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Owning and Operating a Dry Cleaner Business

Finding used dry cleaning equipment

April 13th, 2012 by ChadB No comments »

If you are looking to build or get into the Dry Cleaning Business, or you already have and are considering getting used equipment, then there are few things you need to consider before you continue.  One of the most compelling reasons lately is that many business owners are looking to find ways to reduce costs when replacing aged equipment.

Replacing one or two dry cleaning machines and other equipment with used machines is fine in my opinion.  Actually, if you are looking to replace all your machines at the same time with used equipment you may actually find some really good deals.  If you are looking for a specific brand or model to match your existing equipment when one or more and beyond repair then I suggest ebay actually.  Ebay can be a great source of used equipment that you may not have thought of.

By looking on ebay for used machinery you can be as specific as you need to be.  You will be protected through their payments systems and you can work out a deal with the seller for additional help or service in most cases.  The down side to going through ebay is that you will usually have to deal with shipping, delivery and installation yourself.

Another great place to find used dry cleaning supplies and equipment is also craigslist.  Although not my favorite site to use… it can be done.  I just find it so hard to find what I am looking for, you need to narrow down to specific areas and can’t easily do a proper search over a larger area.  If you get lucky and you do find what you are looking for within your local area, all the power to you.  I just never have that luck on craigslist.

What I recommend the most is that you look for a used equipment dealer.  Even the new equipment sellers also have access to or work with another used equipment dealer.  Check for local listing for businesses that deal in commercial laundry and dry cleaning machines, both new and used and give em a call or check out their websites.  I usually have a few links that I rotate through if you see one, check them out.

There are a lot of used equipment dealers all over North America.  Why? Because the dry cleaning business is in every city and town from east to west coast.  With tens of thousands of stores, there will be a large selection of used equipment in almost any metropolitan area.  Several of the more well known companies include Ecotex, JP Equipment, Onward Laundry, LPD, PWS and many many more.

Another question I have for you is: Are you looking to replace all your equipment, or just one off’s?

If you are replacing one or 2 machines, then I suggest you do find some used ones to match your existing equipment.  Keeping your machines and brands the same will save you a lot of time and headache when it comes to maintenance and service.  If you either do the maintenance yourself or hire a contractor to do regular maintenance it will be a lot easier if you had the same products.  The best would actually be if you can find the exact same machine you are replacing… then you have your old one for parts ( that are still good ).

If you are replacing all your machines at the same time, or furnishing a new business, then I also suggest leasing.  From dealing with not only dry cleaning equipment, but also laundromats, Medical and Dental offices.  Leasing provides a wider range of options for any business.  In some cases you can lease new equipment for about the same monthly costs as your financing of used machinery would be.  Leasing allows you to retain capital dollars and you can customize the payment plans to fit your financial budget and allow you to use the business flow as your guide.

Leasing equipment also allows you to include maintenance and service as part of the agreement for the life of the lease period.   This is usually at a lower rate then you could negotiate a third party contractor for.  The leasing company often has in-house technical staff that service all the machines they provide and will also be able to provide necessary parts at any time during the life of the contract.

In the end, it is up to you what you want to do.  It also depends on your financial situation, how many machines you are looking at and what is available locally to you.  Stick with a local supplier and make sure you or someone local can service whatever you buy.  The last thing you need is to have a machine down on a busy day and the closest service technician is a day away, or not even close enough to get to you.

How much do you make as a Dry Cleaning Business Owner

January 18th, 2012 by ChadB No comments »

You are looking for a business to buy or get into and you are not sure if it is even worth your effort.  You ask yourself, “Should I buy a Dry Cleaning business or look at something else all together”.  This is a huge question that cannot be answered simply, there is going to be some research to do in order to determine if the asking price for an existing business is fair, under or over valued.  The last thing that you want to do is buy into a failing business for more money then it is worth in the first place.

The question I have for you is how much time do you have?  If you have the time to do your own research then you can do some business analysis and comparisons from other similar businesses in your city or area.  The zone or area that business is located has a large impact on the performance of that business.  You have to consider the demographics and the target customers for your business.

If you don’t have the time, then you will need to hire a professional business analyst or broker to assist you in the assessment of the dry cleaner business you are considering to buy.  A business is a business, so the price should be based on the performance and profit that the business generates.  You can determine this in most cases by looking at the financial history.  The previous 3 years should give you a good idea on the profitability of the Dry Cleaners.  Based on the profit margin you can forecast your income from the business, from that point you can determine the return on investment.

A Business Broker specializes in the sales and purchasing of businesses of any scale.  The services offered by many of these companies include market assessments, business valuations, business appraisals and comparisons as well as a large listing of businesses for sale.  Even if you are buying a dry cleaning business and have done all your own research, it is still worth the cost for an independent valuation of the business.  Have a business broker who is not involved with the sale or purchase of the business to do a simple market value assessment of the business.

How Much Can You Make?

In reality, I can’t really tell you because each and every Dry Cleaners will be different.  I can give you a rough idea though.  Based on some survey data on salaries in the US and Canada for Managers and Owners of Dry Cleaners and other Cleaning services such as Laundromats, the Average Salary is between $45,000 to $60,000 annually.  First, remember that this is an average, so there is plenty of room to be making more.  In my opinion, this is a low estimate actually.  This survey that I found seems to target the “Managers” of the business, which in most cases are employees of that small business.  The net income from a business is really what the owners salary is and is often disclosed to the potential buyers as well.

Beyond the business financials, business plans, employees and all the other duties, what will it take to make a decent salary in the dry cleaning business.  In short, it will take your time.

As an example, lets look at a Dry Cleaner owner who is more hands off and hires a manager to run the business.  Out of the business gross profit you will have to pay your Manager, who in turn will make between $40,000 and $50,000.  The business manager will be responsible for day to day activities, storefront, marketing, licensing, permits, staff and other management duties.  The business in turn will be making a profit ( hopefully ) and your take home salary may as low as $20,000 a year.  Not great…. but you have to consider that this is probably income on top of whatever else you are making doing other things, or running other businesses.  You can then the owner and not the manager.

In most cases, unless you operating or buying into a multi-store business, you will both be the manager and owner.  Theoretically combining the income into one for yourself.  You will be the manager and have to put in the time to manage the business and all associated activities.  The more you do, the less you have to pay someone else to do them.  You also get to be your own boss.

The only real way to know how much you will make is to have a close look at the financial statements from the particular dry cleaners you are looking to buy.   This is where the business assessment comes in.  In most cases, when a business owner wants to sell their business they will want to have all the documentation ready for potential buyers.   Often the seller will have already arranged a valuation of the business, both for helping with the sale and knowing how much to sell it for in the first place.

Business financials are the key to knowing your potential income.  I have also found that business broker listings will show gross revenue and net profit/income.  The range on dry cleaners is from a net income of $50,000  to upwards of $250,000 + per year.  The Dry Cleaning business is a well established, long running business model with continued growth throughout North America.   The decision to invest your money and time into a Dry Cleaner is a smart one.  Finding the right size of Dry Cleaners is the next step.  Have a look at my article on Starting a Dry Cleaning Business as well.