Summary

Easy to operate and profitable business, that rents out ice making machines to pubs, restaurants, B&B's, garages , hotels , schools and businesses.

1. History Background

Fully describe the business's activities?

The business imports ice making machines of various sizes and rents them out to Pubs,Restaurants, B&B's,Hotels, Companies , Sports Clubs and in fact anyone who has a need for ice.

How long has the business been established?

4 years

How long has the owner had the business?

The current owner bought the business and took over from 1st.January 2012. Since taking it over he has for personal reasons decided he is not able to continue running it (time/distance/family)and wishes to resell. The previous owners he bought from would still be prepared to assist a new buyer with technical support during a handover period.They had the business for two years.

2. Present Market

How does the business operate on a daily basis?

The unplaced machines are still stored on site at one of the previous owners other businesses but only takes up about 40sq.m of space. Once a client is obtained, a technician installs the machines and provides any necessary maintenance. The business is extremely easy to run and would suit someone who is willing to go out and sell the concept.The only other staff would be a technical person or hands on person as the machine is as simple to install as a washing machine.

How are the clients attracted to the business?

Clients are contacted directly

What Advertising/Marketing is carried out?

The company has a website and distributes pamphlets

Does the business have any contract work?

At present and past owner has chosen to rent on a month by month basis, with a one page agreement being signed but the potential for establishing contracts is huge.

What competition exists?

The company is the only one nationally that offers rental options. There are many other companies that sell the machines.but these can range in price from approx R15,000 - R40,000 per machine

What are the seasonal trends?

All year business with obvious peaks during the festive period and other holidays

3. Financial

Is the business VAT Registered?

No

What VAT documentation is on file?

N/A

Are there up-to-date Management Accounts available?

Yes to the end of Jan 2012.

What Balance Sheet and Income Statements are available?

Financials for the 2011 year end are available as well as management accounts up to the end of Oct 2011.For the purpose of this report the 8 months from this years management accounts were used,annualised and averaged to calculate the Turnover,COS and average Net Profits.Monthly breakdown of all Financials will be made available to all qualified buyers.

What percentage of the business is cash/credit?

All customers are invoiced on the 25th. of each month and payment is made , usually via EFT on the 1st. of the following month.

What is the age analysis of the debtors book?

It is a cash business at present, and rentals are paid monthly.

How could the profitability of the business be improved?

There is immense scope for growth . The recent owners have very successful other businesses and were not devoting a lot of attention to the operation. The market is wide open and it would be beneficial to introduce contracts to bigger customers.

Is Seller finance available and for what amount?

No.

What is the payback period?

37 months but this includes R400,000 of stock. The potential based on existing stock alone being put out to rent is about R90,000 NP per month.

4. Staffing

Give a breakdown of staff/functions/length of service?

There was only one staff member, the Technician who had been with the recent owners for two years. The current owner as per the agreement of sale is still receiving technical support.

How involved is the Owner in running the business?

The current owner is involved to a limited extent as he has another businesses to attend to and this is one of his reasone for selling.He is also based in Gauteng and his wife is reluctant to move to KZN.

5. Premises

When does the current lease end?

N/A

Is there an option of renewal & what period?

N/A

What is the annual escalation %?

N/A

What are the trading hours?

Normal business hours

What is the square meterage of the business?

The machines are stored on the one previous owners business premises and occupy approximately 40 sq.m.The stock that is not out in the field could comfortably be stored in a double garage.

Is a copy of the lease available?

N/A

6. Assets

What is their overall condition?

Most of the unplaced stock is brand new ,whilst some of the machines were previously placed on other sites but are in good condition.

How have they been valued. ?

The only Assets are the stock which has been valued at cost. The stock value is approx. R400,000 but there is another R 300,000 out on rental.

7. S.W.O.T. Analysis

Strengths?

A real need for this service, an easy to run business with a large untapped customer market.

Weaknesses?

Lack of contracts. Customers could withdraw at any time,although unlikely given the cost benefits of renting macines as opposed to buying ice

Opportunities?

Vast.The market is untapped on a National basis.There is also scope for renting machines to emerging and previously disadvantaged entrepreneurs who could manufacture,pack and sell the ice in Shebeens and Clubs in the peri -Urban areas.

Threats?

Other players getting into the Rental Market.

8. Reason For Sale

What is the reason for the sale?

The owner feels he has taken on too much of a responsibility as his construction business in Gauteng demands most of his attention. He was hoping to exit from that business and move to KZN but his wife has had a change of heart.

9. Conclusion

Why is this a good business?

A service that is cost saving in a virtually untapped national market with tremendous scope for growth. The existing unplaced stock alone when placed would raise the monthly Net Profit to approximately R90,000 pm.

What is the price plus stock and the net profit?

The price is R600,000 plus the unplaced stock of R400,000; noting that some R300 000 of machines are already in the field. The average monthly NP for this Financial Year is R26,674 .