Coin Storage
Coin Laundromat – Understanding the Different Cycles in This Business by Brian Brunckhorst
Those who are new to the laundromat business may not realize that coin laundromats can be cyclical in nature. By this, I’m not referring to the impact of the economy on this business. Instead, I’m referring to the seasonality of the laundromat business. During the winter time, business is more robust and profits are higher. However, in summer months, the gross revenue will typically be 10 to 15% less than the collections during the winter month.
What is the reason for this variation?
Well, in the winter time, individuals must wear more clothing to keep warm and protect themselves from the cold and rain. This is also good for our business because winter clothing will fill more washing and drying machines compared to summer clothing.
Despite this, there is a unique time in the year where business suddenly picks up and coin;laundromat owners have a terrific month. In general, it is usually around the spring season. The exact month may be different year of year. For instance, sometimes it is in April; sometimes business picks up in May.
What causes this to happen?
There are several reasons for this sudden increase in business at coin laundromats. First, when the season changes from winter to spring, people will put away their winter clothing and start wearing spring apparel. This means individuals will wash all their winter clothing before putting them away. One example I see around this time of year is how laundromat customers bring in their winter comforters and blankets to clean them before storing them until winter returns. Washing and drying comforters and blankets are definitely good for the laundromat business!
While this is happening, these same individuals pull out their spring and summer clothing from storage. Since all of this clothing has been in storage during fall and winter they will also add to the washing and drying load. As you can see, all of this adds up to a really good month for the coin laundry business.
Buyer Be Ware
Now, let’s look at this from a potential buyer’s perspective. If a buyer is not careful, they could end up paying way too much for a laundromat business. Imagine if you’re interested in buying a laundromat and you make the purchase during the spring time. You’re not alone because many potential owners look to make a purchase around this time.
I don’t have a precise explanation for this trend. Perhaps it is due to a tax refund. Or perhaps it is due to the fact that the listings of laundromats for sale increase. Whatever the reason, potential buyers need to exercise caution and not just look at the numbers for the previous six months of business.
If you’re going to purchase a laundromat business, you’ll want to review at least two years of store operations data. Ideally, this data should include also at least two full summer data. If you follow this suggestion, you could save yourself quite a bit of money.
Here’s a case to highlight this point. A gentleman I knew purchased a laundromat based on only six months worth of information. He came to me after he realized this mistake hoping I could do something. Well, after further analysis, we realized the seller only provided the best six months of operational data. However, by then, it was too late to negotiate a lower selling price. This mistake cost the buyer approximately $75,000. Had he come to me earlier and followed this suggestion, he would have saved himself a nice sum of money.
About the Author
Brian Brunckhorst is one of the nation’s experts on laundromats. He is dedicated to teaching entrepreneurs how to find, evaluate, analyze, and buy a coin laundromat.
Brian is also the author of the best-selling eBook, “Secrets of Buying and Owning Laundromats”. Go to MrLaundromat.com for more information.
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