Floral Shop Serving Denver Area
SUMMARY OF THE BUSINESS – In business since 1948, this floral shop serves the entire Denver metropolitan area. Sales break down is 10% weddings, 20% funerals and 70% other sales, including FTD and Teleflora orders. The shop also carries a selection of vases, greeting cards, containers, balloons, and other related items.
There are generally 10-12 employees, with 4FT floral designers, 4PT drivers and 2-4PT sales staff. Additional 1099 drivers are used during busier holiday seasons. Some of the floral designers have been with the business for 7 years or more. The current Owner is looking to retire, and focuses her time on employee management, ordering and delivery routing.
Sales have consistently been over $800K for the past 4 years, with a 13% profit margin for 2017. Assets included in the purchase are five delivery vans, work tables, displays, furniture, computers and inventory.
Growth opportunities include increased marketing and social media presence, relationships with wedding vendors and funeral homes and participating in local/neighborhood events. The shop is located on a busy street, but increasing neighborhood visibility may increase an already steady stream of business.
A 10% down payment of $36,300 returns $52,758 in the first year after debt payments.
- Year Established: 1948; current owner 35 years
- Location: Denver
- Service & Delivery Area: Denver Metropolitan Area
- Sales Breakdown: 10% weddings, 20% funerals, 70% other sales (which includes FTD and Teleflora)
- Lease: Approximately 2,500 sq. ft. for $4,500/mo.
- Reason for Selling: Retirement
- Employees: 10-15 employees on the payroll during normal times, using an average of 5-8 on a normal day; 3-4 FT designers, 3-4 PT designers, 3 FT drivers, 2-3 PT drivers, 1-3 PT sales/computer entry/general floral helpers. Additional 1099 drivers are used during busier holiday seasons
- Seller Training Period: Negotiable
- Growth Opportunities: Increase marketing & social media presence; participate in local/neighborhood events; relationships with wedding vendors and funeral homes
- Current Owner’s Responsibilities: Employee management, ordering, delivery routing
- List Price: $363,000
- Gross Sales:
- 2017: $881,912
- 2016: $848,483
- Cash Flow:
- 2017: $111,896
- 2016: $86,507
- Assets Included in Purchase*
- Furniture $ Equipment: $93,528
- 5 Delivery Vans: $30,800
- Intangible Assets: Website, reputation from 70 years in business
- A/R: $112,017
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$112,038||$87,601||$102,102||$84,428|
|Compensation to Owner||$19,200||$19,200||$19,200||$19,269|
|11% Tax on total W2 Salaries||$2,112||$2,112||$2,112||$2,120|
|Insurance Premiums for Owners: Health, Life, Auto||$3,600||$3,600||$3,300||$3,000|
|Meals & Entertainment||$0||$48||$64||$0||Owner personal expense|
|Rent||$-29,900||$-29,335||$-30,000||$-29,000||Rent would be $4,500/mo ongoing|
|Seller's Cash Flow = Total Addbacks + Net Income||$111,886||$86,507||$97,411||$79,817|
|Profit Margin||12.68 %||10.20 %||10.73 %||9.94 %|
- 13% profit margin
- Sales of over $800K for the past 4 years
10-15 employees on the payroll during normal times, using an average of 5-8 on a normal day
- 3-4 FT floral designers
- 3-4 PT designers
- 3 FT drivers
- 2-3 PT drivers
- 4 PT delivery drivers
- 1-3 PT sales/ computer entry/ general floral helpers
- Increase marketing and social media presence
- Participate in more local/neighborhood events
- Relationships with wedding vendors and funeral homes
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 3.25. With this information, the computation is as follows:
$111,886 x 3.25 = $363,630
The Fair Market Value found above positions the business List Price at $363,000.
Purchase Price: $363,000
10%Buyer Down Payment: $36,300
10%Seller Financing: $36,300
80%Bank Loan: $290,400
Seller Financing 5-year term at a rate of 5% equals a monthly loan payment of $685.
Bank Loan 7-year term at a rate of 6% equals a monthly loan payment of $4,242.
After business expenses and loan payments, a buyer with a 10% down payment of $36,300 would retain a profit of $52,758, which results in a 145% 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 $363,000 with the terms listed above, the coverage ratio is 1.89.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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