Months into Patricia’s frustrating and fruitless job hunt, she decided to go to “Plan B”--using her savings and some borrowed money to purchase a business. But would a small business she could afford, be big enough to provide the cash flow she needed to maintain her lifestyle

That's a typical question posed by many people interested in purchasing a small California business. And the solution involves thinking in terms of a range of values, because there rarely is a precise number that provides an exact “right” price for any business purchase.

It’s also important not to take too seriously the extreme examples that buyers hear about. You’re not likely to find a seller desperate to “let a great company go” at a figure well below its value. Nor is an informed buyer likely to be a “sucker,” paying twice what a small business is worth.
 
Market Experience
 
To be successful with a business purchase, the smart buyer should seek a good company at a fair price--a price arrived at following an approach consistent with real market experience.
 
That approach determines a small company’s value using a multiplier in a formula with the company’s adjusted earnings. The earnings figure used is adjusted by starting with net profit and adding back deductions for taxes, depreciation, interest and amortization expenses.
 
Business brokers and appraisers believe the right way to select the multiplier is to think in terms of a range of multipliers. And the range repeatedly found in the calculation of prices agreed on by buyers and sellers of small businesses, is two to four.

In other words, a business generating $100,000 in adjusted earnings will likely have a market value somewhere between $200,000 and $400,000. This rather large spread is then further refined depending on various pertinent factors. Some businesses--examples are gas stations and car washes--are in high demand for business purchases. They fetch a value close to the top multiplier. A restaurant with no distinguishing characteristics to make it particularly valuable will be worth closer to the bottom end of the range.
 
Other factors business buyers need to keep in mind when going to purchase a business include: length and cost of the premises lease, condition of equipment, consistency of earnings over time, and seller’s willingness to help finance. 
 
What Buyers Can Expect When They Go To Purchase A Business
 
This brief summary of valuation approach is not intended to equip an inexperienced buyer with ability to determine what a business for sale is worth. The question about what to pay for a company should be asked in collaboration with a knowledgeable business broker or appraisal professional.
 
The buyer can benefit from these suggestions by considering them to be rough guidelines. They’re meant to help a prospective purchaser determine whether available resources are likely to be sufficient to purchase a business profitable enough to provide the income needed.
 
A buyer with a $20,000 down payment, for example, is probably wasting time trying to leverage that sum into purchase of a business generating a $60,000 annual income. Given these circumstances, it might be wise to adjust the purchase strategy, such as raising money from family members, if possible. Or decide to live on much less income. Or try and operate the business while also working at a job.
 
And by knowing how to approach the valuation when going to puchase a business, a buyer can ignore the exaggerated tales that circulate about great business bargains, and can work within market realities.

See all contributions from Peter Siegel

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  Tags: buying a business, buy a business

Yesterday, 290 newly posted listings for sale included a Central Valley Night Club/Bar/Tavern, a San Francisco Bay Area Manufacturing, Wholesale, Sales Company, a Laguna Hills Restaurant, an Ontario Dessert Franchise, a Temecula Bagel & Burger Shop.

11/17/09 Popular Search Choices On BizBen Included:

1. Night Club, Bar, Tavern for sale located in Central Valley - Price: $175,000, Adjusted Net: Call/Email. Established Night Club With A #48 Liquor License And Tons Of Inventory

2. Pavement Coatings, Equipment MFG, Distributor for sale located in SF Bay Area - Price: $595,000, Adjusted Net: Call/Email. Manufacture And Distribute Pavement Coatings And Equipment.

3. Restaurant for sale located in Laguna Hills - Price: $200,000, Adjusted Net: $96,000. Very popular food establishment in mall food court. Loyal patrons.

4. Dessert Franchise for sale located in Ontario - Price: Call, Adjusted Net: $110,000. Dessert Shop #1 Rated Franchise.

5. Bagel And Burger Shop for sale located in Temecula - Price: $25,000, Adjusted Net: Call/Email. Located On One Of The Most Busiest Streets In Temecula.

6. Pizza Parlor for sale located in Modesto - Price: $249,000, Adjusted Net: $100,000. Well Established High Volumne Pizza Parlor. Price Reduced Due To Illness.

7. Live Scan Electronic Fingerprinting Facility for sale located in Thousand Oaks - Price: $25,000, Adjusted Net: $33,120. Live Scan Fingerprinting Business With Equipment.

8. Tutoring Center, Educational Service for sale located in Redlands - Price: $20,000, Adjusted Net: Call/Email. This Business Can Be Used For Someone Wanting To Start A Tutoring Center.

9. Gourmet Bakery for sale located in Anaheim - Price: $129,000, Adjusted Net: Call. Almost New Gourmet Bakery. Very Reasonable Rent 2500 Plus Approx 500 Nnn.

10. Pizza Franchise for sale located in South San Jose - Price: $95,000, Adjusted Net: Call. 1600 Sq. Ft , Located In Busy Shopping Center. Price Is Reasonable And Negotiabl.

11. Printing & Copying Shop for sale located in South Bay Area - Price: Call/Email, Adjusted Net: Call/Email. Be Profitable From Day One! 30+ Year Established Small Print Shop.

12. Auto Glass Shop, Power Window Repair Service for sale located in Orange County - Price: $67,500, Adjusted Net: $50,000. Auto Glass Shop With Other Related Services.

13. Mexican Fast Food Franchise for sale located in Sacramento - Price: $469,000, Adjusted Net: Call. Popular Mexican Fast Food Franchise. Absentee Run And Profitable.

14. Live Music Venue, Night Club for sale located in Redondo Beach - Price: $900,000, Adjusted Net: Call. Large Live Music/Dance Venue In South Bay. New State-Of -The-Art Equipment.

15. Restaurant Franchise for sale located in I-5, Stanislaus Coun - Price: $250,000, Adjusted Net: Call. A Franchise Restaurnt On I-5. Great Location. For Sale By Owner.

16. Mini Market for sale located in Santa Clarita - Price: $55,000, Adjusted Net: $36,000. On Soledad Canyon Rd In Santa Clarita. Store In High Foot Traffic Strip Mall

17. Upscale Bistro Cafe for sale located in Sonoma County - Price: $60,000, Adjusted Net: Call/Email. Cute Upscale Cafe In Historic Building.

18. Self Serve Frozen Yogurt, Sandwich Cafe for sale located in S. Orange County - Price: $64,900, Adjusted Net: Call/Email. Self Serve Frozen Yogurt, Sandwich Cafe Close To Beach.

19. Western Wear Store for sale located in Concord - Price: $50,000, Adjusted Net: Call/Email. Western Wear Store In Concord In A Very Busy Shopping Center Near Downtown.

20. Check Cashing Service for sale located in S. Sacramento - Price: $15,000, Adjusted Net: Call. Fully Caged, 4 Windows, New Store, Great Location.

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  Tags: business opportunities, businesses for sale, business for sale

Coin Laundry – commercial self service laundry equipment placed into service in a retail shopping center. Most coin laundries are owned by individual operators that lease space from property owners on long term leases (10 -25 yrs) or property owners that operate their own laundry business. The business is unique in its operation in that the majority of the work is done by the equipment. Most other businesses require inventory, accounts receivables, and employees that can be very difficult to manage. Newer laundries may have Card Operated equipment that has very unique Marketing and Operational advantages.

The coin laundry industry is nearly 50 years old and most laundries are operated by individual owners. There are some franchise businesses across the nation but most are individually owned.

Clean laundry is considered a necessity of life and good health and just as important as food and shelter. The coin laundry industry has been able to capitalize on this necessity and has been able to thrive during periods of growth and recession. The business has been very successful in high renter occupied densely populated areas but there have been numerous examples of this business being successful in any area with an imaginative marketing approach. People always need to wash their clothes!!

Coin Laundry Value

Coin laundries normally sell for a multiple of their net earnings. The multiple may vary between three and seven times the annual net cash flow, depending on several valuation factors. The following primary factors establish market value:

 -  The terms and conditions of the lease. The amount of time on the lease factored with the increases in rent amount. Most operators and industry experts will look for the total rent amount to be no more than 25% of the overall gross income. Other factors to consider would be the location of the property, entrances and exits, visibility, and parking.

-  The net earnings before debt service, after adjustments for depreciation, and any other non-standard items including owner salary, or payroll costs in services.

-  The age and condition of the equipment. The age of the equipment is often overlooked in the valuation of a coin laundry. This should be a strong consideration in business value. If the existing equipment is at the end of its life and needs to be replaced then cost of the replacement should be factored into the valuation.

-  Competition. It is vital to research the competition in the area. Are any of the existing competitors attempting to remodel or expand? Are there any new coin laundries being built in the area?

Finding the Right Coin Laundry for You!

It is extremely important that all potential investors conduct a precise evaluation of the laundry business they are looking to purchase. There are many different industry experts available that will help in correctly evaluating the business. Most existing laundry owners do not keep great financial records that are reflective of the true income of the business so a more thorough investigation of utility records and collections is necessary.

Just as important as correctly evaluating the business is a thorough self evaluation to determine the feasibility of operating a coin laundry business. Does this business work for me geographically and financially?

The following shows a list of factors to consider before purchasing a coin laundry business:

Financial – How much of my own cash and assets am I willing to risk to purchase this business? Is the business going to provide the cash flow required to maintain operation and payback my investment in enough time to make it worthwhile? It is not recommended to try to borrow all the money necessary to purchase the business. If you can part with 50% of the cash required to purchase the business then it should be a safe investment assuming that all the correct evaluation factors of the business have been investigated. Some opportunities may be available that would warrant borrowing most of the money required to purchase the business.

Location – How far am I willing to travel to effectively operate my business or will I be able to have a manager that will operate the business if I cannot travel that distance? If you plan on managing your own store including emergency calls and collections and only hiring employees for cleaning than it is recommended that you be within 30 minutes of your location.

Opportunity – Is it possible to purchase this business and improve the operation and the income? You will be purchasing a business based on the value of its current operating condition. Most older laundries have great potential for improvement by remodeling and replacing equipment. Most laundries do not have an effective marketing strategy in place. These factors can be a tremendous opportunity for business improvement, income increase, and quick increase in business value. The return on investment can be tremendous with the correct business approach and marketing strategy.

Remember that clean laundry is a necessity of life. The coin laundry business has been able to capitalize on this necessity. The coin laundry business is all cash, and one of the safest and easiest businesses to operate in the nation. There are many tools and experts at your disposal to correctly evaluate this business for value and for yourself.

About Neal Bauman:  Learn more about Golden State Laundry Systems and the Coin Laundry business by attending one of our upcoming coin laundry Investment Seminars. You can reach Neal Bauman at 310-968-7500.

Watch for more blog posts answering viewer questions in the future!

See all contributions from Neal Bauman

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  Tags: buying a business

What's popular on BizBen? Over 200 new business listing postings were added yesterday and BizBen viewers top picks included a Westfield Mall Fast Food Resturant, Dallas, TX Liquor Stores, an Orange County Coin Laundry, a Placerville Health Food Store, a Tustin Chinese Restaurant, as some of the more popular California small and mid-sized businesses for sale that were added and reviewed by business buyers, business brokers, agents, intermediaries, and business owners yesterday on BizBen.com.

11/9/09 BizBen Top Searches Included:

1. Casual Healthy Fast Food Restaurant for sale located in Westfield Mall - Price: $449,000, Adjusted Net: $153,026. We Bake, We Steam, We Grill. We Never Fry-Ever. From Burgers To Sandwiches.

2. Liquor Stores for sale located in Dallas, Tx - Price: $1,250,000, Adjusted Net: $420,000. Two Very Profitable Liquor Stores For Sale In Dallas, Texas.

3. Coin Laundry for sale located in Orange County - Price: Call, Adjusted Net: Call. New Coin Laundry In City Of Brea. Great Street Exposure, Abundant Parking.

4. Health Food Store With Real Estate for sale located in Placerville - Price: $299,000, Adjusted Net: $100,000+. Complete Health Food Store With Building Available.

5. Chinese Food Halal Meat, Dine In, Catering for sale located in Tustin - Price: $175,000, Adjusted Net: $75,000. Established For 15 Years. Famous For Halal Meat.

6. Cooking School Franchise for sale located in Gilroy - Price: $50,000, Adjusted Net: Call/Email. Own A Young Chefs Academy Franchise At A Fraction Of Start-Up Cost.

7. Dry Cleaners, Agency for sale located in Los Angeles - Price: $65,000, Adjusted Net: $60,000. Perfect for couple with alteration back ground.

8. Hamburger & Ice Cream Shop for sale located in San Jose - Price: $185,000, Adjusted Net: Call/Email. Hamburger Shop With Ice Cream!

9. Breakfast, Lunch Restaurant Franchise for sale located in SF East Bay Area - Price: $320,000, Adjusted Net: $82,000. Breakfast, lunch franchise profitable operation.

10. Market, Grocery, Pizza With Real Estate for sale located in Central Valley - Price: $5,575,000, Adjusted Net: Call. Well Established Grocery & Pizza Unit In Central Valley.

11. Burgers and Shakes Fast Food Franchise for sale located in Napa - Price: $375,000, Adjusted Net: $120,000. Franchise of burgers and ice cream. At same location for the past 40 years.

12. Career College School for sale located in Los Angeles - Price: $500,000, Adjusted Net: $200,000. Great Career College Opportunity. Excellent Location, Short Term Programs.

13. Restaurant With Real Estate, Full Liquor License for sale located in Alameda - Price: $1,300,000, Adjusted Net: Call. Stand Alone Restaurant Building and Business Included.

14. Produce Wholesaler for sale located in Northern California - Price: $75,000, Adjusted Net: Call. Well Established Wholesale Produce Business With Excellent Potential For Growth.

15. Restaurant for sale located in S. Orange County - Price: $499,000, Adjusted Net: Call. South Orange County - Excellent Coastal Location.

16. Laser Etching Service for sale located in Sacramento - Price: $30,000, Adjusted Net: $25,000. Laser Etching: Signage, Architectural Features, Collectibles. Owner Retiring.

17. Restaurant And Bar, With Banquet Room for sale located in Downtown Area - Price: $129,900, Adjusted Net: Call/Email. Fully Equippedrestaurant/Bar (Full 47 Lic.) In Downtown Long Beach. Asset Sale !

18. Doggie Daycare And Boarding Center for sale located in Downtown Area - Price: $219,000+/-, Adjusted Net: $110,000. Doggie Daycare And Boarding Center With Large Outdoor Area.

19. Gift, Coffee, Book Shop for sale located in Santa Rosa - Price: $99,000, Adjusted Net: Call. Gift Shop With Magazines, Cartoon Books, Cigars, Coffee Cart.

20. Hair Salon for sale located in Los Angeles - Price: $54,995, Adjusted Net: $50,000. Beautiful Hair Salon On Westwood Blvd. It Has 4 Stylist Chairs.

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  Tags: business opportunities, entrepreneur, entrepreneurship

The current economy may be tough for many individuals who are looking, without much luck, for work that will get some money coming in again. But for franchisors who offer an alternative to the headaches and insecurities of corporate employment, business is on the rise.

And buying into a franchise system can be a smart investment for someone who doesn’t feel secure about a future working for someone else. An auto service, fast food outlet, mailing center or other kind of franchised business can provide a solid and predictable income.

But that choice has some dangers and drawbacks that the franchisors don’t always mention when they’re signing up new franchisees and collecting substantial fees from people who want to buy a business.

For those wondering whether to leave--or have been pushed off the corporate ladder, and are considering a career as a franchisee, here are some of the primary arguments for and against that choice.

PRO

A proven system is one of the key advantages offered by franchisors. They’ll tell you, when selling a business--and it’s somewhat true--that they’ve already made the mistakes in perfecting the model, so you don’t have to. They’ve established a brand that is recognized in their market, and they’ve learned what works to promote sales.

Buying a franchise often is easier than getting an independent business for sale because a potential purchaser has plenty of people--other franchisees--who can help with the due diligence by discussing their own success and problems. Besides, there often is better financing available when setting up or acquiring a franchise, compared to the challenge of raising the funds needed to acquire a non-franchised enterprise.

Once in business, many franchisees appreciate the practical and experienced advice they get about building sales and avoiding problems from the franchisor. And they benefit from pricing and service advantages when purchasing products and supplies that they can acquire with other franchisees at group rates.

CON

But buyer candidates are advised not to get swept away by the franchisor’s assurances and enthusiasm, because franchises fail more frequently than the parent companies admit. And there are some negatives to this business strategy that the franchisor won’t reveal.

The first drawback, of course, is the need to pay a fee of several thousand dollars, maybe tens or hundreds of thousands, just for the privilege in investing in the business. That chunk of cash is required in addition to the money a buyer has to produce for build-out of a new franchise or acquisition of an existing business for sale.  Then there’s working capital and marketing money that must go into the pot. Yes there may be financing through the company, but supporting that debt can take much or all of the profit of the business.

And while there is benefit to a system that is proven to work in producing and selling products and services, it also means limitations. The franchisee usually can’t expand the business by addition of say, ice cream cones at the sandwich shop, or by performing brake jobs along with transmission repairs. Violation of the franchise agreement by breaking the rules can have dire consequences, such as losing the business and all that was invested.

Also to be considered is how quickly the asset of a well-recognized brand name can become a liability. Just ask fast food franchise owners who suffered a big drop in business, not their fault, because of bad publicity when another franchisee sold contaminated french fries.

As in any business decision, the best approach to determining whether a franchise purchase is a good idea, starts with common sense and includes some research and knowledge of, or a quick education about the industry in which the company is involved.

About:  Peter Siegel is the Founder & President of BizBen.com. He consults with business sellers, business brokers, and agents on marketing & advertising strategies when selling businesses and has written three books on how to buy & sell small businesses. If you have a question about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

Watch for more blog posts answering viewer questions in the future!

See all contributions from Peter Siegel

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  Tags: franchises, franchise, franchises for sale

The number of small and mid-market California business sold in October increased substantially from the figures posted for the past few months. We hope this marks the beginning of an upward trend into the rest of the year and in 2010.

The total of 1,314 closed escrows last month compares to under-1,000 figures for three of the past four months. And the increase comes at a time when this good news is apparent in other leading economic indicators.

A key factor in the boosted sales activity is increased availability of purchase funds from small business lenders. And we believe the SBA can be thanked for that. Earlier this year, the federal agency--with funds directed to it from the American Relief and Recovery Act--instituted several rule changes to get its preferred lenders back into the market, making loans to aid in small business purchases. Among the changes was the suspension of loan application fees, increasing its guarantees up to 90% of the value of a loan, and raising the amount of goodwill permissible in a loan it will underwrite.

Also contributing to the positive direction for sales of small businesses is the increasing willingness of people to move forward with their plans for buying and selling. There has been a high level of uncertainty about the economy among entrepreneurs since the problems on Wall Street were reported, beginning last year. Now that buyers and sellers have determined that the economy has not gone over the cliff, they are more inclined to act.

Buyers who are serious about owning a business are starting to make decisions regarding what they want and to make purchase offers. And sellers are coming to the realization that if they are ready to sell, there may be no benefit in waiting another six months or so.

October small and mid-sized business sales, by California county are as follows:

Alameda: 62, Amador: 1, Butte: 5, Calaveras: 1, Contra Costa: 42, El Dorado: 8, Fresno: 37, Imperial: 1, Kern: 18, Kings: 1, Lake: 1, Lassen: 1, Los Angeles: 379, Madera: 1, Marin: 5, Mendocino: 1, Merced: 7, Mono: 3, Monterey: 13, Napa: 3, Nevada: 6, Orange: 99, Placer: 11, Riverside: 23, Sacramento: 64, San Bernardino: 58, San Diego: 129, San Francisco: 61, San Joaquin: 10, San Luis Obispo: 14, San Mateo: 32, Santa Barbara: 25, Santa Clara: 59, Santa Cruz: 7, Shasta: 11, Solano: 14, Sonoma: 26, Stanislaus: 16, Sutter: 7, Tehama: 1, Trinity: 1, Tulare: 9, Tuolumne: 3, Ventura: 30, Yolo: 7, Yuba: 1

About:  Peter Siegel is the Founder & President of BizBen.com. He consults with business sellers, business brokers, and agents on marketing & advertising strategies when selling businesses and has written three books on how to buy & sell small businesses. If you have a question about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

Watch for more blog posts answering viewer questions in the future!

See all contributions from Peter Siegel

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  Tags: small business

Before I start I would like to just make this statement; and if you don’t get anything else from this writing, please learn this. The Laundry Business Model and the full justification of Value of the business are based on its anticipated longevity. A laundry is more comparable to a Commercial Property with a ground lease and other businesses with extensive improvements than like most other business types. For example, the laundries that I remember from my youth (40+ years ago) are, with one exception, all still there.  So, the first test of value for a Coin Laundry is the potential of a long term life expectancy. With that statement made, this article is being written to help show the potential investor the scope of issues to consider before purchasing a coin laundry; and to try to make a little sense out of the numbers. In an actual evaluation these items and more would be considered and evaluated. This is in no way to be considered an outline or menu on how to evaluate a laundry; but rather to demonstrate the scope of the analysis to be conducted.

First, let’s discuss the basic issue of the multiplier (__x Monthly Net = Value).  I hate to tell you how often I have seen people burned because they ran around with what they thought was some kind of secret formula (multiplier); only to discover that “in their case” the formula didn’t support the long term value of the business. A formula is only a base line. This is a measurement of comparison; from the differences of one laundry to another. I like to compare it to the simple test of dropping a plumb line and looking at all the areas that fall East and West of it. This is basic in appraising the value of anything.

The question is what is the multiplier? What adjustments should be considered and to what degree. So let’s make this easy and call the multiplier 60. This is a reasonable place to start. In the 24 years I have made this industry my home, the number has been as low as 50 and as high as 70. One seems as wrong as the other so somewhere in the middle is a good place to start. The 60 number has held reasonably steady, long term. Truthfully, the adjustments against it will determine the value, more than the multiplier, itself.  Right now there are laundries available at all kinds of pricing. It’s confusing, to say the least. But for the most part, laundries seem to be performing well, considering the economic conditions and surprisingly enough continue to sell at about 56 to 60 times Monthly Net price range, in California; That is, ONCE YOU HAVE MADE THE ADJUSTMENTS.  So, what are the primary areas of adjustment

1. The Lease is your first consideration. Without a lease of adequate time to return your investment and then have time to sell to the next investor, the business could be devalued and your ability to sell and regain your initial investment diminished. You need also look at and understand the following,

a. The ground value (what can not be re-located) is easily in excess of ½ the value of a Laundry; even in a new laundry. So, without a good lease, your investment is not secure. The term of the Lease must be of adequate length and reasonable in terms order to both support and amortize the investment; while leaving you the ability to resell the business at some point in the future for a fair return. It is often necessary to negotiate the lease terms with the landlord; at opportune times and almost always at the time of transfer from one investor to the next.

b. The continuing terms of the lease and options should compare well to other leases for other Laundries in the area.

c. The cost of the Monthly Lease rate with NNN and CAM costs must be within the standards of a typical Laundry Business Model.

d. Your lease should be looked at by an industry specialist and an attorney, before signing.

2. The Equipment, Services and Fixtures should be in good condition or the cost of modification and doing deferred maintenance should be considered.

a. What are the age, make and condition of the equipment. Older equipment will affect your operating cost and if not properly maintained, will cost you customers as well.

b. Are the services adequate and in good condition for the equipment; both that are in place and following any future changes and upgrades you might make.

c.  Is the look and condition of the bulkheads, tables, floor and so decor current?

d. Is the laundry kept sanitary, clean and well operating at all times?

3. Understand the Business Model; this is the area to look for long term sustained or increased value to your business. A laundry with correctable imperfections is an opportunity that must be considered when purchasing a laundry. Some of the areas to look at are,

a. Operation Style. Is the business attended? Should it be? Any ancillary businesses?

b. Know the competition; including the apartment houses. You need to know if the laundry vending pricing is within the reasonable norm for the area.

c. Is the equipment mix consistent with the demands of the customers in the area?

i. Enough large washing machines?  
ii. Up to date dryers? (Dryers are faster today, with larger size options and more efficient)
iii. Is the dryer revenue proportionate to the total income?
iv. What percentage of income comes from ancillary businesses?
v. What plans are in place to offset increased utility expenses?

4. The Market Area,

a. Do the demographics and City plans support the long term requirements of the investment and your future marketing plans?

i. What is the rental population within the immediate area?
ii. What is the Household/Family size?
iii. What are the commute time, traffic count and median income for the area?

5. Location issues also need to be considered.

a. Parking is a big issue; especially in densely populated areas.
b. Ingress, egress and visibility should be good.
c. The Center tenant mix can influence your business. Some businesses eat up valuable parking at prime times. Bars, Salons, Dance and other Studios, to name a few.

The laundry business is an all cash, necessity of life service business that is easy to operate, financially rewarding and considered one of the safest US businesses to invest in; and it is most certainly recession resistant. That said. Right now, the basic business model is distorted in many areas and while it offers the smart operator the chance to exceed normal expectations, it is also a dangerous to proceed without the knowledge and understanding of what you are buying. However, to make it even more challenging, it is not very realistic to expect to look at clean records in every case. In some cases (maybe most) it is important to recreate the business through analysis to determine the true value and the true potential.  It would not serve you well to recommend that you not consider these laundries. In fact, they are often the best choices. But you owe it to yourself to go in fully aware.

Learn more by attending one of our upcoming Laundry Buyers Workshops. They are free and intended to assist serious investors in understanding their anticipated new business. You can reach us at (619) 227-5711.

 

About The Author:  Chuck Post specializes in assisting those selling or buyinig coin laundries throughout Southern California. He also offers other specialized services: Expert Witness Services & Coin Laundry Valuations. Make sure you check out his popular monthly workshops on the topic of buying and selling coin laundries. You can reach Chuck direct at 619-227-5711.

Watch for more blog posts / articles from me in the future!

See all contributions from Chuck Post

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  Tags: businesses for sale, business for sale, business appraisal

Six important things to consider whether buying or selling a coffee shop:

1- Location- many things can be done to improve a business but as they say, location location location! Most good coffee shop are located in areas that have good foot traffic and people passing by. If your considering buying a coffee shop that has weak foot traffic be prepared to spend significant money continually advertising the business to remind patron where you are.

2- Rent- Whether you buying or selling, your rent shouldn't be more that 10% to 15% of your monthly gross sales. If it is it has to be renegotiated or you'll be working to pay the landlord. If, as a seller, you've been given a temporary rent reduction due to the economy, then you or your broker has to speak to the landlord to make sure it can and will be permanently passed on to the new buyer.

3- Menu- Does the shop serve any food items? My coffee shop listing had doubled their numbers by adding food items, ie; sandwiches, salads, breakfast and even burgers, all without a hood! Adding food items can be a great idea just make sure there are no restrictions in your lease that would be in conflict with another tenants lease exclusive right to sell. Also you have to work with the health inspector to see what is permitted in your area especially when working with limited equipment.

4- Prepare to be bought or sold- I tell all my sellers, the more organized you are the less time you'll have to spend explaining everything to a buyer and this doesn't just include the financial information. You might know to add dash of this and a spoonful on that but buyer wants the clients to be just as happy with the whatever their buying as they were when the seller was there. The fact is the more you document the easier the training will go when you sell. So start writing things down and creating your own SOP manual for your little shop, otherwise you can expect many phones even after the sale is over.

5- Deciding to get in the business- Buying an existing business can can be a goldmine or it can be fatal. Knowing what and who your dealing with is key. Go to as many coffee shops as you can and sit there a while and observe while trying the coffee. Ask questions like, "do you roast your own beans here?" Note the machines they are using. Gauge the the prices they are charging and the area your in. The secret to most independent coffee shops is the local feeling when you go in and the experience you have when you're there.

Coffee shops have a special place in our culture, we meet our friends there, we treat ourselves to something a little decadent, we even have meetings there. The question is whether or not you see yourself understanding and catering the culture. If the answer is, "yes" then it's the right type of business for you!

About The Author:  Christina Lazuric is an Orange County Business Broker who shares her broker experiences with BizBen readers and has had varied direct small business experience in the past but now assists small business owners sell their business and offers business buyers find their dream business to operate. Phone Christina direct at 949-257-7823.

Watch for more blog posts / articles from me in the future!

See all contributions from Christina Lazuric

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  Tags: buying a business, sell a business, buy a business

FREE!  COIN LAUNDRY BUYERS WORKSHOP

NOVEMBER 7,  SATURDAY - IN SAN DIEGO at 12:00 NOON

Email your RSVP to,  pbibroker@yahoo.com as soon as possible. You will receive the address and other details by November 5, 2009.

We try to keep these events small enough to accommodate beneficial discussion and questions.

You will be given a packet including a work up sheet to use when you are researching this business.

First, we will start at a local Coin Laundry, where you will gain Hands On experience in examining the working laundry. We will go for coffee and have an open discussion about the Pro’s and Con’s of the Laundry Business.

LEARN WHAT TO LOOK FOR AND WHAT TO LOOK OUT FOR IN PURCHASING A COIN LAUNDRY.

The Coin Laundry Business is an excellent investment. Unfortunately, it is also a difficult business to purchase with reasonable assurance of the accuracy of information.

We at PBI are Laundry Consultants. We are not directly affiliated with a Distributor or Manufacturer of equipment. We work directly for you, the Buyer. Regardless if you are working with a Seller, Sellers Agent; or a distributor, we are in your corner in the transaction.

I have SOLD, DEVELOPED and RE-TOOLED hundreds of Coin Laundry Businesses over a 24 year span.  You are encouraged to review a few of the articles I have written here on BizBen.

I look forward to meeting you.

For more information about this workshop please feel free to phone:

CHUCK POST  (619) 227-5711 or

CHRIS MASON (949) 878-2755

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  Tags: buying a business, buy a business

One of the most popular business offerings is the carwash. It’s considered easy to run, the number of cars on the road continues to increase, while it doesn’t seem that carwash installations are being added to keep pace.

But there are some challenges involved in buying a carwash business.

Three Models:

Small business buyers considering this industry will be aided by understanding its three basic business models.

The "tunnel" wash uses a long building for soaping and rinsing as each vehicle travels on a conveyor and later is dried and vacuumed by hand. This is the costliest way to get into the business--usually priced over $1 million, and the one producing the highest revenues and profits. With employees to manage, and a seven-figure cost, this is the most demanding of the carwash models. The owner of this business type often is a corporation or partnership, with two or more people involved, each investing capital, borrowing ability and management time.

Much smaller installations are the "drive through" arrangements that require the customer to stay in the car while it’s being washed. There is no hand labor involved except the customer’s do-it-yourself vacuuming at the end.

Least costly and also the lowest revenue producer is the "self-service" installation using individual bays with wash wands, soap brushes and, once the customer has cleaned the metal finish--front to back, some coin-operated vacuum cleaners to do the same to the interior.

A review of carwash businesses currently available on this site reveals there are opportunities in each of the three categories, with some businesses that seem to be hybrids, offering a mixture of facilities. And while some for-sale carwash businesses involve an installation on leased property, other offerings include the real estate.

Most carwash buyers are particularly interested in businesses with real property offered in the package. It means security; no risk of losing the right to conduct business on the site, and the possibility of enjoying property appreciation.

Other buyers in this category, however, want their investment to go strictly for revenue production. The more money they can put in, the more immediate income they expect to receive. For this part of the market, a carwash with a long lease, perhaps an option to buy the property in the future is the most appealing opportunity.

Valuation

A carwash for sale might be a relatively uncomplicated business to operate. But determining its value usually is a challenge.

Various appraisal approaches are advocated, and the valuation problem is complicated by the question of whether real property is involved.

One popular guideline suggests starting with a determination of market value for assets, including equipment and improvements, inventory and--if this is the case--the real estate. Arriving at the total will involve taking inventory of parts and supplies at their costs, and adding the appraised value of the property, buildings and equipment.

To this value, add what the business is worth. That’s a figure determined by using a factor between two and three to multiply against the annual discretionary income of the seller. And whether the appropriate multiplier is closer to two, or to three, depends on the same factors taken into consideration when evaluating any business, such as location and condition of the equipment.

On a cautionary note, it should be pointed out that many municipalities are concerned about the land use, water use and wastewater discharge associated with car wash businesses. A visit to City Hall should be part of the investigation of any carwash business, to make sure there are no planned changes in laws or ordinances that will negatively affect the business.

See all carwashes for sale on BizBen at this time.

Do you have feedback on buying carwashes? Feel free to comment below on your experiences with either buying or selling California carwashes.

About:  Peter Siegel is the Founder & President of BizBen.com. He consults with business sellers, business brokers, and agents on marketing & advertising strategies when selling businesses and has written three books on how to buy & sell small businesses. If you have a question about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

Watch for more blog posts answering viewer questions in the future!

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  Tags: small business, buying a business, buy a business