If you are considering buying a laundry business, you are in good company. The laundry business offers all of those rewards of business ownership, with much fewer headaches than with most other businesses. Owners are able to operate their business with less time involvement than with almost any other storefront business.
The return on investment is generally good, as compared to other investments and the risk is generally low, assuming you don't make the big mistakes when you make the purchase of your business.
What are the biggest mistakes when buying a laundromat?
1. Accepting a lease that does not protect you long term. Many Landlords do not understand the model of a coin laundry and treat them like any other tenant. While educating them is not always successful, you need to make sure that the lease you end up with will support your investment objectives.
2. Not having an understanding of value. The value in a laundry is often hidden. It is easy for the untrained eye to make a mistake. This is often because the buyer looks at the cash flow instead of what creates it.
3. Inadequate Due Diligence. A laundry needs to be viewed in terms of its longevity. It is not enough to verify the cash flow and expenses. You must also have confidence in the business to give a sustained return, proportionate with your investment.
4. Failure to review and analyze the working model. In any period of time a laundry is subject to some level of stagnation or even obsolescence. Old ideas have run its course and equipment has a useful life. These issues should be evaluated. To grow or even maintain the cash flow, continuous upgrades or re-tooling will be required.
5. Poor discovery in regards to the fixtures and the equipment, how much effective life there is left and how well it satisfies the needs of the customers and the return of investment to the owner.
6. FAILURE TO ACT! Truly the biggest mistake I have witnessed comes from Buyers not following through with their plans. During the due diligence period the new model outline should be developed. This should include the direction you want to go, the added costs to make the improvements and you should be absolutely comfortable with the projected outcome. You should have a time line of what needs to be done when and have the funds secured in order to do it. Do not procrastinate. You should be able to include the improvements into your costs of purchasing the business and finance them along with the acquisition. Those that follow through with the improvements tend to increase revenues and end up selling for a profit. Those that don't watch their investment deteriorate.
A laundry will age. When it does the asset can erode. The lease gets shorter and the equipment gets older, every day. These are the primary assets you are purchasing. The cash flow is relative to the condition of the laundry and how well it competes and markets its advantages. To protect your investment the laundry investor must keep up on the working model. Not following through with wisely thought out planning is the biggest mistake you can make.
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If your business involves alcoholic beverage sales, we can help. Obtaining a liquor license transfer or selling a business with a license in California does not have to be a frustrating and overwhelming process. We have procured thousands of licenses for our clients.
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For over 25 years Peter Siegel, MBA has been providing niche business purchase financial advisory and loan placement services with SBA Loans, Non SBA Financing, Retirement Plan Conversions, Note Restructures, etc. Call me regarding business purchase financing and to get pre-qualified: 925-785-3118.
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Laundry consulting, due diligence, buyer representation: We preview laundries for you and evaluate them. 28 years laundry industry experience: buying, selling, valuing, retooling, analyzing, consulting services for laundry buyers and entrepreneurs in California. Contact us today about our services.
I am an experienced entrepreneur, attorney, & business professor. I & my EvergreenGold® team offer business owners sound advice & expertise to build business value & achieve profitable sales. Call me today for a business evaluation & SWOT analysis for your business anywhere in the USA.
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