ISP investment opportunity (for me)

[Mike Robinson]

Hello

I don't know if any one can help me here but I have been asked to invest some capital in a local ISP business. I know virtually nothing about the business and would like some input on what questions to ask.

Here's the basics; The company is poorly run and the owner has allowed many of his customers to fall into arrears and now owes the company who provides the wholesale services money so they want to cut him off. He wants us to buy some of his hardware and lease it back to him so he can pay off some of his debt.

If you are knowlegable about this business I would appreciate some input.

Thanks!

 

[Summer Fun]

Re: ISP investment opportunity (for me)

The company is poorly run and the owner has allowed many of his customers to fall into arrears

He wants us to buy some of his hardware and lease it back to him so he can pay off some of his debt.

NOW !!! think about what you just said here.

. If he couldn't make it before !! what makes you so sure he can make it with YOUR money. Run away from this deal or offer to buy the company and run it right. . PS I'm retired at 51yrs old.

 

[Bob_VT]

Re: ISP investment opportunity (for me)

ISP's IMO are going to be gobbled up by the newer technology...... I would avoid that business right now and concentrate on a business you are familiar with.

 

[Mike Robinson]

Re: ISP investment opportunity (for me)

...or offer to buy the company and run it right. ...

Thats exactly what would have to happen if the company were to survive. He wants to sell as his health is poor, so at least to start, we would have to take over his subscriber list and start collecting oustanding debts. I'm not sure how we would protect the equipment that we bought from him (and leased back) from his creditors.

 

[Summer Fun]

Re: ISP investment opportunity (for me)

I'm not sure how we would protect the equipment that we bought from him (and leased back) from his creditors.

Pay them and rename the company done deal.

He wants to sell as his health is poor

You didn't say that in your first post .

we would have to take over his subscriber list and start collecting oustanding debts

Start with that NOW !! and see how many people pay up and go from there. .

 

[Mike Robinson]

Re: ISP investment opportunity (for me)

ISP's IMO are going to be gobbled up by the newer technology......

I would appreciate it if you could elaborate Bob. What newer technology do you mean?

Thanks in advance for your time!

 

[Bob_VT]

Re: ISP investment opportunity (for me)

Wireless and cable are consuming the little guys at an astounding rate. One people change services it is usually for good...... Teschnology that was state of the art one year ago has been replaced.

I just do not feel the small business will be able to keep up.

 

[v1_0]

Re: ISP investment opportunity (for me)

Wireless and cable are consuming the little guys at an astounding rate. One people change services it is usually for good...... Teschnology that was state of the art one year ago has been replaced.

I just do not feel the small business will be able to keep up.

Not necessarily. Sure, the larger company has more money - but it also has more to replace, requiring more money. The smaller company can be more agile. The only possible benefit for the larger company is that it can maybe get a volume discount. It will probably have more people involved in making the changes, and that's more labor cost.

It would be a poor decision for the smaller company to compete in an arena where it has a handicap. For example, if you know the larger company has a better network - compete on price, or on services offered.

 

[v1_0]

Re: ISP investment opportunity (for me)

Hello

I don't know if any one can help me here but I have been asked to invest some capital in a local ISP business. I know virtually nothing about the business and would like some input on what questions to ask.

Here's the basics; The company is poorly run and the owner has allowed many of his customers to fall into arrears and now owes the company who provides the wholesale services money so they want to cut him off. He wants us to buy some of his hardware and lease it back to him so he can pay off some of his debt.

If you are knowlegable about this business I would appreciate some input.

Thanks!

Looks like you are looking at being a venture capitalist...

What you should look at is the "business plan" that the company has or is proposing to use. It will detail things like: how the company plans on making money, how they plan on out doing the competition, who their management team is..
Then you take a look at the resume of their management team, and what experience they have doing exactly what they are doing - running a ISP company (or similar). And what role they actually had in their previous companies. The stronger the candidate, the better your chances are that they can turn this around.

 

[ToothDocNick]

Re: ISP investment opportunity (for me)

As a business man who occassionally has to chase people down for the cash they owe me, walk away from this. He cannot run a business, has too much in the accounts receivables, and you can only expect a small portion of those accounts to ever be paid in full. What he is looking for is someone with cash so he can now play with their money. You said it from the start...this guy is asking you to buy his equipment then lease it back to him......and you know nothing about this type of business. So when he decides to default on his lease agreement you will be left with some hardware that is no longer worth what you paid for it and you know nothing about. If the guy was serious about getting out he would just sell it out right, he is looking for a sucker and there is one born every minute. Walk away and put your money into something else.

 

[lowkee]

Re: ISP investment opportunity (for me)

I'm with Bob_VT on the ISP thoughts. Small ISPs in the Us are in bad shape and getting worse. Dialup is not very popular and you aren't going to get more customers as time goes on, only less.

if you really want to get into the tech world, I would look into server hosting, colocation and unmanaged servers. Your biggest outgo in that business is bandwidth and power, both of which are very cheap nowadays. There is plenty of competition out there for hosting, but there are also plenty of customers for it, and local customers have a large preference to local hosting, especially when it comes to colocation.

I have seriously considered this, but coming up with the roughtly 1.5MM to build, wire, HVAC, secure and buy equipment, it smelled of too much risk to me at my funding level. Your funding level may be different.

 

[Mike Robinson]

Re: ISP investment opportunity (for me)

Thank you all for your responses. We have decided not to purchase the equipment from this company. It was too rushed.

Thanks again!