MANDATE REPORT

1. History Background

Fully describe the business's activities

This Salon caters for hair creations, but also offers a Sun-bed for tanning, plus there is a nail bar for nail care. Brazilian blow waves are done as well as hair extensions. Eye lash extensions are done and general beauty tips complete the picture. The owner has introduced her own branded product line for hair care as an added bonus.

How long has the business been established?

1.5 years with about 250 to 300 clients on record.

How long has the owner had the business?

4 years.

What steps are in place to solve "load shedding" problems

N/A

2. Present Market

How does the business operate on  a daily basis

Owner managed but owner is not a hairdresser. Because of this fact, loyal clients will not leave with owner as is sometimes normal in this industry.

How are the clients attracted to the business

Word of mouth, Passing trade in busy suburban thoroughfare and loyal clients. Also monthly ads in local ad pamphlet.

What Advertising/Marketing is carried out

Cheese and wine promotional evenings on a 3 monthly interval with clients.

Does the business have any contract work

No, but longstanding regular clients frequent the establishment

What competition exists

None really.

What are the seasonal trends

Normal as per this industry

3. Financial

Is the business VAT Registered

No

What VAT documentation is on file?

N/A

Are there up to date management accounts?

Owner preparing

What audited financials are available, income statement and or balance sheets?

Owner preparing

What percentage of the business is cash/credit?

All cash

What is the age analysis of the debtor’s book?

N/A

How could the profitability of the business be improved?

There is a huge opportunity to improve turnover. Firstly there are 4 chairs that can be taken up by hairdressers as only one is currently being used, plus the Branded Hair Care products can be more aggressively marketed in store and on the internet.

Is Seller finance available and for what amount?

No

4. Staffing

What is the total staff complement?

1 staff members on payroll (hairdresser)

Staff Breakdown and length of service

1.5 years

Do any receive special perks, bonuses or incentives?

Hairdo’s

Are they on contract?

Permanent

Do any have management potential?

No

How involved  is the Owner in running the business

Owner managed.

5. Premises

When does the current lease end?

A rent of R 5,800 pm includes W & L & Vat.  Current lease expires Jun 2014.

Is there an option of renewal & what period

Yes 3 years, but new lease to be arranged. Buyer can take over deposit.

What is the annual escalation %?

Not sure but thinks it is 10%

What are the trading hours?

Tue-Fri

08:00 -17:00, Sat 8:00 – 03:00 Closed on Mondays.

What is the square meterage of the business?

60m²

Is a copy of the lease available?

Yes

Do you require a licence?

No

6. Assets

Is a full asset list on file?

Owner preparing

Are any items not included in the sale?

No

What is their overall condition?

Excellent

Do any require repairing?

No

How have they been valued?

Fair market / Replacement value

Which assets are on lease/HP and with whom?

N / A

What are their settlement amounts?

N / A

Will Seller settle or Buyer to take over?

N / A

Are copies of agreements available?

N / A

Are they presently insured?

Yes

7. S.W.O.T. Analysis

Strengths

Well established with good name this business has a lot of room to grow. Already showing a good return, with a new owner that can also act as hairstylist, and improving the sales of its own branded products, this could be a gem.

Weaknesses

None perceived

Opportunities

Grow the client base, as above under “strengths”.

Threats

None identified

8. Reason For Sale

What is the reason for the sale?

The owner is involved in other businesses that takes up her time and a qualified hairstylist would be better served here.

9. Conclusion

Why is this a good business to buy?

A clean business running well with a good return of investment waiting for a new owner.