Fully describe the business's activities?
Suppliers of general office stationery to corporates, companies and businesses. Supplies include computer consumables, office groceries and office furniture.
How long has the business been established?
The business was started in 1985.
How long has the owner had the business?
The one partner started the business in 1985 and the second partner joined the business in 2006 when he purchased 50% of the business.
How does the business operate on a daily basis?
One partner opens each morning, the other closes. The resident bookkeeper oversees the business on a daily basis when the owners are not in and she also oversees from the financial side and limited IT side of things.
How are the clients attracted to the business?
There are 5 x Reps on the road 2 of which serve in a customer liason capacity as well. They earn commission on the Gross Profit of the sales that they bring into the business.
What Advertising/Marketing is carried out?
There is a very limited website which can be greatly improved to drive traffic to it as well as modernising it to a Business2Business website for easier ordering etc by existing clients. This will also assist in driving new potential clients to find out about the businesses services.
What competition exists?
Other stationery companies but longevity of this business (33 years) a huge plus. However, like all businesses one needs to remain active in the market.
What are the seasonal trends?
In December the business is only open for 2 weeks and at Easter it is traditionally a bit quieter.
Is the business VAT Registered?
Yes, the business is VAT registered.
What VAT documentation is on file?
Normal VAT returns are on file.
Are there up-to-date Management Accounts available?
Yes, Management Accounts to July 2018 are available.
What Balance Sheet and Income Statements are available?
The February 2018 Annual Financial Statements are being finalised at the moment.
What percentage of the business is cash/credit?
99% of the clients pay by EFT.
What is the age analysis of the debtors book?
Approximately 80% in 30 days and approximately 20% in 60 days.
How could the profitability of the business be improved?
More marketing. Modern website with Business2Business functionality. Joining a buying group or franchise could assist with better purchase pricing.
What is the total staff complement?
There are 14 staff members plus the owners.
Give a breakdown of staff/ functions/ length of service?
5 x Reps, 5 x Drivers, 2 x Stores Clerks, 1 x Bookkeeper, 1 x Buyer.
Do any receive special perks or incentives?
13th cheque is paid at management's discretion. Reps earn Commission but are normally given a token amount as a bonus - also at management's discretion.
Are they on contract?
Yes, the staff have letters of appointment.
Do any have management potential?
Yes, the Bookkeeper already slips into this role almost on a daily basis and one of the Reps has also great potential due to having worked for many years in this industry.
How involved is the Owner in running the business?
The owners are not necessarily there every minute of the day but they are definitely hands-on and know what is happening on a daily basis.
When does the current lease end?
The lease is moth-to-month. The property is owned by one of the partners.
Is there an option of renewal & what period?
Yes. The owner is happy to have them rent at a similar rental.
What is the annual escalation %?
To be agreed upon. Currently 8% to 10%.
What are the trading hours?
The trading hours are Monday to Friday: 8.00 am to 4.30 pm.
What is the square meters of the business?
400 Square Meters.
Do you require a licence?
No licence is needed to operate and trade in this business.
What lease deposit and/or other surety is required?
Probably about 1 months rental will be required as a deposit.
What are the main assets of the business?
The main assets are industrial/warehouse shelving, desks and chairs, computers and delivery vehicles.
Are any items not included in the sale?
All items on the Asset List would be a part of the sale of the business.
What is their overall condition?
Do any require repairing?
None require any repairing currently.
How have they been valued ?
Net Realisable Value/Owners valuation - R650 000
Which assets are on lease/HP and with whom?
All the assets are owned and there is nothing owing on them.
Are they presently insured?
Yes, all assets are comprehensively insured.
Longevity - the business has been around for 33 years. Personal contact with clients via Reps/Customer Service Liason. Known for excellent service. 24 hour turn around time. Knowledge of staff who have been on board for a number of years.
More marketing would be effective. Modern, updated website with Search Engine Optimisation (SEO) used as a tool to attract business.
A Business2Business website will attract and streamline business. Reps could probably be more target driven and incentivised. One of the owners has indicated that he is prepared to stay on for a while earning commission only for the business that he generates.
Normal economic conditions - but with 33 year history this business can be taken to higher levels with a combination of new digital business as well as the Reps etc.
What is the reason for the sale?
Retirement. One partner is 70 years old and the other is 71 years old.
Why is this a good business?
Well-established, excellent staff knowledge, excellent reputation with clients. Established infrastructure. They and the staff know what works after 33 years!
What is the price plus stock and the net profit?
The owners are asking for R2.25 million for the business + Stock at Cost of approximately R998 000. The adjusted Net Profit of the business at February 2018 is R1.676 million.
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