Business Outline

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Ezy Photos

BUSINESS SUMMARY Type:

Photographic Processing and Retail

Date Established:

1987-2004 (Fuji); 2004-Current (Kodak)

Business Hours:

5.1/2 Days per week. 9.00am - 5pm Mon to Fri; 9.00-12noon Sat. Closed all Public and Designated Local Holidays

Financial Details excl GST:

Asking Price $A 165,000 + SAV (Approx $20-25,000) Excl GST Av. Gross Turnover p.a. $A 288,821 Av. Gross Profit p.a. $A 134,518 Counter Cash Flow = 60%cash; 40% EFT

Staff:

Part-Time when required

Premises:

Leased – 3 Years +3 Option Rent: $ 1477.66 gross per CM Floor Space: Approx 126 sq.mt.

Description:

This business is part of an international chain which is the foremost name in photography – Kodak. No franchise fees are payable to obtain the benefits provided by this group. Ezy Photos (Kodak Express) is the only photo processing lab within a 150 mile radius of this thriving regional town. It is a fully equipped lab offering state-of-the-art digital, inkjet and film production capabilities to the local and tourist population. Services provided by the business include express film development to print or disc; digital processing from mini-lab or DIY tellers, poster & canvas prints, passports & ID, scanning (photos, slides, negatives), photocopying, laminating, and photo restoration. In addition, the business holds a small pro-lab portfolio. As well as photo processing, the business acts as a strong retail outlet centre for photographic supplies such as digital and disposable cameras and camera accessories (film, cards, bags, etc) and has a large turnover of frames and albums. With no photographic studio within the 150 mile radius of the town, there is a remarkable opportunity for a photographer to set up a studio as an additional service and an adjunct to the retail side the business.

Location:

Tully, North Queensland. Well positioned in the main street traffic area. 2

Ezy Photos

Vendor Details:

Name:

Marcus & Liz Collins

Address:

PO Box 572, Tully, Q4854

Length of Ownership:

April 2004 - Current

Reason for Selling:

Retirement. The owners have thoroughly enjoyed their “sea change” in the photographic industry but health concerns for both of them play a major role in their consideration to sell.

Previous Professions:

Financial Planning/Psychologist

Business Name:

Ezy Photos

Company Name:

MJ Collins & Associates Pty Ltd ABN:

28 010 891 513

Location:

31 Butler Street, Tully

Contact:

Ph: (07) 4068 2136 Fax: (07) 4068 3204 Mbl: 0411 75 2255 E-mail: [email protected]

Business Logo:

Credit Rating:

Excellent

Bad Debts:

Nil

Training Commitment:

The vendors are willing to offer 2 weeks training, and on-going support and contact to the new owners.

Business References:

Jason Pope-Kodak Rep 0424-025-269 Mark Allen-Fuji Rep 0419-770-495 Alan Frank-Vecchio-Local IT 0407-160-090

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Ezy Photos

SUMMARY MAJOR PLANT & EQUIPMENT SPECIFICATIONS Item

Model No.

Specifications

Date Purchased

Digital & Film Processing & Printing P&E with 8x12/14” print capacity including – Noritsu Digital Lab 3300SM Capacity 8x14”, May 2005 2 x Kodak Kiosk Heads on Stands networked to Lab V5.1 Capacity 8x14” May 2005 Kodak G3 Thermal Printer Cabinet Capacity 8x12” May 2005 with Scanner G3 Noritsu Film Developer V30RA 70Rolls daily Nov 2005

Status Web Site Information New

www.noritsu-koki.jp

New New

www.kodak.com www.kodak.com.

Used

www.noritsu-koki.jp

Graphics Computer System for wide-format printing and networked to the Lab including -. Epson Wide Format Inkjet Printer 7800 24”Wide 2880dpi Jun2009

New

www.epson.com.au

Epson A4 Printer

R800

A4-2400dpi

Apr 2008

New

www.epson.com.au

Epson Flat Bed Scanner

V700

A4-6400dpi

Jul 2008

New

www.epson.com.au

Minolta Dimage Film/Slide Scanner

Multi-Pro

4800dpi

Mar 2005

New

Sypder Profiler & Spectometer

Pro2

ProGraphics

May 2006

New

Custom Built Graphics Computer System w/Samsung 17” Monitor & Addit 80g External Hard Drive Other Services Ricoh Aficio 220 Fax/Scanner/Photocopier

Aficio 220

Lamipacker Laminator Peach Laminator

3500

Apr 2005

New

www.samsung.com

Up to A3 b&w

Apr 2004

Used

(1) 1 Metre W

Sep 2005

Used

(2) 500 W

Jun 2007

New

May 2004

New

Accounting/POS System including – Quickbooks Pro 2004 Accounting & POS programme, Barcode Scanner networked to back end Computer

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www.adeal.com.au

reckon.com.au

Ezy Photos TULLY DISTRICT: Located 1.1/2 hours south of Cairns, Tully (meaning Little Hill) is a major sugar and other fruit/primary producing centre of North Queensland. It is an idyllically tropical and picturesque place set at the base of Mt Tyson, just off the Bruce Highway, and earns fame for its white water rafting in the nearby Tully Gorge. It is the gateway to the famous Mission Beach/Dunk Island area. Approximate Population of the town centre is 3,000, with the Cassowary Coast Council district population at 11,000 (excluding Innisfail region). Road constructions works have now commenced on the flood prone Bruce Highway just south of Tully which will bring an influx of workers and their families into the area during the next four years. Apart from a number of other businesses servicing the needs of the community, Tully has its own hospital, state and private schools, large supermarket with two corner stores, two pubs, a Leagues Club, a Bowls Club, two chemists, two newsagents, two butchers, two white good and furniture retailers and at least five cafes and eateries. STAFFING: • •

Busy Times – 1.5 to 2 Quiet Times – 1

During its busy months, the business can be easily run by 1.5 to 2 people, and during the traditional quieter months between late January to early March, can be comfortably maintained by one person. Current staff consists of a husband and wife partnership (equal part-time), with occasional staff as required. One partner concentrates on retail sales and purchases, laminating services, organising camera repairs and machinery calibration/maintenance; the other partner concentrates on accounting, digital and wide format services, photo preservation and restoration with very occasional retail sales assistance.

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Ezy Photos EXPERIENCE & ABILITY: • • •

No previous lab experience necessary Basic computer knowledge Comfort with public

This business requires no previous knowledge of photographic processing but does require an interest in working closely with the public. Major learning tasks will be the workflow of a digital lab from front counter input to front counter output which can be easily mastered. An individual needs to be comfortable around computer equipment or at least willing to learn the simple tasks that can be performed on a computer, like burning a card to disc. The business also has a Policies and Procedures Manual which outlines the workflow of the lab that guarantees a satisfied customer. SERVICE & MAINTENANCE: Regular machinery maintenance tasks required Kodak Hotline Help Print Manual References All plant and equipment comes with printed manuals for reference. Because of the nature of the Kodak Express Agreement, a telephone hotline is available for any service difficulties or machinery faults. This is an admirable service provided by highly qualified Kodak technicians. Should any problem not be resolvable over the phone, then a technician based in Cairns will visit within 48 hours. The G3 Scanner Unit has a monthly service contract on it for $236.50 per month. The owners have recently resigned their Kodak Express Contract which offers attractive deals and offers to the signee as part of their loyalty programme. The newness of the machinery ensures trouble free operation, and daily, weekly and monthly maintenance of the machinery greatly assists in keeping it that way. Problems that have occurred are usually minor and easily fixed.

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Ezy Photos BUSINESS STABILITY & SEASONAL FACTORS: • •

Averages 40 customers per day Averages $5551 Gross Sales per week

The statistics maintained since 2004 show that annual sales and customer numbers are predictable. This is despite the unpredictability over this period created by the transition from traditional film to digital. Predictability in customer numbers aids in organising when to increase/decrease staff and times appropriate to be away from the business. Customer Base: On the whole, the customer base is made up of loyal local and district people with an annual average of 40 customers per day. This regular and repeat business aids greatly in successful business planning. A smaller customer base is the backpack community as well as tourist activity that occurs during the winter months as Southerners come North for better climate conditions.

In line with other retail business, seasonal factors can affect sales, eg. The Christmas Period compared to the post Christmas period (Feb to April). The annual sales and customer numbers in April 2006 are higher than the same period for 2007 due to the impact of Cyclone Larry in late March 2006. Demand for photographic evidence for insurance purposes was high during these months until at least June of that year. This was coupled with an unusual increase in tourist activity as people visited the area to view (and capture in print) the cyclone damage. 7

Ezy Photos

ACCOUNTING MANAGEMENT: QuickBooks Pro is a user friendly programme that has good accounting properties for small business including inventory and payroll management. The programme has not been upgraded from 2004 because of the minimum change embedded in an upgrade. The only perceived benefit is the new tax tables which are automatically calculated for the user. However, as the staff is minimal, the owner prefers to make a manual adjustment for the 2 payees. Stock and production items are all barcoded and scanned at the counter during a sale. These automatically load into a summary sale sheet at close of day, and adjust the inventory accordingly. The Quickbooks data base can be exported to other accounting programmes if required. PROFIT & LOSS Appendix 1 has a detailed record of the Profit and Loss for the business over the past three years. NOTES ON PROFIT & LOSS (Income & Expenses) • • •

Gross Profit Margin Increasing over past 3 years Reduction in Repairs & Maintenance due to new lab Incorporates 2xVehicle Maintenance & Costs

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Ezy Photos •

Telephone

includes-Telstra-2xLandline,

2xADSL,

2xMobile Phones The average gross profit has increased 10% over these years. In this graph the low January 2007 figure is due to the owners prebuying stock due to their 2 month absence during February and March.

The business sales figures remain steady despite the 50% drop in film processing and sales due to the digital phenomenon. It was only in 2003/4, a few years ago, that digital became a household reality. Australian’s are typically early adopters of new technology and currently lead the world in digital acceptance.

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Ezy Photos High prices could be commanded for print and digital technology when the industry was in its infancy. Industry competition between suppliers and from multi-nationals like Harvey Norman has reduced those prices considerably over this time. For instance in 2004, a 3mb Camera was over $700 and are no longer in production. Whereas a 5mb camera can now retail for under $100; 32mb and 64mb digital cards retailed for $30 and $60 respectively with 512mb cards retailing between $250-$290. To-day, cards below 512mb have been phased out of production. Between 1 and 2gb is the most popular size with the 8gb and 16gb a preference for specialist photographers. 1gb Cards retail for as low as $20.00. The demand for digital continues to increase as is the demand for a wider variety of digital related products that people want to buy. With regard to expenditure, the business owners experienced high repairs and maintenance costs during 2004 due to an old analogue Fuji lab used by the previous owner. They replaced this with a second hand Noritsu 2611 analogue lab in late 2004 and combined with the G3 could adequately manage digital needs at the time. However, in order to meet market trends, they purchased a new digital lab with two extra kiosk heads in May of 2005. This decision has significantly reduced repairs and maintenance costs and reinforced the image of a speciality photo processing store. Secondly, the cost of transition from a Fuji Lab to a Kodak Lab involved significant purchasing of packaging and other materials which affected bottom line profits of 2004. These costs have since evened out over the ensuing two years. Production costs incorporate all chemicals paper for the Lab and the Kiosks including Filters regularly used in the developing and print machines. Waste Management is also under contract but often results in a credit due to the recovery of silver from the developer. Included in the Vehicle costs is the maintenance of the owners’ two vehicles-a 4 Wheel Drive Vehicle and a sedan. The business telephone costs cover two phone/fax lines, two mobiles and 2 ADSL as well as NVC connections which allow access to work computers from home. Maintenance costs for the lab and the kiosks include the monthly annual contract fee mentioned previously. STOCK ON HAND: Stock on Hand is mostly current with very little non-current and no out of date stock. In 2005, the owners discarded a quantity of stock carried over from the previous owner they considered not in keeping with their current digital image. Stock asset value fluctuates between $14,000 and $25,000 depending on the time of year. Stocktakes are carried out quarterly to keep the data base accurate. RELEVANT ASSETS & LIABILITIES: 10

Ezy Photos Plant & Machinery, Furniture & Fittings have an approximate depreciated value of $95,000 as of April 2008. All assets are in good working order and have been purchased during the past three years. The minilab, kiosks and back computers are networked. All other technology is proficient to meet the daily operational needs of the business. All assets are unencumbered by loans or leases. The business has no long term Liabilities. Its short term liabilities are limited to 30 day trading account debts. The business has no bad debts. An extensive camera museum held in store will not be included in the sale.

BUSINESS COMMITMENTS: • • •

Local Donations Street Christmas Party Film Processing for Mission Beach

All Schools are likely to request annual donations towards Fetes. Small donations are usually offered, eg frame, disposable camera or money. The business during the last two weeks of Christmas provides a photographic opportunity with Santa for a reasonable price. This is particularly popular on the last Thursday night before Christmas when all local businesses participate in late night shopping. The business, depending on staff levels, and if it so wishes, can operate a stand at the local Annual Show held on the last weekend in July. Currently, the business processes film development for the Mission Beach Newsagent (ex Fuji lab) at 33.1/3% discount. This helps to increase the per roll quota to keep developing chemicals active. COMPETITION & MARKETABILITY: Ezy Photos was the first to introduce photographic digital technology to the district and remains the leader in digital production in the area due to its speciality image and superior technology. The world-wide revolution from film to digital processing has seen, on the one hand, a dramatic downturn in 35mm film sales and processing, and on the other hand a tremendous surge in digital sales in cameras, cards as well processing requirements from print to digital negatives (discs).

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Ezy Photos While other avenues are available for printing in both Tully and Mission Beach, and sometimes at a lower price, the experience of these owners is that price does not dictate people’s needs to any great extent. Specials, in fact, can be relatively ignored by the public. Rather, the convenience of being able to “do it themselves” combined with friendly personal service from a business dedicated to their needs seems preferable to the locals. While the owners monitor this competition, it has not impacted greatly on the business. The points of difference are the ability for this business to print quality archival and matte standard prints and enlargements instantly at the same price compared to the thermal prints that the kiosks produce. Plus, this business does not charge usage fees for the kiosks, or additional add-on charges for print corrections (eg. Red-eye removal) which makes it attractive to consumers over other DIY tellers. Enlargements have been a strong growth factor in this business which aligns with the experiences of other national and international retailers. Typically larger photos were the exclusive and expensive province of the photographic studio. The DIY desire for people to adorn home walls with their own photos is leading to a strong growth in sales from the traditional 6x4 or postcard print to affordable 5x7, 6x8, 8x10, 8x12 and poster prints. Laminating and frame sales naturally follow with this phenomenon. Another surge of interest has been in archiving as people move to protect their old technology of film and slides from deterioration. Print to print copy and restoration of old prints is popular. Digital camera sales continue to grow despite competition from major chain stores. People feel more comfortable knowing they are not just buying a “box” but a helpful service where they can receive assistance and support in learning how to operate their new digital purchase. FUTURE POTENTIAL & GROWTH OPPORTUNITIES: • • • • •

Photographic Studio Photo Books Poster and Canvas Prints Personalised Gifts (eg Calendars, Mugs, T-Shirts) Archiving & Restoration

One major opportunity for this business would be an adjunct photographic studio. This could be achieved through re-arranging the back area of the store. There is also unused floor space at the rear of the store. Currently, there are no shop-front professional portrait photographers in the area. Most Tully people trip to Cairns to have family portraits taken. Other off-site photographic possibilities are numerous – for example sporting and local activities, kindergarten and pre-school portraits, balls and school formals, and church activities such as communion.

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Ezy Photos Exciting products on the horizon are photo books yet to be promoted to the people of Tully. In-house photo-book production machines are also entering the market. This service can also be outsourced through Kodak. The business currently offers an archiving and restoration service to the community. This section of the business has been growing through word-ofmouth promotion. Facilities are available for this service to be outsourced to Kodak. There is also a niche market for poster and canvas prints which can be produced in-house on the Epson Wide Format Printer. Marketing could increase public interest in these commodities. Once again, this service can be outsourced to Kodak is so desired. The current owners believe that there is untapped potential for customer-number increase in Tully and surrounding districts. Neither of the owners have marketing ability although they have experimented in some types of advertising. For instance, with the local paper, tourist magazines, radio and over the counter handouts.

No reliable statistics can be produced to verify that any undertaking in advertising has resulted in an increase in sales/customers. Customer feedback on in house advertising such as small handouts promoting a particular special inside photo packets has been beneficial as well as window posters and sidewalk signs. The business does not have a loyalty programme, nor does it collect personal data from customers. Both these avenues of customer contact have future marketing potential. No approach has been made to provide services to corporate clients such as local Government including the Hospital, local Council and Schools. While such organisations are already customers of the business, there is an opportunity to investigate the opportunity to add business with this client base. The business can access the on-line services of Kodak for all print and speciality work. CONFERENCE & TRAINING ACTIVITIES: •

State, Interstate and International Conference Opportunities

This business is a member of The Photo Marketing Association of Australia which holds a National Conference in one of the major capital cities during May of each year. Here industry experts, photographers and lab/retail owners come together to experience the trends in the Photographic Industry. International Conferences are also held in USA, Europe, England, Canada and are open to all members of the PMA. These are tax deductible. 13

Ezy Photos Membership of the PMA also entitles the member to access the International Website for literature, statistics and new industry events and promotions. www.photoimaging.com.au (The Australian Division of PMA) www.pmai.org (International Site of PMA)

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Ezy Photos Appendix 1

PROFIT & LOSS 2005 - 2008 Jul '2005 Jun 2006

Jul '2006 Jun 2007

Jul '2007 Jun 2008

70,412 55,954 126,36 7

75,006 39,354 114,36 0

85,598 29,894 115,49 2

526 5,743 2,853 9,502

706 7,097 3,230 10,460

824 5,965 5,580 10,562

Total Items

819 335 40,921 18,767 1,236 9,903 12,726 15 262 5,797 5,918 115,32 3

1,493 912 53,756 19,119 1,487 6,650 16,437 5 240 11,989 5,186 138,76 7

989 3,836 75,715 22,056 2,184 4,705 19,429 0 269 26,896 5,381 184,39 2

TOTAL SALES

241,6 90

253,1 26

299,8 85

SALE S D&P Digital Film & APS Total D & P Items Album/Photo Accessories Albums Bags&Cases Batteries Binoculars, Tripods & Telescope Camera Accessories Cameras Cards Discs & Tapes Film Frames Gift Lines Mats Other Services Printer&Accsy

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Ezy Photos

COST OF GOODS SOLD Rebates Bank Merchant Fees Freight, Handling, Stocking Fee Items Album/Photo Accessories Albums Bags&Cases Batteries Binoculars Tripods Telescopes Camera Accessories Cameras Cards Discs&Tapes Film Frames Gift Lines Matts Other Services Printer&Accsy

0 1,195

0 1,292

-95 1,606

33

0

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377 3,098 1,188 3,164

409 3,538 1,248 3,239

356 3,232 2,207 4,161

519 1,280 31,451 9,324 653 5,179 6,405 78 238 2,202 4,176

830 520 42,577 8,877 664 2,923 8,087 13 245 2,023 3,698

TOTAL COST OF GOODS SOLD

69,332 1,657 42,528 1,437 -1,616 114,5 66

78,888 1,517 40,687 3,270 -971 124,6 84

353 2,585 57,485 10,507 1,155 2,054 9,336 0 253 7,524 3,719 104,92 7 1,230 31,253 1,602 -1,109 139,4 32

GROSS PROFIT

127,1 24

128,4 42

160,4 52

Total Items Packaging, Labelling & Pricing Production Costs (D&P) Sales Discounts Suppliers Discounts

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Ezy Photos

EXPENSES Accountant Fees Advertising Bad Debt Bank Fees Books,Journals and Publications Donations Computer Expense Electricity Fees & Permits Freight Hire Charges Insurance-Business Equipment Legal Fees Marketing & Display Total Motor Vehicle Payroll Expenses Printing, Postage & Stationery Protective Clothing Rent Small Parts, Repairs & Mtnce Laminator Building Computer Developer General Operating Kiosk MiniLab Staff Training Amenities Stock Losses Subscriptions Telephone Waste Management Workers Compensation

5,350 2,985 0 262

2,000 2,701 0 207

2,000 761 170 101

430 68 250 4,452 212 744 153

316 168 0 4,369 305 442 0

504 65 569 4,612 379 906 0

4,025 3,750 3,167 785 378 500 806 634 147 4,709 5,842 7,034 12,737 26,069 26,291 2,730 1,948 1,841 0 27 0 8,928 11,166 15,210 30 45 1,151 1,441 1,433 440 954

0 100 1,101 761 574 2,538 1,763

0 95 376 89 358 2,150 2,504

TOTAL EXPENSE

195 837 1,561 205 4,868 -37 178 62,92 8

0 468 76 354 5,220 -33 81 73,32 3

231 320 0 245 4,948 354 136 76,06 2

NETT INCOME

64,19 6

55,11 9

84,39 0

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