Summary

This is a fantastic manager-run business. The business centres around a publication that generates advertising revenue. In addition to that other advertising brochures generate income a few times per year. Perhaps the best thing is a forward sales book in excess of N$2.4 million and growing! The owner's involvement is minimal. Price: N$3.3 million, with annual income for the owner in excess of N$1.2 million.

1. History Background

Fully describe the business's activities

The main activity of this business the monthly publication of a free, glossy, A4 magazine that is distributed all over Namibia. The magazine focuses on lifestyle, decoration and home improvement. In addition to this, a bi-annual business directory is compiled and also distributed free of charge. Recently, the business got the contract to publish the monthly marketing magazine of a major Namibian company.

How long has the business been established

This publication is now in its 6th year of existence, and has built a solid reputation with the public and advertisers.

2. Present Market

How does the business operate on a daily basis

This business is a well oiled machine! The business employs sales representatives (one of whom functions as a manager) to get advertisers on board. The graphic design function is sourced out, as is the printing and distribution.

How are the clients attracted to the business

Clients are attracted primarily through canvasing and direct selling by the sales force. In addition, the magazine is well known and gets contacted by advertisers.

Does the business have any contract work

The business currently has about N$2 400 000 in advance sales for the coming 12 months, the benefit of which will accrue to the buyer. Many clients are tied into one or two year advertising deals, but forward sales in excess of 1 year are not taken into account in the assets.

What competition exists

The business operates in a niche market, so there is basically no direct competition. Occasionally a direct competitor starts up and usually closes down again after a very short time. However, any print publication that competes for advertising dollars is a competitor to some extent.

What are the seasonal trends

The business has two income spikes per year: Twice a year a business directory is published. December is traditionally a slow month, but due to the long term nature of many of the contracts the troughs are becoming less and less pronounced.

3. Financial

Is the business VAT Registered

Yes, business is VAT registered.

What is the age analyse of the debtors book

Most clients have 30 day accounts, and many of those have a debit order system in place which allows the business to debit the account if payment is not forthcoming. Some larger clients sometimes exceed limits a little.

How could the profitability of the business be improved

This business could be run from a small home office, and the BMW can be sold to save the HP costs.

Is Seller finance available and for what amount

The seller can look at this, but the downpayment must be sizeable.

4. Staffing

Give a breakdown of staff/functions/length of service

The business employs 3 full-time staff, all of which are doing sales. The most senior of the sales representatives acts as manager. The sales people have been with this business for two years.

Do any receive special perks or incentives

All the sales people are on a very small basic, and receive commission. There are individual targets, as well as special incentives to reach certain targets as a group.

Do any have management potential

A manager is already in place.

How involved is the Owner in running the business

The owner supervises the sales team, who carry on with day to day activities more or less independently. The owner does try to see a few clients every day though, and safeguards the quality and timely publication of each edition. He also instigates incentive schemes and specials.

5. Premises

Is there an option of renewal & what period

2 year

What is the square meterage of the business

220sqm which is shared with two other businesses.

6. Assets

Which assets are on lease/HP and with whom

The BMW is on HP and not included in the sale.

7. S.W.O.T. Analysis

Strengths

The business is very well established, and has a great sales force. The strong forward book guarantees current profits even no further effort is made to get sales, eliminating the need to sell the same page to the same client month after month.

Weaknesses

This business has grown 74% in 2009 year on year compared to 2008 - while the rest of the world obsessed about recession. No weakness in sight here!

Opportunities

With a new publication on board whose income is not yet reflected, the profits can only go up.

Threats

None perceived

8. Reason For Sale

What is the reason for the sale

The owners have other business interests that will require their full attention in the near future.

9. Conclusion

Why is this a good business

This business is run by a manager, is growing and offers amazing possibilities. There is a lot more here than meets the eye!

What is the price plus stock and the net profit

The price of this business is N$3.3 million, and the annual net profit is in excess of N$1.2 million.