The Most Important Step in the Purchase Process
If you are in contract to purchase a Coin Laundry, this advanced course
(the Own a Laundromat Webinar supplement) is the course for you!
Want to know more?
Listen to the first track of the Due-Diligence CD.
NOTICE: The Laundromat Due-Diligence course contains many references to technical analysis explained in the Own a Laundromat Webiner. It is not recommended to purchase this course without first going through the Own a Laundromat Webiner. You can take both course together for a substantial discount by viewing the
Webinar Products page.
The Treasure Hunt
Investors & Entrepreneurs,
Now that you have found the perfect coin laundry business, have a signed purchase agreement, and negotiated an acceptable lease with the Landlord, you are ready to begin the due-diligence process.
This is by far the most important step in the purchase process, because if done right, you will be able to close on your new business with confidence that you are getting a fair deal. What's more, the due-diligence process should help you substantiate the reported Net Profit as well as the overall true value of the Laundromat.
Due-diligence is a very detailed process; therefore, you should allow yourself plenty of time to complete it. An acceptable time-frame to complete the due-diligence process is 45 to 60 days. Beware of sellers wanting to close in less than 30 days. That does not really leave you with enough time to do a good job and you may miss something.
Due-diligence can be like a treasure hunt. Your job, during this process is to find out everything that is wrong with the business before your purchase is complete. This can be anything from machines that don't work properly, to leaky pipes; from ineffective or non-existent marketing campaigns, to employee or store mismanagement.
The good news is that everything you find during the due-diligence process is something that you can either get fixed prior to taking over the business or can be used as a basis for a price reduction when you are done with the process and present your findings to the seller.
One of the most important parts of the process is to nail down the Income and Expenses for the business. Remember, if the true gross income is just $500 per month less than the seller claims and the true expenses are $500 more than reported each month, then the net profit drops by a $1,000, which lowers the value of the coin laundry by $50,000 to $65,000 or more.
There are a myriad of checklist items to be performed in this process. To this end, I have divided some of the most important ones into 5 categories.
1. Location Analysis
There are several things I like to look at when evaluating the location of a Coin-Op. The list includes performing a Demographic Analysis, a Competition Analysis, obtaining a crime report for the location and the surrounding neighborhood, obtaining the current building plans from the city for the store you're buying, as well as finding out if there are any other stores in the neighborhood that have permits pulled for remodels or new construction.
2. Income Analysis
When purchasing a Laundromat it is critical for you to attempt to verify the reported income. This means at a minimum, you need to perform a Water Analysis, verify the bank statements for deposits, examine sales receipts for wash and fold, monitor the store collections, and take water meter readings.
3. Expenses Analysis
What you are looking for is each and every expense that is associated with the operations of the Laundromat. Having a complete list of expense items is a must! The most common expense items that I have found to be regularly missing from the books include payroll, worker's compensation tax, repairs & maintenance, personal property tax, business tax, triple net expenses, cleaning supplies, and security system fees.
4. Equipment Analysis
Have a mechanic test each machine and give you a list of all the service items. Get the owners maintenance repair schedule, past repair receipts, and age and model of each machine. Look for signs of water leaks, behind the bulk heads. Check the pipes for corrosion or leaks, and the roof and the boiler for leaks. Inspect the electrical for code violations and make sure there are emergency shutoff switches behind each fixed mount front load washer.
5. Store Value Analysis
In general, a self-service laundry's value is a multiple of its monthly Net Income (the key word being NET). This is called the Store Value Multiplier SVM. This number starts at 50 and is then adjusted up or down depending upon the lease, equipment, competition, local market conditions, and other factors. These are industry-defined standards and formulas used for the evaluation of a laundry. Most Laundromats' SVM range is between 45 and 65. In other words, the value of a coin laundry is usually between 45 and 65 times the Net Monthly Income. That would mean that a Laundromat with a Net Monthly Income of $4,000 would usually be worth between $180,000 and $260,000.
When you take the information gathered by these five steps and combine them together, you will get a real good understanding of how good the deal really is. With the results in hand after completing the due-diligence, you will be able to present your findings to the seller. Good or bad, this is a presentation of facts and in many cases; will either make the deal or end the deal. Either way, you, as a buyer, will be making an informed buying decision, and will be able to sleep well at night knowing that the business is being purchased at a fair price.
As I said before, the due-diligence process is very detailed. Although I only listed five steps above, there are many other things to consider and look for when performing the Due-Diligence and I am constantly adding new items to my list. I have a checklist of over 250 items, which I perform with every Laundromat I enter into a purchase agreement. Because this subject is so entailed, I have had countless requests to help people with their own due-diligence. So to help those interested in learning how to properly perform the due-diligence, I have created a one-hour class on how to do Laundromat Due-Diligence.
This class is an audio CD over an hour long. In the class I go over, in detail, how I perform the due-diligence on Laundromats and how you should too! If you are seriously looking at buying a Laundromat, in the process of purchasing one, or have just started looking, this class is a must-have!
The price for the class is only $347.00 and my clients who I have shared this information with have save thousands, if not tens of thousands of dollars on their purchases. The class includes an outline for you to follow along with as well.
What’s more, as a Bonus, I will even include my personal list of due-diligence items for FREE when you buy the course. The value of the list alone is worth more than the class!
Listen, you don’t have to take my word for how great this class truly is. Check it out for yourself without any risks with my 100% Money Back Guarantee:
GUARANTEE: Get the “Laundromat Due-Diligence CD” right now and if, for any reason, you are not 100% satisfied with the course, send me it back to me within 30 days, and I will personally refund every penny of your money, no questions asked. It's as simple as that.
NOTICE: The Laundromat Due-Diligence course contains many references to technical analysis explained in the Own a Laundromat Webiner. It is not recommended to purchase this course without first going through the Own a Laundromat Webiner. You can take both course together for a substantial discount by viewing the Webinar Products page.
The course includes:
1 Audio CD containing the course
Plus - The Course Outline
Plus - My Due-Diligence Checklist.
Cost: $347.00, plus $4.95 shipping and handling.
Please allow 5 to 10 Business Days for Shipping.