Knowing how much money a laundromat makes is important. However, just as important is verifying how much a laundromat spends. The important number in a laundromat business, and in any business, is how much money you keep, or your net income. You can lose a lot of money by not accounting for or verifying the laundromat's expenses.
The best ways to verify a laundromat's expenses are to:
1. Request Bills and Statements
Some expenses are relatively easy to verify. You just need to make sure you don't miss them in your analysis (which we'll get to in number 3!). For utilities and other regularly occurring bills, you can request to get a copy of the actual bill or statement. I recommend you request at least 2 years' worth of bills.
The utility bills, in particular, can also help you assess the performance of the business. You can use these bills to help you verify the laundromat's income. The variability of the utility bills will be tied to the variability of the laundromat's income.
2. Request the Lease and All Amendments and Addendums
The lease is the most important document in your business. Your rent plus any common area maintenance (CAM) or triple net costs will be one of your largest expenses. Your financial responsibilities will all be outlined in the lease and documents referred to in the lease (amendments and addendums).
3. Verify Expenses Using a Pro Forma
One great way to make sure all expenses are accounted for is to use a pro forma to ensure you don't miss any big expenses. A pro forma will have line items for common laundromat expenses. You can use that to verify that a laundromat's expenses are accounted for.
Not every laundromat will have every expense on a pro forma, but it's worth verifying whether the laundromat you're interested in does or not.
4. Utilize an Experienced Expert, Such as Another Laundromat Owner or Consultant
The more knowledgeable eyes on your deal the better. Tapping into your network of other laundromat owners to get some input on your deal is a great way to analyze the expenses of a laundromat.
Another great tool can be a consultant or coach who has laundromat business experience. There are great consultants out there that could be a great help to you in your laundromat acquisition, including Laundromat Resource. One other potential source of consulting could be a broker who is compensated outside of the deal who acts as a consultant and not the broker.
Buy Right the First Time
I say it all the time, "If you buy your first laundromat the right way the first time, the sky is the limit for you." A huge part of buying right is ensuring you know how much money it takes to run the business so you can have an accurate assessment of the net income you'll keep at the end of each month. Follow the steps outlined above to ensure you do things right the first time! Here's to financial freedom through laundromat ownership.
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