After all the investment considerations have been made,
the next step is to find a potential dry cleaning businesses for sale
and make an evaluation to see which best fit your investment criteria.
Dry cleaning businesses are usually listed by businesses brokers or by
owners themselves on the web, newspaper, and industry related
publications. Once a potential businesses is identified and terms are
agreed on, the first step is for the buyer to negotiate and complete a
letter of intent or LOI to purchase the business. Secondly, a lawyer
that preferably specializes in business law should review all contracts
and leases to make sure the transaction is legally sound. Lastly, a
buyer must do detailed due diligence before closing the transaction.
The following must be considered during the due
Ask for detailed gross revenue and profits for the last 2 years of
operation. Are they able to show bank statements supporting their
income? Are tax records available?
An inventory list of all equipment should be provided. Factors to
consider is age of equipment, warranties, support, and cost of
maintenance. Ask for the person who maintains the equipment and ask him
questions about any particular issues with the store in question.
Make sure the lease terms are favorable. One should have enough time on
the lease to recoup investment and sell the business in the future in
case one chooses to. Ask for an exit clause after a certain period of
time in case of unexpected changes in the business environment.
Make sure the business is adequately insured.
Dry Cleaning Business that are Self Serve are all car business, which in
itself is very attractive to many.
Are there any outstanding debts by the business. If the buyer is to
assume debt (in case of equipment), do terms remain the same? are they
Who are the competitors in the area? are there other dry cleaning stores
being opened in the target area? How does the potential store compare to
How many employees does the operation require. How much are they
earning? Will they stay in the business after change of ownership?
Is the current owner current on all taxes related to the business?
How long has the businesses been in place? how is the businesses
perceived? is there room for improvement?
Ask for the last 2 years of utility records. What is the ratio of
utilities to revenue? have they been constant?
Ask for the last 2 years of supplies invoices. What is the ratio of
supplies to revenue? have they been constant? Revenue of a dry cleaner
is directly correlated to supplies used. A certain amount of perc
(chemical used to dry clean) is used to generate a certain amount of
revenue. Make sure these figures match to avoid businesses overstating
The preceding information provides a
general guide on how to buy a dry cleaning businesses. But as every
businesses situation is different, other questions particular to the
businesses should be asked. In addition, it is recommended to consult
with other dry cleaning owners or experts to help through the
transactions. A bad transaction can result in headaches,
litigation, and even bankruptcy. Therefore, any amount spent on experts
is worth the peace of mind.