Summary

A huge Warehouse used for the purpose of " STORAGE". The stock levels are maintained to supply the customer base on regular basis.Great prices and specials are offered to clients purchasing in bulk.Refer to mandate nr 24531.

1. History Background

Fully describe the business's activities?

This huge family business is a Wholesale and a Retail outlet.They are one of few to possess licenses for both trading venues on different premises.They supply small & huge retail liquor stores in and around town with stock and sell to the public.Deliveries are made to the clients in the entire Mpumalanga district with orders no less than R80 000 per load.The Owner decided to down size his client list and retain only 100 of his active client base.The business is operated from two different premises. The retail outlet which is 350m2 & another storage premises of 350m2, to carry stock of R7 million.

How long has the business been established?

The Business owner initiated the business approximately 12 years ago and has operated the business ever since.

How long has the owner had the business?

There are currently no proper steps in place to solve load shedding and power disruptions. But as with any wholesaler business is equipped to trade manually if the need arrises. On the up side the town and immediate area does not often suffer many power failures or heavy load shedding.

2. Present Market

How does the business operate on a daily basis?

The Business supplies wholesale stock to smaller liquor stores, restaurants, bar's & pub's in and around town. They trade on a daily basis as a normal bottle store. Administration and en route planning is done every morning to dispatch the stock to the bulk buying clients.Clients are called weekly to place their orders and specials are promoted telephonically to these regular clients.Pricing is done on a daily /weekly basis.The owners know the clients personally and are available to assist when clients run out of stock during busy times.

How are the clients attracted to the business?

The business caters for a wide variety of stock as they are contracted with all the well known & popular suppliers.Due to" bulk buying" the business enjoys many perks in the form of pricing, cash rebates , sponsors & promotions.The Owners are well looked after by the companies and are often sent on trips overseas with special promotions.

What Advertising/Marketing is carried out?

The owner makes use of flyers from time to time when they have large specials or promotions. Brand house signage cover the walls inside and outside.The store itself advertises specials on best sellers. Clients who buy bulk are on a contact list.They are updated on all new stock and special offers as soon as they are placed on the shelves.

Does the business have any contract work?

In this industry "contracts " are never signed. Verbal agreements are made between the parties .Three factors are involved : 1. Customer service 2. Customer loyalty (determined by excellent service ) 3. Competitive Pricing

What competition exists?

The Business has no competition in the immediate area. The closest competition would be wholesalers in PTA. According to the owner these outlets have proven to be their biggest competitors in wholesale due to pricing and bulk buying.

What are the seasonal trends?

April and December reflects a" high peak" period boasting impressive turnovers and profits. The rest of the year is fairly consistent with spikes during June & November with a steady flow of business.

3. Financial

Is the business VAT Registered?

The business is VAT registered.

What VAT documentation is on file?

The VAT 201's are on file and may be viewed on request.

Are there up-to-date Management Accounts available?

The Business operates on the Odyssey POS systems. Reports can be printed at any point in time. A set of Management accounts are kept on file and may be viewed on request.

What Balance Sheet and Income Statements are available?

The balance sheet and income statements for the periods up to end February 2011.They are kept on file and may be viewed on request.

What percentage of the business is cash/credit?

The owner estimated that the business trades 50% cash and 50% credit. Credit is only granted to bulk buyers .They settle accounts via EFT or Cash

What is the age analysis of the debtors book?

Minimum 8 days - Maximum 30 days. Many Suppliers are paid with cash.

How could the profitability of the business be improved?

The profitability can be improved by : 1. Improving the method of advertising throughout the entire region. 2. Obtaining more contract clients in the region as well as locally. 3. It was suggested that the retail outlet and the store room be separated with the idea to revamp the store & make the store more customer friendly. 4. The owner is in a "comfort zone " but has many plans to share with the Buyer on how to generate further growth & expand his business. THe buyer can triple the current turnover and profits. 5.The Owner also suggests that buyer purchases his own property & build his own warehouse and keep the retail shop at the same premises. 6.The Buyer can open later in the evenings until 8pm and close later on saturdays at 5pm

Is Seller finance available and for what amount?

This depends entirely on the shortfall amount.

4. Staffing

What is the total staff complement?

2x Driver@ R2500 1x forklift driver @ R2500 The staff are paid from the retail outlet.

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

The drivers deliver according to the logistics routes planned by the manager in specific areas of the district.The forklift driver loads the trucks and packs the orders in the trucks for delivery.

Do any receive special perks or incentives?

No special perks or incentives.

Are they on contract?

The staff are not currently on any official employment contract.

Do any have management potential?

No the owner operates the warehouse with the help of the liquor stores manager.

How involved is the Owner in running the business?

The owner is 100% involved in the business. He personally opens and closes the business every single day. The owner himself administers the payroll, financial & management aspects of the business. He negotiates prices & rebates with suppliers.He promotes specials on branded products to this clients.The success of this business is due to a "full hands on" approach to the business.The owners know the business well & can tell when there is something wrong in the business.They are prepared to share this info with the Buyer.

5. Premises

When does the current lease end?

A new lease agreement will be negotiated. Terms, conditions and time periods will be negotiated with the landlord.

What is the annual escalation %?

The current escalation as per the lease is 10% annually.

What are the trading hours?

Trading hours: Monday to Friday: 08H00 - 18:30 Saturdays from 08H00- 15H30. The business is NOT OPEN ON SUNDAYS.

What is the square meters of the business?

The storage space is 350sqm in size

Do you require a licence?

Yes. Licenses are : 1. Wholesale License for the premises 2. Retail License for the sale of liquor to the public. You may contact your Broker for this application & transfer The Owner offered to assist in this regard. 3. SAMRO music license 4. Fire Exits & Extinguishers 5. Inspector to inspect premises for lockers, hygiene & toilet facilities.

What lease deposit and/or other surety is required?

All deposits and suretyship to be paid will be negotiated with the landlord. The key deposit is 2x months rental & one month in advance.

6. Assets

Is a full asset list on file?

This is just a warehouse there are no fixtures or fittings available in this space. Vehicles: 1x Man truck -8ton-R200 000 (2002 model) 1x Mercedes Truck-4 ton-R200 000 (2004 model) 2xTata Trucks-4 ton- @ R260 000 each (2004 model) 1x Forklift- R80 000 There is only stock , vehicles & promotional items like glasses etc.

Are they presently insured?

Yes, They are insured by Ingwe- Benadie.

7. S.W.O.T. Analysis

Strengths?

Strengths: 1. The business is both a Wholesale & Retail outlet. 2. The business can allow for reduced prices to regular clients. 3. The business is long established and well known to the local residents. 4. They offer a delivery service. 5. They receive special rebates & perks. 6. Non perishable items are sold, except for Beers 3-6 months shelf life depending on the hot summer weather. 7.Wine expires within 1-2 years. 8. High Profits - Huge Quantities

Weaknesses?

Weakness: 1. This is an extremely time consuming business. 2. Unless a trustworthy person shares the load of managing the business it will leave very little free time for the owner.

Opportunities?

Opportunities: 1.Acquiring your own property & building your own warehouse/ storeroom. Retail outlet stays on current premises due to it being well known & supported 2.Obtaining more contracts and advertising throughout the Mpumalanga region. 3.Employ Representatives to market the business. 4.Restructure the Administration of the business, implementing filing system and more office space.

Threats?

Threat: 1. A very real threat is crime. 2. Armed robbery may be expected. 3. Security is a must have in this industry with armed response services. (the current business has a CCTV on premises )

8. Reason For Sale

What is the reason for the sale?

The owner wants to retire and therefore needs to sell the warehouse and the retail outlet. Please be advised that the retail shop and the warehouse is sold as ONE UNIT!

9. Conclusion

What is the price plus stock and the net profit?

Selling price including stock is R8 Million including MANDATE NR 24531 Net Profit is approximately R360 716 pm