| There will come a time in every coin laundromat | | | | you bought your business and look at the business |
| owner's future when moving on and pursuing other | | | | through a buyer's lens. You should create a list of |
| endeavors is the right thing to do. Regardless of your | | | | everything that a buyer will find when examining your |
| reasons for selling, if you have managed your | | | | business. The list should include both the pluses and |
| business well, your coin laundry could be a substantial | | | | minuses of your store. |
| asset. However, if you've poorly managed your | | | | Ask yourself, "What makes this store superior than |
| store, don't have an accurate set of financial | | | | its competitors and what makes it inferior?" Be sure |
| information, and haven't planned for the sale far in | | | | to identify any major risks that would potentially |
| advance, the value of your business could be | | | | scare a buyer. These risks should be things that are |
| negatively impacted. Despite what some might think, | | | | both within and outside of your control. |
| the time to plan for selling your store is not the day | | | | Once you have made your list, sort it in the order of |
| you list it for sale, but rather, the day you buy it. | | | | importance. Remember, the more detailed you are |
| The one question that you should be asking yourself | | | | here, the better idea you will have of how a potential |
| is, "What are the things that I can do now to | | | | buyer will view your business. |
| maximize the value of my Laundromat in two to | | | | The course that I sell also teaches how a potential |
| three years?" | | | | buyer will back into your income through water |
| To answer that question, here are three steps that | | | | analysis and how to analyze the market with a |
| you can do today to help you maximize the value of | | | | demographic analysis. Knowing how a buyer will be |
| your coin laundry. | | | | looking at your store is critical in determining how to |
| Step 1: Calculate the Value of Your Laundromat | | | | maximize its value. |
| All businesses that make a profit are valued based | | | | Step 3: Improve Value and Reduce Risk |
| upon a multiple of net income. This multiple, in the | | | | After you have calculated your SVM, take the steps |
| coin laundry business, I call the SVM or Store Value | | | | now to improve the different criteria that the |
| Multiplier. This is equal to the value of the store | | | | multiplier is based upon. As an example, if your lease |
| divided by its average net monthly earnings before | | | | only has a few years left on it, the SVM will be |
| debt service, over a 12-month period, usually the | | | | negatively affected. By spending the time to |
| most recent one. To calculate the SVM without | | | | renegotiate your lease with the Landlord, you will be |
| knowing the value of the store, one must look at | | | | able to secure a longer and more stable tenancy, |
| several criteria including, multiplier base, lease, | | | | thus increasing the multiplier. Likewise, replacing old |
| equipment, competition, demographics, amenities, and | | | | equipment with new equipment or adding better |
| overall coin laundry market. By adding or subtracting | | | | amenities would also have a positive impact on the |
| from the multiplier base, an adjustment for the other | | | | SVM. |
| factors, you can arrive at the SVM. The SVM has a | | | | Now that you've identified what your store's major |
| range anywhere from 0 to as much as 75, but | | | | risks are, you can take steps to correct some of |
| usually ranges from 40 to 60. | | | | them. Make a list of the top three things you can do |
| I have a course that, among other things, teaches | | | | to reduce a buyer's risk. Perhaps you could secure a |
| you how to calculate the value of a coin laundry and | | | | maintenance agreement to fix machines and stabilize |
| how to calculate the Store Value Multiplier. Once you | | | | your repair costs. Or, increase your store's ancillary |
| have your SVM, you can calculate the value of the | | | | income sources. You could try to reduce your |
| Laundromat by multiplying the SVM times the | | | | insurance rates by shopping around or lower your gas |
| average monthly net income. As an example, if your | | | | usage by replacing your old boiler. |
| calculated SVM is equal to 50 and the store has an | | | | Any specific elements that create value or |
| average net monthly income of $4,000, your store | | | | preemptive action you take to lessen the buyer's |
| would be worth around $200,000. | | | | risks will not only enhance your business's value, but |
| Step 2: Examine the Laundromat as if You Were | | | | in many cases will also put extra cash in your pocket |
| Going to Buy It | | | | each month. And for those of you who don't have |
| As a buyer interested in purchasing a coin laundry, | | | | any plans to sell your business for the foreseeable |
| you went through the phase in the purchase process | | | | future, now is the best time to get your operation |
| called Due Diligence. This is where you examined all of | | | | running its best. You never know when life's |
| the financials of the business, analyzed the | | | | circumstance will throw you a curveball and being |
| demographics, and inspected the equipment. When | | | | prepared will help you get top dollar for your |
| planning for the sale, revisit the steps you took when | | | | business. |