How to Ask Better Laundromat Due Diligence Questions
Hi, I’m Keira Hamilton. I’m an SBA loan broker and former laundromat owner. In this post, I want to share some insights on how to ask better due diligence questions when you’re thinking about buying a laundromat. I’ve seen a lot of buyers focus on questions that don’t really get to the heart of what they need to know. If you’re new to laundromat ownership, it’s easy to ask the wrong things because, well, you just don’t know what you don’t know! In this post, I’ll break down some common questions I hear and offer better alternatives that will give you more meaningful information.
1. Stop Focusing Only on Machine Count
I see a lot of people ask, “How many machines do you have?” It’s a valid question, but it’s not the most helpful. Machines are important, of course, and you should definitely get an equipment list with details on brand, condition, and age. But just knowing the number of washers and dryers won’t tell you much about the business’s potential.
Evaluate Equipment Age:
Pay close attention to how old the machines are. Older machines tend to break down more frequently, leading to unexpected repairs that can disrupt cash flow and operations.
If the machines are at least 15 years old, I recommend getting a quote from a distributor to replace them. Many distributors also offer in-house financing and can give you a monthly loan payment estimate. Even though the machines may continue chugging along for years, I always like to have a worst case scenario picture.
Understand Capacity:
Compare the revenue the machines are generating to how often they’re being used. If there’s an electronic payment system on the machines, often these apps can run usage reports. But, I prefer the old fashioned way: Go do a few loads of laundry at the mat. Go on different days and at different times of day. Pay attention to how many machines are being used at once and the overall customer experience.
If the equipment is already running at capacity, your growth options may be limited to raising prices or running a wash & fold service at times when the mat is closed to the public.
When we bought our laundromat, many of our dryers were about 20 years old. This is near the end of lifespan for Dexter dryers - fortunately, we were able to keep extending the effective lifespan with small inexpensive repairs here and there. But a laundromat as a business is highly dependent on the machines and their condition - if I were to buy another laundromat, I would definitely bring my technician to help me with due diligence.
2. Ask About Prices in Context
I often hear buyers ask, “What are your vend prices?” or “How much do you charge for wash & fold services?” These questions aren’t bad, but they don’t tell the whole story. Prices only matter when you compare them to the competition.
Research the Market:
Instead of just asking about prices, ask how the laundromat’s prices compare to local competitors. Or, do the research yourself.
If prices are lower, it might mean there’s room to raise them. On the other hand, if prices are higher, you’ll want to see if the business offers added value, like Wi-Fi, parking, or seating, that justifies the premium. Is there room to add any amenities that would justify a price increase down the line?
Raising prices is one of the lowest effort means in which to improve your laundromat’s profitability. We increased profitability by 36% during our ownership by raising prices and improving operational efficiency (and thus increasing customer satisfaction and retention.) A small adjustment, like 10 cents per lb for wash and fold, won’t be felt by your customers - but can make a big difference for your business.
3. Expect Employee Turnover
Another common question is, “Do you have good employees?” While having reliable staff is important, you can’t count on employees sticking around after the sale. In fact, I’ve been through this myself—just two days after I bought my laundromat, the previous owner’s employee quit!
Employee Roles & Responsibilities:
Especially when you’re buying a small operation with only a few employees, the quality of the current employees isn’t that relevant to you as a new owner. Sometimes employees don’t stick around after the business is sold anyways. And you can always let someone go if they’re not meeting your expectations.
Instead of getting to know the current employees before you buy the business, get to know their roles and responsibilities. What shifts do they cover, and what exactly do they do during those shifts?
Equally important to understand is what the current owner is doing on a regular basis and what your role as the new owner will look like.
Expect turnover, especially if you’re hiring for minimum wage. There are some real gems out there who will work exceptionally hard and are trustworthy - but they’ll often pursue new opportunities (as they rightly should, if they have a good skill set and dependable work ethic).
4. Uncover Hidden Labor Costs
One thing I always tell buyers is to figure out how much time the current owner spends working in the business. If the owner is working 20 hours a week but not paying themselves a salary, that labor cost won’t show up on the P&L statement. This can make the business look more profitable than it really is.
Verify Hours & Wages:
Find out how many hours the owner works and what tasks they handle.
If you plan to hire someone to do the owner’s job, you’ll need to account for that in your operating costs.
Also be sure to verify wages. If employees are being paid under the table, you may not see wages fully reported on the financials. Make sure you understand the full cost of labor, as that will be one of your biggest expenses.
5. Go Beyond Security Issues—Ask About Recent Problems
Many buyers ask, “Do you have security issues?” It’s an important question, but it’s also limited. There are plenty of other problems unrelated to security that you can experience with a small business. Problems are to be expected and I guarantee you will not be able to find a business with zero problems. It’s all about finding a business that has the kinds of problems you’re able to and willing to deal with.
My Favorite Due Diligence Question:
Ask, “What are three problems you’ve dealt with in the past month?”
This question will give you insight into the owner’s involvement in day-to-day operations and whether they’re being transparent with you. If the owner hesitates or can’t answer, that could be a red flag.
Final Thoughts
Asking better questions during due diligence can make a huge difference in your decision making process. It’s not just about the numbers—it’s about understanding the growth potential, market context, operations, and challenges. When you dig deeper, you’re more likely to find a business that fits your goals and set yourself up for success.
I’ve been through this process myself, and I know how overwhelming it can feel. If you’re thinking about buying a laundromat or just want to learn more about the process, feel free to check out my YouTube channel for more tips. You can also stop by my Office Hours or book a one-on-one consultation with me. I’d love to help you on your journey to business ownership!
