Summary

Manufacturing and production of customized leather items.

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Fully describe the business's activities?

The core activities of their business encompass the manufacturing and production of customized leather and synthetic leather products tailored to meet the unique demands of the corporate gift, conferencing, and hospitality sectors. The business owns its own retail handbag fashion brand which they showcase at a dedicated retail space within a beautiful lifestyle market. As part of their ongoing efforts to enhance their customer experience, they are currently in the process of upgrading their online store, positioning themselves for greater accessibility and convenience in the digital landscape.

How long has the business been established?

The business has a rich history, having been established for an impressive 40 years. Over these four decades, they have honed their expertise, built a strong reputation, and developed lasting relationships with their valued customers in the corporate gift, hospitality, and consumer sectors."

How does the business operate on a daily basis?

Their daily operations commence with the inception of either inbound or outbound sales inquiries. Upon confirming a sale and receiving the necessary deposits, job information is relayed to their production team.

The production process initiates with the creation of an internal purchase order, which serves as a blueprint for production activities. Raw materials are allocated according to this purchase order, and they meticulously record the progress and material usage throughout the entire manufacturing process.

To ensure customer satisfaction, they keep their clients in the loop with regular progress updates and guidance on project completion. Final payments are duly recorded, and upon completion, the goods are released to their valued customers.

Their daily operations are supported by a team of highly-trained staff, and they have established efficient systems that permeate every aspect of their business, ensuring smooth and organized processes.

What Advertising/Marketing is carried out?

At present, their primary method of advertising and marketing is primarily driven by 'word of mouth.' While this approach has proven effective and valuable in building a strong client base, they also recognize the potential benefits of exploring additional marketing strategies to reach a broader audience and further promote their products and services. They are actively considering new avenues for marketing to complement their current efforts.

What competition exists?

They face competition from a mix of formal business competitors, numbering two or three, who operate within their niche and offer similar leather products. Additionally, there are several other competitors in the synthetic leather product range segment. The presence of both direct competitors and those offering synthetics within their product range necessitates a strategic approach to maintain their market position and distinguish themselves in terms of quality and innovation.

How could the profitability of the business be improved?

Direct Retail Expansion: Building on the success of their first retail outlet, they see an opportunity for growth by expanding their direct retail operations.

Online Marketing: While in its initial stages, their online marketing efforts hold significant growth potential. They aim to harness digital marketing to reach a wider audience and drive sales. Tapping into 3rd party online channels (Takealot, Avo and soon Amazon) also presents significant growth opportunity.

Targeted Corporate Marketing: Focusing on end-user corporate clients presents an opportunity to improve their Gross Profit Percentage (GP%) through larger orders and increased sales and the elimination of a middleman in the transaction.

Utilizing Existing Capacity: They are well-positioned to accommodate growth as they have sufficient machinery and production space to support increased demand.

By pursuing these strategies, they aim to boost profitability and drive sustained business growth.

How involved is the Owner in running the business?

The owner plays a highly active role in the business, particularly in driving lead generation and conversion systems, overseeing the delivery process, and providing direction for the overall business strategy.

When does the current lease end?

The current lease is scheduled to conclude in three years. It's important to note that the building is owned by the current owners, and there is an available option to extend the lease for an additional two years. Furthermore, there will be an annual escalation of 7% applied to the lease, and a two-month deposit is required.

What are the trading hours?

Monday to Thursday: 07:00 to 16:00
Friday: 07:00 to 14:00
Total working hours: 42 hours per week
For the retail market:
Wednesday to Friday: 09:00 to 15:00
Saturday, Sunday, and public holidays: 09:00 to 16:00

What are the main assets of the business?

The primary assets of the business include machinery, stock, and patterns or intellectual property.

Strengths?

Well-established
Strong market reputation
Positive supplier relationships
High creditworthiness
Operates its own retail outlet
Deposits contribute to positive cash flow
Efficient and controlled production processes
Design and patternmaking on CAD
Computerized cutting machinery contribute to accuracy
Agility of production capacity

Weaknesses?

Lack of current marketing efforts
Limited brand exposure
Need for a stronger junior administrative person
Risk averse, aging lead entrepreneur

Opportunities?

Government - designated manufacturing policies
Collaborations with unions for corporate gifting
Leveraging local content, such as Amrod, for growth and partnerships