Do you want to buy a laundromat and you want to know what to look out for? If YES, here are 20 important questions to ask when buying a laundromat business.
Entrepreneurs who don’t want to go through the rigors of starting their own laundromat business from the scratch find solace in the fact that they can own a business by buying a laundromat business that is put up for sale or a franchise of an already established laundromat brand.
So, if you intend buying a laundromat business in the United States of America, then it will be to your advantage to ask the right questions or else you will buy a business that is dead and can hardly be resurrected. No doubt, you may not have the exposure to ask the right questions, questions that will position you to be at an advantage especially if it is your first time of buying a business.
There are business experts that can help you make the right decisions, but in case you don’t have a budget for that, then you might find this article highly resourceful. Now let us consider 20 crucial questions that you should ask before buying a laundromat business;
Questions to Ask When Buying a Laundromat
1. The Track Record of the Company Selling the Laundromat
The first thing that should compel you to make enquiries on any company that is selling a laundromat is to ask about their track record.
If you can’t really place a finger on any ‘first’ that the company has achieved or anything significant that they have achieved over the years, then you should reconsider your decision of buying the business except you are dealing directly with the owner of the laundromat business.
2. Why Are They Selling the Business?
Of course, there are many reasons why a business owner would want to sell his or her business and some reasons might not be what a new owner would want to deal with.
For example, if the owner is selling the business because it is not making profits and they have been running at a loss, you might want to reconsider buying such business. But if the owner is selling the business because of relocation, retirement or no longer interested in the business, then it makes sense.
But you don’t have to take whatever answer the seller gives you hook, line and sinker hence the need to carry out your own investigations. You can do this by asking neighbors or customers about the business.
3. How Did the Business Fare in the Last Five Years
Another key question that you should ask before buying a laundromat business is the success story of the business, what are the wins and testimonies of the business that they are proud of and will be willing to share with the whole world. If they don’t have any, then you may want reconsider the decision of buying the business.
The truth is that no one would want to buy a business that is not profitable and one of the easiest ways of knowing how profitable a business can be is to see the profitability of the business during the peak period. If the seller will be willing to let you into the company’s books, it will help you make an informed business decision. You might want to also check to see the highest loss they have recorded in during their lowest period.
Another good question that you should ask if you want to buy a laundromat business is to know the average running cost of the business. The truth is that some businesses aren’t as profitable as they ought to be because of the over the board running cost of running the business.
When a business owner fails to eliminate some not too necessary expenditure when it comes to running their business, they will always fall short of their profit margin or even struggle to make the business profitable. This question is important especially if the owner is selling the business because the business is not making profits.
6. The Terms and Conditions Attached To Buying The Laundromat Business
Please note that when you are buying any business or signing any contract, there are always terms and conditions attached to the contract document. Some investors fall prey to dubious business owners selling their business with hidden terms and conditions that will trap them.
For example, if you are buying a laundromat business from Mr. A and Mr. A has hidden debt that you are not aware of, if you buy the laundromat business and the debtor shows up to claim his debt, you will be held liable as the new owner of the business. This is why it is very important to ask of the terms and conditions attached to the laundromat company.
Some of the terms and conditions might not be favorable to you so ensure that you critically look into them before making your decision. If need be ask the seller to sign an indemnity that will protect you from any debt that has been incurred before you bought the business over.
7. Ask if There Are Any Additional Support Available to You If You Buy The Laundromat
Aside from asking for the terms and conditions of buying the laundromat, another critical question you should ask before making your decisions is to know if there will be any additional support you stand to get if you buy the business.
There are some companies that will provide free consultancy service and support for a period of time. Some can mentor you, recommend some key staff member and even introduce you to their customers and do the proper handing over before finally exiting the business.
8. The Number of Laundromat Companies (Competitors) in the Location Where The Business is Located
Another key question that you should ask before buying a laundromat business is the number of laundromat businesses that operates within same location i.e. the likely competitors that you will face in the location. Of course, you can carry out your own due diligence, but it won’t be out of place to ask the seller of the business. With that, you will be able to know if you should go ahead buying the business.
9. Ask About The Mode of Payment
Most businesses that are put up for sale usually make flexible payment plans that will make it easier for buyers to buy the business. However, some sellers would need nothing less than outright payment. So, in case you don’t have all the money saved up somewhere for the purchase, then you should ask to know the mode of payment.
Interestingly some seller may give you the option of paying by installment over a period of time or writing out postdated checks or even paying in kind et al.
10. Ask About The Company’s Profile
It will be out place for you to buy a laundromat business without going through the company’s profile. If it is not available online, demand it from them. The truth is that a company’s profile is part of what is needed when accessing the business.
It will give you a pointer to why the business is running at a loss or why the business is not maximizing profits or getting a fair share of the available market.
11. Ask to Know The Business Tax Status
Another critical question that you must not fail to ask if you are buying a laundromat business is the tax status of the business. If you are buying a business in the United States you may not want to fall victim of buying a laundromat business that is defaulting in the payment of tax.
Even if you get an answer from the seller of the laundromat and you see the tax certificates, you should still go ahead to consult the Tax Board Office.
12. How Often Do They Renew Their Permits and Operational License
Businesses in the United States of America are mandated to renew their permits and operational license from time to time. So, it will not be out of place to ask to know how frequent the owner of the laundromat business renews his or her permits and operational license.
As a matter of fact, you need to know if the current permits and operational license are still up to date. You just have to know what you are going into before buying any laundromat business that is put up for sale.
13. How Long Has The Business Been Put Up for Sale
Another important question that you should ask the seller of the laundromat business is the duration the business has been up for sale. The essence of this question is to know if the business is attractive or overly priced.
If the business has stayed long in the market, it could be that the business is not worth the hype and that will help you price the business below the listed price. A laundromat business that is attractive or rightly proceed will not last in the market.
14. What Are The Liabilities and Assets of The Laundromat Business
When it comes to valuing a business that is but up for sale, you should be able to have a clear picture of the liabilities and assets of the business. No investor will embark on the journey of buying a business without having a true picture of the assets and liabilities of the business.
So, if you have plans of buying a laundromat business then you must make it a point of duty to ask to know the liabilities and assets of the laundromat business and what you will be inheriting.
15. Debt Payment Options if Any
It is important to know if the laundromat business has active debts and the payment options available as regards paying up the debt. It is rare to see businesses especially businesses that are put up of sale that don’t have backlog of debts.
In case the seller of the laundromat don’t have a plan to pay the debt, then you must negotiate to your advantage if you are going to be inheriting the debt of the business
16. Are They Willing to Leave Key Staff With You
If the reason they are selling the laundromat business is to move on to other related washing and dry cleaning business that will demand that they migrate all their staff, then you would need to recruit new staff and that may not put the business at a vantage position.
This is the main reason why you must ask to know if you are going to be inheriting some of the key staff members when you eventually buy over the business. It will help you to continue the flow of the business without starting with new staff members who may not know the terrain.
17. The Profile of The Owner, Board Members and Directors
The profile of the owner of the business, the board members and directors is also another info that you should know before buying a laundromat business. Note that you can only request for this information only if the laundromat business is a standard one with a well – established business structure.
The reason why you should ask this question is to be able to establish the pedigree of the owner, the board members and directors of the business especially as it relates to their integrity.
Another important question that you must not fail to ask especially if you can’t find it in any available document is the business model and philosophy of the laundromat business.
The business model and philosophy of the laundromat company are also a part of what you should know before making your buying decision. If the business model and philosophy of the laundromat business does not conform to your style, it means you would have to put in work to create a new business model and philosophy.
Although this is not enough to deter you from buying any business, but it will help you have a proper perspective if what you are signing up for.
19. The Position the Laundromat Company Occupies Amongst Top Laundromat Businesses in Your Country
Although it is difficult to find a laundromat business owner putting up his or her business for sale if the business is amongst the top performers in the industry, but the truth is that no one wants to buy a laundromat business that is at the bottom of the industry.
This is the reason why you must ensure know the position the laundromat business is occupying before going ahead to buy it.
No doubt, there are business experts that can buy a business that is at the bottom rung of the industry and in no distant time, push the business up the ladder. If you don’t have such expertise at your disposal, then it is not advisable to go ahead to buy such business.
20. The Benefits You Stand To Gain When You Buy The Laundromat Business
If you want to buy any laundromat business that is put up for sale, you should ask the seller to list out the benefits that you stand to gain when you buy the business. Who knows, listing the benefits you stand to gain from buying the laundromat business might just be the extra push you need to make a good business decision.
There you have it; the 20 questions to ask when buying a laundromat business.