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Woman Wear w/ Passive Owner

Boutique & online store with 245K in profit!

CASH FLOW
$244,726

Specifications

  • Price
    $790,000

  • Revenue
    $874,642

  • Equipment
    $5,000

  • Location
    Des Moines area with online customers

  • Inventory
    $23,000

  • Profit Margin
    28%

  • Lease
    1,000 sq. ft.: retail space, stock room with office, restroom

  • Intangible Assets
    On-trend for the customer base, accessible pricing, growing area of town, excellent social media reviews, positive social media engagement

  • Employees
    4: 1 Full-time Assistant Manager, 2-3 part-time retail associates

With a functional staff, owner is only in store part time! Offering women’s clothing in the Des Moines, Iowa area, this darling boutique with stylish offerings compels you to buy something perfect for the season.  This shop caters to those purchasing ladies clothing including tops, bottoms, dresses, shoes, and accessories all at reasonable prices without sacrificing charm.  In addition to the brick and mortar location, the webstore is a good source of revenue as well as an opportunity to capture an out-of-town market.  The site features easy navigation and sales through a popular e-commerce platform since 2015.  

The Assistant Manager takes care of the day-to-day operations and oversees the three part-time retail associates.  The owner currently works at the shop part-time and oversees ordering, financials, and social media remotely.

With an excellent cash flow, profit margin, and social media reviews, this business is drawing customers to the shop and website.  Areas of continued growth could be found in expanding the customer demographics to include college-aged and recent graduates or expanding some size offerings.  Increasing advertising and the overall web presence may have a positive impact as well as holding pup-ups in different areas of town to expose potential shoppers to this bright and unique boutique.  

Business Highlights

  • Year Established: 2015
  • Location and Service Area: Des Moines area with online customers
  • Clients Demographics: Generally, 30-45 year-old women, anyone looking for a cute and reasonably priced outfit
  • Merchandise: On-trend women’s wear: tops, bottoms, dresses, shoes, accessories, etc.
  • Lease: 1,000 sq. ft.: retail space, stock room with office, restroom
  • Reason for Selling: New opportunities
  • Employees: 4: 1 Full-time Assistant Manager, 2-3 part-time retail associates
  • Seller Training Period: 3-6 months 
  • Growth Opportunities: Expand to a younger demographic (20-30), expand into wider size range, increase online presence and revenue, pop-ups
  • Current Owner’s Responsibilities: Part-time in-store hours seasonally, oversight, social media

Financial Highlights

  • List Price: $790,000
  • Gross Sales:
    • 2018: $874,642
  • Cash Flow:
    • 2018: $244,726
  • Assets Included in Purchase*
    • Equipment: $5,000: Shelving, racking, computer
    • Average Inventory:  $23,000:  Clothing and accessories, bags, mailing supplies, etc.
    • Intangible Assets: On-trend for the customer base, accessible pricing, growing area of town, excellent social media reviews, positive social media engagement

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnNotes
201820172016
GROSS SALES$874,642$928,477$510,330
Net Income Shown on Financial Statement$194,124$188,725$89,218
ADDBACKS
Compensation to Owner$30,000$80,000$0
11% Tax on total W2 Salaries$3,300$8,800$0
Depreciation$4,493$7,266$30,416
Interest$488$591$238
Meals & Entertainment$2,626$2,431$595
Auto$2,195$1,030$1,621Personal
Pension & Profit Sharing$7,500$20,000$0To Owner
TOTAL ADDBACKS$50,602$120,118$32,870
Seller's Cash Flow = Total Addbacks + Net Income$244,726$308,843$122,088
Profit Margin27.98 %33.26 %23.92 %
  • Great profit margins year-over-year!

Typical Clients and Merchandise

  • Clients:
    • Anyone looking for a cute and reasonably priced women’s outfit!
    • General demographics are 30-45 year-old women
  • Merchandise
    • On-trend women’s wear
    • Tops: long-sleeve, short-sleeve, tanks, etc.
    • Bottoms: jeans, shorts, skirts
    • Dresses and rompers
    • Shoes and sandals

Employees

Total Employees: 4

  • 1 Full-time Assistant Manager
  • 2-3 Part-time retail associates

Growth Opportunities

  • Expand to a younger demographic (20-30)
  • Expand into wider size range
  • Increase online presence and webstore revenue
  • Hold pop-ups to expose a greater audience to the boutique

Valuation Details

The Firm 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 2018 cash flow was used with a prescribed multiple is 3.2.  With this information, the computation is as follows:

$244,726         x          3.2       =          $783,123

The fair market value found above positions the business list price at $790,000.

Funding Example

Purchase Price:                             $790,000

15%Buyer Down Payment:      $118,500

15%Seller Financing:                $118,500

70%Bank Loan:                         $553,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,209.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $7,267.

After business expenses and loan payments, a buyer with a 15% down payment of $118,500 would retain a profit of $131,009, which results in a 110% 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 $790,000 with the terms listed above, the coverage ratio is 2.15. 

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. 

*The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$790,000

$
%
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:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 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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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.