Evaluating Your Laundromat For Sale
There are several factors that go into listing your laundromat for sale. Evaluating a laundromat for sale and determining an appropriate sales price are just two of those factors. Some others include gross revenue, cash flow, lease, and asset value.
To get started you’ll want to ask yourself some questions.
Should I Replace All Of The Equipment?
Will you be able to properly sell your laundromat to cover the increased debt/ expense?
Let’s say you own a laundromat with no current debt service, and it is valued at $250,000. You based your value on cash flow. But the equipment is a little dated and it’s beginning to have some mechanical failure. Is it worth replacing all the equipment say upward of $250,000 or more?
Your dated equipment may very well be holding you back from obtaining new and increasing existing revenue. With that being said, if you are to replace all of the equipment, you’ll need to realize the increase in revenue and then sell based on the increased revenue and market share.
Keep in mind that this option may take some time. Such a large undertaking will take some time to prove that it was an asset to the business’s revenue.
Can My Cash Flow Cover My Debt?
If you are in need of selling your laundromat in a quick fashion, then you will need to keep this in mind when setting your asking price and overall negotiation for sale.
The buyer coming in will be in need of replacing the equipment in order to remain competitive within the marketplace. Therefore, buyers may not be willing to pay what the current cash flow evaluation is because they know that there is an immediate need for asset replacement. So ask yourself, can the current cash flow cover new debt service for the buyer?
Now, let’s say your dated, out of order equipment is truly holding you back, but your laundromat is outperforming the expected proforma. This positive performance may be due to some other factors such as a tremendous demographic, great location, etc. If that’s the case, then quite possibly, you would be able to replace the equipment, realize an immediate increase in business and be able to sell for an amount to cover the new debt service and return desired income over and above.
Is a Partial Equipment Re-tool An Option?
There is also another option. Let’s say you are able to keep your 15+ years-old dryers running effectively with proper preventive maintenance and routine cleaning. Your washers, on the other hand, don’t have the energy efficiency and the bells and whistles that your competition has. If you replaced all or part of your washers you could increase capacity, decrease utility expense, increase traffic, offer better benefits to the customer.
This would be a significant and immediate improvement on your asset, increase in revenue, reduction in utility and overall better evaluation of your business for interested buyers. Leaving them an opportunity to obtain proper ROI immediately and then allow them to realize better opportunities by replacing the dryers at a later date.
There are a lot of different ways to peel the potato here. Overall, it boils down to choosing the option that works best for you. Be sure to evaluate and look at all possible options, match that up to your immediate and long term needs and see what works best for you, your customers, your equipment, your business, and possible exit strategy.