SUCCESSFUL
COIN-LAUNDRY INVESTING STARTS HERE�
Your author,
If you are considering investing
in a laundromat, you can download some basics here.
Although the laundry mat industry
enjoys sound fundamental demand, it is important to remember there are pitfalls and significant fine-points
to beware of.
(Client Testimonial) Mr. Ruff Thank you once again for your time this
morning. I cannot tell you how much I appreciate the conversation we had
today. I was telling my wife, what an eye opener it was just speaking with you.
I admit I am jumping into this with blinders on and unfortunately I trust
people too much and take their word (which is really stupid). I told her
the best thing we did was spend the money for your expertise. I would have
had no idea all the items to look for which you pointed out. Once again
thank you for the education. Best Regards Thomas B. "Prior
results do not guarantee a similar outcome.� N.Y. CLS Jud �1200.6(a)1 forbids attorney
use of false or deceptive advertising
SOME POINTS FOR THE CAUTIOUS
BUYER:
You must
understand what you are buying and you must be very careful not to pay too
much. Major key to price is gross sales. In fact, it is fair to say that a
10% misrepresentation as to gross sales can impact the overall value of a
coin-laundry business by some 20%, and maybe considerably more; therefore,
you must ask the right questions, and be able to assess the accuracy of the
answers.
Coin-laundries
may appear straight-forward � that is part of their appeal to investors - but they are not transparent - they lend themselves well to fraud and
significant omission. Therefore, seller representations - especially those
as to gross revenue must be verified by
independent means. �Financial
Statements� are representations of the seller - they are not independent means.
One
means of independent verification is the comparison of claimed revenue to water
and fuel usage.
More
information on the analysis of water usage is available from me, but you must
remember that constantly leaking water will affect the accuracy of the
analysis. Therefore, you must be alert for water leaks. Choose a time when
there is no washing machine activity and check the waste-line outflow to
ascertain that water is not leaking through
the machines. As most machines sit idle with the dump‑valve open, any
water leaking into the machine (due to a defective water‑valve) will pass
undetected through the machine and into the waste‑line.
A more reliable, but more complex, alternative to water
bill analysis is analysis of fuel usage. It is more complex because it involves
more variables, but more reliable for two reasons: firstly, as fuel is never
permitted to leak, one need not allow for leakage; secondly, as fuel is far
more expensive than water, willful distortions are cost prohibitive to effect.
When advising a purchaser as to the potential gross sales of a laundromat, I
rely heavily upon analysis of fuel consumption.
�
Be alert to seasonal weather
changes when evaluating a coin laundry. Both the first week of warm
weather in the Spring, and the first week of cold weather in the Fall can
excite a 10% to 20% increase in coin laundry business.
IDENTIFY ANY NEED FOR MAJOR
REPAIRS:
An
example of a major repair is replacement of basket or tub shaft bearings.
Whenever you consider a launderette purchase, open the door on each dryer and
each front-loading washer, reach in and try to rattle the basket or tub. If you
can rattle it, it needs bearings ‑ an expensive and difficult repair ‑
especially for front-loading washing machines, due to the water‑tight
seals.
DON�T PAY TOO MUCH:
This
site generates a fair amount of email response. With alarming regularity I
receive emails from desperate people who are seeking my help. Typically,
they had a lifelong dream to be in business. Then someone died and left them a
little money, or they retired and received an associated sum of money. Then
they purchased a laundermat without knowing how to figure out what it was worth
and they paid too much; after they make their note payments and pay their
expenses, there�s no money left - no return on their investment � and
frequently worse. I�m sorry, but the time to correctly evaluate what the
business was worth was before it was purchased. Usually, it�s too late for me
to be able to help.
YOU NEED A COIN LAUNDRY EXPERT:
In the
evaluation of any business, competent assessment of risk versus reward is not
possible until all significant issues have been identified and accurately
analyzed. Laundry mats are no different; however, it�s difficult for
newcomers to get the help they really need - certainly, neither the seller, nor
the broker, will point out any problems with the business. The average
lawyer is no help- their only job is to get you what you are paying for-
not to reach the issue of whether or not you are paying too much. An
accountant�s evaluation is only as reliable as the accurate
information you can present him or her with. In fact, I recently represented
an accountant who had made a careful analysis of a coin-laundry business based
upon information given him by the seller; after reviewing his analysis with me
(I identified two significant misrepresentations), he drastically revised what
he was willing to pay for the store.
WHOM CAN YOU TRUST?
Even if
you wisely elect to seek professional advice, unbiased* advice isn�t easy to come by. It�s difficult to find
someone who has no self-interest in the outcome. Business brokers have an
obvious self-interest. So do laundry equipment salespeople (before they can
sell you equipment, they need you to buy or build a coin laundry). Books on
laundromats are very often published by people who sell laundry equipment;
trade magazines are published by those who sell advertising space to those who
sell equipment; �consultants� are almost always those who are selling (or
collecting finder�s fees from those who sell) equipment. These sources will
always exclude important information that is inconsistent with the promoter�s
desire to sell equipment.
*
unbiased: impartial; having no interest in the outcome
HERE�S WHAT I CAN OFFER YOU:
If you
have read to this point, you are seriously considering buying a business you
don�t understand. That�s OK � and it�s where I come in, for the key to
success is to secure impartial expert advice. This is exactly what
I offer. My loyalty is solely to my client. I do not broker coin laundries. I
do not benefit from the sale of laundry equipment. As my only source of income
is the fees I receive from my clients, my economic survival depends upon my
reputation, which in turn depends upon honest assessments.
For a
very reasonable fee, I will empower you with information you must have, and
I will �walk through� the first coin-laundry with you to make sure you
understand all of the important issues (there is very much more to a laundromat
than meets the eye). You will learn to ask the right questions of the seller
and I will assist you to verify the accuracy of the answers. With reliable and complete information, we
can properly evaluate the purchase, and if it survives scrutiny, commence legal
acquisition.
MY LEGAL COUNSEL IS ALSO AVAILABLE
TO YOU:
My
consultation fee includes my showing your local attorney how to incorporate
laundromat specific terms of purchase which will significantly improve your
deal, enhance your legal position, and make it much harder to cheat you. It
makes no difference where, in the U.S.A or Canada, he or she practices, my
purchase agreement clauses will enable him or her to protect you, get the equipment transferred to you in
excellent running condition, and ensure your success.
In some
cases, I am available to personally represent you. Information on Legal representation
is available below.
NEW LOCATIONS:
If you
are considering building a new laundromat, first contact one or two laundry
equipment distributors in your area. Distributors usually offer �turn key�
(they will build the whole thing for you) proposals. Generally, a distributor
proposal will include� demographic data,
a �radius map�, estimates as to prospective gross and net, a sketch of the
proposed facility, a list of recommended equipment,� and an estimate of construction costs. Laundry
equipment distributors never advise against new coin-laundry construction (no
construction = no equipment sale). Familiarize yourself with the proposal
and then consult with me.
MY
MOST IMPORTANT ADVICE:
Be it a
coin-laundry purchase, or the purchase of some other business, if owner
financing is part of your deal, avoid personally guaranteeing notes. A personal
guarantee not only renders you personally liable, it has the effect of reducing
the sellers financial incentive to see you do well and give you whatever help
you may need.
�
A FEW WORDS IN CLOSING:
As
laundrymat principles are universal (in my consultant practice, I decline to do
site inspections- they are unnecessary to my analysis) the above is
applicable to any laundermat in any area. However, although this piece was
calculated to be informative, it should not be regarded as comprehensive; it is
not.� Fundamentally important issues such
as: business analysis techniques that are unique to laundromats; specific terms
of sale that are unique to laundermat transactions and necessary for the
protection of launderette purchasers, including the transfer of laundry
machinery in excellent running condition; laundry mat marketing and
demographics; and many other issues unique to laundromats are not even touched
upon here. Please don�t use this limited information to go out there,
buy a coin-laundry, and get yourself into trouble.
The above is presented as a public service by the
author,
You are invited to download more information on
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Consultation Service Package�
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