The new forum will be your outlet to get information on the billboard industry, connect with new and seasoned outdoor advertising professionals, and ask questions and get additional ideas to help you succeed in the industry.
I look forward to answer questions as well as growing this forum into a unique resource.
Sincerely,
Dave Reynolds
Founder, OutdoorBillboard.com
Glad to see this!!
I was wondering what are we contractors to do when we go to work on a companys sign and there is no safety cables or back rails or catwalks. Are we suppose to take their advice when thay say just be careful. Has anybody run into this problem. Should it not be a common practice for all billboard owners to keep their structures safe for workers. It is bad enough that they require us to wear harnesses but nothing to clip into.
ANY ADVICE>
Thanks and be well.
That is a great question, because I know exactly where you are coming from. We used to service other people’s signs using our own crews as a source of additional cash-flow. Some had all the required safety equipment. Some had none. We needed the money, but didn’t want to go broke in a big lawsuit. So we hired an attorney to advise us on what would happen if somebody got injured.
It’s against the rules of OSHA to put men up on a sign without the required safety equipment. If somebody fell off, this is what would hapen:
So really, it just makes no business sense to get up on a sign without safety equpment. And if the sign owner tells you it’ll be O.K., remember that means nothing in court.
One solution would be to convince the customer to install safety equipment, maybe even offering to pay a portion of it, if it means a big account with a lot of cash flow. I’ve done that before in select cases.
Frank;
Thanks for the great advice. Why do they always have you sign a hold harmless agreement? They seem to always tell you that it is not on the budget to put a $300 safety package on a sign. Do you really feel that shepard hooks are safe, considering some of the boards are old wood faces with stringers coming loose and rotten plywood. If god forbid you do fall, more than likely the face will come loose with the sudden jerk. In the older days it was not quite a risk because you usally were switching faces,but today they just put vinyls on top of old wood. Some of these double stacks were not meant for vinyls. Again Frank thanks for the advice,and be safe and well.
Some more great points! A “hold harmless” agreement is probably not going to hold up in court for the sign owner. You can’t get out of liability under such an agreement if you know you are breaking the law (or every sign owner would have some derelict off the street sign an agreement to agree to shoulder all their liability if somebody fell off a sign – the court sees right through that). I have seen shepherd hook accidents where the panels break, only they normally end up grabbing on the stringer on the way down – it can still cause a fatal accident. That’s reason #1,000,000 to have the required OSHA safety equipment. It sounds like you need to educate people on why it is in THEIR best interests to have that safety equipment – do they really want to go bankrupt to save $300? Some people do not understand how dangerous going up on a sign is. Educate them on it. I used to have a small scale model of a billboard that I used to demonstrate sign construction and servicing – or you could just make a diagram. Most people, once they understand the risks to their business, will willingly upgrade to OSHA specs. The others should be avoided – it’s just not worth the liability.
P.S.: I found that the people who were too poor to buy the safety equipment also nickled and dimed us to death and rarely paid their bills on time – do do you really want them as customers, anyway?
Thanks Frank;
I do alot of safety upgrades for a great company that is employee based but they are very budget conscious for boards that subs work on. My only problem is when osha catches our crew,(wearing harnesses) but nowhere to clip into. I know it is all about numbers,Secure Leases,sellable,customer contracts etc. Condition of structure is last concern. I enforce upon my crew make sure every crosby clip is tight, no straps attached to access ladders because it could always be the next person climbing that may need that cable tight.
But anyway Frank thanks for the great advice, and be well.
Frank:
What do you thoughts on purchasing a plant of around 30 faces that needs some TLC?
I think that a plant with 30 faces is a fine size – I bought one with 30 faces in Los Angeles years ago. It is just big enough to have cost efficiencies and enough cash flow to be worth entering a market. But I am concerned when you say “TLC”. Does that mean the signs need repair and better sales and management, but are in great locations? Or does it mean that the signs are abandoned and out in the middle of nowhere? And what do the signs rent for in that market? Please respond and give me more details so I can give you a more accurate opinion.
Thanks Frank, I bought your book, listen to your calls, and I am reside in the billboard capital of the world or at least top ten, NYC. I started my billboard business officially at the start of this year and have been learning the business over the past 2.5 years in my spare time. I have not quit my day job but I have targeted a couple markets outside of NYC that are more at my current level and I have several leases one of which should be permitted and ready for development in the early part of 2009. That being said, I could forsee maybe 10 faces in the next couple years at my current pace, but I am anxious and getting my wife interested who is in advertising in NYC and we have mulled the idea the idea of buying a plant that maybe requires a period of relocation to get a good set of signs and make it great.
I am sure the above sounds well and good but the kicker is how do I quit my day job, buy a plant, and pay mortgage, so on so forth and survive for any length of time and obtain the necessary financing etc.
I think that’s enough for now and I would like to meet or at least speak to you outside of the Monday call if possible. If not, I will try to get a word in on the next call and maybe consider the boot camp you started. Thank you for your time.
(866) 977-7727 Anytime
I think that you should break your goal up into smaller steps.What you have presented is an enormous challenge, and would be hard for almost anyone to accomplish overnight.
The least amount of cash flow in the business is in buying existing signs. Why? They cost more than building them yourself, so all the cash flow goes to pay debt. Additionally, it is extremely hard to find a large enough collection of billboards at one time to offer enough critical mass to allow you to quit your day job.
You would probably be better off finding new locations within a few hours of your home, and work that attack plan until it generates the kind of cash flow that you need. But I would really think twice about quitting your day job – most of my contemporaries built their billboard investments while still holding a regular job. It takes a lot of pressure off of you.
You can still buy billboards along the way as opportunities pop up, but it is nearly impossible to say to yourself “I want to buy 30 billboards at a fair price” and then run into that deal. In over a decade, I only found one deal of that size – and I found it over 1,000 miles from my home!
Thanks Frank I appreciate the advise. Do you have any thoughts about obtaining liability insurance for myself and the owner in the event the someone was injured or worse as a result of the sign? The reason I ask is finding a company to get me what I need at a reasonable rate for 1 million dollar policy has been more of a challenge that I expected. Do you recommend any companies? Thank you
I don’t know of any specific companies, but I do know that you need to get maybe five to ten quotes to get your best deal. I would start with the commercial insurance brokers, which you can find on the internet. I would also get bids from the usual carriers, like State Farm. You should also call some of your competitors and see who they use.
Also, look into the cost of a balloon to give you more than $1,000,000 in policy value. A million won’t go too far if someone gets killed or maimed. You can sometimes get a low cost “balloon” of another million or two on top of your basic policy. At least get the price and see what it is.
The key here is VOLUME. Get a ton of quotes.
Thanks Frank:
Any thoughts on what a 60X20 sign or similiar, supported by wooden poles, 600’ off the row is worth or how to price?
The billings are about 1,500 - 1,700 per month. It one of the grandfathered signs supported by wooden telephone poles, and if it blows over, its over.
I need a “general” way to look at these types of signs and understand how to price and your thoughts in general. Thank you.
These type of signs are EXTREMELY hard to value, for several reasons: 1) they are not a standardized size or even business model for most larger outdoor plants 2) they are very risky (as you pointed out, if they go down then they’re gone) 3) banks hate to make loans on old, wooden signs 4) they have perpetual maintenance issues due to their large size and crude construction.
That being said, they are fine income producers. But you have to buy them REAL CHEAP. I’m talking three times cash flow or less. The most I’ve ever paid is five times cash flow, and that was for a sign on a 30 year lease with no tear-down provisions and steel reinforcement, on a highway with 200,000 traffic count on the edge of downtown.
If you are a seller, you’ll probably get your best price trying to sell to someone who does not understand the industry and might pay you ten times the cash flow, thinking they’re buying a 10% return on their money. However, unless they have all cash, no bank is going to finance that. And if you carry paper, you might as well keep the sign, since the buyer is using the signs cash flow to pay you back (you could keep the sign and get the same cash flow, and still own the sign).
Thanks Frank:
Any thoughts on what a 60X20 sign or similiar,
supported by wooden poles, 600’ off the row is
worth or how to price?The billings are about 1,500 - 1,700 per month. It
one of the grandfathered signs supported by wooden
telephone poles, and if it blows over, its over.I need a “general” way to look at these types of
signs and understand how to price and your
thoughts in general. Thank you.
What kind of land rental are you having to pay on said sign? That would help in pricing it.
These types of signs exist due to a loophole in the original Highway Beautification Act (now fixed by most states). In it, they arbitrarily chose a distance from the right-of-way beyond which the ordinance did not apply, which is around 660’. These signs were built to take advantage of that loophole – that’s why they are so far off the road and, to make up for it, so large. They are normally made out of wood since they pre-date metal construction and they are normally in more rural areas.
Their unusual size and construction gives them unique issues. The first issue is the perpetual problem of keeping them intact. This sign is probably made out of 38 sheets of 4’ x 8’ plywood, with six to eight telephone poles. There is a ton of windload on this structure – a 20’ x 60’ is like turning a 1,200 sq. ft. house up on end. In big winds, it is not at all unusual to lose a few panels. The best example is Howard Hughes’ “Spruce Goose”: huge wooden things are just tough to hold together. This leads to the second issue, which is understanding the grandfather status on the permit. Most areas allow you to make repairs up to a certain percentage of new construction cost. But if the whole sign comes down, your permit is lost and you are out of business.
Another problem is renting the space. Because they are so far off the road, many advertisers are turned off to them. And then there is the issue of how to get financing on such an odd-ball structure. And finally, figuring out an exit strategy down the road.
So how much is one worth? That’s a very difficult question. From an income perspective, you can use a return on investment benchmark, such as a 20% cap rate, making it worth five times the annual cash flow [revenue minus expenses]. However, you’ve got to take additional discounts since you have the risk of it falling down, the risk that you can’t put it back, the difficulty in renting the space, etc. And then on top of that, you have the problem of calculating the real revenue it will safely produce during the recession, and the impact of vacancy. You will probably end up with a value equivalent to around two to three times existing annual cash flow. But even then, make sure to use plenty of “padding” in your numbers.
Sure, the seller will tell you “why should I sell it that cheap?” That’s the problem you always get into on these signs. To the owner, assuming he has it paid off, there is no risk to calculate. Whatever he rents it for each month goes straight into his pocket. But you are approaching it from a different perspective – you are having to evaluate a risk-adjusted return on capital going forward. Don’t let him “bully” you into making an incorrect valuation. If the sign blows down two years into the deal, he is not going to be there to help you or give you that portion of your money back. All business has risk in it – but you should never engage in “stupid” risk. Leave that to the subprime lenders.
There are saftey lines that can be installed as a temporary saftey lines. They are called Horizontal lifelines and they meet all OHSA reqirement. They can be moved from billboard to sign or to any frame that you need to be hooked off to for saftey. If you need to know were to find them email me
at jwyatt7749@msn.com
I want to know about outdoor billboard? Can you help me? please
Vancao,
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