CLA Connect Open Forum

1.  weekly $ volume analysys

Posted 11 days ago
​Hello all,
I am currently doing due diligence on an existing laundromat out of state and have a question regarding determining weekly $ volume for the laundromat.
I am currently counting the bills from the coin exchanger and dividing that amount by the gallons of water used  per day. I have come up with $0.1020 cents per gallon income(i.e.: 1000 gallons of water = $102.00) after the 1st week of due diligence.
I have all water utility bills going back 18 months and can predict, I think, the monthly $ volume then divide by how many days in the month and come up with a $ value per day.
Am I missing something?
The price negotiated for the business is dependent upon weekly volume average for the past 12 months...my accounting method shows a 22% less volume than negotiated in the purchase price... very important for me to know if my calculations can be used as a guideline?
Thanks in advance

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Robert OBrien
Store Owner/ Employee
Essex CT
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2.  RE: weekly $ volume analysys

Posted 11 days ago
Robert,

Laundromat revenue comes through the washers and dryers - not the bill changers. The bill changers simply exchange money.

There could be some customers bringing in their own coins and using the machines. There could be some customers buying coins from the bill changers and taking them out to wash their car down the street.

You need to verify washer and dryer sales - not changer usage.

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Larry Adamski
Muskegon Laundromat
Spring Lake MI
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3.  RE: weekly $ volume analysys

Posted 11 days ago
The water to income ration is also variable if they have machines that are programmable by the customer. For example if they do or do not charge for heavy duty  or super cycle wash than the income to water ratio will fluctuate. Years ago a manufacture of programmable wash cycle washers stated in their promotional literature that their Emerald series washers "remove the correlation between income and water usage!". And yes they used the exclamation point.

The best due diligence would have someone on site for a week to verify machine usage, water usage and coin counts. Aside from that the numbers are subject to factors that are not precisely accountable.

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David Keith
Store Owner/ Employee
san diego CA
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4.  RE: weekly $ volume analysys

Posted 11 days ago
Thank you very much, I was there for a week and did the numbers daily...and no customer programmable machines

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Robert OBrien
Store Owner/ Employee
Essex CT
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5.  RE: weekly $ volume analysys

Posted 11 days ago
Edited by Curt Harrington 11 days ago
You really should listen to Larry and David. HAVE SOMEONE THERE for a week. Do not count coin boxes or changer use or water use PERIOD.

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Curt Harrington

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6.  RE: weekly $ volume analysys

Posted 10 days ago
The responses are all accurate & correct. Attempting to value a business on coin changer activity & being there a week is putting you @ a gross disadvantage

 What week was it? 1st part of month, middle, or end of month? All of that matters.

 What financial statements have been shared? Do you have all utility data or just water?

 Good luck.

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Juan
Store Owner/ Employee
Cocoa FL
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7.  RE: weekly $ volume analysys

Posted 10 days ago
From experience and my errors.

Count the machine usage for 1 month.
If they have a camera system get remote access so you can view the mat when you want. Also get backup copies of the recordings. It may be hard to believe but some people may stuff the coin boxes. Get 2 years of utilities. You can see trends if business growing or shrinking.  Financials are also good to get but those to can be misreported but typically by under reporting sales and over reporting expenses so more in your favor.

I have not not done this yet but you can go to the local city building department and see if anyone has pulled construction permits in the surrounding area.

Have someone competent check check out all the machines and infrastructure.

Ask a lot of questions. Sometimes its more about how they answer the question and not the answer itself.

Good luck.

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John
Store Owner/ Employee
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8.  RE: weekly $ volume analysys

Posted 9 days ago
​Thanks John, very helpful

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Robert OBrien
Store Owner/ Employee
Essex CT
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