Investor partner needed for Established Design Firm

JCDesign

I have a business going on 3 years now designing and
remodeling homes. I have managed to make it this long through the recession by
adding clients to fill the empty spaces. I am looking to expand my business
with a small inexpensive office and other services to offer so that when the
market recovers I will be able to support the work load from all of the clients
I have added over the past year. My highest income year 2007 with only 5
builder clients working alone with a price 35% less than my current charges I
grossed $90k with no overhead working out of my home just designing with no
other services. Now I have 20 builder clients and growing with a much more
homeowner client base over the past year. However because of the slow economy I
don`t have the funds I need to expand and buy the little equipment I still need
to offer the additional services I have found a need for in my industry. The
investment would be around $75-$100k and I would turn over 50% of the business
ownership in return. Please contact me for a business plan and break down of
the costs of which the funds are needed. I am also educated with a Bachelors
Degree in Architecture and many years experience designing and building homes.
There is a lot of income potential in the next 2 years that should give a great
return on your investment. This will be a business that includes all of the
following services: Designing New Homes/Additions/Remodels, Printing &
Scanning services with electronic file library`s for builders, Online plan
website selling plans for a network of designers, Building & Remodeling
homes for clients, Rendering services and material lists for building. This is
an established business with a solid client base not a startup company hoping
and waiting for the first client to walk through the door. To learn more about the business and see some
of my previous work in my Design Portfolio go to www.jamiecomptondesign.com.
Thank you and I look forward to speaking with you.

JCDesign

Unfortunately being self-employed has made it difficult to get a loan and my wife has been a stay at home mom now for going on 2 years so we don`t have a second income. We just refinanced our home to get a better rate when the rate began lowering and I had to jump through hoops of fire and a few back flips to get that done with the credit crisis. The only option I really have is to look for an outside investor. My business has seen steady growth in clients but the income has been less with the economy. This is why I want to change the direction of my business to offer other areas of service so that if one area is low the others can help supplement the loss. These services were decided on because of past request from clients and experiences on my own part trying to find them. I want to be smart with the investment which also has portions budgeted for steady advertisement which I have not done in the past. I have built this business on mostly referrals from clients and a few mailings to local builders. Right now the market belongs to the homeowners not the builders, they are the clients looking to take advantage of this market. Builders will begin being active again once they sell their current inventory and the banks begin lending them money again. I have also partnered up businesses with two builders for limited partnerships per project. One is for projects under $500k and the other is for projects over $500k with a 50/50 split on profits between their company and mine once the job is completed though we will be splitting duties equally. With a profit margin of 25-35% of build cost per home with my companies share being 12.5-17.5% there is quite a bit of return since most of the designs I typically do average around $400k build cost. Another service for the online plan website has companies making millions a year selling outdated designs that are already seen in every neighborhood in parts of the country. I have a network of designers interested in selling their plans online for extra income waiting for the fair deal that others are not offering. I`m not saying we will make millions but if I can offer more for less with great quality designs there is a great market waiting. I have no problem working with a partner even with one whose not exactly active in the day to day activities. I am a bit of a workaholic and have done everything required of me and more to keep my business going. I work 70 hrs a week even when slow because when I see the work decline I work even harder to find more. This is more than a business to me it is my life and everything I know, it`s not an idea that came in a dream one night that I am now looking for someone to invest in. This is an established business with real clients in need of smart growth sensitive to today`s economy but planning for the next boom that will inevitably come. My business is different than my local competitors many of which are ran and operated by individuals that lack the credentials I find important in designing a home. I give more standard for less in my plans and still have a faster turn around time because I usually know what the client wants before they do. My charges are still 30-70% less than my competitors prices so I have room to raise my rates as needed over the next few years to support the growth. I have created a network of sub-contractors to use rather than hiring full time help until the market recovers to save on overhead expenses. In the field of dreams terminology rather than building it and they will come, the players are already here waiting for the game to start and I need a field for them to play on when it does.

robertj

Mark,
 
Most investors do not want to run "your" company. Generally the few instances where I`ve seen the investors "take over" it`s because that was the only option left for saving what they could of the company and their investment.
 
However, there are unscrupulous people in this world and one needs to exercise caution when forming any type of business relationship.
 

JCDesign

Thanks Mark!  I have no problem with an investor overseeing the business and giving input on their ideas of directions to take I am an open minded guy and far from being set in my ways. I specifically need the money to pay for the Office space/utilities for the yearBuy the 2 large format printers & scanner needed (one black & white for plans and the other color for renderings and sales posters)Software for the additional servicesFurniture for office spaceYellow Page listings for the year in many market areas (I haven`t listed in the past)Target marketing to homeowners through direct mailing post cards, many don`t know they have the alternative to hire a designer then shop for a builder saving a lot of money.Development of website to sell plans with security, shopping cart and check out.Working capital if needed though the target marketing should bring in the homeowner business needed to support some of the growth. I already have neighborhoods waiting for the market to return for me to start designing as well as a few other projects on hold.
My direct competition in this area market had an investor invest $275k into their start up. However the one thing they are missing is a Principle Designer, they asked me to start up their company and train 10 drafters to use the program we use to design homes called Softplan.  I turned it down because they wanted me to give up my company bring my clients but wouldn`t in return give me any share in their company. I felt like it would be too easy for me to train their employees and then they let me go to save money. They have contracted out to designers for their previous work that they show clients as their own. They pay the designer so much each time the design sells and they make modifications to it to match the customers needs and charge the full amount of a new design at a high rate. I had a client tell me they had them to do a design for a homeowner and the homeowner didn`t want anything they had to offer but instead wanted something to be drawn from scratch from their ideas. It took them 18 months to get something the client was happy with and from what I heard they actually paid another designer to do the work in fear of being sued since the project was to be completed in a few weeks.  Not one person in the office has a Degree in Architecture as I was told by someone who worked for them. They have sales people then they have drafters most with 2 year degrees and a design supervisor. I want to create a similar setup but with an actual designer over seeing the work and meeting with the clients face to face. I would like to train people to do what I do so that the business becomes independent of itself and would continue to operate while I work to continue growing the other business areas.  Those I train will move up to lead designers to lead teams of other designers hoping to follow the same path.  I have many connections for potential team members for each service and would like to participate in a work study program with the local High Schools and Colleges for those interested in this career.
I don`t know that this exactly answers your question Mark but I can`t really give up too much more on a forum. My business plan outlines much more and breaks down costs much better than I can post on here. However I just can`t release it to anyone it would have to be serious investor who would have to sign a confidentiality agreement.
Thanks for your advice Mark.

JCDesign

Mark, Most investors do not want to run "your" company. Generally the few instances where I`ve seen the investors "take over" it`s because that was the only option left for saving what they could of the company and their investment. However, there are unscrupulous people in this world and one needs to exercise caution when forming any type of business relationship. 

Your correct Robert, I have already had some of those guys approach me well before I decided to take this direction. I had one tell me they would take 100% ownership of the company and I would work directly for them. Another who began the conversation with asking if I could put my home and cars up for the collateral on their investment who also mentioned he was in the process of selling a night club building he acquired from his last investment venture which I saw red flags flying every direction. I began ignoring his phone calls that came for another month. There are scam artist everywhere so I will be extremely careful with who comes aboard so that everything I worked for doesn`t disappear. I will also be sure that in the contract they would only be allowed to sell back to me if they decide to cash out at any point so they don`t sell to someone like you are warning me about.
I have some builders clients who are giving me some leads on investors they have used for spec homes and model homes. They all seem to think that $100k is a fairly good deal from their experience working with me as a client and that one of these guys may be interested. We will see I guess.
Thanks for your help guys.JCDesign2/17/2009 12:10 PM

JCDesign

I thought about taking multiple investors but it seems much more difficult to divide. I want the investors to make money so how would I divide stock shares or percentage so that they would still be interested? Dividing 50% in to 4 $25k investments doesn`t seem as appealing. I could go with higher percentages where I become the minority share holder but more than the other individually. Then I would have in the contract that shares can only be sold back to me to prevent one from buying the others shares and own the majority. What are your suggestions of dividing up the needed investment? Thanks!

JCDesign

That sounds great but I don`t know where to go to find those guys. I know that if I am able to get the full amount that it would help my business get to the next level for greater income and paying the investment back plus interest could be done fairly quickly over the next few years. I have reached my full potential as the business currently is and if I take a vacation so does the business. I need to get to that next level to become more of a business owner rather than self-employed mode. I just don`t know where to go for that funding so I thought that someone would be interested in the residual income of their investment as a partner. Even if I didn`t offer the other services and continued to only do designs based on the clients I have now, when the market returns I expect to see around $200k-$300k of work coming in. I have no choice but change directions because there is no possible way I can do that much work myself.  If i add the marketing campaign in to the equation that amount could be much higher. Without the investment I stand to lose clients on slow turn around and close doors to other work. It would take me about two years to get the funds saved up myself and by that time too many missed opportunities will have came and gone.
Thanks!

JCDesign

I have been receiving great advice and using it to restructure my business plan. I have also been getting some shady responses like the one above. I know it sounds like I am all over the place but really it is one business with services centered around that business that feed off each other rather than using other businesses. In my business plan I break down each service and show everything from costs of equipment still needed, overhead for that service (not including office and utilities), charges for the service, profit margin and how directly related it is to the main service which is designing homes. For example blueprint printing is broken down to costs to print per linear foot vs charge per linear foot matching the lowest area price. Then the relation to the design business would be that I will be changing all plan formats to the sizes requiring these over size printers to print. Speaking with my builders I found that all of them have these plans printed for each home they build anyway and said if I offered the service they would definately use me to save some time. They are spending $300-$400 per home to print the number of plans they need and they tell me they have to wait sometimes a week or more for the area printers to have them ready because they are so busy even in this slow housing market.
I believe it sounds like I`m all over the place because I am trying to tell of so much in such a little space and I don`t want to give up to much info. Honestly Mark, the suggestions you gave above is Greek to me. My knowledge is building and designing homes, I am trying to better educate myself in business as I go but have a long way to go when it comes to the areas of investment and corporate finance. I have tread very lightly until now and understand that I can`t grow anymore unless I explore new territories of business.
I have someone I know that lost a lot of money in the stock market investments he had that is thinking of getting out of the stock game. He lost 6 times the amount that I am needing and isn`t seeing what is left going anywhere for a long time. I am restructuring the offer by using the investment as a debt that I would pay back plus interest and he would also be given 10% ownership of the company and an equal share of the end of year profit to go toward the loan. Now the first half of the end of year profit would stay in the company each year as working capital. The second half would be taken out and divided equally between he and I.  Now because I am receiving a salary to live on I plan on using my share to put towards the debt of the investors investment. After the investment is repaid with interest the investment partner would continue to receive an equal share every year unless he decided to cash out and sell his 10% ownership back to the company. I have already been communicating with my accountant for his advice as I go and he said he would be sure that I don`t do anything that would get me in trouble.
What do you guys think?

JCDesign

I noticed his posting has been removed. The first thing I did when I saw his posting was check his profile. He became a member that day and posted the same exact posting 7 times in 5 minutes. How convincing could he possibly be?  I have already seen so many of these guys already it`s not too hard to pick out most of them because they are so bad at what they do.  I have to laugh at most of them though, if your going to try and scam someone at least try to be more convincing by using proper grammar or even spell checking your postings LOL!

NashG

Thanks for the information.Drug Intervention MaineNashG2/25/2009 5:14 AM