Fully describe the business's activities?
They supply good quality used spares for cars and bakkies of all makes and models. The business stocks a wide range of used parts including but not limited to engines, gearboxes, power steering pumps, turbos, lock sets, computer boxes, air-con pumps, throttle bodies, distributors, and alternators. They buy accident damaged , end of life and non-running motor vehicles for cash. The business is also a reseller of accident damaged vehicles to be rebuilt and used vehicles. This business is an RMI approved dealer and they are registered with the SAPS as a second hand goods dealer. All spares are sold with a start-up guarantee ensuring good quality working parts.
How long has the business been established?
The business has been in existence in excess of 30 years. The business has been occupying its current premises for the last 26 years.
How long has the owner had the business?
The owner had the business since its inception.
How does the business operate on a daily basis?
The business hours are 8am to 5pm Monday to Friday and 8am to 12:30pm on Saturday. Used and accident damaged vehicles are bought directly from the public and on auctions. These vehicles are then sold as-is or stripped for spares. Used spares are sold and delivered countrywide.
How are the clients attracted to the business?
The business has built up a loyal client base over the years resulting in a lot of repeat customers and word of mouth referrals. In addition to this the business has a website and places ads on th einternet and social media platforms. The business has a good location and has a lot of walk in business as they have been selling used spares from their current premises for the last 26 years.
What Advertising/Marketing is carried out?
The business advertise used spares on gumtree, olx and facebook. Salesmen participate on whatsapp groups.
Does the business have any contract work?
What competition exists?
The business competes with all other scrapyards and used parts dealers across the country. The business is located in the scrapyard mecca of Johannesburg.
What are the seasonal trends?
Business is quite consistent throughout the year, with spikes in sales around March and November.
How did the Covid-19 pandemic impact the business turnover / daily operations?
The business has been impacted by Covid-19 like the rest of the economy. The impact of the various lock-downs has resulted in fewer vehicles on the roads and less demand for motor vehicle parts. The business has however still been profitable throughout the period and turnover is improving as the lock down restrictions are relaxed.
Is the business VAT Registered?
What VAT documentation is on file?
VAT returns are kept at the Seller's premises and will be made available to serious buyers.
Are there up-to-date Management Accounts available?
Yes there are up to date management accounts from the Seller.
What Balance Sheet and Income Statements are available?
Annual Financial Statements for 2020 and 2021 are kept on file.
What percentage of the business is cash/credit?
Virtually 100% of the business is cash/credit card. No customer credit is given.
How could the profitability of the business be improved?
Whilst the business has a substantial stock holding, an injection of stock comprising later year model vehicles, and a focus on bakkies and Taxis will improve profits. Marketing campaigns, increase in sales staff and engagement with workshops/panel beaters as well as securing a salvage a contract/(s) with an insurance company/(ies) will have a drastic impact on profitability.
Is Seller finance available and for what amount?
What is the total staff complement?
The staff compliment consist of the following: - owner; - selling sales manager; - 1 sales person; - 3 vehicle strippers; - 1 motor mechanic; and - 2 general workers..
Are they on contract?
Do any have management potential?
There is a sale manager in place who has more management potential.
How involved is the Owner in running the business?
The owner is involved on a full time basis in the business and is responsible for all buying. He is also involved in customer engagement and sales.
Any special arrangements for the staff related to the Covid-19 pandemic?
None other than the normal Covid-19 safety precautions/
When does the current lease end?
The owner owns the building and will enter into a lease agreement with the buyer. The owner is willing to sell the building should the buyer be interested to invest in the premises.
Is there an option of renewal & what period?
To be negotiated with the Buyer.
What is the annual escalation %?
To be negotiated with the Buyer.
What are the trading hours?
Monday to Friday : 8am to 5pm. Saturdays: 8am to 12:30pm. Closed on Sundays and public holidays.
What is the square meters of the business?
The business currently occupies approximately 400 square meters under roof and around 2000 square meters yard space. The building is much larger and the remainder of the building is let to other tenants on month to month basis (owners preference in the current economy). Their is ample space available to accommodate expansion/growth.
Do you require a licence?
The business requires a certificate issued by SAPS to sell second hand goods as required by the Second Hand Goods Act. All second hand goods purchased and sold must be recorded in a register which must be kept available for inspection by the SAPS.
What lease deposit and/or other surety is required?
To be negotiated with the Seller.
What are the main assets of the business?
The main asset of the business is its stock which is has an estimated value of more R3million. Fixed assets comprise of shop fittings, shelving, counters, cameras, computers as well as the building.
Are any items not included in the sale?
What is their overall condition?
Do any require repairing?
How have they been valued ?
The owner assisted us with the valuation of the stock as well as the building.
Which assets are on lease/HP and with whom?
N/A - all assets are fully paid for.
Are they presently insured?
Yes all assets are comprehensively insured.
- Well established business - over 30 years. - Good location - in the scrapyard hub of Johannesburg. - Strong reputation and standing in market. - Good profit margins. - Nature of product implies super profits for time to come. - There has always been- and will always be a strong demand for used spares.
- Lack of marketing. - Insufficient focus on buying. - Insufficient sales force. - Insufficient stock holding.
- More focused marketing. - Increase in stock holding and more specific later model vehicles with a focus on "bakkies" and "taxis". - Insurance companies allowing panel beaters to use used parts. - The reputation of this business - with the right focus, drive and structure this business can once again become one of the largest if not the largest used spares dealer in Gauteng. - The premises underutilized and is therefore scalable to support the growth strategies of a new owner.
- The stagnant economy in South Africa. - The risk of additional lock down restrictions.
What is the reason for the sale?
The owner has been involved in the industry for more than 30 years and wants to spend more time with family.
Why is this a good business?
- Very well established business. - The business remained profitable despite the impacts of Covid - 19, - The business has enormous growth potential with the right focus, drive and energy. - The business performed phenomenally in the past.
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