User Panel
Posted: 2/1/2024 4:52:04 PM EDT
[Last Edit: diggerwolf]
I have an opportunity to buy an established dry cleaners, on a busy intersection, near my hometown.
I've never owned a business before and, admittedly, I have a lot to learn. But first, their P&L shows an annual net income of $210K, yet the two owners' W-2s total less than $40K. Where did the money go? Did they really make $210K or $40K? Maybe I need a CPA... Attached File |
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"History is not there for you to like or dislike. It is there for you to learn from it. And if it offends you, even better. Because then you are less likely to repeat it." LtCol Allen West
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[#1]
OP,,,I owned a biz for thirty years. IT IS A SECOND MARRIAGE. IF IF IF your "employee" is sick guess what...no matter WHAT you will take his/her place. IF IF IF you don't pay the rent,,,,The landlord will lock you out and sell your shit. The only good customer is a dead one. You will TRULY see how stupid people can be. As for the books you show it isn't a large cash flow business. You'll end up making about $50-60K a year and working 5 1/2 days EVERY week with no vacations. The IRS will be YOUR boss.
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[Last Edit: Freiheit338]
[#2]
$5,416/month wages x 12 months/year = $64,992
$65k covers all the headcount to run the business for a year? Don't need a CPA to see that line item doesn't add up. |
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The rules are simple: they lie to us, we know they're lying, they know we know they're lying, but they keep lying to us, and we keep pretending to believe them.
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[#3]
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The rules are simple: they lie to us, we know they're lying, they know we know they're lying, but they keep lying to us, and we keep pretending to believe them.
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[Last Edit: diggerwolf]
[#4]
Yeah, they sent tax returns. Either they're stupid or crooks.
Their "Income Statement" on the left, my edits using numbers from 2022 tax return on the right. Attached File |
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"History is not there for you to like or dislike. It is there for you to learn from it. And if it offends you, even better. Because then you are less likely to repeat it." LtCol Allen West
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[Last Edit: Ndenway1twicetimes]
[#5]
Laundry/steam laundries/finishers/dry cleaners is a lot of work,
Dry cleaning chemicals prices fluctuate daily, steam presses, boiler, dry cleaner, business sized commercial washer/drier are expensive and need daily preventive maintenance/cleaning and it's best if you know how to repair them because if you have to call a service tech, their hourly rates and parts are expensive. It's hot, no a/c, you will fire boiler up at 5am so you can press/finish everything for the day so you can shut boiler down before noon, it's fast paced hands on work, finishers & press have to be fast and accurate to do excellent work, wage is mediocre, benifits is two weeks paid vacation or less, no health insurance etc. but you'll find employees with all the illegal immigrants coming in country, people who can't find work anywhere else and ex-cons on parole needing a job. It's best if you know how to operate the steam presses/dry cleaner, steam irons, starch washer etc. Because you will need to train your employees and operate the equipment plus be owner/hr/customer support/press laborer & boss. Plus you'll be in the shop first and last 6 days a week and the 7th day you'll be repairing equipment. My mother and aunt worked in steam laundries/dry cleaners from 11 years old until they retired in their late 60s |
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[#6]
how contaminated is the soil underneath it? my wife used to work for an environmental engineering company, they made big $$$ cleaning up the soil under contaminated dry cleaning businesses
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[#7]
Dry cleaners use alot of chemicals that are heavily regulated by the govt.
Keep accurate records. Don't be surprised if a chemical you use starts to double or triple in price then is totally unavailable. |
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[#8]
Where’s the line item for customers who pay cash and the cash goes straight into the owners wallet?
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[#9]
You sure they weren't just laundering some cash through the place?
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[#10]
210k gross does not leave much room to pocket money after leasing, utilities, dry cleaning products and supplies, reimbursing Aunt Jackie for the fur coat you ruined, insurance, advertising, extra help, and whatever else I'm not thinking of.
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[#11]
Originally Posted By Brawnydog: 210k gross does not leave much room to pocket money after leasing, utilities, dry cleaning products and supplies, reimbursing Aunt Jackie for the fur coat you ruined, insurance, advertising, extra help, and whatever else I'm not thinking of. View Quote $210K net |
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"History is not there for you to like or dislike. It is there for you to learn from it. And if it offends you, even better. Because then you are less likely to repeat it." LtCol Allen West
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[#12]
Originally Posted By rstrobel: how contaminated is the soil underneath it? my wife used to work for an environmental engineering company, they made big $$$ cleaning up the soil under contaminated dry cleaning businesses View Quote It's in an established strip mall on a busy intersection. I suspect that isn't an issue, but good advice about something to look into if I move forward. |
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"History is not there for you to like or dislike. It is there for you to learn from it. And if it offends you, even better. Because then you are less likely to repeat it." LtCol Allen West
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[#13]
How long will the current lease last?
How is the landlord? Would the lease mostly likely go up after the current lease expires? Check history of lease, ask other store owners in the strip mall. Check BBB report. What is the reputation of the dry cleaner? (interwebs) How old are the equipment? Will any require replacement/upgrade due to local/state government regulations or breaking down? How is the service pricing structured compared to other dry cleaners near by? (customers will drive extra miles to get cheaper service) How close are the other dry cleaners? Reputation of those other stores? Besides the dry cleaning services, does it have alteration service? show repair service? etc. How current is the POS system? Does it have customer management capability? Why is current owner trying to sell this place? |
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You mother fuckers are not real
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[#14]
You'd be crazy to purchase a business without a CPA and a lawyer to vet the financial statements and current contracts, leases ect...
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[#15]
I would think that in some areas, with more and more people being remote workers, the need for drycleaning suits, etc, might be down.
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[#16]
Originally Posted By billclo: I would think that in some areas, with more and more people being remote workers, the need for drycleaning suits, etc, might be down. View Quote I can’t find the podcast I listened to a while back that covered dry cleaning history and process, but WFH and post Covid have impacted dry cleaning significantly. Even those that work in the office, the culture of dress requirements have changed to a more relaxed environment. Due to all of these factors dry cleaning has taken a big hit. There is also the concern of chemical use in the facility, there are significant rules and cleanup costs associated that the owner would have to deal with. |
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[#17]
A few people have touched on it, but just be aware dry cleaners are often declared Superfund waste sites due to decades of chemical contamination into the ground.
Under strict liability the current owner can become the bag holder and end up being financially responsible for remediating contamination that has been there for over fifty years. Families have been ruined and left destitute more times than you can count going back over forty years because of this. If you think the ATF is bad, try the EPA . https://letmegooglethat.com/?q=Epa+dry+cleaner+superfund+site TL;DR: You are opening yourself up to potential unlimited financial loss. |
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I'll get my man... to clean your kit.
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[#18]
They aren’t showing the true numbers that much I guarantee.
The contamination thing is also no joke and I would assume that almost every one has some sort of issue. About 8 years ago a friend of mine was selling his business valued at around ~75 million. One of his locations was down the hill from an old dry cleaners in a strip center. While in the due diligence period the buyers of my friends property discovered that the soil was contaminated due to runoff from said dry cleaners. It opened up a can of worms that came close to tanking the sale. In the end the deal got done but the estimated cleanup cost were in the millions. Not to mention the cost of legal bills. |
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[Last Edit: Lex]
[#19]
OP-
I spent 20+ yrs in the laundry/dry cleaning industry. I've been an owner-operator, chemical/distributor rep. I would strongly urge you to look elsewhere. Trust me....pieces across the counter are becoming less and less...Customer attitudes suck more and more....employees suck more and more...supplies cost more and more. It's labor intense, hot, not great margins, and a "great way to turn a lot of money into a little money". Knowing what I know about the industry/business, I wouldn't touch it. Feel free to IM me here. I'd be happy to chat. I've been out of that industry for 3 yrs now (into an entirely different industry thankfully). |
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[#20]
Looks like you have an opportunity to buy yourself a job - in a miserable environment. I would be inclined to pass.
If running this would be your primary income, I can almost see it. If you have anything else you oversee, this is going to eat your lunch. -shooter |
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[#21]
Originally Posted By GonvilleBromhead: A few people have touched on it, but just be aware dry cleaners are often declared Superfund waste sites due to decades of chemical contamination into the ground. Under strict liability the current owner can become the bag holder and end up being financially responsible for remediating contamination that has been there for over fifty years. Families have been ruined and left destitute more times than you can count going back over forty years because of this. If you think the ATF is bad, try the EPA . https://letmegooglethat.com/?q=Epa+dry+cleaner+superfund+site TL;DR: You are opening yourself up to potential unlimited financial loss. View Quote This. Who fucking cares if you can pocket 100k in cash every year and still run the business. The EPA comes in and goes so far up your rectum your great great great grandparents will feel it. DO NOT FO |
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"That pistol just kept saying, let go of my ears, you don't know what you're doing." - thehellbringer
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[#22]
Whelp this was an idea to supplement my income as I approach retirement, but after some research, and all of your helpful responses, this isn't it.
We have a couple rental homes that provide monthly passive income, but after all expenses, not really enough to move the needle. |
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"History is not there for you to like or dislike. It is there for you to learn from it. And if it offends you, even better. Because then you are less likely to repeat it." LtCol Allen West
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[#23]
what background do you have in this industry?
if none, RUN, dont walk, but RUN away from this idea. drycleaning is also a contracting industry. the strong will survive, but piece count is way down from where it was 10 years from now and will be further down 10 years from now. (i mfg poly for drycleaners at my family business since 1956) |
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