BikeBiz Bicycle and cycling retail news
You don’t have know too much about the British bicycle market to work out which company is being advertised for sale here.
The advert was placed in The Telegraph by sales agents Turner Butler.
Interested? Contact the sales agents. Please do not speculate about the company’s identity on the bulletin board, not even obliquely. All comments would have to be deleted.
Sales Memorandum
One of Europe’s Best-Known Companies In The Cycle Industry
Confidentially offered for sale
Location: Re-locatable
Asking price: £5,195,000
Asking price includes
Sales of £5.3m+
Many, many years of successful operations
Many exclusive UK Agency/Distributorships
Excellent opportunities for growth and expansion
Best product range available in the UK today
High levels of customer satisfaction
Essential supplier to the retail trade
Growing network of retail accounts
Well-established loyal Client base
Specialist supplier relationships
Trusted and respected name
Bicycle assembly facility
Excellent profit margins
Training and handover
Significant Goodwill
Computer system
Stock
Business profile:
Specialising in the mid-to-top end of the market, this business supplies mainly niche product, still purchased from largely European suppliers and mostly on an exclusive basis. It boasts a wide, well established, loyal Client base of Independent Bicycle Dealers (IBD’s), wholesalers, specialist bicycle makers and Halfords Bike Huts scattered throughout the UK, Ireland and the Channel Islands, all of which it services from a 7,000 square foot centrally located UK warehouse. It has also recently established its own bicycle assembly facility.
From bottles and cages through to wheels and suspension forks customers have everything available to them from this business. Many suppliers have worked with this business for a great number of years – some since its inception. Often acting as the exclusive distributor to the UK and if not then as the largest UK distributor this business has had the foresight to select exactly the right brands to work with over the last few years. Recent distributor appointments, including some major names are due to contribute significantly to company turnover and profitability over the next few years.
This strategy of actively seeking out well known brand names to complement existing product has proved successful in driving volume sales through existing accounts, enabling the company to grow in stature as well as increasing awareness of it throughout the world of cycling.
As well as having the right product this business has the commitment to customer service to back it up – both in terms of stockholding and speed of delivery. This has resulted in very high levels of customer satisfaction, extremely important for a business where 70% of orders are taken over the telephone. This business believes in customer service with very high levels of technical expertise always available to customers. On average 95% of an order is despatched the day it is received. Short delivery lead times ensure stock levels are quickly replenished.
To great effect this business has also recently invested heavily in IT – fine-tuning systems to improve the volume and quality of sales information available to its highly motivated Sales team, meeting the demands imposed on the business from the escalating growth in on-line purchasing and improving the efficiency of bicycle production. The intensive use of IT in the Sales Office enables this business to supply its customers with personal Excel price lists, CD’s of all products and the most up to date information.
Key strengths:Having downsized and re-structured in response to market changes a few years ago, this business now operates on a very firm financial footing, a strategy that continues to pay dividends as this business enjoys excellent prices from its suppliers who are safe in the knowledge that they will receive swift payment in return.
Many of this business’s suppliers are specialists in their field of production. Most have been in business for a very, very long time and are generally financially strong.
Having worked with some long-standing suppliers this business can boast exclusive Agencies and Distributorships across a wide range of bicycle products and major international brands.
With a very strong Corporate image and a structured approach to sales and marketing, this company has become more and more an essential supplier to the retail trade in the last few years in a period when many IBD’s have actively sought to reduce their number of suppliers.
Although there has been heavy duplication of product and significant growth in the importance of major companies, this business has attracted more than 300 new retail accounts during this period with sales increasing from £2.39m in 2000 to £4.16m by the end of 2004. This network continues to grow apace.
There is growing consumer interest in top quality bike components – an area in which this business has been active for more than 25 years. To meet this increasing demand this business can now arguably claim to have the best product range available in the UK today. This business now markets a much wider range of MTB and Road product with a wider appeal and enjoys considerable credibility in the marketplace.
Key opportunities:The cycle industry is currently undergoing considerable change as companies are absorbed or fail, re-organise their distribution channels, expand or cut their personnel. On the one hand the prices of some bicycles are lower than they were ten years ago. On the other top prices are paid as the perception of cycling is decidedly upmarket.
More and more people are turning to the use of bikes for any number of reasons. Sales of bicycles and accessories are expanding, the quality of retail outlets is improving beyond all recognition and there is a huge choice in the marketplace. Always a favourite pastime on the Continent, cycling is growing in the UK as never before.
With its enviable collection of products for the sports and leisure market this business is ideally placed to meet this spiralling demand. It is envisaged that new products will contribute in excess of £580,000 of turnover in 2005. Forecasts suggest an overall increase of 15% in total for the portfolio in 2005.
Having established its name as a components supplier there is considerable scope to leverage its reputation within the marketplace to move into other sectors. As well as developing its own brand products there are other areas – locks, luggage and tyres for example, where this business is still actively seeking distribution rights – which would have considerable impact on turnover and profitability.
Increasingly renowned in the UK for its bikes’ range there is scope to move into Europe with this brand – capitalising on the significant markets there are in countries such as France, Holland and Belgium.
Conversely, this business also regularly receives a large number of requests from overseas manufacturers seeking an outlet in the UK.
Growth and Expansion:It is estimated that there are probably an additional 50 to 100 potential accounts which this business could pick up in the current trading period which in an opening year could provide an additional £50,000 + in turnover. It is also envisaged that the big accounts this business has established will get stronger with the existing customer base remaining robust. There are certainly clear indications that certain customers want to do more business with this company.
Customer Service:Technical competence is an absolute priority in this marketplace with Dealers needing to be highly competent in matters relating to product indemnities and warranties. To meet this demand this business provides the marketplace with some of the most complete product knowledge available. The result is self evident in the business’s sustained level of repeat custom.
Advertising and Marketing:This business is a major exhibitor at the London International Cycle Show and benefits greatly from the favourable exposure parts of its product range frequently receive often in the product review sections of the Trade and consumer press.
It has also in the past been instrumental in encouraging key supplier participation in major events in the Cycling calendar such as The Tour of Britain, ‘Mountain Mayhem’ and the ‘Sleepless in the Saddle’ events, for example.
This business has a well designed and easy to navigate web-site which performs well in all of the major Search engines for all the most appropriate Search terms.
This site is due to be upgraded shortly to incorporate a new trade on-line ordering facility which it is envisaged will significantly impact on turnover and profitability.
Technology: An entirely new computer system was installed approximately one year ago and is maintained by a young IT and technical team helping a continuing move towards a paper-less working environment and more efficient bicycle production.
In particular this provides the telephone sales department with an unprecedented amount of sales information as well as providing the materials for on-going communications with the trade. An on-line ordering system is due to come into effect imminently to cater for the escalating growth in e-commerce business.
Employees: Excluding the owners of the business the company employs twelve personnel in a variety of sales, IT and warehouse functions.
Premises:
The business is centrally located in the UK with a warehouse consisting of bulk storage and shelf stock depending upon the type of product and the manner in which orders are picked. Additional on-site storage has been organised following the increased bike and wheel building activity.
With the lease due for renewal in 2007 and available capacity insufficient to meet requirements following the recently introduced brands, it is recommended that new owners re-locate the business to premises more suited to the scale of the current and predicted future operation.
Reason for sale: This is a genuine retirement sale although one of the current owners could be available on an on-going basis in a Part-time capacity if considered appropriate, subject to negotiation.
Financial Information:
The business is being 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.
Projected turnover for the 2005 financial year is £4.75m with projected increases of over 11% per annum for the foreseeable future resulting in a projected turnover for the 2006 financial year of over £5.27m.
Support and training:
The current owners of the business will provide full business familiarisation, training and handover to ensure a smooth transition to new owners as appropriate.
