How much should a dry cleaning business cost?

I am going to purchase a dry cleaning business. I am not sure if their asking price is fair and reasonable. I have purchased many homes.

I gauge those costs based on the market. Are businesses the same, or is their a Gross/Net income marketing formula? Asked by Tragic 46 months ago Similar questions: dry cleaning business cost Business.

Similar questions: dry cleaning business cost.

There are Business brokers who specialize in helping evaluate and purchase a business. I would suggest hiring an expert and not relying on the people here. The price paid should be a function of the performance of the business in the past, the amount of time left on and terms of the current lease (if the lease runs out in a year, your rent could triple, forcing you out of business).

The depreciated value of the equipment, the existing stock of chemicals, and so on. It is very complicated and I don't know all of the ins and outs, but there are experts who know..

Very roughly... Very roughly: Look at their books and see how much profit they made averaged over the last three years, after paying salaries, taxes, insurance, utilities, and most everything. In most competetive industries that are not monopolies, they end up with a profit margin of 5 to 10 percent on sales. Figure out what percent return on investment you'd be comfortable with.

Then figure out how much you'd like for a salary. For instance if you'd like 20% ROI and the business has been making $100,000 a year, it had better not cost more than five times that. And so on.

For more details, you might want to try a business planner for this business planmagic.com/business_plan/retail/dry_c... .

1 Ancient_Hacker is right, but when figuring your ROI, remember the time and energy you will be putting into working at this business and what else you could be doing with that time and energy. There are real estate investments that have a pretty safe ROI of 8%, where all you have to do is go to the mail box, cash the check, and send a check off to the bank to pay the mortgage. If you are going to make a bit less than 3 times as much, you need to put that into perspective as to how much you will earn for how much work.

Ancient_Hacker is right, but when figuring your ROI, remember the time and energy you will be putting into working at this business and what else you could be doing with that time and energy. There are real estate investments that have a pretty safe ROI of 8%, where all you have to do is go to the mail box, cash the check, and send a check off to the bank to pay the mortgage. If you are going to make a bit less than 3 times as much, you need to put that into perspective as to how much you will earn for how much work.

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