Opportunities
2 Location Floral Shop with Great Staff
Sold
40+ years in business with established clientele
Specifications
For over 40 years, this 2-location floral business has established a solid clientele due to excellent service and great staff. Located in the southeast corner of South Dakota, both shops are run by managers with the seller operating passively. With minimal competition, this is a great chance to take a small-town company and grow it.
In addition to offering a large inventory of fresh flowers, customers can choose from a variety of contemporary, traditional and high-style designs. Also available are silk and dried arrangements, which are great for decorations in businesses and homes alike. Offering decorating services for local companies is a great area for growth.
Deliveries are made daily, with 3 part-time employees in place to make them. Each location has a delivery van, both of which are included in the sale. Deliveries are made within a 20-mile radius of each shop.
A buyer working as an owner/operator can increase profits by promoting floral displays and interior decorations for businesses, nursing homes and care facilities. Already popular for funeral and wedding arrangements, expanding the service area is another great possibility. This is an ideal opportunity for an existing floral business looking to open new locations, or for an individual wanting to own a tidy operation.Business Highlights
- Years in Business: 40+
- Location: Southeast South Dakota
- Service Area: Deliveries within 20-mile radius
- Specialties: Plants, contemporary & traditional arrangements, high-style arrangements, silk & dried arrangements, wedding and funeral designs
- Building:
- Location 1 – 1,700 sq. ft.
- Location 2 – 1,500 sq. ft.
- Reason for Selling: Retirement planning
- Employees: 1 FT Manager, 1 PT Manager, 3 PT for delivery and some floral design
- Hours: One location is open Mon – Sat, the other is open 4 days per week
- Seller Training Period: 90 days
- Growth Opportunities: Floral displays/interiors for businesses. Promote in nursing homes and care facilities, as well as schools.
- Current Owner’s Responsibilities: Current owner is passive and is NOT a floral designer
Financial Highlights
- List Price: $120,000
- 2017 Gross Sales: $363,401
- 2016 Gross Sales: $372,534
- 2017 Cash Flow: $42,275
- 2016 Cash Flow: $49,432
- Assets Included in the Purchase
- Equipment: Displays, baskets, glassware, furniture and fixtures
- Vehicles: Delivery van in each location
- Intangible Assets: Reputation and community standing
- Inventory: Retail goods, fresh and silk flowers
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | Tax Return | Tax Return | Tax Return | Tax Return | Notes |
| 2017 | 2016 | 2015 | 2014 | ||
| GROSS SALES | $363,401 | $372,534 | $381,945 | $353,216 | |
| Net Income Shown on Financial Statement | $-6,484 | $-2,153 | $-2,115 | $-41,389 | |
| ADDBACKS | |||||
| Manager Salary | $32,500 | $32,500 | $32,500 | $32,500 | Run as owner/operator to cut this expense |
| 11% Tax on total W2 Salaries | $3,575 | $3,575 | $3,575 | $3,575 | |
| Depreciation | $1,916 | $3,944 | $6,789 | $6,052 | Non-cash item |
| Interest | $3,864 | $4,583 | $4,769 | $4,308 | Non-onward going expense |
| Amortization | $6,865 | $6,865 | $6,863 | $6,865 | Non-onward going expense |
| Meals & Entertainment | $39 | $118 | $17 | $234 | Personal items run through the business |
| TOTAL ADDBACKS | $48,759 | $51,585 | $54,513 | $53,534 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $42,275 | $49,432 | $52,398 | $12,145 | |
| Profit Margin | 11.63 % | 13.26 % | 13.72 % | 3.44 % |
- 3-year average Gross Sales of $372,627
Employees
- 1 FT Manager
- 1 PT Manager
- 3 PT for delivery and some flora design
- 3 available for call-in during busy times
Growth Opportunities
- Indoor planting options
- Holiday decorating
- Holiday wreaths
- Outdoor decorative potting
- Offer more style options
- Increase availability of this service
- Another great area for the holidays
- Corporate accounts
- Offer services to more corporate clients
- Promote to nursing homes and care facilities for decorations
Valuation Details
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2017 Cash Flow was used with a prescribed multiple is 2.9. With this information, the computation is as follows:
$42,275 x 2.9 = $122,598
The Fair Market Value found above positions the business List Price at $120,000.
Funding Example
Purchase Price: $120,000
20% Buyer Down Payment: $24,000
10% Seller Financing: $12,000
70% Bank Loan: $84,000
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $224.
Bank Loan 7-year term at a rate of 6% equals a monthly loan payment of $1,227.
After business expenses and loan payments, a buyer with a 20% down payment of $24,000 would retain a profit of $24,865, which results in a 104% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $120,000 with the terms listed above, the coverage ratio is 2.43.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857