Fully describe the business's activities?
Upmarket facial, skin & body salon focused on serving existing & walk-by clientele, within a Durban (West) suburban Mall. The services including facials, massages, body scrubs, nails, feet, etc, are provided by two specialist staff (was 3-4 when at full turnover before Covid), within 4 multi-purpose therapy rooms, as well as, the feet & nail stations in the front of the Salon, & a storage room at the back. An in-house CCTV system with app connects to a cell to allow for remote viewing, while an alarm & wifi system are also installed.
How long has the business been established?
4 years when set-up by the Seller
How does the business operate on a daily basis?
Clients either call or walk-in for an appointment or to purchase skin products. The present two facial, massage, skin & nail specialists, provide services within the 4 individual rooms or the front area nail & feet stations. The owner who has another business and is thus hardly ever at the Salon, orders the stock & controls the financial side of the business.
How are the clients attracted to the business?
The Salon has been within the same premises for the last 4 years, and has built up an excellent name for the Salon's upmarket & expansive look, as well as, quality service & products, provided by professional staff, leading to numerous word-of-mouth referrals. In addition, the position on an inside corner thoroughfare of the shopping centre, allows for many walk-by potential clients, while there is an existing client base built up over the last 4 years,
What Advertising/Marketing is carried out?
A good website & loyalty programme have been utilised in the past. The new owner will need to create their own website as the present one is linked to the Sellers other Salon. The broker has allocated R20 000 within the expenses report for such.
What competition exists?
A similar business operates within the same centre, but is well below par, in size, staff & services. Within 10km's other centres have similar businesses, but again not at the same upmarket level of this Salon. The industry trend is that businesses this size exist across suburbs & share the market without detriment to each other.
What are the seasonal trends?
Turnover: Dec, Jan, & July tend to be the highest & Feb the lowest (but within 25% of the mean)
Is the business VAT Registered?
Yes the PTY is VAT Registered - but is inclusive of two other businesses, so VAT recons & transference will not be possible. The Purchaser will have to purchase this business as a going concern out of the Sellers PTY (3 businesses) & house such in a CC/PTY that is VAT registered before the Effective Date of takeover, to ensure that no VAT is raised on the sale.
Are there up-to-date Management Accounts available?
MA's are available for the past full financial year & will show monthly variations in turnover & expenses. Proof originates through the till system (ESP) - with reports being able to be generated to separate : service - product - staff member & even a stock take exception report; with various options dependant on input available under this system. There is an in-house camera system which keeps the last months recording of the reception/till area. Within a normal financial year, the turnover is some R1.7m with a NP of R467 000. The expenses shown in this Report cover pre-COVID turnover with 4 staff costed therein. As a non-franchise store, the profits are solely for the owner.
What Balance Sheet and Income Statements are available?
None as the PTY includes 3 businesses & only one Salon is being sold.
What percentage of the business is cash/credit?
No credit is offered to clients, with some 25% of business being cash vs 75 % being Dr or Cr cards.
What is the total staff complement?
Two qualified ladies while the Salon requires four in the busiest periods.
Give a breakdown of staff/ functions/ length of service?
2 x 4 yrs (qualified beauticians). They can each cover various services. They work on a basic plus commission (on product sales & services provided). An additional member or two could be employed as turnovers rise following the COVID re-opening - back to turnovers of some R1.78m, with 4 staff costed into the financials for the previous normal 12 month period, to ensure that the quoted expenses & NP are a true reflection.
How involved is the Owner in running the business?
The owner basically manages the stock & finances remotely as she has another smaller Salon elsewhere.
102m2 shop with excellent corner glass frontage onto a main thoroughfare. The rent is R28 000pm all inclusive (ie some R13 000pm plus additionals) with an 8% escalation & an opportunity to enter into a new 3 year lease, with a 2-month rental deposit.
What are the main assets of the business?
A full asset list is available, which is inclusive of 2-4 yr old equipment that was purchased new & is underutilised within the Salon, considering it's turnover/clientele. A new motivated hands-on owner, rather than the present remote owner, will make a huge /personal difference to client interaction/turnovers without any other equipment required, apart maybe from a laser machine. All assets are in good condition & are serviced locally when required. They are fully paid-up & would cost some R300 000 new but are valued at a 2nd hand value of some R100 000. Apart from the assets, there has been an investment into fixtures & fittings worth some R200 000, with the upmarket nature thereof being easily notable.
This upmarket Beauty Salon was established 4 yrs ago within the same corner glassed large shop in the main thoroughfare of a West suburban Mall of Durban. It has built up an excellent name for quality service & products, provided by professional staff, leading to numerous word-of-mouth referrals. Various product lines, with some major players involved.
It lacks an involved Owner which for a committed new owner/manager, will result in increased client centricity, turnover & profits. Marketing & business development is a low priority that could easily be adjusted to effect a positive output (eg promotions / small free bee's within the centre or close by at traffic points). R20 000 has been set aside within the expenses of this Report for the creation of a new website and signage.
Improvements could be made in advertising the business, offering further services & products (eg laser machine), & promotions within the centre
That competitors in the area enlarge, employ more staff, add further products & services, but as per the industry norm, this is unlikely to occur. Realistically, as long as the new owner continues to operate the business in an acceptable manner, it's portion of the market is protected, with positive changes thereto allowing for growth within an ever growing suburb/market.
What is the reason for the sale?
Present owner whishes to reduce the work-load of multiple salons to manage/control & rather return to more attention to personal service within one of her businesses.
What is the price plus stock and the profit?
The Sale Price is R495 000 , excluding a stock average of some R100 000. A normal annual turnover of R1.7m, nets the owner/business some R467 000 pa.
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