possible purchase

[don-h]

New to the board. I am in the process of negotiating for an existing laundromat. It's in need of a facelift. Machines are 17 years old Wascos. The revenues are down around 15% from last year which I suspect is due to the appearance. No new competition has opened in that time although a brand new one is opening about 1/2 mile away in a feww weeks/months.

I have read about trial periods before purchase. I am interested in hearing about this, ie how it works, how long, etc. I think in light of the circumstances listed above a trial period could be very beneficial.

Thanks

Don

[buddy]

Watch out for the new one opening in few weeks. It may further dwindle the revenue at the MAT you're buying.

[mike]

This one sounds "dead in the water"

If the new mat owner didn't even bother to buy out the competition, it means he doesn't think he has to.

This one won't fly for many years, if even then !

[don-h]

Thanks for the heads up. Forgot to mention that the present owner did not put the business up for sale. I happened to approach her. Does that change your view?

Don

[mike]

Don H,

Not much, unless the owner is almost giving away the business, you have a "forever lease", and you know that the new store won't be a "superstore"

I just don't see how you can make it fly. (certainly not as a first time buyer)

[Fred50]

Don H,

Let me give you a view from the other side. I just built a new store that is larger than my competition.

Why did I build this store? I saw my competition as a bunch of rundown, filthy, poorly managed stores run by people who had gotten lazy. They all failed to keep the places clean, not to mention the general state of disrepair of their equipment.

I was approached by a few of these folks to buy their stores, I declined. If I thought that they were worth much, I would have bought one of them and rehabbed instead.

Customers like new, but they love clean and once you let a place really go it is hard to turn it around. Even if you clean the place up, customers may still be reluctant to return.

Based upon my experience, if the new "superstore" is going to be run by someone with a clue, it is going to hurt a store with 17-year old equipment that needs a "facelift".

Nothing against folks on the board with older equipment. I saw many older stores that were impressively clean, neatly decorated/painted and served their customers well enough to make building a new store a risk not worth taking.

By buying this store, you are already starting in a big hole. What do you think the chances are of digging out of it?

One last point: Many mats are for sale and you may never know it. The owner may have listed with a broker that you have never run across or he could have been shopping it with other owners or equipment distributors. There is no multiple listing for businesses in most areas like residential real estate and mats for sale don't usually have a For Sale sign out front. In many cases the employees may not be aware of a pending sale.

Good luck!

[Kitty]

17 year old wascos in a well kept mat that delivers conistent customer service with a hands on approach will be difficult to combat and not easy to over throw. You wasco guru and backers out to be thinking "potential" well kept 17 year old wascos still have life potential and these machines that are cleaned and polished will easily compete with the newer machines out today. Our 16 year old wascos consistenly vend more turns than the brand new huebsch we have in the same store. A facelift consist of the entire package, atmosphere, building structure and appearance, inside cosmetics as well as machine year and model. Not every new store will put out or damage the comp, many new big stores will overpay and lose big.

[Fred50]

Kitty, Kitty, Kitty,

Do you think that I was insinuating that ever mat owner with an older store should just shut their doors when a new store comes to town? Not in the least.

I spent the better part of 6 months trying to get an elderly owner of a 33 year old store full of Milnors to sell to me. He has a great location, superior staff, building, etc. Competition proof, no. Tough to beat, yes!

Now back to my point, plain and simple. If you are buying a place that needs help and is in decline (profits, repair, etc) AND a new store is coming in nearby - RUN, don't walk! Why take
that kind of chance if you don't have to?

If the old guy sold me his place, I would be asking Tony how to do bearing jobs on 33 year old Milnors.

Relax! One of the main reasons that I built new is that in my area it ended up being lower risk from my perspective to build new in a superior location than take a risk on a place that was selling for dubious reasons or that was overpriced or beyond repair.

[don-h]

Thanks for all the valuable input. I am certainly looking at this opportunity with greater scepticism. I am still interested in hearing about "trial periods". If I can be in thrail while the new competition opens, I will have the opportunity to bail if the incme declines to less than the payments.

I am entering into this the same way I do all business opportunities, based on income/expenses.ROI.

Any help on the trial period???


Thanks,

Don

[mike]

Don H,

I would be very surprised if you could get any kind of trial period.

From your point of view, you would still be losing a downpayment, (nobody is giving a trial period for free)

From the owners point of view, he has no control over how you run the mat, so you may not make what he thinks you should. (any owner knows that once the "bloom is off the rose" for a new buyer, the jig is up)

Sure, try and get a free trial period, but don't hold your breath.

[pete f]

Mike is right, but wrong also about the new mat owner buying out the comp. Not all new store owners are that smart.
IF the store is highley profitble now then I would consider buying it. The new store may take 30% of the revenue away so factor that in. If you remodel the store you may get 30% more revenue. That means if you buy it and remodel it when the new store opend you will be doing about the same revenue as it is now. I have been and am in this exact situation. If you could buy the store with 50% down and its current cash flow would pay the note back in 3 years then I would consider it as making decent money.