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Rapidly Expanding Dance Studio & Community Center

CASH FLOW
$31,914

Specifications

  • Price
    $65,000

  • Cash Flow
    $31,914

  • Revenue
    $102,428

  • Inventory
    $5,000

  • Location
    Northwest of Omaha, NE

  • Down Payment
    30%

  • Reason for Sale
    Family health issues

  • Profit Margin
    31%

  • Employees
    3 Coaches/Teachers in addition to seller

Located a short drive north of Omaha, this growing dance studio has flourished from just a handful of students to over 120 in the past 6 years. Housed in a spacious, open 6,000-sq. ft. facility, children are instructed in ballet, tap, and gymnastics, and may also participate on dance teams. With the seller, there are 3 other coaches and teachers working Monday through Thursday in the evenings.  They recently also added several bounce houses and other fun party essentials for indoor birthday parties and events around the community.

Looking to sell because of family health issues, the owner is willing to stay on as an instructor, and a buyer would be hard-pressed to find a better choreographer. With many credits to her name, she has recently created routines that have qualified her dancers for a world competition.

This studio is in-demand and waiting for a new owner to keep it growing for years to come. Growth exists in partnering with schools for instruction and studio use, as well as adding more adult classes. A buyer could also consider devoting some space for fitness.

At a purchase price of $65,000, a buyer paying 30% down could profit $23,619 after debts. This represents a 121% return on investment during the first year.

Business Highlights

  • Year Established: 2011
  • Location and Service Area: Northwest of Omaha, Nebraska
  • Classes: Ballet, tap, gymnastics, dance team
  • Enrollment: 120+ enrolled for classes, 300+ monthly visits
  • Lease: 6,000 sq. ft. leased for $1,295/month
  • Reason for Selling: Family health issues
  • Employees: 3 Coaches/Teachers in addition to seller
  • Hours: Monday – Thursday 4pm-9pm for classes
  • Seller Training Period: Seller is willing to stay on as an instructor
  • Growth Opportunities: Partner with schools; more adult classes convert some classrooms for fitness
  • Current Owner’s Responsibilities: Owner teaches classes and develops routines

Financial Highlights

  • List Price: $65,000
  • Gross Sales:
    • 2017 - $102,428
    • 2016 - $90,996
    • 2015 - $81,318
    • 2014 - $54,837
  • Cash Flow:
    • 2017 - $31,914
    • 2016 - $20,515
    • 2015 - $30,252
    • 2014 - $24,572
  • 31% Profit Margin
  • $20,000 in Assets included in the purchase:
    • $5,000 in apparel
    • $15K in industrial bounce houses including a 32 ft. double slide, obstacle course, jousting arena, and traditional bounce houses
    • Intangible Assets:
      • Website
      • Active social media accounts that are monitored for SEO traffic
      • Talented roster of teachers/students
      • Name recognition

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnTax ReturnNotes
20172016201520142013
GROSS SALES$102,428$90,996$81,318$54,837$42,728
Net Income Shown on Financial Statement$21,794$4,023$22,707$8,968$-2,968
ADDBACKS
Depreciation$1,024$4,807$2,873$871$544Non-cash item
Home Office$750$750$750$750$750Expenses unrelated to business
Hail Damage Replacement$0$11,600$0$11,600$0One-time expense
Auto-Personal Use$8,346$10,935$3,922$2,383$3,141Auto expenses unrelated to business
TOTAL ADDBACKS$10,120$28,092$7,545$15,604$4,435
Seller's Cash Flow = Total Addbacks + Net Income$31,914$32,115$30,252$24,572$1,467
Profit Margin31.16 %35.29 %37.20 %44.81 %3.43 %
  • 31% profit margin
  • Consistent growth in sales yearly

About the Studio

  • 3 PT coaches/teachers
    • Gymnastics
    • Cheerleading
    • Lyrical
  • The seller is also an instructor and choreographer
  • 6,000-sq. ft. facility leased for $1,295/month
    • Open space with a front office
  • Instruction includes ballet, tap, gymnastics, competitive dance and more
    • Currently 120+ kids enrolled in classes
    • Classes run from September to May, with summer devoted to camps

Income Analysis

  • 2016 has shown more steady monthly sales, as opposed to the drastic swings from month to month in years past
  • The studio has grown in presence and student numbers, and is producing more reliable income

  • A large percentage of income is generated by summer camps and competitions
    • A new owner could increase profits by offering more camps and focusing on competitive dance teams

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          Multiplier          =          Price

Cash Flow is the sum of net income plus any owner perks and non-onward going expenses.

Multiplier is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).

The Cash Flow for 2017 is $31,914. The prescribed multiplier is 2.1.

With this information, the computation result follows:

$31,914           x          2.1       =          $67,019

The List Price for the business is set at $65,000.

Funding Example

Purchase Price:                         $65,000

30%Buyer Down Payment:     $19,500

15%Seller Financing:                 $9,750

55%Bank Loan:                        $35,750

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $182.

Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $509.

After business expenses and annual loan payments of $8,295, a buyer would retain a net operating income (profit) of $23,619.  A 30% down payment of $19,500 results in a 121% 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 $65,000 with the terms listed above, the coverage ratio is 3.85. 

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. 

Purchase Price:

$65,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

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:
2017 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2017 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: %

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