SUN CITY WEST, Ariz. — You have your eye on a store across town that you’d like to buy, but what don’t you know about it? There are many questions to be answered before you can get serious about making an offer or signing a deal.
As my experiences were based on leased stores, I’m focusing on that particular arrangement here. Let’s dive in.
BEGIN WITH YOURSELF
Owning/operating laundromats can look easy to the outsider. In truth, they are harder to run successfully than many expect. Here are some points that can help steer you in the right direction:
- Ask yourself honestly, have you done the numbers in due diligence to see if you can afford it? Is it capable of making a good profit?
- Are you eager to work hard to make your mat a success, even when you’re nice and relaxed and enjoying something else when unexpected problems come up?
- Are you OK with getting emergency calls any time of day 365 days a year?
- Do you have family members who can help you out in a pinch?
- Do you have a basic understanding of the best ways to advertise and market your mat?
- Do you have enough money to pay for everything in the transaction? What about extra money to pay unexpected charges, and to pay the bills for a few months until the business can stay afloat on its own? (I liked to calculate every expense I could think of, then add an extra 20% for the things I had not thought of that always seemed to come up.)
- Are you handy? Do you have at least some basic understanding of how washers and dryers work? A typical mat can have 100 machines or more, each with over 100 parts. If you can diagnose and repair your own equipment, you’ll save a lot of money. If you can’t, you’ll be at a competitive disadvantage. Equipment distributors can help (some even offer repair workshops), and there are tutorials online.
TIME AND TALENTS
Every business requires a skill to maximize success. Aside from maintaining the equipment, laundromats require some trade skills. You don’t have to be a master, just have some familiarity with light plumbing, light electrical, and light carpentry. Having a good understanding of how a laundromat works gives you an edge over competitors who do not.
Your time is important, too. Many people are attracted to this business thinking that it can be managed on a part-time basis. It can, but only by experienced operators.
In the beginning, spend as much time as you can getting to know the customers, their wants and needs; how to diagnose and repair the equipment; and any other practical experience that you can get. After things are going smoothly, you can try to start backing off.
Go online and search everything you can about it: Yelp reviews, property records, building ownership, etc. Looking up a mat in a shopping center, I got some good nuggets of info from the owners of neighboring stores. You could even drum up a conversation with an attendant or two. And customers sometimes reveal things that can be helpful.
A good retail business lawyer can help you a lot with the lease, any outstanding judgments, working within local ordinances, labor law compliance, and a non-compete clause.
Your lawyer will need to draw up, or review the purchase contract. They should tell you they are putting in a clause to prevent the seller from opening a new mat within X miles. A good lawyer with retail business experience will add these kinds of protections, as well as listing the assets, and other pertinent details.
If you are purchasing new equipment, your distributor also has a wealth of knowledge for you. Just as with the seller, you’ll want to negotiate a non-compete agreement with the distributor. I’ve see mats built from scratch, costing hundreds of thousands of dollars, only to discover a year later that their distributor opened a new mat across the street, or down the block.
So protect yourself with a simple paragraph outlining how close you’re willing to let them open a new one near your mat. The time to do this is when you are negotiating for the equipment.
Check back Thursday for Part 2!
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
