Share This Info:  

Investing In A Laundry Business: Two Methods For Buyers Of Laundromats


Laundry Investments Chuck Post Explains

When investing in a laundry business, there are two methods. One is preferred, but the other is far more common. If you are considering entering into a new industry, like most now entering the laundry industry, you want to have a good understanding of both the opportunity and the pitfalls of the business before investing into it. Keep in mind that while the rewards of doing it right, as well as the costs of the mistakes are high; most are in the 10's of thousands and often in 6 figures.

The laundry business, for those who do know it well, understand that when the laundry investment-model is set up correctly, the benefits are far better than what you may hear or ever realize. The real rewards are for those who understand the difference between the operating model and the business investment model. Here is where you either enter the world as a, Laundry Investor or make the decision for the more common path, a Laundry Operator. Understandably this revelation may cause you to be confused but, it is a fact that not all laundries circumstances will allow for the greater opportunity. This discovery is best worked out when doing diligence.

This is not to say that the laundry will not perform as expected. If your diligence is well done, the laundry should perform and you should be able to expect a cash flow or Return of 17% - 22% (base +/- add backs) of your cash investment. We are rather discussing its sustainability and what to do with it from here; how to both increase the cash flow proportionate and increase long term value and expand the investment. As an investor, you want everything to line up with your investment model so that you can take advantage of larger opportunities and to expand for the larger investment.

The difference between an operator and an investor, is established by design within a model.

The varying results of these two models are most apparent in the end game. One laundry, I will use as an example, was developed by a client of mine back in the 80s. The laundry was sold at age 11 to someone that did not understand the business, for a high-normal evaluation level. It was a very good laundry. The family that purchased and operated the laundry did everything the same way as the original owner except everything was now older and also required more maintenance, which was a growing issue. In the next couple years all went along with little change in revenues but soon later, everything started falling apart. The rent went up and utilities took an unusual jump, all adding to the owner’s woes. The owner was afraid to raise prices because competitors were as or lower than the family’s laundry. They attempted promotions but when the promotion ended, the business was left at the same level as before. Eventually, customers started going to other laundries, revenues started a slow decline and the owners were just not prepared.

This laundry was bought back by the original owner after about 4 years, for a very low price. The laundry investor then rebranded the laundry and replaced the needed equipment. The laundry model was also upgraded as was the operating model and the business grew. It grew beyond and soon to exceed the original numbers of when the laundry was sold only 5 or so years earlier. To further the story, this laundry was sold again after operating for another 6-7 years and boy, with old equipment, it is way past time to be retooled and rebranded.

There is a lot to understand about any business. Unfortunately for many that enter the laundry business it is just too easy to get by for quite some time with very little understanding of the business. The difference between a Laundry Operator and a Laundry Investor lies within ones decision to create an investment model.

Categories: Buying A Business, How To Buy A Business

Contributor:

Chuck Post
Areas Served: Southern California
Phone:  619-227-5711 Cell, 949-878-2755
I have 32 years experience in the laundry industry, specializing in assisting laundry buyers with buying or starting up, building, re-tooling, laundries in Southern CA. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations. Call 619-227-5711 (Cell).





  Helpful Resources To Assist In Selling And Buying California Businesses
Brad Steinberg, Business Broker: Laundromat Specialist

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.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Mike Hurrell, Broker: Laundry Specialist - Southern California

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.

Peter Siegel, MBA, BizBen Founder, ProBuy, ProSell Programs

Founder & President Of BizBen.com (since 1994) & BizBenNetwork.com. I am the Lead Facilitator for the ProSell & ProBuy Programs on both websites. I consult daily with buyers, sellers, and intermediaries daily about buying and selling businesses. Call 925-785-3118.

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. Call 949-500-5893.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of successful closings. Office: 909-255-8353, Cell: 509-951-7230.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Investing In A Laundry Small Business: Two Methods For Buyers Of Laundromats

When investing in a laundry business, there are two methods. One is preferred, but the other is far more common. If you are considering entering into a new industry, like most now entering the laundry industry, you want to have a good understanding of both opportunities. Chuck Post explores both.

4 Essential Facts For Coin, Card Laundry Buyers Seeking To Buy A Laundromat

Many Californians want to buy a coin laundry because it's a business that doesn't require full time owner attention and because, as an all cash business, the owner is always paid before the service is provided. Peter Siegel at BizBen explores these issues in his latest artcle/blog post on BizBen.

Thinking Of Selling My Business: What Factors Create Value And Drive Price?

There are a lot of misconceptions about what enhances the value of a business. The following factors in this Discussion Post on BizBen are aspects of a business that really drives its value and pricing. Business owners thinking of selling should check these out these factors before selling.

How Many Months Should I List My Business With A Business Broker?

It's important to remember that selling a business takes time. Unlike selling a house, which can be sold relatively fast, a business can take up to six months to a year to sell. Joe Ranieri (Orange County Business Broker) at 714-292-5448 explores this topic from a Business Brokers perspective.

Who Really Represents The Business Buyer In A Deal? Does Dual Agency Work?

Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottom line is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.

What Is The Typical Business Broker Fee For Sellers And Buyers? Who Pays It?

Was just asked the question from a business owner what the "typical commission" amount is for a broker or agent and if upfront fees are common? Thought this might be a great Discussion topic on BizBen for both business owner/sellers and potentially for business buyers (buyer representation).

Why Isn't My Business Selling? 6 Great Questions To Ask Yourself For Answers

It can take months, sometimes longer to sell a small business. Here are 6 questions from Peter Siegel, MBA (Business Purchase Financing Expert, ProSell Program Advisor with BizBen) at 925-785-3118 to ask yourself to help you determine why your small to mid-sized California business isn't selling.

Financing A Business Purchase With Limited Or No Real Estate Collateral

In my experience working with the "right banks and financial institutions" repayment ability sometimes overrules collateral pledged by someone needing financing for a business purchase or a down payment. Peter Siegel, MBA (Business Purchase Financing Expert) at 925-785-3118 shares his experience.


Chuck Post Laundromat Industry Expert
Escrow Services Diane Boudreau-Tschetter
Veld Group Business Brokerage Los Angeles County
Cheryl Maloney Restaurant Broker San Francisco
Facebook
Twitter
Linkedin
Vlogs and Podcasts
BizBen ProBuy Program
Business For Sale California Stats
California Educational Events Buying And Selling Businesses
Advertise On BizBen
New Postings Reports On BizBen Sign Up
BizBen ProSell Program

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2020, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
4 Essential Facts For Coin, Card Laundry Buyers Seeking To Buy A Laundro...
Read More News
Investing In A Laundry Small Business: Two Methods For Buyers Of Laundro...
Read More News