Nutritional Supplement Manufacturer In Santa Cruz County For Sale

Business description

Manufacturer of proprietary nutritional supplements for a niche market. Materials cost is 9% of revenues. Business has its own FDA approved manufacturing facility in 3,900 square feet which is operating at a fraction of its capacity. Business is for sale due to passing of the founder, who was in his 40's, four years ago. Sales have gradually slipped from over 1 million to about 650,000 without an owner/manager over the past four years. This business needs an owner/manager who will actively market the products.

Experienced employee team has continued to develop new products and market existing products, but has been hampered by lack of capital as the owner is the estate of the founder. All employees work part-time averaging about 20 hours per week in order to keep expenses down. Several members of the team have formal training and experience in chemistry, herbal medicine and the specific market niche the company serves. The company uses an outside laboratory to test all ingredients and all batches of product prior to shipping.

Labor as a percentage of revenues is high because of the low volume of sales, causing loss of manufacturing efficiencies that could be achieved in larger batches. The company purchased new manufacturing equipment this year when it moved into a larger facility. The business potentially can produce great profits if volume can be restored to 1 million plus range. Primary skills needed by new owner are leadership, marketing, sales and general business management.

Property information

Real Estate:

Lease

Lease terms:

Lease expires 11/1/2013

Leasehold rent:

$47,700 per annum

Location:

Santa Cruz Area

Premises details:

3,900 Square foot leased units in multitenant light industrial complex. 2,000 square feet is FDA approved production lab.

Size in square feet:

4

Planning consent:

All improvements were made in 2011 with city permits and inspections and Health Department Inspection.

Business Operation

Expansion potential:

Since owner died in 2007 there has been minimal marketing of the products resulting in a steady decline in sales. The employees are quite capable but have been hamstrung due to lack of funding from the owner's estate. The products are sold in several countries besides the US. There are European distributors. Retail customers buy the products most often when referred by their doctor or other health practitioner, so normal retail distribution doesn't work - the products just sit on the shelf. A marketing program targeting doctors, psychologists, and other health practitioners would develop a broader base of trusted medical advisors to refer the product to patients where the products are needed. The malady for which the products are sold has many non-profit entities serving it, so marketing through the non-profit organizations is another obvious way to reach the users who need to know about the products.

Competition / Market:

The nutritional supplement market is very large. This company has proprietary products to serve a special niche in the market place. Its products command very high prices and are well-respected in the market.

Reasons for selling:

Death of owner

Trading hours:

Monday - Friday. All employees work part-time, averaging 20 hours per week except CEO, who works about 35 hours.

Employees:

8 part-time

Years established:

12

Other information

Support & training:

Since the owner has passed away, training will be done by the employees.

Financing available:

Estate of founder is the seller. Executor of estate is risk-averse, but will carry a small note. Also, an existing note with principal amount of $20,000 and payments of $552/month including 4% annual interest may be assumed.

Furniture / Fixtures value:

$80,000 (included in the asking price)

Inventory / Stock value:

$90,000 (included in the asking price)