How long has the owner had the business?
The seller established the business in 1997. It originally operated from home but has grown over the years and recognised as a leader in its field. The business is essentially offering interior decorating services but a wide range of specialised manufacturing is taking place to support the service with unique added value products.
How does the business operate on a daily basis?
Sales and marketing involves following up on leads generated from advertising activities and enquiries received. Customer visits are followed up with quotations and the business receives orders from an exceptionally high percentage of quotations offered. The in-house factory and workshops manufactures high quality furniture and related products which assist in keeping costs and service levels at optimum levels. Delivery and installation forms part of the service.
What Advertising/Marketing is carried out?
The business has an active web site and facebook page nd is actively promoting its social media forums. An advertising budget is supporting their electronic profile with increased support and following as a result. The main source of business however remains the high level profile that the business has created over many years offering added value services at highly competitive prices. Many satisfied clients return and actively refer new business all the time.
What competition exists?
The business operate in a very large market segment and it has many competitors in various sectors of its diverse manufacturing and services application.
What are the seasonal trends?
September to November annually represents the busiest period in the year and April normally the worst. The business closes between the 15th of December and 15th of January.
Is the business VAT Registered?
Are there up-to-date Management Accounts available?
Financial statements for the period March to May 2017 is pending.
What Balance Sheet and Income Statements are available?
Annual financial statements for the 2017 financial year has been provided. The business has started the process of restructuring the business early in 2017 and has succeeded in increasing margins, improving cash flow and also dramatically reducing overhead costs. The profit monthly as reflected in the profile is based on historic revenue and margins but indicating realistic and sustainable overhead costs. Current pfofits are substantially higher.
What percentage of the business is cash/credit?
The majority of customers pay 50% deposit and the balance on installation and pay either EFT or make card payments. Large projects and large customers get some terms.
What is the age analysis of the debtors book?
The business had a debtors book of approximately R1,0m on the 28th of February 2017 but is in the process of tightening up terms dramatically.
How could the profitability of the business be improved?
- The business could potentially benefit opening a sales store in for example Sandton and closer to the area where most of the competitors are operating from. - Price optimisation is a possibility with most competitors offering higher prices. - Exhibiting at trade shows such as Decorex could increase enquiries and resultant revenue stream. - Diversification of the in-house manufactured range.
What is the total staff complement?
Total is 35 employees in addition to the seller. The cost to company salaries and wages paid in the 2017 Financial year was R5,6m which has since been reduced by R1,7m without affecting productivity or service levels.
Give a breakdown of staff/ functions/ length of service?
1 x Production Manager- Furniture 1 x Manager material workshop. 1 x Installation specialist 20 x Material workshop employees 8 x Furniture manufacturing staff 1 x Driver 2 x Accounts. Additional installers are available to the business as required
How involved is the Owner in running the business?
The seller is actively involved in sales, customer contacts as well as the finance and general management of the business. She has a superb mangaement base to back her up.
When does the current lease end?
The business is operating from a large manufacturing and residential cluster owner by the seller. The buyer will have an option to move the business or rent the space required at market related price. For the purpose of the income statement on this profile a provision of R75,000 per month has been used which is deemed to be sufficient to rent a similar sized facility.
What are the trading hours?
Monday to Friday 07:30 - 17:00 Overtime is a possibility during the peak season from October leading up to closure on the 15th of December.
What is the square meters of the business?
Estimated space currently used: - Workshop 1: 200m2 - Workshop 2: 200m2 - Office space: 100m2 - Reception and showroom. 100m2 - Yard space: 200m2 - Storage space: 100m2
What lease deposit and/or other surety is required?
One month deposit and one month rent in advance.
What are the main assets of the business?
Vehicles, manufacturing equipment.
What is their overall condition?
All assets are in good and functional condition.
What are their settlement amounts?
Will Seller settle or Buyer to take over?
There is a lease on one delivery vehicle which needs to be taken over by the purchaser.
Are they presently insured?
This is a hugely successful business that developed into a major player over the many years that it has been in operation. It has developed into a major brand over the years and enjoy enormous market appeal as a result of quality products and services rendered at competitive prices. The business has a large database of satisfied clients and social media following which could be harvested when new products are launched or specials promoted. They also have future contracted business on the books.
It has been operated as a family business with a lot of unproductive salaries and other costs that affected the cash flows. Terms with clients and collections were generally under managed but has been tightened with positive results. The dependence of the business on the founding member/ selling will have to be properly assessed and managed during handover.
The formalising of systems and procedures could support capacity. Marketing and sales activity could generate increased awareness. Moving the business closer to core market will improve its physical visibility. Further cost, margin and productivity optimisation opportunities exist and should be reviewed regularly. You can also bring in a commercial and Hotel Division to scale the business for additional growth.
Cash flow management and stricter terms should be applied in order to limit losses.
What is the reason for the sale?
The seller wishes to retire and relocate. The 2 divisions comprising Furniture Manufacturing and Curtaining can be sold separately.
Why is this a good business?
It is well established and has a positive following. It also offers scalability for a buyer with a more formal approach to business.
What is the price plus stock and the net profit?
The asking price is R4,0m plus stock of approximately R2,0m including raw materials and finished products on display in the showroom.
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