Summary

Easy to run shavings manufacturer with the following key features: 1 - Sells an average of 9 000 bags of shavings per month (less than 50% of the mill capacity); 2 - Yield of 76 -90 bags of shavings per ton; 3 - Wood shaving mill is designed to produce 1 000-1 200 bags per day; 4 - Very little working capital required; 5 - 6 Employees; 6 - Repeat customers; and 7 - High demand for shavings; and 8 - The product is a necessity.

Give me more information

Fully describe the business's activities?

The business manufactures wood shavings used in horse stables.The wood shavings mill can also manufacture shavings used by chicken farmers. The only difference is the size of the shavings. Chicken shavings must be manufactured from dry wood, whilst horse shavings can be manufactured from wet wood. The same mill with different blades is used to produce chicken shavings.

How does the business operate on a daily basis?

The business uses a wood shaving mill to produce wood shavings from reject pine logs. The logs are delivered in 32 ton loads. Average production per months is in the region of 99 tons. The wood shaving mill has a capacity of 1 000 - 1 200 bags per day. Each bag weighs approximately 11kg (if dry) and up to 13kg if when wet. The wood shavings mill dumps the shavings onto a conveyor belt which drops the shavings into bags. Labourers assist with filling and binding of bags. Bags are delivered to customers using a 5 ton truck. Devilries are only done for full truck loads i.e. 400 bags.

The production yield is approximately 78 - 90 bags of shavings per ton, depending on the moisture content of the logs.

The business currently sells an average of 9 000 bags monthly at an average selling price of R20/bag excluding delivery cost.

What Advertising/Marketing is carried out?

None what so ever.

What competition exists?

Completion is either on a very small scale (horse shavings) or a very large scale (chicken shavings) with enormous overheads.

How could the profitability of the business be improved?

The profitability could be improved by doing more marketing and advertising and by planning log purchases well in advance to ensure constant supply of raw materials.

Give a breakdown of staff/ functions/ length of service?

1 x Driver (since Feb 2022).
1 x Maintenance and machine operator (1 year).
3 x Labourerers (since Jan 2022).
1 x Electric saw operator (since Jan 2022).

Do any have management potential?

No.

How involved is the Owner in running the business?

The owner spends approximately 2 - 3 hours a day on the business doing the following:
1 - Invoices to customers, delivery schedules and payment follow-ups.
2 - Ordering of wood and plastic bags.
3 - General admin.

When does the current lease end?

The business runs from the owner's farm in the Midvaal municipal district. There is no rental agreement in place.The business can easily be relocated, alternatively the Seller is very willing to enter into a monthly lease agreement with the Buyer. The wood shaving mill requires approximately 120 sqm to operate. Yard space is required for log storage and cutting 2.4m logs into 1.2m logs. The yard space must have sufficient entry, turning circle and exit for an interlink truck, approximately 300 sqm.

The seller is prepared to rent the existing premises to the buyer at R10 000 per month.

What are the trading hours?

Monday to Friday 7;30 am to 4:30 pm. Saturdays if required.

What are the main assets of the business?

The main assets are as follows:
1- Wood shaving mill with customer designed conveyor belt and cabling;
2 - 2019 5 ton FAW truck (approximately 53 000 km);
3 - Electric saw;
4 - Chain saw; and
5 - Spares and shaving knifes.

The current owner uses a 12t/m Leyland crane truck of off-load the logs. This crane truck belongs to a friend of his, who is prepared to sell the truck at R55 000.00

Strengths?

Easy to run business with low overheads.
Low staff compliment.
Repeat customers.
Shavings is a necessity in the horse and chicken industry/farming.
Very low working capital requirements.
This is the most efficient shaving mill with the lowest labour input available in the market.

Weaknesses?

No marketing or advertising.
The location of the business in proximity to its customer base.

Opportunities?

The current wood shavings mill has the capacity to more than double existing production.
Direct marketing and advertising.
Social media.
Proper planning of raw materials purchases and transport.
Shavings is as essential to horses and chickens as toilet paper to humans.
The processes can be streamlined, planning can be improved and headcount can be reduced with the right guidance and input from the new buyer.