Fully describe the business's activities?
Very easy to operate from home without staff. Existing clients place orders/replacements or request servicing (owner or if involved an external party is utilised for repairs). New clients are approached to purchase coffee (unground or ground) or machines, or rent machines. Machine retail prices range from R3 000 to R100 000 each. Some 38 machines are owned by the business and rented out, mainly on the basis that all coffee is purchased from this supplier; while two larger ones are on rental agreements that should continue into the future. The owner visits the Durban based clients about 3-4 times a month, to push the relationship, sales, and servicing of machines. Suppliers are paid COD but would offer 30 days if required (which present owner doesn't)
How long has the business been established?
15, of which 11 have been with the present owner
How are the clients attracted to the business?
Existing clients provide the major portion of revenue, with referrals and the website being important, while business development is not conducted enough. The website is relatively good but online sales are not advanced
What Advertising/Marketing is carried out?
Attempts have been made in leaflets & radio, but rewards have not been noticed
Does the business have any contract work?
No - although Corporate/Business/Restaurant/Bar clients do provide continual revenue
What competition exists?
Quite a few competitors, with product lines being the main distinguishing factor presently. Some suppliers are simultaneously competitors in respect of coffee.
The 150-200 regular clients consist of : 70% corporate/business & 30% - restaurants & coffee bars.
60% coffee sales, 20% machines (sales / rentals), & 20% spares
Is the business VAT Registered?
Yes, although being regularised, noting that being a small business, one would probably buy the business out of the PTY to ensure to carry-across liabilities.
Are there up-to-date Management Accounts available?
Quickbooks MA'a are produced each month from Invoices / receipts (inward & outward), which will show monthly variances. This Report is drawn up from the MA's excluding personal benefits. The Net Profit of R415 129 is that amount accruing to the owner (inclusive of whatever salary he wishes to draw). An additional Net Profit of R18 000 is achievable if one works from home (small storage area - 10m2), as well as, through better control of expenses (eg own computer at R9 000) No AFS are available
How could the profitability of the business be improved?
Push business development - with all types of clients, in respect of coffee & machines Push other product lines - Barista Training, smoothies, milkshakes, chillers, slush, catering equipment
What is the total staff complement?
The business is operated by the owner with time to spare each day
Presently operated from some 25m2 with two other businesses. A cost of R60m2 was included within the expenses for the business report. However the R18 000 pa allocation could be saved (become part of the Net Profit) if operated from home.
What are the main assets of the business?
Some 38 rental machines & a coffee grinding machine. They are valued at some R150 000 on a re-sale value, but would cost some R400 000 to be replaced
15 yr operating business in Durban with a good name for products & services Established client & supplier network Steady turnover of some R1.3m pa that could be improved with more effort easily operated with excess time on hand in a day No staff hassles
Owner operated only
Push other product lines - Barista Training, smoothies, milkshakes, chillers, slush, catering equipment
Other competitors, some of which are also suppliers to this business
What is the reason for the sale?
Owner is emigrating
What is the price plus stock and the net profit?
The Sale Price is R750 000, excluding R10 000 stock, but including the 38 rental machines and the grinding machine. The business achieves a healthy stable annual Turnover & Net Profit of R1.3m & R415 000 respectively (with later rising R18 000 pa should the business be operated from home).
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