Fully describe the business's activities?
They collect arrear school fees plus small to medium commercial debts. Average debts about R5000 - R 20 000. Most schools are on the Cape Flats and CT Central areas. Most of their schools have dealt with them for 10+ years and rehand over defaulters if accounts are not fully settled. Fees are not difficult to collect as there is a culture of non-payment but once pressurised payment is made.
How long has the business been established?
Since 2002 - 18 Years
How long has the owner had the business?
How does the business operate on a daily basis?
A monthly call schedule is worked on. Daily calls are made reminding of payment - sms's/emails/letters are used. Council has set rates for each action so these are recorded and claimed accordingly. Amounts collected are recorded daily, allocating the business share .Gazetted fees are set out for each action. Clients are paid on 60 days. There database has an accounting package, so all actions are recorded automatically. All work is on a contract basis and close co-operation with school bursars is maintained.
How are the clients attracted to the business?
Mostly through repeat business and recommendation through other schools. They have not had to canvass for new business for the last 3 years. They are at a stage where they can be "picky" as to what work they take on.
What Advertising/Marketing is carried out?
They do personal courtesy calls on each school about once a year. They keep in contact with bursars on a weekly/monthly basis.
Does the business have any contract work?
All clients sign an agreement. Cancellation clauses allow them to keep working the debt for the next calender year. Since 2003 they have only had one cancellation.
What competition exists?
There are other debt collectors in Cape Town, but only 2 are known to also collect school debt. Most feel that the smaller amounts are not worth while where we believe this is a gap in the market that we have occupied for the past 18 years. These debts are relatively easy to collect and they do not get involved in legal procedure.
What are the seasonal trends?
Jan- March are slow as most people overspend in December. From Aug/Sept they get very busy with new handovers. Oct/Nov they are inundated with payments/settlements. Matric dance is a big event and pupils are not allowed to attend unless fees are up to date so collections are big at this time.
Is the business VAT Registered?
What VAT documentation is on file?
All VAT fully up to date.
Are there up-to-date Management Accounts available?
Yes - up to Feb 2020. Their database has everything on record since 2004.
What Balance Sheet and Income Statements are available?
What percentage of the business is cash/credit?
99% cash. As clients pay so their commission is deducted and the balance paid over to schools. Where a client pays directly to a school the commission is deducted off the next payment to the school - there have been no bad debts since inception of the business.
What is the age analysis of the debtors book?
Nothing on credit.
How could the profitability of the business be improved?
More energy into marketing for new work.They have become "picky" as to who they take on but by taking on all these schools there turnover would increase substantially.
Is Seller finance available and for what amount?
What is the total staff complement?
3 x "Call centre " ladies 1 x Admin lady
Give a breakdown of staff/ functions/ length of service?
Rita -Office manager - 7 years service; calls debtors; manages other staff; liases with bursars; arranges visits to clients if necessary. Lil - Clerk - 1 year service ; call centre; does own emails etc. Averil - 7 months; call centre Abeda - 8 years ; admin lady
Do any receive special perks or incentives?
Yes - to discuss
Are they on contract?
3 Are employed on an as and when needed basis, paid hourly at different rates. Abida is permanently employed.
Do any have management potential?
Abida and Rita
How involved is the Owner in running the business?
A couple of hours per day when need be. Her role mainly involves daily banking and receipting and general support.
When does the current lease end?
The business is run from home.
What are the trading hours?
Usually 8.30am to 5pm Mon to Fri
What is the square meters of the business?
45 sq metres is all that is required
Do you require a licence?
Yes, from the Council of Debt Collectors. This is the name of the CC as well as in the names of the Members and staff members.
What are the main assets of the business?
RMBS Database plus accounting package.They have over 60 000 files on record, presently over 3000 current files. 10 Desktop computers with Windows plus screens. 1 x Samsung fax / printer/scanner. Switchboard plus 5 Voip phones including routers and headsets.
What is their overall condition?
Good condition.Last payment on phone system to be made in March 2020.
Do any require repairing?
How have they been valued ?
The RMBS database was written specifically for them and this has been upgraded regularly with latest innovations.
Which assets are on lease/HP and with whom?
Are they presently insured?
Their team works well together. They have full backing of schools and education department to collect unpaid fees. No investment in stock. Bank deposit fees are paid by client. Ideal business to run from home. Little skill needed. The database package does all the thinking and accounting for them. There will always be people in debt.
Labour intensive - can become repetitive.
Debt has been around since the beginning of time. They haven't marketed the business for years because they did not feel the need to expand. Someone younger and with enthusiasm can take this business to the next level. Debt collecting can be expanded to other industries.
What is the reason for the sale?
After many years in the busines, the owners wish to retire.
Why is this a good business?
Earnings from day 1. No stock to invest in. Dedicated staff who are on hourly rates. Protected by Government regulations on debt collection and Debt Collection Council. Contracts in place for all clients. Never a bad debt. Turnover can be increased by taking on new schools and by diversifying into other industries.
What is the price plus stock and the profit?
Selling price : R 1 600 000 Average monthly net profit : R 55 580
Annual Turnover Amount between R 500 thousand and R 6 million