Opportunities
Upholstery Services & Furniture Repair
Sold
Serving residential and commercial customers for 100+ years!
Specifications
Serving customers for over 100 years, this furniture upholstering and repair company has built a strong reputation for old-world craftsmanship. Considered a recession-proof trade, this business weathered the recent economic downturn with minimal disruption, and has tremendous growth potential. There are 6 employees in place to manage the work.
Work is split 60/40 between residential and commercial customers, with all stripping, cutting, repairing and upholstering done within the 3,300-sq. ft. building. The business location includes a showroom, work room and basement for storage.
Included in the purchase is over $35,000 of equipment, from saws, sanders, sewing machinery and office equipment, to a Grumman 5-ton delivery truck and fabric inventory. The seller mainly purchases inventory from 6 vendors for residential fabrics, and works with secondary vendors for commercial supplies.
Areas of growth include adding online fabric sales and hiring an in-house interior designer to help customers choose fabrics. An ambitious buyer could also add furniture and accessories for retail sales, and look to hiring more workers to generate more sales volumes and quicker turnaround time.
Business Highlights
- Year Established: 1897; under current owner for 32 years
- Location and Service Area: Lincoln, Nebraska
- Demographics: 60% residential, 40% commercial
- Services: Furniture repair, upholstering
- Building: 3,300 sq. ft. leased at $1,435/month – includes showroom and work room
- Reason for Selling: Retirement
- Employees: 6 – sewing, upholstering, cutting
- Hours: Mon – Thurs 7am to 5pm, Fri 7am – 4pm
- Seller Training Period: 90 days transition
- Growth Opportunities: Online fabric sales; hire in-house interior designer to work with customers; retail sales of furniture & accessories; increase staff to generate more volume, restaurant services, car restoration
- Current Owner’s Responsibilities: Estimating, bidding, handles books, upholstering
Financial Highlights
- List Price: $190,000
- 2017 Gross Sales: $473,179
- 2016 Gross Sales: $439,500
- 2015 Gross Sales: $334,197
- 2017 Cash Flow: $94,811
- Profit Margin: 20%
- Assets Included in Purchase Price: $33,550
- Equipment: $16,550 – saws, sanders, sewing equipment, office equipment and more
- Vehicles: $10,000 – Grumman 5-ton delivery truck
- Intangible Assets: Database, website, trademark, name & reputation, relationships
- Inventory: $9,000 in fabric inventory
Cash Flow Analysis
| Description of Financial Statement | Tax Return | Tax Return | Tax Return | Tax Return | Notes |
| 2017 | 2016 | 2015 | 2014 | ||
| GROSS SALES | $473,179 | $439,500 | $334,197 | $453,666 | |
| Net Income Shown on Financial Statement | $52,207 | $29,670 | $-14,439 | $37,611 | |
| ADDBACKS | |||||
| Compensation to Owner | $24,100 | $35,040 | $17,420 | $24,480 | |
| 11% Tax on total W2 Salaries | $2,651 | $3,854 | $1,906 | $2,693 | |
| Depreciation | $1,803 | $2,997 | $1,802 | $1,803 | Non-cash item |
| Interest | $3,608 | $1,168 | $4,021 | $4,927 | Non-onward going expense |
| Insurance Premiums for Owners: Health, Life, Auto | $5,900 | $5,900 | $5,900 | $5,900 | |
| Retirement Plan | $832 | $832 | $832 | $832 | Owner Simple IRA |
| Auto-Personal Use | $3,710 | $7,481 | $6,005 | $8,892 | Auto expense unrelated to business |
| Rent | $0 | $0 | $-9,364 | $-9,459 | Onward going rent of $1,453/month |
| Customer Bad Debt | $0 | $0 | $26,000 | $0 | Unpaid customer debt - customer went out of business |
| TOTAL ADDBACKS | $42,604 | $57,272 | $54,522 | $40,068 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $94,811 | $86,942 | $40,083 | $77,679 | |
| Profit Margin | 20.04 % | 19.78 % | 11.99 % | 17.12 % |
- Increasing sales 2015-2017
Location & Services
- Showroom and workshop are in Eastern Nebraska in a 3,300-sq. ft. building
- Space is rented for $1,435/month ($17,220/year)
- Workshop houses $35,550 in equipment
- Pieces are stripped, cut, repaired and upholstered in the workshop and delivered to customers upon completion
- The showroom houses the many fabric samples for customers to choose from
- Fabric is retailed at twice the wholesale value
- Clients are also able to use their own fabric selections for use
- Fabrics range from leather and other common residential choices, to commercial-grade materials for heavy use in banks, hospitals, restaurants and other commercial spaces
- Average job is 2 pieces (sofa and chair)
Employees
- Currently there are 6 employees who assist in all aspects of the process
- Cutter
- Seamstress
- Also maintains pricing in showroom, as vendors change prices roughly twice per year
- Upholsterer (2)
- 1 is mainly commercial, the other is mostly residential
- Handle upholstering, cushion stuffing and delivery
- There are also 2 employees who can do all of the above (cut, sew, upholster)
- Seller handles estimating, bidding and books, as well as pickups and customer relationships
- Roughly 1/3 of estimates require travel
- 75%-80% of jobs are within the immediate city area, with the rest elsewhere within a short drive
Assets
Equipment - $16,550
| Delta 18" bandsaw | $1,000.00 |
| Delta 8" table saw | $750.00 |
| Delta Rockwell drill press | $500.00 |
| Delta 4" belt sander | $250.00 |
| Juki sewing machine, with table | $1,200.00 |
| Consew sewing machine, with table | $1,200.00 |
| Singer sewing machine with table | $1,500.00 |
| Curtis Air compressor, 80 gal | $2,500.00 |
| Copper line air handling system | $500.00 |
| flourescent fixtures in work space | $500.00 |
| LED lighting in showroom with contract | $1,200.00 |
| Dell desktop computer | $1,200.00 |
| 2 printers/ fax/ scanners | $800.00 |
| pre-printed forms for office | $500.00 |
| Quickbooks payroll update contract | $450.00 |
| Assorted hand tools and 1 grinder | $2,500.00 |
Inventory - $9,000
| Revolving supply inventory | $4,000.00 |
| Customer fabric inventory | $5,000.00 |
Vehicle - $10,000 – Grumman 5-ton delivery truck
Work Samples
Process
In all, the process from stripping to final assembly is done over 10 days. Currently, the company has a 3 to 4-month backlog of jobs.
- Furniture is stripped to the frame
- Frame is checked for damage or wear and tear
- Any repairs needed are done before springs are tied and the piece is set for covering
- Cushions are cut and shaped for sewing
- Once fabric is cut, it is rebuilt by the upholsterer
- Any changes to padding or styling are handled by the upholsterer and completed
- Finishing touches:
- Once the frame is finished, the skirts/cushions are fitted to the upholstered frame and sewn
- The piece is put together and delivered to the customer
Pricing
| Type | Cost | Fabric Protection |
|---|---|---|
| Sofa – 70” and longer | $800 | $65 |
| Complete Breakdown | $200 | |
| Loveseat | $750 | $55 |
| Complete Breakdown | $150 | |
| Lounge Chairs & Recliners | $465 | $45 |
| Chairs w/o Skirts & Cushions | $350 | |
| Complete Breakdown | $125 | |
| Ottoman, traditional | $145 | $25 |
| Larger, Tufted | $150 - $225 | |
| Martha Washington | ||
| w/ Upholstered Arms | $320 | $30 |
| w/o Upholstered Arms | $295 | $25 |
| Dining Seats – Boxed | $45 | $30 |
| Tight | $35 | $5 |
| New 1” Foam, add | $10 | |
| New 2” Foam, add | $20 | |
| Re-web Failed Deck, add | $10 | |
| Drop-in Rocker Seat | $125 | $5 |
| Pillows 8” – 22”, Dacron insert | $35 | $5 |
| Needlepoint Pillows | $65 | |
| Pillows w/ Decorative Cord | $45 | |
| Or Fringe & Dacron Insert | ||
| Hour Rate of $57/hour for repair |
Growth Opportunities
- Add online fabric retail
- Hire in-house interior designer to work with customers in choosing the right fabrics for their needs
- Retail sales of furniture and accessories
- Hire additional workroom personnel to generate more volume and increase turnaround time
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, the 2017 Cash Flow was used. The prescribed multiple is 2.05. With this information, the computation is as follows:
$94,811 x 2.05 = $194,363
The List Price has been set at $190,000.
Funding Example
Purchase Price: $190,000
15% Buyer Down Payment: $28,500
15% Seller Financing: $28,500
70% Bank Loan: $133,000
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $531.
Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $1,748.
After business expenses and loan payments, a buyer with a 15% down payment of $28,500 would retain a profit of $67,461, which results in a 237% 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 $190,000 with the terms listed above, the coverage ratio is 3.47.
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