New Advertising Business


#1

I am looking to startup a new advertising business.
I live in a town of roughly 65,000, with 300,000 in surrounding areas.

My plan is Junior Billboards. I am thinking 10 to start with. My questions are:

How much do these cost? Is it easy to put the paper on? What is the average rental rate for one of these?

I read on here of somebody building wooden poles that are 12 by 24 in display size, How much do those cost?

Sorry, one more question.

A local company is selling 7 billboards with 14 faces and annual “Quoted” revenue of 84,000. The leases on 6 signs are perpetual.
How much should I pay for this company?

Thanks for any help.


#2

If you are serious about starting a billboard company, you really need to buy and thoroughly read our Home Study Course, and take advantage of the weekly one-hour free mentoring group call that we do every Wednesday. You questions are way more complicated than I can respond to in a couple sentences on the forum.

The size of your town sounds correct for building outdoor signs, but there are some pretty important concepts that you have to implement to not be wasting time and effort. For example, does your city and state allow new signs and, if so, what size do they allow? Do they allow wooden, multi-pole construction?

As for the company to buy, I would not even consider that until you’ve read the Home Study Course and know what you’re doing. Otherwise, you could potentially lose your investment. The revenue does not matter on that deal as much as the net income – and even then, you’ve got to be able to know the costs so you can make sure that what they tell you is accurate.


#3

I just bought your book and will read through that. I figured it would be a good tester on how good the quality of the Home Study Course may be. No offense, just like to get a feel of who I am working with before diving in. Though neither is a big investment.

They do allow signs, but not sure that the ordinance code in any of the areas specified if it could be wooden poled or not, nor specification of multipole.

I would just like a ballpark price on what you would pay for a billboard company normally. I have heard 6x net revenue before, while most companies would only get 3x net revenue. I work in an insurance field right now, which also has good residual. TO buy a book of business would be around 2 to 3 time net revenue.

Do Poster Billboards (6 x 12) still work and bring in good revenue? I have gotten a few quotes and the numbers work if I am going to be able to rent them for 150 to 200 per face. Is this logical. Most of the billboards around here rent for 1200 average per face.


#4

If I’m buying billboards, I’m shooting for 20% cap rates or higher (return on investment – not to be confused with cash-on-cash return). This is the type of return that allows for a return of your principal, at an imputed 8% interest, over 7 years or less.

If I’m selling billboards, I’m shooting for 10% cap rates. It would take you about 30 years to get your money back under that scenario.

6’ x 12’ billboards are called “8-sheets”. They can still work, but you have to understand that they can only hold limited copy, because of their size. They are also normally in less desirable areas. You would need to find advertisers that can work around both obstacles – such as bail bondsmen, personal injusry lawyers, etc. Yes, $150 to $200 per face could be reasonable for the right advertiser.


#5

20% makes a lot more sense to me. The guy I was/am dealing with mentioned a price that would be about a 5% to 6% cap rate. This seemed outrageously high to me. Can’t blame a guy for trying though.

There are so many billboards in my town I wanted to get a niche market that would be closer to the viewers eye. I also wanted to make it less obtrsive to the business that I put the sign on. I figured this was the way to go. Thanks for your help.

Any idea on costs of an “8 sheet” structure vs a “30 sheet” structure.

Thanks


#6

You can often buy 8-sheet structures – as scrap in a pile at a billboard plant – for $1,000 or so. That’s about 1/25th the cost of a 30-sheet. Of course, there’s a reason for that: 1) they are smaller 2) they have no lights or catwalk 3) the locations are less popular. But from a cash flow standpoint, the 8-sheet is going to make more immediate cash flow than the 30-sheet [the only exception would be a 12’ x 24’ 30-sheet made out of wood on several wooden poles].


#7

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