Fully describe the business's activities?
Kitchen Design, Manufacturing, Installation and Cabinet making business.
How long has the business been established?
The business was established in 1996 by the current owners - 24 years in the market.
How does the business operate on a daily basis?
The owners open and manage the business on a daily basis. One owner oversees Admin and the Factory the other owner is involved on the sales side. The Factory Staff make and assemble the kitchen cabinets in the factory and it is delivered completed to be installed quickly and efficiently. No construction of cabinets etc on clients premises - just installation.
How are the clients attracted to the business?
Reputation - Word-of -mouth. Google Adwords, Website, referrals from completed jobs.
Does the business have any contract work?
Each kitchen installed is signed up as a fully binding contract.
What competition exists?
This company's pricing for their product tends to be 10% to 15% cheaper than most other companies which offer a similar high-end product. What is also attractive to potential clients is that the kiitchen is basically fully assembled in the factory and then just installed on site. It means time in the space of the customer is limited with limited mess etc. This has proven to be very attractive to clients.
What are the seasonal trends?
The 2nd half of the year tends to be busier. September and October is very busy. Builders holidays are taken in December/January.
Is the business VAT Registered?
Yes, the business is VAT registered and also has an importer/exporters number.
What VAT documentation is on file?
Normal VAT returns and recons are on file.
Are there up-to-date Management Accounts available?
Yes, there are up-to-date Management Accounts.
What percentage of the business is cash/credit?
The business operates on the following basis: 60% deposit is required from clients on signature of the contract, 35% is paid before the cabinets leave the factory and 5% is paid by the client on installation. This results in good cash flow in the business.
What is the age analysis of the debtors book?
The oustanding 5% is normally collected immediately on completion of installation but very seldom beyond 2 weeks.
How could the profitability of the business be improved?
Increase the sales staff with one or two additional people - they must be mainly commission based. Currently the sales functionis reliant on the one owner.
What is the total staff complement?
There five staff plus the two owners.
Give a breakdown of staff/ functions/ length of service?
1 x Cabinet Maker, 1 x Fitter, 1 x Fitter's Assistant, 1 x General Labourer, 1 x Driver who also acts as storeman and in receving department. 1 x Owner in Admin/Factory oversight, 1 x Owner in Sales.
Do any receive special perks or incentives?
The staff have to belong to the industry bargaining council and they therefore belong to a provident fund via the bargaianing council. The bargaining council pays bonuses directly to their members.
Are they on contract?
Yes, they have letters of appointment.
Do any have management potential?
Yes, in a Supervisory capacity on the factory floor.
How involved is the Owner in running the business?
The owners are involved in the business on a daily basis.
When does the current lease end?
The current lease ends at the end of Januray 2021 but the landlord is happy to enter into a new lease with new owners. The rented premises is also available for sale by the landlord.
Is there an option of renewal & what period?
Yes, there is an option for renewal with an option to buy as well.
What is the annual escalation %?
The annual escalation is currently 8% per annum.
What are the trading hours?
Monday to Friday: 8.00 am to 5.00 pm.
What is the square meters of the business?
450 Square meters.
Is a copy of the lease available?
Yes, a copy of the lease is available.
Do you require a licence?
No special licence is required to run this business.
What are the main assets of the business?
Woodworking and cutting machinary plus a delivery vehicle. There is also a design software programme used by the company. The licence costs R4 000 per year and is well worth it. THere are also over 600 kitchen designs on file which are owned by the company and is a part of the sale.
What is their overall condition?
Very good to excellent. A very neat and clean business generally.
Do any require repairing?
No, maintenance is done when required.
How have they been valued ?
Net realisable value.
Which assets are on lease/HP and with whom?
All assets are fully paid for.
Are they presently insured?
Yes, the business is comprehensively insured, including the assets.
Proven methods of manufacture and installation which are transferable to new owners, perfect price point for the market they are working in, off-site manufacture is a good selling point.
Currently only has one sales person. If another sales person or even two were added it would instantly translate to more sales and profitability.
Being the resident installer in new complexes has huge growth potential. The suppy of stone and appliance rebates and kick-backs could be utilised/negotiated better resulting in better profitability. The DIY cabinet-making side could be grown nicely with some extra capital for stock.
Normal economic conditions. However, this business is very busy despite the Covid scenario.
What is the reason for the sale?
The owners both wish to persue other interests after doing this for nearly 25 years.
Why is this a good business?
The proven method of manufacture, the pricing point of their product, the low overheads and nice profit for the owners make this an excllent business to get into and grow. There is also the potential to franchise the business.
What is the price plus stock and the profit?
The asking price for the business is R3 million including stock . The adjusted profit of the business is R1.44 million which is accruing to the owners inclusive of their salaries and drawings.
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