Listing ID: 72584
BUSINESS ACTIVITY: The Company retails remote controlled gas-powered cars, trucks, planes, helicopters, rock crawlers, construction equipment and other vehicles that can be controlled from a specific distance using a specialized transmitter.
HISTORY: The store was purchased in May of 2012, by the current owner and a silent partner that wrote a check for $59,500. The store was in a rebuilding mode. The word got out in the RC community that the store was sold. This word-of-mouth advertising saved the Company from going out of business. The Owner was ordering inventory from his suppliers and paying for the inventory on his credit card.
Within a few months the Company had been rebounding with sales growing each month. Cash flows were tight, but the business was paying for the business and family’s expenses.
Just before Thanksgiving of 2012, The Owner received a call around from another hobby store owner asking if they would like to take over his store. It was quickly recognized that the previous owner had run the business into the ground.
The Owner was becoming exhausted working 75 to 90 hours a week with sales from the 2nd location not meeting cash flow needs. He was starting to regret purchasing both stores. The Owners wife was still a stay-at-home mom and was asked to go to 2nd location to see what could be done to save the store. She figured that she would see what could be done and spend a few days in trying to help her husband.
Within 90 days she had terminated the 6 employees that they inherited from the previous owner and replaced them with 3 individuals that actually wanted to work and worked with vendors to purchase inventory that sells. 10 years later, she still has limited product knowledge but has a great handle on inventory controls and managing the store.
Today the Company is busier than ever and need to hire additional employee just to keep up with the organic growth. The Owners are proud of what they have built. The foundation has been laid for a new owner to build upon. With a strong industry outlook, the Company is poised for strong growth.
- Asking Price: $625,000
- Cash Flow: $406,588
- Gross Revenue: $2,413,318
- EBITDA: $331,588
- FF&E: $5,000
- Inventory: $120,000
- Inventory Included: Yes
- Established: N/A
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:N/A
- Lot Size:N/A
- Total Number of Employees:4
- Furniture, Fixtures and Equipment:N/A
First location is in a free-standing building with leased space totaling approximately 1,932 square feet. The lease is for $2,985 per month, plus NNN charges with lease expiring on August 1, 2022, with a three-year option to renew. Second location is in a free-standing building with leased space totaling approximately 1,400 square feet. The lease is for $1,371.36 per month, plus NNN charges, with lease expiring on August 1, 2022, with a three-year option to renew.
Included in the purchase price will be for 30 days to familiarize the new owner with the operation of the business, its policies, and its procedures. This will include relationships with suppliers and customers, ordering and purchasing methods, marketing Orientation, and plans for the future.
Sellers are at retirement age and would like to retire to their second home.
The Company has limited marketing strategy in place. The Company has relied on their reputation, repeat business, word of mouth and robust website to grow the sales. The outlook in the industry is strong. A new Owner with more energy could increase floor space and expand products to grow the business.
The sale does include inventory valued at $120,000, which is included in the requested price.
Why is the Current Owner Selling The Business?
There are all sorts of reasons people resolve to sell operating businesses. Nevertheless, the true factor vs the one they tell you might be 2 absolutely different things. For instance, they may say "I have too many various obligations" or "I am retiring". For numerous sellers, these factors are valid. But also, for some, these may just be excuses to try to hide the reality of transforming demographics, increased competitors, recent decrease in profits, or a variety of various other factors. This is why it is very vital that you not count completely on a seller's word, yet instead, utilize the seller's solution combined with your overall due diligence. This will paint an extra practical image of the business's existing circumstance.
Existing Debts and Future Obligations
If the current company is in debt, which many companies are, then you will need to consider this when valuating/preparing your offer. Numerous businesses take out loans with the purpose of covering items such as supplies, payroll, accounts payable, and so on. Bear in mind that in some cases this can suggest that revenue margins are too thin. Lots of companies come under a revolving door of taking on debt as a way to pay back various other loans. In addition to debts, there may also be future commitments to think about. There might be an outstanding lease on equipment or the structure where the business resides. The business might have existing contracts with suppliers that must be fulfilled or may cause charges if terminated early.
Understanding the Customer Base, Competition and Area Demographics
How do companies in the location attract new consumers? Most times, companies have repeat consumers, which create the core of their everyday profits. Specific factors such as new competition sprouting up around the area, road building and construction, and also personnel turnover can affect repeat customers and adversely influence future incomes. One vital thing to take into consideration is the location of the business. Is it in an extremely trafficked shopping mall, or is it concealed from the main road? Obviously, the more people that see the business on a regular basis, the higher the possibility to build a returning customer base. A final idea is the general area demographics. Is the business placed in a largely populated city, or is it located on the outside border of town? Exactly how might the neighborhood average home income effect future earnings potential?