Colordo Online Only Contemporary Quilitng Retailer

This is an online only craft retailer that is in West Metro Denver, Colorado. They have a huge selection of high-quality inventory, with over 15,000 products online and in stock located on site.  Crafters and, Fashion Designers love their fast service, huge variety, and custom customer service.

The 2024 revenues were 3.5M with properly adjusted earnings of 420K.  The sales price has just been lowered to 875K plus inventory and have identified other locations nearby to move the business to save the buyer money of rent.  I believe that this has one of the largest equity building potentials of any business that I have represented in at least 5 years.  This business has a lot of ways to grow the company.

We want to clarify some common questions/concerns:

Inventory:   Inventory should be thought of as more valuable than cash for the following reasons:  The more that the business has in stock, the more you will sell and sell after the closing.  You will own the it on the closing day at its cost and the Seller will have already paid the cost to acquire it.  In addition, this allows you to finance the purchase of the inventory through a bank loan as part of the total purchase price.  When you sell the inventory, you will recover the cost PLUS a profit.  This will also reduce or eliminate the need for working capital as you will turn inventory into cash every day from the closing date forward. 

The downward earnings trend has slowed but the lease is clearly an issue at this point as a % of both the revenues and the earnings.  The Sellers understand that they need to help a potential buyer obtain a bank loan so with that in mind, there are several important changes to this listing:

The Sellers will now allow the buyer of the business to move the business into a more efficient space.  They have considered all options including dividing their current space up and after meeting with experts have decided that moving the business would be the best option for all.  They believe 6K to 8K square feet would be sufficient for the current operations and still allow for some growth.  They currently occupy over 12K square feet that is currently less than 50% utilized.  They have identified other locations between 6K and 8K in size that are available now which will satisfy a banks and the SBA’s requirement to make a lease adjustment in their calculations.  The locations are close enough to their location that there will be little to no risk of losing any employees, has enough parking, and a meaningful reduction in cost per square foot, room for growth, and in a condition that will require little buildout.   We estimate this will save an estimated 135K per year in lease/double net cost compared to what they are paying now.  The Sellers understand that the cost of this move will fall mostly if not entirely to them which they estimate at 40K to 50K(they have already done this once in 2018).  They will not move the business before a sale of the business because each potential buyer may want a different location, size, and buildout. 

The adjusted earnings with the 135K lease adjustment to a new location takes the current earnings from 285K to 420K.  This makes the 875K sales price just over 2 times the earnings plus a negotiated amount for the inventory.  This is the first time this will be listed below 2 ¾ times the adjusted earnings.  This should also prove that they are serious about selling. 

They are 2/3’ds the way as of 12 31 24 to eliminating the sponsorship/contribution charitable payments to smaller companies and events in their industry.  They stopped contributing in late May of 2024 and this expense showing in the income statements has dropped from 120K 2 years ago to 43K as of year-end 2024 which will be 0 by June 1st .  This will now make it much easier to get a bank loan and for a higher % of the sales price.  They are also slowly addressing the drop in profit margin through reducing the cost of inventory and raising prices.    

The Sellers also want to reiterate that one or both will be available part time after the closing and after the transition if the Buyer needs the help. 

This is a happy place that is spending almost nothing on advertising, adding products, or growing the company. 

There is a lot of equity building opportunity with this company.  We have had several Sellers do marketing studies on what they can do with this with very positive results, but the lease was always the ultimate problem which also made it impossible to get a bank loan.  This should no longer be an issue because there are other locations available, and this is not a location driven business(online only). 

For Sale:

ONLINE ONLY, CONTEMPORARY CRAFT RETAILER

Location: West Denver Metro, CO 

The 2024 revenues were 3.5M with properly adjusted earnings of 420K.  This is a profit margin of 10% which is good for retailers, and they did this with an advertising expense of only 25K which is less than 1% of revenues.  The sales price is 875K plus inventory currently estimated to be over 650K which they will sell for 500K.

The owners state that they are not advertising/marketing people and that a marketing oriented new owner can grow this business much larger.  The location is using less than 50% of their warehouse space and therefore; have decided to allow the new owner to move the business at the Seller’s cost.   

The Sellers are husband and wife in their mid 60’s(Retirement age). They love their business but she is an artist/designer and wants to spend more time in her studio creating.  He was a website designer and puts together the weekly newsletter to their subscribers and updates the website.  Both are willing to help the new owner part time if the new buyer wants one or both of them to.  They have created a great foundation for someone who knows how to drive more online traffic to the website to take this to the next level.

This business has helped to modernize an old industry through updated colors and patterns through a very well-known company both domestically and internationally.   This company has built a fantastic foundation that the new owner can build on.   They have a fast and interactive website, 117,000 subscribers to their online newsletter, very high online ratings and customer service, and a custom-built office/warehouse which is only half utilized.  This all adds up to a very valuable foundation to future growth.

This company has a great reputation as proven by their 4.8 star Google rating, 4.7 star Facebook with 12,448 followers, 95,000 Pinterest followers, and 117,000 subscribers to their biweekly online newsletter.  They have strong recurring revenues based on their selection, excellent interactive quality website, customer service, and pricing.  There is an opportunity for growth with overseas customers, as their US prices are typically half of the price per yard or meter, in other countries like the UK, Canada, and Australia. Some of their largest customers are overseas, repackaging their products to sell retail in their own countries.

They have 2 “key” employees, an office manager who has been with them for 17 years and is has been thoroughly groomed to take over one of the owners job when the business is sold, and a warehouse manager who has been there for 12 years and can fill in for every key employee also. The owners enjoy their jobs, love their employees, and have had fun expressing their creative talents in this industry.  The other owner, works 40 hours a week opening and closing the office/warehouse, website everything, facilitating purchasing e, and has created analytics that provide useful statistical analysis of the revenue trends and overall business.   Neither one of them are marketing experts and this is who they think the buyer will either be already or will focus on post-closing.  They do very little social media and very little targeted marketing.  

The company is at exactly the right time for new ownership.  They are very good at what they do but the company needs a marketing team to take this to the next level.