RIPON, Wis. — Perhaps you are a vended laundry owner with a year or so under your belt, or maybe a seasoned veteran with operations, marketing and maintenance soundly in hand. Is it time to think about a second store?
How do you know if you are ready? How do you know if it’s financially feasible?
The bottom line is if you manage your store effectively and have a vision of scaling operations, today’s manufacturer-financing packages can make adding a second store far more possible than you think. But financing is only one aspect of duplicating your success in a second location.
TIMING IS EVERYTHING
It goes without saying that if you are having any issues in your current vended laundry, adding a second store isn’t a great idea. So, the first step is to take an accounting of your current operation. If it is successful and, after paying your expenses, you are turning a net profit, financially, that’s a good start.
While financial liquidity is a plus and can help speed the next store along, success in the business will weigh heavily. Solid equity built up in your current location will assist in obtaining financing.
Take a personal accounting as well. In this business, experience counts. Having a couple years in the Laundromat game means you have gone through up and down cycles. Note what you’ve learned and any mistakes you made that you will sidestep this time around.
BENEFITS TO ACQUISITIONS
There’s little debating that buying an existing business is infinitely easier than building a new store from the ground up.
For starters, you are buying something that is already running. Even if you decide to wait on retooling, the business is already earning — there’s a customer base being served (though possibly not very well). There’s no downtime. When the keys are turned over, the “open” sign can go on.
Perhaps most important, there are no impact fees tied to going this route. As anyone in the business knows, these fees are significant, often upward of $200,000.
Finally, building your business through acquisition eliminates all the back and forth with municipalities, in terms of permitting and the like. Speak with anyone who has experienced delays in opening a new store and there’s a better-than-average likelihood the project got sent off the rails by the permitting process. Growing through acquisition enables owners to steer around that potential pothole.
HOW TO GET STARTED
Just like the experience of buying a house, it makes sense to have a chat with your lender. Devoting time up front to identify your borrowing level and get pre-approved can save substantial time later on when you are ready to buy.
This is obviously where manufacturer-based lending programs are able to be more aggressive and competitive in helping owners expand their business — similar to what they saw with their first store or two. The secured-loan structure, meaning the equipment equity, makes it much easier to expeditiously work through the approvals process. Owners we work with are continually surprised at the level of funding, in some cases up to 80% of the acquisition and retool costs can be rolled into the loan. Best of all, getting pre-approval rarely costs anything.
At any rate, it makes sense to meet with your lender to get an idea of the size store you are able to add to your portfolio.
Having been pre-approved and with an idea on financially where you stand, it’s about finding a location. Your local distributor should be an excellent resource on that front.
While you can certainly survey your area on your own, a local distributor should have a wider view of Laundromat owners who may be looking to sell their businesses. Again, this is where being pre-approved can work in your favor as a catalyst to jumpstart negotiations with an owner who may be on the fence. Never underestimate the value of being able to move quickly on a purchase.
Check back Thursday for the conclusion!