5 Questions To Ask Before Purchasing an Existing Laundromat Business
Buying an existing laundromat is a great way to get your foot in the door as a new laundry business owner. We've worked with a lot of laundry investors who opted to take over an existing coin laundry business. However, it's always important that you know what you're getting into before you make such a big investment. Here are our top five questions you should be sure to ask before buying an existing coin laundry operation.
- What are the average monthly operating costs? One of the main benefits of purchasing an existing business is that you should have access to months, if not years, of receipts that can help you accurately estimate your expenses going forward. Scrutinize recurring overhead costs such as rent, utilities, employee salaries, and insurance as well as less common expenses, such a snow removal or security services. Having an accurate picture of the previous owner's monthly expenses will help you create an accurate financial plan as well as uncover any red flags, related to, say, excessive equipment or utilities costs. .
- How old is the laundry equipment? Commercial washers and dryers wear out over time, especially with the excessive use and abuse characteristic of a busy laundromat. You'll want to know from the get-go whether the facility will require equipment upgrades and/or a complete re-tool so that you can budget accordingly.
- What repairs have been doing on the laundry equipment? Who serviced the machines? This is an important question because commercial washers and dryers that haven't been maintained properly are more likely to have issues down the road or wear out sooner. You'll want to see all service records to make sure previous owners have kept up on laundry equipment maintenance. You'll also want to note if maintenance was done by an experienced laundry service technician. Not following the manufacturer's service recommendations or working with a laundry expert for repairs can be red flags. Likewise, excessive repairs on individual machines can signal that it's time to replace those units—another potential large expense to be aware of.
- Are all the machines and other equipment paid for? It is important to be aware if there are any outstanding loans on the business or its equipment. Ask for receipts and proofs of purchase to ensure they align with what the previous owner says.
- What are the surrounding demographics and current customer base like? Your laundromat location and demographics are SO important to the success of your business. While you can do a lot of research into this on your own (driving/walking around, chatting with local businesses, crime reports, newspaper articles, demographics reports, etc.), it's always nice to get perspective from previous owners and any real estate or leasing agents. Hopefully, they'll share about existing customers, new developments in the area, and other unique insights that only an owner would have. The more you know about who you're marketing to and serving, the better off you'll be.
If you're interested in opening a new laundromat or taking over an existing coin laundry business, we can help. We can answer questions regarding financing your laundry equipment or whether or not investing in a laundromat is a good idea depending on your circumstances. Here at Martin-Ray Laundry Systems, we work with laundromat operators and investors all across Colorado, New Mexico, Wyoming, West Texas, or western Nebraska; we would love to share our expertise with you. Contact one of our experienced commercial laundry experts to chat about how to make your dream laundromat business a reality.