Last month’s article generated an abundance of e-mails and calls from potential buyers from around the country who told me their stories about the various brokers who are actually trying to sell laundries without audited financial statements and with no tax returns. The one commonality shared was that brokers were telling potential buyers that laundries can be valued by the looks and/or condition. Now that’s one for the books!Regardless of how nice a laundry might look or how new the washers and dryers are, that’s not how it works. Don’t let your eyes fool you when you are evaluating your purchase — if the laundry doesn’t have cash flow after debt service, then the valuation is zero.I’m angered by the fact that some brokers have no integrity and take people’s life savings without conscience. Yes, it’s a bonus if a laundry is in good condition and well-kept, with clean machines that are all in working order, but I must insist that the purchase price be based on a multiple of the net/net cash flow. Don’t fall into that mirage, believing there’s water in the middle of the desert, because some of these sellers and brokers are taking advantage of your lack of knowledge in purchasing a coin laundry business.PROTECT YOUR NEST EGGPresume that all sellers are liars if they don’t have the proper and formal financial documentation to validate the numbers they’re representing. Also, in the event that you fall into the scenario we’re discussing, you have every right to report the seller and the broker for misrepresenting the facts. Protect your nest egg and only buy if the laundry has audited financial statements and signed tax returns.Too many times to mention, owners have sought my assistance to bail them out of the mess they’ve gotten themselves into. Protect your investment up front and contact a reputable industry consultant before you purchase a coin laundry to ensure the best possible results for your investment.TIPS FOR BUYERS: KEEP YOUR EYES OPENOK, grab a pad and paper. Here are the tips of which you should take note when buying a self-service laundry.
- Never buy an existing laundry without audited books and records.
- Don’t allow yourself to be over-leveraged to make a deal — any deal.
- Survey the area to assess the competition so you know what you’re up against.
- If you’re not a people person, don’t buy a coin laundry. You’re buying into a good-will industry, and you must be good with people.
- If you don’t have at least 30 hours per week to devote to your laundry, don’t buy one. This isn’t a vending business, and if a seller or broker tells you otherwise, walk the other way.
- Maintain a two- to three-month cash reserve to run the business.
- Don’t try to run the laundry without seeking a professional laundry consultant for advice.
- Always have a marketing strategy in place that you can execute effectively.
- Always change the moneybox and changer locks after taking possession of a laundry.
- Sign up for free service schools to reduce your maintenance costs and better build that bottom line.
- Again, it’s great if a laundry is in good shape and looks good, but don’t let your eyes fool you!
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].