How to Sell a Dry Cleaning Business

Posted On: 12/14/2016 / By:
Selling A Business

The process of selling a business is very dynamic and includes multiple steps from deciding to sell to signing over the business to the new owner. If you are looking to sell a dry cleaning business, there are some best practices to follow to ensure the sale goes smoothly. Sunbelt Business Brokers has outlined the steps to sell your dry cleaning business below in order to guide you through the sales process.

The Right Time to Sell

Dry cleaning businesses have suffered in the last few years during the recession, but in 2015 the cleaning industry as a whole had a record comeback after generating $51 billion in revenue. The Bureau of Labor Statistics estimates that job growth in the cleaning sector will continue to increase about 6% through 2020. While clothing has generally become easier to care for, there is an enormous opportunity for dry cleaners in the next few years. The dry cleaning industry has benefited from the increase in innovative service models, including door to door service for customers as well as green cleaning methods.

Initial Steps to Sell a Dry Cleaning Businesssteps to selling a dry cleaners

When selling any business, there are important first steps to help the sale go as smoothly as possible. From compiling business reports and records to evaluating machine maintenance, getting your dry cleaning business ready for sale requires some detail-oriented work from the business owner.

1. Collect Reports

Before you do anything, make sure that you gather all the business reports and financial records from the last three years. Make sure to include profit and loss statements, balance sheets, annual reports, sales and inventory logs, and machine maintenance records. Collecting all of this information will help you in the valuation process as well as give potential buyers the quantitative data they need when considering their purchase.

Machine maintenance records are something that many business owners overlook when putting together their reports in preparation for a sale. When you are selling a dry cleaning business, machine maintenance reports are vital to attracting qualified buyers. When you can, provide confirmation that all your machines have been consistently maintained and serviced, so that potential buyers are more incentivized to sell the business.

It is also helpful to compile a contact list of all vendors, chemical suppliers, maintenance companies, and other businesses you work with. This will not only allow for a smoother transition for the new owners of your dry cleaners, but it will also give you a chance to collect any missing service or maintenance records directly from your contacts.

2. Review Environmental Regulations

After you have collected all of the records and reports from the last three years, it is time to review the environmental compliance of your dry cleaners. In the last ten years, there have been a number of new rules and regulations enforced on the dry cleaning industry by the U.S. Environmental Protection Agency (EPA) and dry cleaners are expected to follow certain environmental regulations.

These regulations vary from state to state, and even city to city, so it is best practice to have a lawyer familiar with environmental law review the local statutes to ensure that your dry cleaning business is following all the necessary rules.

Some regulations to keep in mind during your check include:

  • Confirming compliance with newer Perchloroethylene regulations.
  • Reviewing GACT standards for both state and national compliance.
  • Ensuring satellite waste accumulation areas are up to code.
  • Confirming the proper disposal of hazardous waste in accordance with regulations per state and national guidelines.
  • Reviewing wastewater permits and sampling frequency.
  • Confirming proper EPA reporting and records keeping in accordance with state and national laws.
  • Reviewing preparedness and prevention for environmental emergencies.

Violating any of the state or national guidelines regulating dry cleaners can result in a fine from $15,000 to $100,000 or more, depending on the severity of the non-compliance. Make sure that your dry cleaning business is following all the environmental codes and regulations before you list the business for sale.

If there is room for improvement with environmental compliance, make the necessary changes before listing the dry cleaning business for sale to appeal to potential buyers.

Valuing a Dry Cleaning Business

A wide variety of factors determine valuations, including everything from location to the state of the equipment. When valuing a business, it is necessary to take into consideration the net profit from the last three years, the rate of return a buyer wants to see, asset value, the number of years a buyer expects to own the business and more. Valuations are complicated, so the help of an industry professional is vital.

When valuing your dry cleaning business, consulting with a business broker is your best course of action. A business broker will look at a number of factors when valuing your dry cleaners including:

  • Location of dry cleaners
  • Upkeep and quality of the facility
  • Number of machines for cleaning
  • Special features (i.e.: drive-thru, delivery service, special care services, etc.)
  • Net sales
  • Duration of the lease and the quality of the landlord/tenant relationship
  • History of the operation including relationships with the neighborhood
  • Competitive environment of the area

Each of these aspects impact a buyer’s interest in purchasing your dry cleaning business, and a business broker can assist you with the entire valuation process.

How to List a Dry Cleaners for Sale

While it is possible to sell a business yourself, listing your business for sale with a business broker is a far better choice. A business broker can make sure that your dry cleaners is being portrayed in the best light and has industry connections that can help find potential, qualified buyers to accelerate the sale process. Additionally, a business broker can be relied on to schedule meetings, show the business to prospective buyers, negotiate the terms of the sale including payment options, and facilitate the closing of the deal.

If you are considering selling your dry cleaning business, contact the professionals at your local Sunbelt Business Brokers office. Our brokers not only have the industry knowledge to make the process run as smooth as possible, but they also have local expertise that can make all the difference when selling your business.

John Davies

After obtaining his MBA, John began his career at PriceWaterhouseCoopers, the international accounting and consulting firm, and subsequently joined Progressive Corporation, a large U.S. based insurance company. John was a Division President at Progressive and subsequently became the CEO of a New York based private equity investment company. In 2001, he founded MMI as a platform investment company and MMI has subsequently acquired 10 additional companies. John is also the founder and co-owner of MMI Capital Partners and SFI Investments, LLC, a registered broker dealer.

John’s professional credentials include being a Certified Public Accountant (CPA), Certified Business Intermediary (CBI), Series 7-General Securities Representative, Series 24-General Securities Principal, Series 63-Registered Representative and Series 79-Investment Banking Representative, Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU) and Chartered Property and Casualty Underwriter (CPCU). He is a frequent speaker on various business topics and served as the subject matter expert for the writing of “Selling Your Business For Dummies,” a Wiley Press publication.

John and his family live in Cleveland, Ohio and are actively involved in the community. He currently serves on the Board of the Rock and Roll Hall of Fame, the Cleveland International Film Festival, The First Tee and Jump Start.

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