You have investigated the self service laundry business, it sound attractive and you are ready to take your first step in buying your own Laundromat. There are a host of things to evaluate but let's not get the cart ahead of the horse. The first question is how will you purchase this business?
The coin laundry business attracts a mulititude of people from all walks of life who long to enjoy a great return on an investment, a lower stress, relatively simple work day and flexibility in that work day. Consequently there is a lot of competition to buy a store that is either doing well or has the potential to do well.
In my experience many assume they can enter the business with very little money. You may luck out and take over that lease and walk into a store that requires sweat equity and little money but a vast majority of future store owners will buy the store. Those that have money and the ability to buy now are the one's who will win the battle for the store they want.
Perhaps you have the money; ready, willing and able to invest in the exciting world of laundry. Or, maybe you don't have the money and simply assume a loan is readily available to purchase your soon to be thriving business.
If you are in the latter category you want to prepare yourself well before you make an offer or your offer will not be seriously considered.
There are a few options, some easier than others.
Consider using the line of credit you have on your home. If you opened a line in the last several years the rate on that money should be quite low; prime, currently at 3.25%, plus 0 or maybe some nominal margin. This is cheap money and likely the lowest you'll find to purchase a business.
Another source to tap into which many have but is often overlooked is that of an IRA or 401k. You are legally able to use these funds to purchase a business. There are many rules and regulations that go beyond the scope of this article but with the right counsel this option could be attractive. It is not overly costly to set up and you are not paying any interest. You are giving up the opportunity to earn interest on your investment that is currently in your IRA or 401k but you also could out perform your current yield and YOU are in control of your earning destiny!
What if you don't have cash on hand, a line of credit or a retirement fund? You need to get a loan of course. Are they easy to come by? Most know that lending is a little more difficult now a day but financing is available.
SBA loans will almost certainly be your best bet. You will need a minimum of 25% down, a credit score north of 680, reserves and the seller will have to provide tax returns.
There are other loans beyond SBA which will have their own set of requirements and guidelines. Again, something to look into now.
Prepare yourself; seek an experienced professional that can help you with the business financing process. This is an invaluable service that will turn you into a real buyer! Do this sooner than later. The last thing you want is to find the right store then have your offered refused due to your inability to perform immediately. Few, if any, sellers will accept an offer with a financing contingency.
You may also need to finance the equipment you will need to refurbish and improve the store. The distributor for said equipment can help you here at the right time but qualifying for equipment finanicing is less stingent than getting a loan to purchase a business and readily available through many banks and even through equipment manufacturers.
As you continue to explore the world of Laundry remember; first things first. If you don't have cash on hand decide the best way to get it. If it is a loan or tapping into a retirement fund then get the paper work done right away so you can turn yourself into a qualified buyer and begin building your Laundry business!
About The Author: Steve Erlinger specializes in assisting those buying and selling laundromats in the Orange and Riverside County areas. He helps potential laundry buyers navigate the many facets of finding, evaluating, and operating coin laundry businesses. He also assists current owners find additional stores or evaluate an existing store in order to help grow their business. Steve can be reached direct at 949-500-5893 for more information.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Steve Erlinger: Laundry Broker, Consultant - Southern California
I specialize in the laundry industry broker and consultant in Southern California. I assist buyers navigate the many facets of finding, evaluating, and operating a laundry business. I also help current laundry owners find additional stores, sell, evaluate an existing laundromat.
|Brad Steinberg, Broker - Laundromat Specialists
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
|Larry Larsen, Broker, Laundry Specialist - Orange, LA Counties
I have over forty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance.
|Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance
For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.
|Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence
Chuck Post has 32 years experience in the laundry industry, specializing in assisting laundry buyers (and entrepreneurs) with buying or starting up, building, re-tooling, laundries throughout California. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations.
|Mike Hurrell, Broker: Coin & Card Laundry Specialist Brokerage
Providencia Properties Inc in association with Golden State Laundry Systems is a full service Coin Laundry Real Estate Broker. At GSLS you will receive personalized attention from our professional staff of coin laundry experts. To sell or buy a Southern CA laundromat call Mike at 310-223-2240 X209.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
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Chuck Post (reach him at 619-227-5711) a laundry consultant, specialty broker, buyer representative & due diligence advisor starts this discussion on why it's important to have an exit strategy in mind while buying a laundromat! He & others explain why this concept is so important to serious buyers.
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Is a laundry business for you? Read the Pros and Cons of buying and operating a small or medium sized card or coin laundry. If you have ever thought about buying a card or coin-op laundromat you should read this BizBen blog post by Steve Erlinger (Laundry Broker & Consultant at 949-500-5893).
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