Fully describe the business's activities?
Specialist Water Use Licence Application consultancy for farmers. Other services include Speciality Studies, Irrigation Design, Dam Design, Geology Reports, Geohydrological Reports and Method Statements for dams.
How long has the business been established?
The business was started in 2012 by the owner and is therefore 9 years old.
How does the business operate on a daily basis?
The owner has ensured that the business is able to operate well in her absence. From managers in the office to out in the field, the satff are well-trained, qualified and competent.
How are the clients attracted to the business?
Mostly by referrals from farmers to other farmers, advertising in agricultural and irrigation magazines and facebook groups.
Does the business have any contract work?
The clients have to pay a 70% upfront deposit for licence applications. This is a process and clients stay on for the duration of the process which moves to phase 2 and then to phase 3.
What competition exists?
There is one firm of lawyers who are also quite active in this market. Otherwise not much competition due to the knowledge factor of the staff of this firm.
What are the seasonal trends?
March toDecember are exceptionally busy periods. January and February are a little quieter.
Is the business VAT Registered?
Yes, the business is VAT registered.
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 available.
What percentage of the business is cash/credit?
Clients pay by EFT.
What is the age analysis of the debtors book?
The clients pay 70% of the cost of the process up front as a deposit. The balance of 30% is collected over three months as the process of Phase 1 is finalised.
How could the profitability of the business be improved?
Organic growth by taking on more clients through more advertising and more staff. Setting up of a Water Audit Department would increase revenue greatly. Farms have to have a water audit annually. Also, the setting up of an Accounts Resolution/Payments division to help clients with their accounts at the Dept of Water Affairs would bring in immediate additional revenue.
What is the total staff complement?
There are 14 people in the organisation all together.
Give a breakdown of staff/ functions/ length of service?
An organogram of staff duties etc is available to qualified interested parties.
Do any receive special perks or incentives?
Bonuses are only paid at managements discretion.
Are they on contract?
Yes, all have letters of appointment.
Do any have management potential?
Yes,there is one staff member in particular who is the 2nd in charge and has the ability to run with the management of the organisation.
How involved is the Owner in running the business?
The owner is currently involved in the business on a daily basis.
When does the current lease end?
The current lease ends in May 2021.
Is there an option of renewal & what period?
Yes, there is for one year.
What is the annual escalation %?
The annual escalation is 8.5%.
What are the trading hours?
The trading hours are Monday to Friday: 7.00 am to 4.30 pm.
What is the square meters of the business?
234 square meters.
Is a copy of the lease available?
Yes, a copy of the lease is available.
Do you require a licence?
The business needs a qualified Geohydologist, Agricultural Engineer and a Civil Engineer on board all of which are in place in the business.
What lease deposit and/or other surety is required?
Normally two months rental deposit is required.
What are the main assets of the business?
Furniture, fittings and computers as well as normal office equipment.
What is their overall condition?
Very good to excellent. The laptops and cell phones are all company owned.
Are they presently insured?
Yes, the business is fully insured.
Positive cash flow. Profitable. Knowledge of staff. Referrals from clients. This is a service that is essential because all farms and farmers need water use licences.
Can grow organically with more clients and staff but this takes extra capital which will be needed.
Needs to take advantage of growth areas like Water Audits and Account Resolution services. This is potentially very lucrative. Every farm has to have an annual water audit.
None really as the competition tends to fail when it gets to phase 3 of the application process which is luctative. The competition also does not have the knowledge of this team.
What is the reason for the sale?
The only reason for the sale is a family health scenario which affects the owner directly.
Why is this a good business?
Positive cash flow. Profitability. Knowledge of staff across the board. Strong growth prospects. Strong future imcome as most current clients are moving to Phase 3 of the application process.
What is the price plus stock and the profit?
The asking price for the business is R4.8 million. The adjusted profit accruing to the owners, including owners salary is R2.19 million. Phase 3 of the licence application process for most of the current clients is about to kick in ensuring even more stable revenue in the coming years.
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