Fully describe the business's activities?
Manufacturer, importer and distributor of hand crafted upmarket Ceiling Fans throughout Southern Africa and the Indian Ocean Islands
How long has the business been established?
How long has the owner had the business?
How does the business operate on a daily basis?
The business primarily operates via: a) its online presence, attracting discerning clients b) it extensive database and longstanding relationships with architects, interior designers and property developers c) Tenders and quotations to hotel and luxury lodge operators d) There are also regular drop in retail customers
How are the clients attracted to the business?
The business is very well known in the trade, and these relationships are nurtured and maintained by the owners Online ad campaigns using Google, Facebook and Instagram are aimed at attracting new customers Mostly as in S A Home Owner - print media
What Advertising/Marketing is carried out?
Mostly ads in S A Home Owner - print media
Does the business have any contract work?
Large orders come in fairly frequently from hotel and lodge operators. This typically involves multiple units at a time
What competition exists?
Only one other serious competitor
What are the seasonal trends?
Tourism industry refurbishments in the winter months and individual buyers in the summer months. Turnover wise the breakdown is fairly even throughout the year
How did the Covid-19 pandemic impact the business turnover / daily operations?
The initial impact in the early part of the South African lockdown was quite pronounced, affecting both production and sales. This situation has eased considerably, and operations are almost 100% back to normal Turnovers have recovered strongly, and are close to or exceeding pre Covid levels. This improvement is expected to continue - i.e. real growth in turnover for the foreseeable future
What steps / actions have been taken to combat the effect of Covid-19 pandemic?
Operations, sales and production are now essentially all back at 100%.
Is the business VAT Registered?
What VAT documentation is on file?
Full Vat documentation will be made available to qualified buyers
Are there up-to-date Management Accounts available?
Yes. The quality of the financial information in the business is exceptionally good
What Balance Sheet and Income Statements are available?
All financial records dating back for 6 years are on file and available to serious and qualified buyers
What percentage of the business is cash/credit?
Very little, if any, cash. All payments in full prior to delivery of goods. No credit terms.
What is the age analysis of the debtors book?
No bad debts Most clients pay upfront, and where they don't substantial deposits are taken
How could the profitability of the business be improved?
Various - there is a lot of potential to increase sales. This will be discussed with qualified buyers but for now lease refer to the SWOT analysis below
Is Seller finance available and for what amount?
No A phased buy in is possible, depending on the negotiated position of each party
What is the total staff complement?
Give a breakdown of staff/ functions/ length of service?
3 of the 5 five staff are the current shareholders - and they share the responsibility for operations, marketing, sales, administration and the financial department. These functions are conducted at a level of detail and precision not often encountered in businesses of this size. The other two are production staff taking care of assembly, electronics, quality control etc. The production manager in particular is a key individual integral to the manufacturing side - very loyal and a high work ethic
Do any receive special perks or incentives?
Are they on contract?
The 2 non shareholding staff = Yes, they have standard contracts of employment
Do any have management potential?
Probably not. The management team (shareholders) is strong, and the possibility exists for a new buyer to only purchase a portion of the shares (e.g. 50%) initially and keeping some or all of the shareholders onboard for a while while learning the ropes. The balance of the shares can be bought out later in this instance on a pre determined formula. It is also possible to buy 100% on Day 1
How involved is the Owner in running the business?
The owners are fully involved in the business. However it can be pointed out that they are easily able to take advantage of the many lifestyle benefits of the Garden route - including relaxed working hours
Any special arrangements for the staff related to the Covid-19 pandemic?
No, not necessary
When does the current lease end?
The current lease expired at the end of March 2021. The relationship with the landlord is good and the landlord is highly unlikely to wish to cancel the arrangement. The company is considering it's options and at this stage is keeping the agreement on a month to month basis. It would be simple to renegotiate the lease for a further 3 - 5 years if considered advantageous.
Is there an option of renewal & what period?
Yes, this is entirely negotiable
What is the annual escalation %?
What are the trading hours?
Monday to Thursday - 08h30 to 16h30 Friday - 08h30 to 14h30
What is the square meters of the business?
First floor workshop/showroom/office = 230m2. Ground floor Storeroom 35m2. Total 265m2
Is a copy of the lease available?
Yes, will be made available to qualified buyers
Do you require a licence?
What lease deposit and/or other surety is required?
Normal commercial lease terms
What are the main assets of the business?
This is not an asset intensive business All suitable and necessary equipment, tools, workbenches etc. are on-site and in perfect working order
Are any items not included in the sale?
Everything is included
What is their overall condition?
Do any require repairing?
How have they been valued ?
They have a value on the Balance Sheet, but this value is lower than their true worth in the business as they are in most instances depreciated Effective date financial statements will be drawn and u and agreed by the parties. This will be a 'sale of shares' transaction, whether partial or 100% buy out
Which assets are on lease/HP and with whom?
All assets are fully owned
What are their settlement amounts?
Will Seller settle or Buyer to take over?
Are copies of agreements available?
Are they presently insured?
Yes, where necessary
External Environment â¢ Positive association with Knysna â Home of the SA timber industry â¢ Positive association with the green energy movement â¢ Good following with affluent âbaby boomerâ retirees in Western Cape & KZN coast â¢ Customers overwhelmingly in the top LSM quartile who are generally immune to periodic economic fluctuations. â¢ Luxury product range aligns well with upmarket tourist industry, lodges, resorts and bush camps â¢ Southern Africa economic imperative to grow share of world luxury travel market. Recently enacted Africa free-trade agreement will result in reduced cross border duties/tariffs â¢ Growing health awareness and preference for natural and non-intrusive cooling/heating solutions (versus air conditioning) â¢ Relatively small market size resulting in few competitors occupying the niche luxury fan space in Sothern Africa. â¢ Above-inflation electricity prices extending the relative advantage of fans over air conditioning (one air conditioner consumes the energy of approx. 20 â 30 ceiling fans). Internal Environment â¢ Well run financial systems, up to date accounting, tax and legal compliance. â¢ Healthy balance sheet and sufficient working capital, including bank overdraft facilities where required. â¢ Excellent customer records and data base of potential customers â¢ Established system of promotional emailers sent out to customer data base +- 6 times per annum. â¢ High quality website and online quote request function â¢ Active presence on social media platforms, Facebook, Twitter, Instagram maintained by external consultants familiar with the business values and image. â¢ Comprehensive and well-balanced product range comprising locally manufactured and imported fans ranging in price from approx. R3,150 to R8,743 (excl VAT) â¢ SA market leader in energy-efficient brushless DC motors versus older technology AC induction motors. â¢ Product is well-suited to online selling. â¢ Minimal exposure to customer credit. System of advance deposits on acceptance of order and payment in full prior to dispatch. â¢ Ample pricing âheadroomâ compared to our most relevant competitor in the luxury fan market. â¢ Good balance of skills across the existing partners in the business, covering Sales, marketing , finance , commercial and IT.
â¢ Reliance on one or two individuals such as the production manager and the partners. â¢ Reliance on key foreign suppliers and product ranges supplied by them. â¢ Export to distant markets not really feasible at scale unless remote repair centres are established. â¢ Dependency on electrical contractors for proper installation of our products. Improper installation can lead to complaints and result in unnecessary cost on our side as well as reputational damage.
â¢ Post-Covid recovery in tourism industry and investment in tourism infrastructure in Southern Africa. â¢ Business provides a solid platform to diversify into related products (eg: Industrial ventilation, alternative cooling systems, home automation etc). â¢ Development of a better integrated and more comprehensive digital marketing strategy. This project has been commenced and we are in the process of identifying a suitable specialist vendor. â¢ Growth of on-line shopping will allow the business to market certain of its range to a much wider audience. â¢ Appointment of reliable and cost effective preferred electricians in major centres. â¢ Affordable and attractive product showroom spaces in the major centres (Gauteng, KZN and Cape Town) â¢ Possible âbuy-outâ of our only serious competitor
â¢ Production manager suddenly leaves or is incapacitated. This would create a significant short term disruption but would not be fatal to the business due to the current structure which is evenly split between local production and imports. â¢ Sudden Rand depreciation would significantly affect pricing of imported products and imported components used in own produced units. â¢ Major lighting/fan distributor enters the SA market aggressively. We consider this highly unlikely due to the relatively small market size and the specialized nature of the business. â¢ Major investment by the other only serious competitor and commencement of a price war. Once again, this is considered most unlikely.
What is the reason for the sale?
One of the partners is past retirement age, and is planning to move abroad to fully retire The other two partners are also considering emigration in the medium term, but are happy to proceed in the best way for an incoming party
Why is this a good business?
Exceptional products, well established brand, loads of potential upside, very good back end systems and financials and the possibility of owning a thriving business while living on the Garden Route
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Annual Turnover Amount between R 500 thousand and R 6 million