20 Year Old High Margin, Low Volume Home Based Mail Order Business, Which Can Be Operated From Anywhere In The UK
Barry, Penarth, Llantwit Major & Surrounding, The Vale of Glamorgan
Business overviewAs I am approaching 80, I am selling my Mail Order business which distributes a niche consumable product into a niche market easily bolted onto an existing mail order business.
I started this business which can be operated from anywhere in the UK in 1998 at the age of 59 after disposing of another business I had started from scratch in 1983 having been made redundant. I had a Sipp pension but as annuity rates were and still are, low I wanted to do something to help with my standard of living and to keep my brain active.
After investing in sales promotion using mail shots and trade magazine inserts, combined with personal recommendations it grew quickly to over £44,000 within 5 years and this became a problem as I had not planned to spend so much time operating the business on my own and had no desire to employ someone. It was producing a good margin and after paying for all my motoring expenses, my phone, mobile, broadband and website costs, still made a healthy net profit.
So I decided to stop promoting the business and let it settle back to a more manageable level which it now has and I spend little time operating it now and average 2 orders a day
Despite this lower level of sales volume at £26,325, in the audited accounts for the financial year to 31st March 2018, it still produced £11,683 gross profit after all outward carriage costs via FedEx and the Post Office. So if you added this business to an existing mail order business already covering its costs this would go straight to the bottom line. In the current financial year to the end of March 2019 sales are holding up well compared with the same period last year and I am anticipating that the level of sales will be comparable to last year at a similar gross profit.
The expenses that reduce the gross profit down to the net profit include £182 depreciation of vehicle and computer etc, an allowance of £600 for the use of my home as an office and £400 accountant’s fees, all my motor running costs of £3348, telephone, mobile phone, broadband costs totalling £819 and very little expenses are incurred apart from those, mainly £10.79 per month for the website hosting.
I sell a single premium brand product to a single customer type within the UK and there is plenty of scope to develop the sales by adding additional product ranges if a business had the storage space. My stock resides on a single 3ft wide rack of shelving in my garage.
Had I been 20 years younger and wanted a larger business I would have added to the product range I was selling as my target customer base uses far more items than the single product I was supplying them.
I have a database of over 8000 potential target customers in the UK of which over 10% have bought from me since 1998. Last financial year I supplied 154 different customers across the whole of mainland UK and in 20 years have not suffered a single bad debt because of the type of customer I supply. Many of my customers have been buying for well over 15 years and have remained loyal.
You can operate this business from anywhere in the UK as my customers are from Stranraer to Penryn in Cornwall, The Scottish Isles to the IOW and all places between.
My business in not an online business, although I have a website where customers can download an order form. I do not do any proactive selling and never call customers to obtain orders. All orders are sent voluntarily and unsolicited and arrive 50/50 by e-mail and Fax (Yes, some people really do still use faxes!).
I sell to outlets connected to the NHS, a consumable product that they use regularly and on average reorder 2 or 3 times a year throughout the UK and I gained the majority of my customers from direct targeted mail shots, inserts in trade magazine then some personal recommendations.
I carry a month’s stock (Max £1000) which resides on a 3ft wide storage rack in my garage and order on 1st of each month and pay at end of following month. Customers generally pay me by end of month in which they order producing a healthy cash flow. I therefore have no need for an overdraft at the bank. In 20 years I have never had a bad debt!
I purchase a low value leading propriety brand product through the manufacturer's distribution channel and achieve a healthy gross margin of 44.53% (Last year's audited accounts) after absorbing carriage costs, as I do not charge customers carriage except on small orders. Average order value last financial year was £61.64.
As with any product there is competition and mine can be purchased from a number of outlets but I give an excellent customer service which has enabled me to retain customer loyalty without having to be the "cheapest on the market" which seems to be the trend on e-Bay and Amazon.
I receive on average 2 orders per day, some days none, others 3 or 4. Two orders on average takes me 20 minutes to invoice and pack ready for collection which I dispatch same day or next working day depending upon the timing of the order either by FedEx (Next day guaranteed) or Royal Mail depending upon the weight and destination.
With this customer type there is a wide range of products that they use which if added to the product offer could increase sales considerably but as I mention above, I was not looking to expand my sales as I was happy with the situation as it was.
Regarding the handover, I am prepared to assist any purchaser in the transfer of the business. If not too far away, in person but with remote access I can assist wherever you are located for as long as required.
Details like customer database, suppliers, FedEx contract, website, software used; my email address etc will all be handed over.
Until I find a realistic genuine buyer I am deliberately withholding the business name and product.
The main benefit of this business is that it can operate from home anywhere in mainland UK.
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