The Laundromat business can bring great rewards if done right.
Just as it can bring disappointment if one doesn't take the necessary
steps to make sure this business is right for you. That is why
one needs to perform the necessary due diligence and get help
from experts in the fields to make the right decision is made.
For s quick overview of the pros and cons of these approaches,
let's look at the following.
New Laundromat
Pros
- New
equipment and infrastructure that will need minimum
maintenance for years to come.
- The
potential for return on equity is higher because
one would not be buying the clientele, which usually
runs a certain multiple of total revenues
- A
new location provides flexibility in design to meet
an individual investors own needs and desires.
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Cons
- Equipment
investment is substantial for a new operation.
- The
cost of opening a new Laundromat can in the hundreds
of thousands of dollars, much of it which will have
to be cash as financing options would be limited.
- Construction
delays and cost overruns are a real possibility.
- Usually
there will negative cash flow in the first 6-12
months of a new Laundromat as it establishes it's
clientele
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Existing Laundromat
Pros
- All
equipment, infrastructure are in place so it can
be a turn key operation.
- Predictable
cash flow based on a track record and established
clientele.
- It
is relatively easier to obtain financing for an
existing Laundromat. Usually the required down payment
for a Laundromat will range between 40-50% of the
sales price.
- Existing
clientele can provide feedback on the operation
so one can improve on it and thus increase revenues.
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Cons
- Maintenance
of used equipment and infrastructure such as plumbing,
boilers, etc. can prove costly.
- One
pays premium based on a multiple on profit.
- One
can inherit many maintenance issues that are not
apparent at the time of sale.
- One
encounters the possibility of misstated revenues
because of the cash nature of the business.
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