MANDATE REPORT

1. History Background

Fully describe the business's activities

DVD rental outlet where customers come to rent movies, games and series. Older movies are sold bi-annually on a special sale day earning the business an additional R 12,000 income pa.

How long has the business been established?

6 years

How long has the owner had the business?

3.5 years.

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

The shop next door has a generator and shares with the Video outlet.

2. Present Market

How does the business operate on  a daily basis

The Assistant opens and closes the shop daily and helps the clients with their rentals. The owner comes in from time to time to supervise any queries and to purchase new releases.

How are the clients attracted to the business

Word of mouth. Walk-in customers and people living in the area frequent the establishment.

What Advertising/Marketing is carried out

None

Does the business have any contract work

No

What competition exists

Various in the area but not in close proximity.

What are the seasonal trends

Busier during December

3. Financial

Is the business VAT Registered

No

Are there up to date management accounts?

Yes

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

Properly kept set of management account, cashups and other financial information is available to a prospective buyer to confirm the numbers of the business

What percentage of the business is cash/credit?

Mostly cash, some credit cards.

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

N/A

How could the profitability of the business be improved?

 N/A

Is Seller finance available and for what amount?

No

4. Staffing

What is the total staff complement?

2 x Permanent Assistants working shifts and 1 x casual assisting over weekends

Do any receive special perks, bonuses or incentives?

No

Are they on contract?

Permanent

Do any have management potential?

2 x Assistants runs the shop

How involved  is the Owner in running the business

Very little, and due to family pressure in another family business, owner now spends hardly any time there, thus this can be almost considered a forced sale.

5. Premises

When does the current lease end?

A rent of R 4750.00 pm all inclusive. (W & L etc)

Is there an option of renewal & what period

Yes, but unsure of period, although no problems are foreseen.

What is the annual escalation %?

Not sure, but new lease to be created

What are the trading hours?

Mon-Sun

10:00 – 20:00

What is the square meterage of the business?

40m²

Is a copy of the lease available?

Yes

Do you require a licence?

Film and Publications Board notification.

6. Assets

Is a full asset list on file?

Yes available and prepared for fair market value

Are any items not included in the sale?

No

What is their overall condition?

Good

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

Almost a passive income for owner. Staff runs day to day operations. Stable income, with low overheads and easy to manage business. Well situated is suburban mall with good client support.

Weaknesses

The size of the shop is small and limits immediate expansion, although it forces owner to keep it streamlined.

Opportunities

Grow the client base by advertising, marketing and promotions, as this is not done at all and increase Blueray and Games side.

Threats

None identified

8. Reason For Sale

What is the reason for the sale?

The owner’s father passed away and she inherited his engineering business on the East Rand. It is very difficult to run between the two businesses and thus the sale.

9. Conclusion

Why is this a good business to buy?

An easy to run business with a good return of investment waiting for a new owner.