Listing ID: 80830
Business Overview
Up for sale is a 14-year-old business that sells its own unique, trademarked brands (as well as private-labeled brands) of 100% organic aromatherapy candles and sprays. Without doing any advertising whatsoever, the business averages over $30,000 in net profit in years without significant private-label orders (like 2021) and closer to $50,000 in net profit in years with such orders (like 2020).
The business boasts an amazing 85.6% gross profit margin (i.e. revenue minus cost of goods sold) and an equally impressive 63.8% net profit margin (i.e. net profit after all business expenses). The owner estimates that she only spends about 6-8 hours per week running the business (almost all of which could easily be handled by an employee or contractor).
The business’ revenue is diversified among 4 unique sales channels:
1. Wholesale sales to a large distributor: 38% of revenue over the past 3 years
2. Private-label orders by other retailers: 28% of revenue
3. Wholesale sales to various retailers: 26% of revenue
4. Retail sales directly to customers: 8% of revenue
Private-label orders (the business’ #2 revenue source) are oftentimes quite large and are also fairly sporadic. The biggest private-label client typically places an order about every other year. The 2021 P&L, upon which the asking price is based, only includes ~$1,900 in private-label sales, whereas the year 2020 included ~$42,500 in private-label sales.
Key Information
– Niche: 100% organic, chemical-free aromatherapy candles, massage candles and sprays (please sign the NDA to see the domain name)
– Store Model: Primarily B2B (92%) + limited B2C (8%)
– P&L Period: Calendar year 2021
– Business Age: ~14 years (launched in 2007)
– Avg. Monthly Gross Revenue: $4,017
– Avg. Monthly Net Profit: $2,561
– Net Profit Margin: 63.8% of revenue
– Owner Time Requirement: 6-8 hours per week
Asking Price: $165,000
The seller’s $165,000 asking price was calculated as follows…
Annual net profit (2021): $43,839
x 4.0x Annual Earnings Multiplier: $122,928
Plus: Approximate cost value of inventory: $45,000: $167,928
Rounded down to $165,000
As mentioned above, 2021 only included ~$1,900 in private-label sales, whereas the previous year (2020) had ~$42,500 in private-label sales. Had 2021 been a year where the biggest private-label client placed an order, the earnings multiplier would be closer to 3x.
Business History
In her own words, following is the owner’s synopsis of how the business came to be:
“I am a health-conscious mother and wife who cares deeply about finding the healthiest and best products for my family. In 2007, I began learning about the dangers and harmful effects that traditional candles posed to myself and family, so I began to seek healthier alternatives. The more I researched and learned, the more I realized there was nothing that fit my needs.
“I come from an entrepreneurial family, so I decided that I wanted to fill that need with a healthy glowing candle — one that was not only safe and healthy, but luxurious and beautiful. Specifically, I wanted a healthy alternative to all the candles on the market… one that was free of petroleum products, harmful synthetic fragrances, chemical dyes, and lead.
“After a lot of research and development, I was ready to launch my candle line. In our first year in business, I decided to attend 3 large international trade shows in Las Vegas. Attending these shows validated my idea and product lines, as we received rave reviews from the attendees. One of the industry’s most prominent distributors was attending the show. They fell in love with our products and decided to add them to their catalog. They managed the marketing, sales, and distribution of my items. As a result, I only had to focus on production.
“Over the years, it has been very lucrative and has given me a very comfortable income without much effort. Because of this relationship, I have not needed to promote my brands or focus on direct-to-consumer sales channels. Revenues have been consistent, despite the fact that I have not focused much on growth.”
Sales Channels
As introduced above, the business generates revenue through 4 distinct sales channels:
1. Wholesale sales to a large distributor (38% of revenue over the past 3 years): The business’ #1 revenue source is wholesale sales to a large distributor in the industry who fell in love with the products way back in 2007 and has been buying & distributing them for the past 14 years. Over the past 3 years, sales have increased from $16.1k (2019) to $20.4k (2020) to $28.9k (2021).
2. Private-label orders by other retailers (28%): The 2nd biggest revenue source over the past 3 years is generated by private-labeling some of the business’ products for other retailers. These orders are typically quite large and also tend to be fairly sporadic, with the biggest private-label client placing a huge order every other year (on average). The 2021 P&L (upon which the asking price is based) only includes ~$1,900 in private-label sales, whereas private-label orders generated $42,500 of revenue in 2020.
3. Wholesale sales to various retailers (26%): In addition to the main distributor that buys and distributes the business’ products (in #1 above), there are a handful of small retailers that also buy and resell the products. Order range from several units (on the low end) to hundreds of units (on the high end).
4. Retail sales directly to customers (8%): Despite the fact that the owner has never done any traditional or online advertising for the business, its Shopify retail website still generates a few thousand dollars of sales each year. Direct-to-customer sales have accounted for approximately 8% of revenue over the past 3 years, but this number could increase significantly by starting to advertise the products or sell them in online marketplaces (see the Growth Opportunities section below).
Store Operations
At its current revenue level reflected in the P&L above, this business only requires about 6-8 hours per week to run.
The owner typically spends 2-3 hours per week responding to emails, answering phone calls, ordering raw materials for the candles and sprays, maintaining the company’s books and records, etc. She also spends around 4-5 hours per week on production (i.e. mixing the raw materials and pouring the candles) and preparing orders for shipment.
The vast majority of these tasks could easily be handled by an employee, staff member or contractor.
The owner will of course train the buyer (or the buyer’s team) on how to handle all aspects of running the business, including ordering raw materials, mixing them, pouring the candles, and shipping out orders.
Included with the Sale
The sale includes all of the following…
– The domain names and websites (one for wholesale customers and one for retail sales), including all textual and graphical content
– 2 trademarked logos (for the 2 brand names)
– All inventory on hand (estimated to be around $45,000 at cost value), including raw materials and freshly-designed branded packaging
– All customer lists and email lists associated with the business (comprised of ~2,000 retail customers/opt-ins and ~500 wholesale customers/opt-ins)
– All social media accounts (Facebook, Instagram, etc.)
– All contracts and relationships with existing distributors, wholesalers, retailers and private-label clients
– 30 days of support to train you/your team on how to run the business, produce, package & ship products, and pursue growth opportunities
Financial
- Asking Price: $165,000
- Cash Flow: N/A
- Gross Revenue: $48,207
- EBITDA: $30,732
- FF&E: N/A
- Inventory: $45,000
- Inventory Included: Yes
- Established: 2007
Detailed Information
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:N/A
- Lot Size:N/A
- Total Number of Employees:N/A
- Furniture, Fixtures and Equipment:N/A
N/A (Home Based)
The sale includes 30 days of support to train you/your team on how to run the business, produce, package & ship products, and pursue growth opportunities.
Seller wants to focus all time and efforts on another (non-competing) business
About the Market & Products The business sets itself apart by selling aromatherapy candles, massage candles and sprays that are 100% natural, organic, clean and safe. They have no synthentic fragrances, chemicals, dyes or materials of any kind. Their candles are a 100% natural alternative to the toxin-filled candles on the market. They use 100% natural wax, cold-pressed straight from coconuts, and have no chemicals of any kind. This coconut wax is blended with only the purest essential oils and/or organic plant aromas. The candle wicks are textile-grade, lead-free, natural cotton. Each candle is hand-poured in small batches, ensuring the utmost quality. The business operates within a growing and profitable candle market. U.S. retail sales of candles are estimated at approximately $3.2 billion annually, and the trends are leaning heavily towards the natural, organic niche. Consumers are becoming increasingly wise and health-concious and are demanding products that are healthier for themselves and the environment. With increased focus of mental health, mindfulness, meditation, and the like, the need for natural candles and massage oil candles will only become stronger. In addition to aromatherapy candles, the business also sells a line of 100% natural massage oil candles used as a part of a multisensory spa experience. They are currently being bought by luxury spas, smaller day spas and private consumers for home use. According to the American Massage Therapy Association (AMTA), the massage therapy industry is an $18 billion industry and continues to grow. These all-natural massage candles have proven to be a favorite amongst spas and gift shops. To see the business' websites (one for wholesale customers and one for retail sales) and the brand names and products it sells, please sign the NDA.
Following are the top growth opportunities in the owner's own words: 1. Direct to Retail - Whole Foods, book stores and gift shops are other very good fits for our product lines. Our brand values fall in line with the Whole Foods market trends and offers a huge opportunity for placement within the nationwide grocer’s chain of stores. Bookstores and gift shops are also a very natural fit for our candles. Salons and day spas are also a good fit for our sprays, candles, and massage oil candles. 2. Expand Private Labeling - The opportunity for private label manufacturing is a great avenue for revenue. There are A LOT of companies looking for 100% natural candles and room sprays. Developing this sector of the business could be very lucrative. All of our current private label accounts reached out to us directly. If the new owner wanted to advertise, I believe it could draw a ton of interest. I believe co-branding with resort gift shops and resort spas would also be a good play. Also, co-branding or private labeling massage oil candles for spas and/or chains such as Massage Envy could be a great partnership. 3. Social Media, Social Media, Social Media! - There are huge opportunities with Instagram, Facebook and Tik Tok; I just haven't taken the time to explore them. Direct-to-consumer is a huge and untapped market, and [my brands] are anxiously waiting to be unveiled to the world. I feel there could be a very loyal following behind our brands with just a small amount of social media presence. Loyalty programs, newsletters, product reviews, refer a friend programs, etc. would be the first opportunity I would pursue. 4. Find New Customers Through Trendy Subscription Boxes - Subscription-based companies that send out monthly gift baskets and boxes could prove to be a great way to find new customers. Many of these trendy subscription boxes would match our brands perfectly. We've been contacted by companies like these in the past, but we haven't ever tried it. With our profit margins being as big as they are, I think this could be a great avenue to bolster our direct-to-customer sales. 5. Create Our Own Subscription Program - But why leave it to subscription box companies alone? Creating our own subscription program (direct-to-customer) would also be a very lucrative and easy way to generate passive income and loyalty. A quarterly or monthly candle subscription-based program could be a fun way to engage consumers and make a great gifting opportunity. 6. Sell on Amazon and Other Online Marketplaces - An Amazon account is currently being set up by our distributor for our 2 brand names. They are currently onboarding all the products and then will be managing and fulfilling the site. It should be ready to launch soon. Additionally, the new owner could start selling our products on Etsy, Walmart Marketplace and other huge online marketplaces.
This Business Is Home Based
Additional Info
The venture was started in 2007, making the business 15 years old.
The deal does include inventory valued at $45,000, which is included in the asking price.
Why is the Current Owner Selling The Business?
There are all types of reasons why individuals resolve to sell companies. However, the genuine reason and the one they say to you may be 2 completely different things. For instance, they may claim "I have a lot of various responsibilities" or "I am retiring". For many sellers, these factors are valid. But, for some, these may simply be reasons to try to conceal the reality of altering demographics, increased competitors, current reduction in profits, or a variety of various other reasons. This is why it is extremely crucial that you not rely absolutely on a vendor's word, but rather, make use of the vendor's response combined with your overall due diligence. This will paint an extra practical image of the business's existing situation.
Existing Debts and Future Obligations
If the current entity is in debt, which lots of businesses are, then you will certainly need to consider this when valuating/preparing your offer. Many companies finance loans so as to cover things such as supplies, payroll, accounts payable, and so on. Remember that sometimes this can indicate that profit margins are too thin. Lots of companies fall under a revolving door of taking on debt as a way to pay back various other loans. In addition to debts, there may likewise be future obligations to take into consideration. There might be an outstanding lease on tools or the structure where the business resides. The business might have existing contracts with suppliers that need to be met or may cause charges if terminated early.
Understanding the Customer Base, Competition and Area Demographics
How do companies in the location bring in brand-new customers? Often times, companies have repeat consumers, which create the core of their day-to-day profits. Specific variables such as new competition growing up around the location, roadway building and construction, and employee turnover can impact repeat clients and negatively influence future earnings. One essential point to consider is the placement of the business. Is it in a very trafficked shopping mall, or is it hidden from the highway? Undoubtedly, the more individuals that see the business regularly, the higher the possibility to construct a returning client base. A last idea is the general location demographics. Is the business placed in a largely inhabited city, or is it situated on the outside border of town? How might the neighborhood average home earnings effect future revenue potential?
