Opportunities
Floral Boutique with 22% Profit Margin in Omaha
Specifications
Established floral studio and store with over $500,000 in gross sales. Situated in a well-trafficked strip mall in Omaha, this anchor store has become a staple since its opening in 2003. Delivering within the Omaha metro, this store has a customer retention rate of 80%. Sales have been at a steady clip over the last few years, bolstered by daily orders and contracts. The current owner has recently been signed for a large event that is expected to invoice over $6,000, and any ownership transition should not interrupt this deal.
All staff are well-trained and capable, working within set hours and with the understood need for some seasonal flexibility. Currently there are three full-timers and one part-timer employed in the studio, in addition to two alternating delivery drivers. Employees are encouraged to help in the creation of custom floral designs that are then featured for sale. The seller is also assisted by a part-time bookkeeper who logs invoices into ShopKeep Point of Sale software.
The 2,000-square foot building is leased at $11.25 per square foot, which is half of what most stores pay in this particular development. Leasing is all inclusive, covering the shop’s common area as well. Included in the sale is a delivery vehicle with around 50,000 in mileage.
With the right buyer, this already successful business could increase sales through improving web traffic and revamping marketing materials. Seller is willing to finance 20%, and with a down payment of $24,000, a new owner may expect to see a three-fold return and a profit of $95,749 the first year.
Business Highlights
- Gross sales over $500,000 in 2015 and 2014, and annualized at $531,336 in 2016
- Anchor location in high traffic strip mall with 80% customer retention
- Lease at $3,200/month, which is roughly half that of the rest of the development
- Current owner invests 40 hours per week and is supported by well-trained staff
- Seller is unable to continue as owner due to back injuries that hinder long periods of standing
Financial Highlights
- List Price: $120,000
- 2016 Gross Sales: $514,759
- 2015 Gross Sales: $518,613
- 2016 Cash Flow: $113,432
- 2015 Cash Flow: $36,002
- 22% profit margin
- $46,498 worth of assets included in the purchase:
- Equipment: $27,998 – floral cooler, design tables, wall and cabinet displays
- Inventory: $18,500 – gift merchandise, event and storage inventory
- Intangibles – membership in Flower Shop Network
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return | Tax Return | Tax Return | Notes |
| 2016 | 2015 | 2014 | 2013 | ||
| GROSS SALES | $514,759 | $518,613 | $507,482 | $441,003 | |
| Net Income Shown on Financial Statement | $51,333 | $-31,048 | $-341 | $-16,714 | |
| ADDBACKS | |||||
| Compensation to Owner | $41,600 | $41,600 | $41,600 | $41,600 | |
| 11% Tax on total W2 Salaries | $4,576 | $4,576 | $4,576 | $4,576 | |
| Depreciation | $4,591 | $6,857 | $5,719 | $3,165 | Non-cash item |
| Interest | $765 | $834 | $99 | $0 | Non-onward going expense |
| Amortization | $0 | $0 | $0 | $465 | Non-cash item |
| Insurance Premiums for Owners: Health, Life, Auto | $0 | $5,292 | $0 | $0 | Non-onward going expense |
| Travel | $7,837 | $891 | $0 | $0 | Travel unrelated to business |
| Auto-Personal Use | $2,730 | $7,000 | $0 | $0 | Personal use of auto unrelated to business |
| TOTAL ADDBACKS | $62,099 | $67,050 | $51,994 | $49,806 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $113,432 | $36,002 | $51,653 | $33,092 | |
| Profit Margin | 22.03 % | 6.94 % | 10.18 % | 7.50 % |
- Profit margin of 22% in 2016
- 68% increase in cash flow during 2016
Assets & Inventory Sampling
- Floral cooler - $5,500
- Signs - $2,500
- Display cabinets - $3,850
- Back room shelving - $1,830
- Storage inventory - $5,000
- Gift merchandise - $10,000
- Event Inventory - $3,500
Employees
- The store runs with 3 full-time personnel and 1 part-time associate, as well as 2 delivery drivers that rotate schedules
- Employees design and complete orders
- The store owner mostly supervises employees and order completion, but has a background in design and will still create when needed or desired
- Current employees would be capable of floral design, so a new owner need not be already in the industry
Products
- Bouquets & Corsages
- Traditional roses, custom, and more!
- Gourmet gift baskets
- Honey Lover
- Gardeners Delight
- Spa Indulgence
- Goodies
- Natural Handmade Soap
- Local Raw Honey
- Indoor plants
- Potted palms
- Chinese Evergreen
- many more!
Growth Opportunities
- Website overhaul could increase online traffic
- The current design is functional, but is not visually appealing
- Current owner has not done much in marketing
- Add radio ads as part of this effort
- Attend bridal/event trade shows
- Distribute flyers to businesses and homeowners
- Work with wedding planners and event planners
Valuation Details
The Firm Business Brokerage used a Cost-to-Create Valuation methodology to determine the Purchase Price of the business.
Due to the time, money and energy involved, it would take more than the List Price of $120,000 to recreate and build the reputation of this business.
Funding Example
Purchase Price: $120,000
20%Buyer Down Payment: $24,000
20%Seller Financing: $24,000
60%Bank Loan: $72,000
Since the bank loan would be under $150,000, this business would be a perfect opportunity for an Express Loan!
Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $447.
Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $1,026.
After business expenses and annual loan payments of $17,683, a buyer would retain a profit of $95,749. A down payment of $24,000 results in a three-fold 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 6.41. Please note that the decision of whether to extend a loan on any particular sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Funding Details
Business:
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
Loan Payments
| Monthly Payment to Bank: | $ |
| Yearly Payment to Bank: | $ |
| Monthly Payment to Seller: | $ |
| Yearly Payment to Seller: | $ |
| Total Monthly Debt Service: | $ |
| Total Yearly Debt Service: | $ |
Conclusions
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
|
Cash Flow: 2016 Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2016 Cash Flow |
$ |
| Annual Debt Service: | -$ |
| NOI: |
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
| Down Payment: | $ |
| NOI: | |
| ROI: | % |
Attachments
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210 N 78th St. 2nd FloorOmaha, NE 68114
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