Looking to Purchase, Ne Help would be appreciated

[S.Boldis]

Hi im new to the business but looking to purchase my first mat....
The asking price is $30,000
The Revenue is 192,000
Cash Flow of 60,000
the space is 2300 sq.ft
There's Full Service, Dry Cleaning, and Drop off Service
19 Washers, 20 Dryers, 1 Spin Dry, 2 Coin Machines, 3 Vending machines, 2 soda machines, there's 1 full time employee and 1 part time
The water is 800 a month, rent is 4,302, utilities 2500 a month
Do these numbers all sound correct to those of you with experience?

[WhatwasIThinkin]

couple of things off. $30,000 asking price is a typo I guess. 1 f/t and 1 p/t employee-how is that?

[S.Boldis]

Nope no type the asking price is $30,000. Spoke with the broker and the two owners have had a personal dispute and no longer speak to each other, and im assuming would like to no longer be in business with each other. I've got more information including there utility financials, if you could lend your opinions.

Approximate Revenue Per Month
Washer and Dryers - 9,500
Drop Off Service - 3,300
Dry Cleaning - 1,700
Leased Space - 1,100
Soap and Goods (sales) - 600
Soda/ Water Vending Machines - 200
Game Machines - 300
Total Per month - 16,700

Approximate Expenses Per Month
Rent - 4,302
Utilities (Gas & Electricity) - 2,500
2 Employees (4days & 3days) - 2,000
Dry Cleaning - 850
Water - 800
Soap and Goods (Laundromat use) - 650
Insurance (1,000,000 Coverage) - 142
Misc. Exp Maintenance - 100
Trash Pick Up - 82
Soda/ Water for Vending Machines - 60
Total Per Month - 11,486

$16700.00
$11486.00
----------
$5214.00

They are selling the business AS IS without any terms and conditions attached by the buyer.

[pete f]

how long is the lease for?

[Walter]

Either this is the Deal Of The Century or it's too good to be true... Assuming there's any kind of assumable lease of more than a couple of years, here's my suggestion - make an offer to buy with NO contingencies, but structure it in this way:

1. Business Asset sale only
2. contractually, assume NO pre-existing liabilities, or known or pending lawsuits, IRS audits, etc...
3. Go through a formal escrow process to make sure there are no pre-existing loans, mechanics' liens, passive partners, etc.
4. To seller's knowledge, that there are no existing issues with equipment or facilities
5. Maintain right to verify income...

RIGHT NOW, while the paperwork is being formalized for your signature...
1. Make sure property was NOT formerly a gas station or that there are ANY potential hazmat issues...
2. Any new stores being built or planned in immediate vicinity of this store?
3. Are utilities payments up-to-date?
4. Check lease to make sure landlord cannot pass on to you major upgrades to roof, building, etc.
5. Make sure city/state is not about to exercise its right of "eminent domain."
6. Make sure lease does not contain a "subordination clause," and if it does, make sure current landlord is solvent and not likely to go bankrupt.

Others can add to this list. You can also PM me...

Walter

[Palmyra Jim]

Something isn't right. If is it, I'll buy it and commute from Rochester, NY!!!!

Quick sales form owner disputes are always more profitable.

Good luck and be sure you are protected.

Jim

[pete f]

There has been no answer about the lease terms. Probably the reason for the price.

[Kitty]

If something smells fishy there is something stinky sitting around the corner...

Sometimes, many times, sellers get slick and buyers get excited. People tend to get tricked out of life savings and into, what was that movie called.... Money pit.... or a purchase can turn into just a bad bad dream and what was thought of the american dream turns into the freaking nightmare from hell.

Looking at real documentation of a sellers business is the only way to determine its value and the revenue it has been producing. It may be difficult to determine down to the penny the gross sales but you can cetertainly weed out the sellers who are inflating their revenue. Be sure you understand where the revenue is being generated and what each line item of the expenses are.

For instance, a WDF business there is COGS be sure there is a line on the financial statement that takes at least 35% off the top of the revenue or ask how they take that expense from their revenue. Remember a finacial statment can be tweeked and printed in most offices at any given time a mere adjustment in Quick Books is all it takes.

When looking at the Financials be sure the soda and Soap machines will have a deduction COGS line taken from gross Income, this will be deducted before your Net Gross Income is totaled. If you do not see this, question the seller how they account for this expense, these numbers affect the bottom line to the operator, if they omit these types of numbers from their statements then you must be prepared to roll up your sleeves and dig or run away.


It is the buyers job to understand completely where the revenue is being earned, the average tpd per machine how many customer per week in self serve and who is utilizing the WDF, who are those customers? Do not just take the financial statements and crunch numbers or assume the fact that the business has been in business for XXX amount of years that the success will continue or increase with new ownership. Not to say it will not, but once the tables turn and new owners come into an exsisting business their is a debt service, upgrades and other new expenses are to be consider in the overhead that most likely the previous ownership did not have to consider. It is always more work than one thought and it is always something....and it is never just about counting quarters



BUYERS BEWARE DO YOUR HOMEWORK COMPREHEND WHAT YOUR STUDYING!!!

;) Kitty