Considering the state of the current economy,  I would hold off on starting a new "bought, failed business"..  People all over the country are holding pat on consumer spending. Corporate and small business too.. Not an overall positive climate to feed a new business...

I would agree that it is a decent time to buy tangible real estate at deflated prices.... for example...

Just an opinion...  Good luck on whatever you choose to do!

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Dear Wayne,

You answered all of your own questions, don't do it!

I've worked with you-- enjoyed your good spirit, technical abilities, incredible work ethic and your friendship. I doubt I have ever met anyone who manages their time so efficiently… 

Most of the folks here know you threw your writing of the Zaxcom manuals and your willingness to share on this forum.  They haven't a clue of the things you are capable of.  For what it's worth -- I believe that it's a good time to economize and not take on any future long term costly commitments...

Sincerely

Ron

Flourish & Prosper

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Others have given you some excellent advice.  I'll add the following questions to the discussion:

  #1  Is this something that you really WANT to do, or is it a situation where you simply feel the need to examine an opportunity presented to you?

  #2  How much does the "handul of steady clients" bring in vs what you'd be paying for the company?

  #3  What is the reputation of the company?  How much marketable value is there to that reputation?  Reputation-wise, would you be better off starting from scratch with a new business?

  #4  How much would it cost you to tool-up to replicate DVDs and Blu-Ray disks?  Do you have the needed capitol to stay ahead of the market?  (Remember how quickly VHS died.)

  #5  Is this something that you really WANT to do?  (Yes, it's worth asking yourself this one twice.)

JB

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Guest Ken Mantlo

Good advice has been shared here.  If you really want to move in this direction and buy a business that's going down hill and feel that you can turn it in a new direction, then you have to be creative in the deal.  You have the upper hand. 

If it were me, I would construct a deal where you didn't hold all the risk.  Share it with the seller with a definate payoff in the end that will get him out WHEN/IF things  look up.

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Thanks to everybody here. I took a long motorcycle ride on Saturday with a group of folks (sorry Ron I just happened to be at a gas station so I couldn't talk when you called me), and did a lot of thinking about this deal because I have to give him an answer this week.

John, you have some great questions and some I really want to answer. In particular, the first one. No, this not something I 'want' to do. I received the call out of the blue and felt that I really should consider it. Ironically, when I really examined what I wanted to do with the company, where I wanted to move it, it was out of the replication business because that business is dying. A few more years of life and then it's mostly gone. But the places I could move it to, or really move it immediately, are simply into areas I'm already involved in, such as audio recording. Then the question became, why get involved in the replication business anyhow. The business name use to mean something to people, but the reality is, that was 15 years ago. Today it simply is ignored by most.

When I was midway home Saturday, I made the decision not to buy the company. For me, the negatives simply outweighed the positives and by a lot. It simply made no sense to me to get into replication. So, I'm not going to do it. However, it did stir some creative juices and now I'm going to explore some new ideas that I hadn't thought about before.

Wayne

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