How long has the business been established?
The business was established in 1995 by the current owner and operator of the business.
Fully describe the businesses activites.
The business is solid 21 year old, well established manufacturer of cardboard boxes in the agricultural region of Mpumalanga.
How does the business operate on a daily basis?
The business operates on a daily basis by supplying specific measurement and design of branding cardboard boxes to farmers for all types of produce, butcheryâs for bulk meat packaging, and dairies for all dairyâs for packaging of all related products, office administration for filing, in fact the business is capable of manufacturing to specification of size any cardboard box and the required printing thereon. The raw material arrives by delivery to the factory in large sheets, which are then cut to the size of the specific clientâs specifications. Those that require printing are then printed on and printed on with companyâs logos or branding, they are then bundled in stacking sizes with strapping ready for transportation to the clients. The business has 2x Hyundai bakkies and one NQR 500 truck for delivery purposes. The business also has a Ford Escort which was utilized as the representative vehicle.
How are the clients attracted to the business?
The business has been established since 1995 which has attracted over these years its solid client base. The current clients are attracted to the business by its longstanding relationship which they have with the business. One of the many reasons they support the business is due to the historical good service and quality supply of the boxes to them. The business does not advertise and is reliant on word of mouth for new clients. The business had a representative on the road who visited mostly existing clients and has now relocated. The business currently supplies a specific service to specific markets. The business has no visibility exposure to attract new clients.
Does the business have any contract work?
No, the business has no written contract work in place, however this said most of the business clients have been supportive of the business for many ongoing years and have continued to support the business continuously.
What competition exists?
Within the geographical area wherein the business operates are found 2 other similar businesses, both of whom also do considerably well and have their own specific markets and client bases.
What are the seasonal trends?
The business due to its split basket of clients, being agricultural farming, dairy farming, beef, poultry and commercial has ongoing and incoming work. Various farming produce comes into season at various times of the year, but always offer consistent demand as there is consistently fruits and veg that need to be packed as with, dairy, beef, and poultry, commercial is a little more erratic .
Is the business VAT Registered?
Yes, the business is VAT registered.
Are there up-to-date Management Accounts available?
Yes, the business has up to date management accounts and historical VAT returns as well as the current financials of 2016 all available on file for perusal by a qualified potential buyer.
What percentage of the business is cash/credit?
The business operates on a 90% credit basis. The age analysis on the books is varies between 30 to 90 days. Existing clients are afforded an account of 30 days from date of statement. The business is currently operated under a CC. The seller is willing to either look at the new prospective owner taking over the entire CC with the debtors and creditors or he will settle the creditors and collect in the debtors him and the new owner can start afresh book with the existing clients and not take over the CC.
How could the profitability of the business be improved?
The business in terms of marketing and adverting for new business has become complacent and has placed reliance on its current basket of clients for its income. The appointment of a sales representative to actively engage and aggressively market the services of the business to new clients other than servicing the existing clients must be a consideration .Included in the businesses assets is a newish vehicle for such a purpose of such a representative. A consideration to drive the encompassing of listing new business could be given to incentivesâ motivations on the listing of new businesses into the businesses basket of existing clients. This marketing and sourcing of new clients will be greatly beneficial to the business and the income of the business. The business may also consider expanding on its manufacture of related products which are also made of cardboard.
What is the total staff complement?
The current staff compliment is 10 which include the owner. There are 4 general workers, 3 operators, 1 operator supervisor and 1 driver. Two of the staff joined the company in 1996, 3 in year 2000, 1 in 2003, 1 in 2006, 1 in 2010, 1 in 2011. The staff is on contract. They do receive a bonus of 60% of their salary on their birthday .The business had employed a representative until recently in the business; he is however no longer with the business. The replacement of this employee can rest with the prospective new owner. The owner is involved in the day to day running of the business and his wife does the admiration, she has however relocated to the coast and attends to the admiration from afar currently. The prospective new owner depending on their skills sets set and spouses would need to replace this supportive function within the businesses operations.
When does the current lease end?
The business currently operates from the sellerâs property which he has more recently sold due to him wishing to relocate to the coast where his family has already relocated to. The business therefore can be relocated to a more suitable premise. The current and new owner of the property may be willing to extend the current agreement of usage of the warehouse on his property for longer than what has currently been agreed upon which is until December 2017. The prospective new owner will see that the figures we present on the mandated report reflect a greater expenditure than what is actually on the financials, reason being consideration has been applied in the event the business relocates and the expected rental and utilities it can be expected to pay in such a circumstance in comparison to what it currently in place. It will therefore be the new owners discretion if he wishes to relocate the business for greater opportunity and exposure or remain and conclude a new agreement at the end of 2017 with the new owner of the property on which the business currently operates on. Should the new owner elect to relocate the business at the end of 2017 then he will then require the first months rental for his new premises in addition and as well a deposit of at least equivalent to the first months rental must be budgeted for. No rental deposit is required under and for the current operational site of the business.
What is the square meters of the business?
The business currently operates from a barn/ shed of approximately 100sqm.
Is there a full asset list on file?
Yes, there is a full asset list on file. The entire assets as listed on the asset list are in a good working condition. The assets are insured. The assets comprise of limited office furniture, detrimental manufacturing machinery and 4 vehicles of which comprise of 2x Hyundai bakkies, 1x Ford Escort, 1x Isuzu NQR 500 truck. The settlements on the truck and the ford eco sport will be settled by the seller from the proceeds of the purchase price he obtains. The new owner will therefore obtain the entire asset fully paid for. The settlement of these vehicles is on the provisional understanding the seller is in acceptance of the purchase price offered and agreed upon between him and the purchaser.
What is the overview of the business?
The business is a solid well established manufacturer of cardboard boxes. It has a long reputable understanding of supply and provider of service to its current client base. The operational platform lends itself to immediate expansion. This can be accomplished by aggressively marketing and advertising the business services. This marketing can be directed through social media or an daily active representative canvasing for new business. The business has only been reliant on its current client base and has therefore limited its expansion in its geographical area. The seller is only selling due to relocation of residence. The business currently operates from an area and location with very little exposure and visibility which can be envisaged as to be limiting its expansion. Despite this the business has a good net profit and income. We have for the purposes of this mandate removed the expense of the sales rep who is no longer with the business and the sellers wife, both of these posts may need to be filled depending on the new owners skills set, perspective and directive for the business. There is in the expenses a salary allocated for the owner for R20,000 over and above the indicated net profits.
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