Have you ever browsed on Zillow at houses for sale? If so, you may have seen some listings that wowed you. Maybe they stirred something inside of you and made you want that house. You’ve probably also seen some listings that made you wonder what the seller and agent were even doing. The house is a mess. The pictures are awful and don’t show you what you need to see. And unless you’re a flipper looking for a bargain, you probably weren’t drooling over those houses.
Your business listing will be looked at similarly. And although buying a house and buying a business are different processes, the concepts do overlap. In addition to preparing the documentation a buyer will need to see, you should also prepare the rest of your business to wow potential buyers. This article is about how to do that.
Preparation is the Key to Success
If you’re thinking about selling your laundromat, you definitely want to watch the replay of a webinar on how to sell your laundromat for the most money with Andrew Cunningham. (It’s usually only for pro members with the other webinar replays, but I won’t tell if you don’t tell!) See below to watch it!
Back to preparing your laundromat to sell. I’m going to break this preparation up into two categories. The first category is preparing the business. The second category is preparing the aesthetics.
While we at Laundromat Resource believe and preach that the value of a laundromat is based on the performance of the business, I also must acknowledge that aesthetics do play a role in the perception of your business, both by potential buyers and by your customers.
1. Preparing Your Laundromat Business to Sell
Laundromats are valued based on a multiple of the net income they produce. Net income is the amount of money that is left after paying off all business expenses. As a seller, then, your laundromat is most valuable when you can maximize your net income. There are two sides to net income and as you prepare your laundromat to sell you should look at both sides.
Obviously, increasing the income of your laundromat will help increase its value. There are a few different ways you can do this, especially if you have a little bit of runway before you sell. Let’s talk about a few options.
- Raise Prices
Usually, the quickest and easiest way to increase your income is through raising prices. Laundromat owners are notoriously bad at raising prices to market value. We’re afraid we’re going to lose customers or that a competitor will undercut us and put us out of business. Or, maybe, we’re just afraid to get complaints from customers. However, as inflation and expenses rise, raising prices is normal and natural. Just look at gas stations. Their prices change daily sometimes. So, do a little research to see if there is room to raise prices.
More customers mean more money. So invest in advertising efforts to draw in new customers. This can be paid advertising (faster) through platforms like Google and Facebook, or organic advertising (slower) through search engine optimization (SEO) or social platforms.
Usually coupled with advertising, promotions designed to attract new customers or to retain existing customers will help you increase your laundromat’s income when properly applied.
- New Services
Another option to increase income is to offer new services, such as alterations, a drop-off laundry service, or a laundry pick-up and delivery service. Sometimes these new services can be grown to equal, or even eclipse, the size of your existing business. This option won’t be a quick process so if you’re selling imminently this may not be the right thing for you, but if you have a little time it could work.
- Add Income Streams
Obviously, adding more ways to bring in income will increase your income. Selling soaps, snacks, and sodas, adding an ATM machine, or adding any other additional income streams can help you boost your income and, therefore, the value of your laundromat. You can download a list of Value-Add opportunities to give you more ideas when you join the free or pro membership!
The other side of net income is the expense side. While you can potentially increase your net income by increasing your overall income, you can also increase your net income by decreasing your expenses. Here are a few categories to consider that could decrease your expenses on your way to maximizing your net income.
I hesitate to mention this because there is usually more to be lost than gained by decreasing staff hours or pay. However, it’s worth examining whether you are getting the most out of your staff. There may be hours you can cut without major consequences to the overall customer experience. I would advise being cautious here. Often, a better alternative to cutting hours or reducing employee pay is to simply look for a higher-quality employee. But, as one of your largest expenses, an examination of wages is warranted.
While you likely already have a lease, it is most likely one of your largest expenses. It may be worth a conversation with the landlord or property manager to see if there can be any renegotiation in the lease. A reduction in the rent amount, the common area maintenance expenses (CAM), or triple net costs can save you money and add value to your laundromat. While you’re negotiating the lease, longer leases are more valuable for laundromats, so work on getting some time added to the lease, too!
The most obvious ways to gain efficiencies in a laundromat are to replace old equipment with new equipment. That can get pretty expensive pretty quickly and if you don’t have a long enough runway to demonstrate an increase in business and decrease in expenses, it may not be worth it. However, there are also other things you can look at to achieve a more efficient operation. For example, ensure there are no water leaks or drips (or gas for that matter!). Make sure your boiler is set to the proper temperature. If you have a hot water tank, insulate it. It will reduce the workload on the boiler, saving gas and electricity. Connect timers on the lights. You can even consider turning off power to washers and dryers when you’re closed.
- Unnecessary Services
This is a good time to evaluate the services you pay for and determine whether or not they are serving the business. Sometimes we sign up for services, publications, or software that served us at one point but no longer do. Cancel any unnecessary services or subscriptions to save on those expenses.
Again, I’m hesitant to mention this as you can usually find cheaper insurance somewhere but you typically have to compromise on your coverage. Don’t sacrifice coverage to save a few dollars. However, it’s always good to keep your insurance agent honest and see what other options, packages, and offers are available. Saving money on your insurance or getting more coverage for your money will both make your laundromat more valuable.
2. Preparing Your Laundromat Aesthetics to Sell
It’s not supposed to be the case, but the feeling a buyer gets when they look at your laundromat will play a factor in their interest in your laundromat. It will also play a factor in how much they are willing to pay for your laundromat.
When I talk about preparing the aesthetics, what I am really saying is that we need to evoke a positive feeling in buyers when they encounter our laundromat. There are a few things we can do to help make that happen.
- Keep It Clean
Ok, this one has to be obvious, right? Well…have you ever walked into a laundromat that wasn’t clean? Probably more than the number of laundromats that you have walked into that were clean. We obviously want to keep it clean, but it’s important to be extra diligent with this when you’re listing your laundromat. Not only will it give a potential buyer a better impression of your business, but it will also make your customers happy. Win-win. Be meticulous.
- Keep It Fresh
Make your laundromat feel fresh. Paint the walls. Add some plants. Consider updating your flooring. Look for ways to freshen up the place. If your laundromat is feeling dated, consider updating small touches, like the signage.
- Maintain the Outside
Both buyers and customers will experience your laundromat first from the outside. Get them started on the right foot. Make sure the parking lot and sidewalks are clean. Keep the windows washed. Make sure your signage is in good condition. And, of course, paint the outside if it needs it.
- Appeal to All of the Senses
We tend to focus on what we can see. However, often smell and sound can evoke powerful emotions. Make sure your laundromat smells fresh and clean. And consider what potential buyers and customers are hearing, as well. Personally, I’m not a huge fan of listening to daytime talk shows or news channels as they tend to create a negative atmosphere. Consider an alternative like AtmosphereTV to keep things positive.
- Pay Attention to the Details
A great tip is to get someone you trust to be honest with you that doesn’t already know your laundromat to come in and point out things that need improvement. This can sting a little, but having fresh eyes on your business will open your eyes to things that need improvement that you wouldn’t have noticed. Make minor repairs, ensure the bathroom is in great shape, and add subtle touches like trim pieces. Keeping your laundromat coordinated, both in color and in material, will go a long way to provide that wow factor.
- Represent Your Laundromat Well Online
A bonus! Many of your customers will experience your laundromat for the first time online, not in person. So make sure your listings are complete, high-quality photos are used, and descriptions are clear. Make sure your website is modern and informative. Check that your Google and Yelp business profiles are complete and updated. Update any social media accounts for your business. All of these will help a buyer understand your business more, evoke a positive association with your business before they ever see it, and instill confidence in your business.
- List it For Sale on Laundromat Marketplace
It’s free. There are a LOT of potential buyers checking there. And you’ll sell it fast! Why wouldn’t you?
Selling your laundromat can be a big deal, but following these principles outlined above, you’ll be well on your way to selling your laundromat for the most money.