The Re-tool laundry is simply a laundry that is in a position to be advantaged by adjusting your business model, including replacing some or all of the equipment. While the idea of replacing equipment after already investing a great deal of capitol is uncomfortable to many owners/investors. The fact is that every day the equipment gets older, as does the lease gets shorter. If the equipment mix or the condition of the equipment is not kept up to date in a laundry, or it is no longer meeting the desires and needs of the market place, you have no reasonable choice but to do exactly that.
Failing to take the necessary steps will be the start of the businesses and the probable erosion of your investment. The re-tool process, done correctly can greatly increase your position both in bottom line cash flow and your investment value; sometimes far beyond what the additional investment combined with your base investment might have been. The best news is that doing these improvements are financeable at up to 100% of all costs. I teach my Clients that they can’t just look at the purchase price alone in evaluating a business investment. They must also look at the total required investment, including the needed improvements and include these in their investment allowance.
Why is this important to a business buyer? The answer, this is the best way for a business operator/entrepreneur to realize the true value when purchasing a business; certainly in a business like the laundromat where the income and the value is supported by very expensive equipment. So if you are going to accept the challenge of advancing yourself in this economy, you need to look at the true risk as well as at the work ahead of you as logically and as analytically as possible. Only then will your readiness combined with the opportunity = your success. Let me just add that opportunities abound today.
It can be easily added that if current owners of businesses understood this and have the wherewithal to make these changes and would, they could greatly improve their position as well. Why they don’t has baffled me for more than the 27 years I have been in the vended laundry business. Although, it was much like that when I was in the Bicycle business too. But for today’s prepared buyer, there lies the opportunity.
So what do you do with this information? I would recommend writing down every well thought out, seemingly obvious and even somewhat stupid question you have and start getting answers. Everyone reading this is at one stage of buying and/or owning one business or another. So start by jotting down the business types you are interested in. Understand both your personal cash flow requirements and your investment goals. Be realistic in asking yourself if you do qualify. (Note: In Southern California a vended laundry purchase will require a cash infusion well into 6 figures or more and good credit as well.)
It is true that in some cases a laundry might be purchased at a lower rate but in reality it is likely that it is in need of some amount of additional investment and that could be as much as 100, 200 or even 300k in after the purchase investment; in order to get it operating at a good model level. The risk of undercapitalization in this business can have disastrous effects. Fact: a laundry with 12+ year old equipment will need to have the equipment replaced; at least soon and keep in mind that a single new washer, alone including freight and basic installation will cost about 150.00 (per pound of wash capacity) or more.
However, after all this is said, if you prepare yourself and you follow sound reason on your journey toward independence, study hard and be sure to look at the worst of the lot and learn. Ask why it’s like this. Ask what will need to be done to correct the problems; ask if you are prepared for what needs to be done to correct the things that are negatively affecting the business. Most importantly ask if the location is sound? If so, you might have just found the “Diamond in the rough”. As for one personal plug; if you are wondering who you might ask?
Contributor:
Cheryl's a restaurant business broker, over 25 years in the bar and restaurant industry coupled with a J.D. Cheryl works tirelessly to create successful strategies and effective negotiations for those who wish to purchase a new or sell an existing bar, restaurant, cafe, or night club. 415-309-2722
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