28 Years of Trading History Ref No. PB0060

Business Summary

Net Profit: $108,057
Price: $245,000
Industry: Wholesale, Retail, Service

This is a simple and easy business to manage. There is no other serious competitor in Perth. It is a very secure business with an extensive history including survival and profit through good times and bad. Nonetheless it has been managed very conservatively, leaving the new owner with considerable scope to expand sales across both the product, service and import activities.

Key Features

  • Profits can be proven
  • High Gross Profit margin
  • Essential products and services
  • Long established – 28 years
  • Exclusive customers
  • Strong supplier relationships
  • No reliance on sales staff to generate sales
  • Low competition – monopoly supplier of some products
  • Excellent location
  • Low advertising
  • COD payments – low working capital

Business Overview

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At present the owner spends a day a week on the service aspect of the business while a casual  covers the shop; demand for this service is substantially higher than currently under taken. The vendor estimates this service could easily be expanded to two to three days a week on current demand, doubling or even tripling its profit.
The business is an importer and retailer of an extensive range of floor coverings. The showroom is beautifully furnished with large displays, giving customers an accurate view of their prospective new floor. It was established in 1989 and has only had two owners. Since inception (28 Years Ago) it has traded from the same premises on a Monday-to-Saturday working week (closing at midday on Saturdays).
 
As well as floor coverings, related products and materials can also be purchased from the showroom.
The business also operates a wholesale business, supplying floor coverings to various retail outlets stretching from Geraldton to Albany and this could easily be expanded on coving areas such as the far north and Goldfield areas.
 
“Across Australia, home renovations activity was valued at $32.6 billion during 2016 and accounted for some 33.9 percent of total residential building value according to the Housing Industry Association”

Key features over other businesses
 
 
  • High Gross Profit margin
A high gross profit margin of 60 percent is indicative of a business which is not price-sensitive and has firmly established its own niche market.
 
  • Profits can be proven
The business has a complete set of verified accounts which clearly show its profitability.
 
  • Essential products and services       
The growing Western Australian population will require new homes, while property owners will always be motivated to renovate, meaning there will be steady demand for the products sold by the business for many years to come.
 
  • Long established – 28 years
The business has been servicing the Perth market for almost three decades, meaning it has a proven, consistent track record. Because of the vendor’s age the business has been managed on a conservative basis, allowing the new owner many potential areas to further expand. Evidence of this is that the business has historically reflected growth with no marketing plan, sales force or large advertising budget. 
  • Exclusive customers
Extremely strong relationships have been established with several wholesale buyers in country areas.  They place orders on a regular basis.
 
  • Strong supplier relationships
The business benefits from strong and long-term relationships with first class suppliers.
  • No reliance on sales staff to generate sales
The vast majority of sales are simply self-propelled, which means that the current owner does not have the overhead of running a sales force. However, it also puts the new owner in the enviable position of having at hand a means by which demand could almost certainly be increased if need be.
 
  • Low competition – monopoly supplier of some products
The businesses main competitor recently ceased trading as the owners retired. In these market conditions, the business is now able to achieve an improved margin which will result in a greater profitability. Unique products with no competitors results in excellent margins.
 
  • Excellent location
The business operates from an ideally appointed showroom on a busy road, where it has been situated since it was established 28 years ago. It has become a familiar landmark to Perth residents.
 
  • Low advertising
The business is in the fortunate position it does not have a large reliance on advertising to generate sales. Promotional activity is presently restricted to advertisements in the Yellow Pages and a fortnightly in the Sunday Times. This costs $300 per month. Most customers find the business from its online presence; the website draws in many prospective clients and the business invests in SEO to make sure it is number one if people search for its products.
 
  • Barriers to market entry
Aside from the significant capital requirements to establish a business such as this, a newcomer to the market hoping to compete with this business would find it very difficult to secure overseas suppliers for the same product range carried by this business; as would building a network of installers that are competent to install the product. Professionally displaying products needs a large showroom and a reasonable size warehouse to keep the stock, both of which are very hard to find close to Perth. And most significantly, any newcomer would face competing with a business that has forged a reputation for quality products – some now exclusive – and service over 28 years.
 
  • Low hours per week by owner
This is a business that is easy to run and manage. The current owner works approximately 40 to 45 hours per week, though this could easily be reduced if desired by simply hiring staff. The owner undertakes various roles within the business, making for an interesting job. The week may involve sales, quotes, packing orders, deliveries, on-site cleaning and resealing of a floor, and receiving supplier deliveries.
 
  • Low trading hours
The business generally only operates from Monday to Friday, 9:00 am to 5:00 pm and Saturday 9:00 am to 12:00 pm.
 
  • COD payments – low working capital
This is a high cashflow business with some 95 percent of debtors paying COD.  This provides the business with an excellent cash flow, which minimises the need for working capital.
 
 
  • Could be run under management
Up until 18 months ago the current owner employed a showroom manager who worked four days a week. He held this position for 10 years, which allowed the owner to work only a couple of days a week. That employee moved back to Ireland so the current owner took on running the business full time, which allows the buyer the ability to step into a similar role, or opt to hire a full or part time manager.
 
  • High asset value in the purchase price
A high percentage of the purchase price is made up of tangible stock and equipment. Compared to low asset businesses, the business reflects a lower risk and potentially delivers a higher bottom line profit through being able to minimise its tax through claiming depreciation as a non-cash expenditure item on its long-life equipment.
 
  • No bad debts
During the vendor’s ownership, the business has not experienced any bad debts. 
 
PROFITS CAN BE PROVEN
Ticks all the boxes!!!!
Stable and easy to operate - You’ll Be Convinced When You Read Our 50 Page Report
This one won’t last.

Contact us today to receive a detailed business profile – the first step to your securing this exciting opportunity.

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Important: Recent analysis of our business sales reflected over 75% of businesses sold were to buyers who registered interest against the business before the report was finalised, which eliminated the need to advertise the business for sale in the media.


 
 

Financial Analysis

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Plant $60,000 Stock $50,000 Goodwill $135,000 Total price $245,000 Net profit $108,057