People get into the Coin Laundry business for a variety of reasons. Mostly, Laundromat buyers just want financial independence and the relatively comfortable lifestyle a successful Laundromat can provide. Reasons for selling Laundromats include disputes, divorce, illness, moving, etc. And a buyer should ALWAYS be mindful of who he or she is buying from.
Buying a Laundromat can be somewhat tricky in that more times than not revenues are not easy to assess because of the cash nature of the business. An Laundromat owner might now keep the best of records, etc. But with the help of Laundromat auditing consultants, a buyer can get a range of revenues and double check claimed income. As a buyer, you MUST ALWAYS verify revenue by using utility methods and site visits. Something to keep in mind is that brokers are salesmen and most will lack the objectiveness of a third party consultant.
Who is Selling?
One has to know who and why a person or entity is selling the business. The seller will be providing revenue records for buyers to analyse and before giving credibility to the revenue records, one has to trust the seller. A broker receives from the seller a revenue statement and all expenses and this data is used in a spreadsheet to present a financial picture of the operation.
Water, Gas and Electric Bills
Usually 95+ percent of the revenue from a Laundromat is tied to water usage. A competent consultant can verify seller's revenue information by using a formula that provides a range for revenues. Many times brokers will assist in verifying revenues but as a buyer you should always double check information with a third party consultant. A seller should have at least a year's worth of utility records to be verified.
Financial Records
Ask for tax and bank deposits if available. Do they match claimed revenues and income?
Joint Coin or Money Collection
While not necessarily a way to verify income or revenue, a buyer should request seeing collections and seeing the "coin count". This is particularly useful if the water meters are being read at the same time, that way one can attribute the exact correlation between revenue and water usage. ALWAYS have a third party auditor or consultant with you when doing this. Problems with inflating revenues by "sprinkling" coins in the boxes prior to joint coin collections are a common problem with unscrupulous sellers. And some brokers who are focused on commission and who hide behind the clause of "not being responsible for information provided by seller" might look the other way costing you, the buyer potential financial pain and frustration.
Site Analysis
One should always visit other stores in the area to asses the competition. Factors such as pricing, equipment, etc. has to figure in the final offer for the Laundromat. In addition, one can get an idea for room for growth. If being represented by a broker, they will do that as well because it is their job but as the buyer you should always do this yourself as well.
Store Visit
You should visit the store randomly and see how it operates. Better yet, you should spend 2-3 days at the store and get to know the clientèle, the workers, issues, etc. One can get a better idea of what is working and what can be improved by doing this.
Lease
Ask for a copy of the Lease and read it carefully. Call the landlord and get to know them as well. Sometimes unfavorable lease terms will damage the potential of a Laundromat. Have an attorney go over the Lease with you to avoid any surprises in the future.
Industry Research
Look online for Laundromat resources. Ask other owners of what issues, ideas, or suggestions they might have for you. You can also join trade groups or visit trade related events for a better idea of the Coin Laundry Business.
Sources: Laundromat123.com
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