Business description

Well Established Supplier of Welding Tools, Engineering Supplies and Consumables

Very well established – operated for many years by the current Owner, this is one of the leading suppliers of welding tools, engineering supplies and consumables in the south east of England. Whether it’s welding machines or consumables, gas, gas equipment, power tools, hand tools and abrasives, this is the place to come.

With accounts with the vast majority of the major manufacturers operating in its sector, this business is literally a ‘one stop shop’ with a customer base that ranges from the DIY’er right through to the local manufacturing, engineering and construction businesses, which represent over 150 trade accounts. A large proportion of turnover arises from export sales to countries right across the world and in particular to companies operating in the petrochemicals sector. The business also supplies a number of other smaller distributors in its sector that don’t have access to the accounts of the major manufacturers this business has.

The main aim of this company is to fulfil orders both speedily and competitively. This company has a wide range of stock readily available. And if it isn’t available this business will source it. Staff are knowledgeable, professional and pride themselves on delivery. Not just limited by what’s available ‘on the database’, or ‘in the catalogue’, the ability to source anything from anywhere is ingrained in all staff and the cornerstone of the success of this business.

This is a very well established business which has been at the core of the industrial supplies sector on a local and international basis for almost sixty years. With turnover for the financial year ending May 2008 of almost £525,000 generating gross profits of almost £175,000 and pre-tax net operating profits of almost £45,000 after minimal Directors’ remunerations and significant exceptional costs, this represents an excellent opportunity for an existing operator to increase its presence in the sector or for a new entrant to establish a foothold in the industry by acquiring one of its longest standing operators.

Key strengths:

This business is one of the leading suppliers to the local marketplace specialising in welding and engineering supplies and consumables – all available at competitive prices. It also services an extensive export customer base right the way across the world with a particular presence in the petrochemicals sector. With direct access to the major manufacturers, the stock carried by this business is both extensive in its range and depth – and is therefore readily available for collection by local customers. Such is its relationships with its manufacturers it frequently receives export orders from them or their sister companies directly. However it is the ability of the business to source absolutely anything a customer requires, speedily and cost effectively which has helped it to establish an enviable reputation in the marketplace.

Customers are always offered helpful and friendly service from the experienced and very helpful staff, resulting in a high percentage of repeat business. Its location – well known due to the sheer length of time it has been in operation, encourages personal visits especially from some of the smaller customers keen to pick up the necessary equipment on the way to a job. This very successful, carefully managed business has a constantly growing base of satisfied clientele and accounts. There is constant high demand for its products and accessories, leading to a consistently strong performance, making this business an excellent acquisition opportunity.

Key opportunities:

There is an outstanding opportunity to build on the existing business levels and customer base of this company. With a strong demand for this business's products, combined with a capacity to increase turnover, a new owner contributing fresh ideas, investment, enthusiasm and motivation will have every advantage of building on an excellent platform.
Having been established for so long the business invests little in marketing and advertising. Certainly the development of a web presence, possibly with an e-commerce facility would increase its profile outside its current customer base – and in particular on the export side. As Purchasing Departments come under increasing pressure to source at lower and lower prices from alternative suppliers, often through access to the Internet, this is certainly an area for future growth and expansion.

And whilst the business does quite well within its local marketplace, the introduction of a sales rep to call upon potential new customers would certainly impact on turnover and profitability. In addition, certain international markets – particularly within the petrochemicals sector are experiencing significant growth. Specific plans for sales and marketing to attack these markets – with even the possibility of regular sales visits and appearances at trade shows etc would enable this business to secure a lucrative share of these markets.

Customer Service:

This company enthusiastically offers a high level of personal service. This business has expert, highly knowledgeable, reliable, loyal staff which has helped establish its excellent reputation for always being able to supply, a reputation that has attracted and continues to attract new referrals and an extensive base of very satisfied clientele.

Financial Information:

The business is offered for sale as a going concern. All financial discussions will take place directly between the vendor and all interested parties under the auspices of Turner Butler.

Turnover regularly exceeds £500,000 with the business generating revenues of almost £525,000 for the financial year ending May 2008 with gross profits of almost £175,000 and a pre-tax net operating profit of £43,500. There were minimal Directors’ remunerations of £7,600 and exceptional ‘one-off’ costs of almost £30,000.

The Asking price of £245,000 is for a sale of the shares in the business based on a Balance Sheet value of £82,500.

Property information

Property:

Leasehold

Lease terms:

Rent and Rates currently total £24,000 per annum (to include Rates at £650 per month).

Location:

The business is located just off one of the main arterial routes into one of Surrey’s busiest commercial centres and in area which has a high density of companies - small, medium and large which are potential customers for the products this business supplies.

The premises – which were personally acquired by the current Owner a number of years ago are approximately 3,000 square feet in total – split equally between the Ground and First Floors, with the Ground Floor given over to the Trade Counter, Stores and Office accommodation with the First Floor dedicated to additional Office accommodation and Stores.

There is a car park to the rear with additional free street parking available, adjacent to the site.

Rent and Rates currently total £24,000 per annum (to include Rates at £650 per month).

Situated in an up and coming residential area, outline Planning Permission is being sought for residential development. The freehold is available subject to negotiation in addition to the Asking Price for the business – at the prevailing market rate taking into account the planning opportunities. The owner has indicated an offer in the region of £350,000 for the premises plus a share in the profits from re-development may be acceptable.

Other information

Competition / Market:

Apart from advertising in specialist trade directories relevant to the Oil and Gas sector, this business invests little in marketing and advertising. The business has no web presence. The most cost effective form of marketing for the business is its continued presence in the marketplace for the past sixty years and strong word of mouth recommendation, testimony to the excellent reputation the business has built throughout its many years of operation.

Support & training:

The Owner will provide full business familiarisation, training and handover, covering all aspects of the business, to ensure a smooth transfer to new Owners.

Reasons for selling:

This is a genuine retirement sale.

Trading hours:

The Trade Counter is open between 8.00 am and 5.00 pm weekdays excluding Fridays when it closes at 4.00 pm. The business currently closes between 1.00 pm and 2.00 pm for lunch.