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Acquisition or new business: Which one is right for you?


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Acquisition or new business: Which one is right for you?

Buying an existing laundry business or building your own from the ground up – one in the same, right? Not quite. While there are plenty of similarities between starting your own business from scratch or buying into an existing, “turnkey” operation, it’s the differences that will guide you in the right direction.

For starters, consider these two types of laundry businesses:

  • Turnkey – The previous owner has already built the business. The customer base, the store, the employees, the equipment and most other elements are already in place. All you have to do is pay acquisition costs and then “turn the key” to get started.
  • New business – On the other hand, a new business is one you create yourself. Instead of buying in, you’ve got to come up with the idea, find a location, hire employees and pay all those other startup costs.

There are pros and cons to each option, and either one could be the right choice for a small-business owner and fledgling entrepreneur. Here is what you should know:

Pros of turnkey operations
Say you’re looking to acquire an existing laundry business. What should you be looking for? Some things to keep on your list include:

  • Purchase price – Find a business for sale that is priced roughly three-to-five times the net income.
  • Age of equipment – Younger equipment means fewer repair costs right away, but perhaps a higher purchase price.
  • Lease – A more attractive business is one with a longer lease, so you have time to get a return on your investment.

Turnkey operations can benefit both first-time investors and seasoned investors. First-timers don’t have to worry about all the nuances – and costs – of starting their own business from scratch. They can instead focus on simply running one. Seasoned investors can skip that timely step too, and work with an eye on business growth.

“Turnkey operations can be better for first-time investors.”

Pros of new developments
Instead of acquiring an existing business, you could opt for a new development. What are the pros here?

A new laundry business means you have more influence and control over the process. You can decide the direction, the target audience, the location, the marketing and all the other factors. You will have an opportunity to forge your own path and carve out your own niche, not pick up where someone else left off.

However, new developments can be more complicated. The many startup steps are tricky for first-timers, which means this direction is typically better for seasoned investors. With that said, keep these pros and cons in mind as you build your own laundry business.

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