The key factors to consider when buying a laundry business
Guest Feature By Bob Eisenberg
|Meet laundry industry expert Bob Eisenberg. Over 35 years of experience in laundry management, sales, marketing, and advertising. Schedule a free 30-minute consultation.|
Are you looking to buy a Laundromat, either existing or to build from scratch?
Are you thinking of selling your existing Laundromat? Do you need assistance in the evaluation of your store to learn its value to sell or your accountant needs an evaluation?
In this article, I want to provide the answers and, especially, the important data that you will need to make informed decisions about buying or selling a laundry business.
Building a new laundromat
If you are looking to build a new laundromat business, there are key factors every investor should look at in their research phase. Such as…
- Demographics: A demographic analysis (what good is having 12 pages of numbers if you cannot understand what is important to your purchase).
- Cash flow: Forecast to determine what is your revenue potential, expenses to ultimately understand how much profits you can earn and where your break-. even point is and what your ROI could be. Understand what percentage of the market share you need to make your numbers.
- Competitive analysis: Determine if you can compete effectively.
- Lease: What do you need in your lease that pertains to your business? Or, if you are purchasing the building, understand how much you can afford to pay and still have positive cash flow.
- Equipment Mix & Layout: What is the appropriate mix of laundry equipment for the specific demographics? What layout and design are best for this location (no two are typically the same), the wrong mix of laundromat equipment can result in underperformance.
- Location: Is the location suitable for wash, dry, and fold business? What is the importance of off-street parking, how it relates to your success and mix of equipment?
Buying an existing laundromat business for sale
If you are looking to purchase an existing laundromat, there are additional pieces of information that you will need to dive into.
- How do you confirm actual revenue in a cash business?
- Are the expenses in line?
- What you need to know about the lease that you are about to take over, including CAM charges.
- Or, if you are purchasing the building, understand how much you can afford to pay and still have positive cash flow.
- How old is the equipment (really)?
- How does the Laundromat compare with the existing competitors?
- What would you expect to invest in the Laundromat after you own it?
What you need to do is take a financial snapshot of the business as it is now versus what it will look like after you purchase it. Just because the laundromat you are buying is profitable for the existing owner, it does not mean you will be profitable afterward. What you can do to increase business and what your ROI could be.
Get an unbiased set of eyes to help you
If you have an existing store and you are considering selling, or your accountant needs an evaluation for reporting purposes, it is imperative to get a realistic, accurate unbiased report on its value.
Having the right information will enable you to understand what the fair sale price would be for the laundromat business.
The information I shared earlier are what buyers need to make smart decisions. It might also result in a higher sale price and shorter due diligence for the seller. Win-win.
Plus, with a non-biased opinion of your laundromat business, at the very least, you can get a valuable roadmap on to help improve your revenue and enable you to sell at a higher amount.
Look, if you are selling at an average 4-time multiple and improve the bottom line annually by $20,000.00; that will bring an additional $80,000.00 to your value! Wouldn’t you prefer that?
If you are thinking about buying or selling then I can offer the unbiased consulting to help you. I can help you determine what you should pay for a laundromat or sell one for. We can research the answers to all of these questions to get accurate data for both the seller and buyer. Let’s make negotiations easier.
Before spending your hard-earned money, and before you sell your store for less than its worth, get in touch for a free 30-minute consultation.