Location: Eldridge, IA
Bloomers Flower Shoppe is a small flower arrangement and delivery service located in Eldridge, IA. It is an owner operated business with potential for growth as the neighboring tri-cities area expands. Bloomers has a well-established client base and by importing flowers wholesale from Guatemala, they are able to keep their cost of goods sold down.
Bloomers’ main source of revenue is flower arrangements sold to the local population. However, with a more aggressive marketing campaign, their market could quickly expand into the neighboring cities. We have added a scenario based on this larger market into our model with an addition to the building to increase production. We have also included a less rosy scenario where the cost of our flowers increases, and we are unable to enter the larger market from the neighboring cities.
Since this is a smaller business, we plan to finance 51% of the project with owner’s equity (about $150,000) and to finance the rest though a local bank with interest rates around 5%. We calculated our WACC and IRR to be 6.5%, a reasonable rate for a small business venture.
In order to make this business model work, we decided we would need to buy the building the business is located in rather than to continue to rent. The total price we are willing to pay to purchase the building, assets, and company is $297,900. We value the business to be $50,000 and the building and land to be the rest. So with some investment beyond what the current owner is willing to make, Bloomers has potential for significant growth.