Have you decided that it’s finally time to make a purchase? With creative financing, you might be able to defer payments or interest for a year. More importantly, it’s essential to realize that remodeling and adding machines must, in many cases, be done in phases.Last month, a customer purchased washers and dryers from a distributor who projected that it would only take three months (once the machines were installed) to make “lots” of money; money that would exceed the payments.Now the reality: The revenue was not enough to cover the note, and the owner had to come out of pocket by more than $1,000. This was a case of a sales representative overselling a customer by providing misleading income projections — projections that did not come anywhere close to what was promised. The owner is now literally paying the price for this.If the buyer had done the remodel/replacement in phases, this would not have happened.BEWARE OF PROJECTIONSProjections are just that, projections. When purchasing, you must get references from other customers who have purchased machines from this representative/broker and/or have purchased and built Laundromats from this person or company.Projections can be deadly without due diligence. How is the sales representative coming up with the projections?Do your homework! Don’t get mesmerized by a perceived reputation, or how long this individual has been in the business. By “checking out” this individual, you are doing your part to ensure you are getting accurate and professional guidance — and avoiding a huge financial mistake that could destroy your business.DON’T SIGN ON THE DOTTED LINEIf you’re not sure about the proper due diligence, here are some things to think about:
- Ask for the names of at least three customers who have done business (built stores) with this person.
- Ask for the names of at least three customers who have purchased equipment from this person.
- Ask for the names of at least three customers who have purchased an existing laundry from this person.
- Visit this person’s business. Does it have a fully stocked parts department?
- Visit with the in-house service support team.
- If this person works out of his home, don’t believe that you can receive the proper support.
- Check out the service vehicle(s). Is it fully stocked with parts?
- Ask when the free service/training schools will take place.
- Get a list of this person’s financial sources. Ensure that you can get the required financing before you are in too deep.
- If you feel that you are getting the run-around in any way, walk out!
All I wish for you is success. Feel free to contact me if I can be of any assistance to you.