purchase of card store

[tlev89]

HI,
When purchasing a card store do you base your valuation on collections or actual usuage?
Keep in mind that card stores have a float.
IN reference to the store im looking at
Collections are about 11,500k a week, im not sure what the float is and im sure the owner wont tell me.
Any suggestions would help.
thank you

[DuboisLaundry]

Are you buying the store for the income it will produce?
the income is the collections

if you remove the card system it might change, just as any other change in the vend price.

isn't the float just the amount that is stored on cards currently in circulation? almost all of it will eventually be spent doing laundry.
If the seller tries to tell you that a lot of cards are thrown away with money still on them, don't believe it - laundry customers are too cheap to do that.

a short term interest free loan - similar to the time between the water getting used and the water bill being paid. Do you consider bimonthy water meters an extra value when evaluating a store?

oh sure, some cards will be lost but I wouldn't expect that to be worth much more than those dropped coins that rolled under a dryer or behind a washer, and I sure wouldn't be considering those in the valuation of a store.

[Walter]

You should ask the owner, and my bet is he will tell you. If he won't tell you that is an enormous RED FLAG. Most card systems differentiate between collections & sales. Whether he'll tell you the truth is another matter. My bet is that the monthly gross he's quoting you includes float - just my hunch...

Depending on the neigborhood and its customer base (transient renters), for some large card stores the float can be $1000 a month or more - that's 1k that keeps accruing month in, month out...

Walter

[anonymous]

There is a hell of a lot of that "float" that is never spent. While someone above said that is not true, I know it is in my store and every other owner I know that has a card store. On average every card that is not used for 6 months or more will never be used, and the typical balance on those cards is about $1.50.

[DuboisLaundry]

wow I'm suprised
I wouldn't have expected a card system to fetch that much free money

[pete f]

I would guess collection to mean all the money pulled out of the card machine. In my card store, I can figure how much was used to buy cards, how much was spent on wash, dry and soap vendor. The rest is float, which never goes down, but I grab all the cash out of 2 card machines and call it income. I have seen customers have 3,4 cards with them, I ask if they want me to buy back all but one and move the money on the remaining card many say no, like having spares I guess.

After you sign an agreement to purchase and sign the disclosure forms, such as agreement not to compete in the market if you do not buy the store, non disclosure of financial information of the store, etc, you should get a full accounting. I would never give full information to a buyer without a deposit and protection of my financial information.

[laundryboy]

When purchasing a card store remember that you are buying future liability. The seller owes you all money customers have put on their card and have yet to use as of the the day you transfer.

Example: In June a customer put $20 on a card and uses the laundry facility. In July, you purchase the laundromat. What ever the customers balance (unused card balance) is should be transfered to you (the new owner). In other words, the float is a liability to the business, at some point in the future the customer will collect service from the laundry. In the future, the new owner will be paying for the expense of providing the service.

The float can be a very tricky aspect to a business transfer. If the float is $10k, that means the prior owner has already collected the money and the new owner is expected to provide the service. This can also be thought of as a deposit that will be used at a future time. You don't want to be covering the deposit unless YOU have received it.

One way to handle this is to account for the outstanding card balances on the day of transfer and take that as a credit. Purchase price less float will be the required funds at closing. This is just like prorated taxes on real estate transfers.

[Silent Roo]

Remember a Card store generally can have VERY detailed information about machine usage that is all on computer. We have done a store that will report by the min which machines are turning which are not. It is kind of neat to see. In this store the back bank does not get used in the evening but is the only one moving in the morning.

The owner turned about 6 months of reports to me as I was a Middleman in the negotion. It is hard to fake raw data that can come from the card system. I know not all are hooked to the computer tracking however it can be a HUGE help if it is.

Second. as to the Float. The float is one of the main benifits of the system. It does not change and stays very constant. Even more so if you price at odd amounts. For example do not set the washers and dryers on one cycle to =$5 Set it to 4.75 or 5.25. If you price smart your float should be at least 10%

[anonymous]

...It is hard to fake raw data that can come from the card system. ....

Second. as to the Float. The float is one of the main benifits of the system. It does not change and stays very constant......

From my experience both of these statements are false.

A card system keeps all data in a database, all you need is a front end to the database to change the data in it.

Float constantly changes, and generally increases by a certain amount every week unless you purge accounts that have not been active in some period of time.

[pete f]

From my experience both of these statements are false.

A card system keeps all data in a database, all you need is a front end to the database to change the data in it.

Float constantly changes, and generally increases by a certain amount every week unless you purge accounts that have not been active in some period of time.

This all depends on the card system and machines used. Mine stores info on each piece of equipment, so I would have to replace all the readers to "fake" an income. Who goes thru such trouble, the water bill is still available also.
As for float, it is money left behind. It is profit, not a liability.
It does fluctuate monthly ( I only calculate it monthly) but NEVER has it been a negative, IE, More service was used than cash taken in. I do not purge accounts, I have no way to do that easy. I don't need to, people so it for me by loosing their cards, damaging them, moving away, etc. The 10% number is way more than I have seen though, I am closer to 2%-4%, my store is in a poverty zone. Basically float pays for the cards and then some.