Dry cleaning lucrative business?

[RK15]

Good morning all,

As a brief background, I am an investment professional with relatively deep pockets capital wise.

I am interested to diversify our business cashflows into other small businesses that can be bought relatively cheap, low operating costs and most importantly that can (hopefully) provide stable cash flows.

I wanted to know if anyone had any thoughts on dry cleaners and whether owning one (or several) in some prominent areas could be a profitable business if done correctly?

The primary aim is to bring in stable and steady cash flows with high volume.

Some questions:

1) How sensitive are dry cleaners to changed in the economic cycle?
2) Roughly what sort of turnover could you expect from a standardly run Dry cleaners outside London (say Surrey) weekly/annually?
3) Do customers prefer to collect or pay extra for delivery service?

Any information would be fantastic. This is a new area for us, so I am doing some preliminary research.

If this is in the incorrect thread, could you please direct me to the best place to put this.

Thanks,
RK15

 

[The Byre]

Most of the dry cleaners around our way seem to have gone out of business.

 

[RK15]

Hi Byre,

Thanks for that information. Could I ask generally what area you are referring to?

 

[Chris Ashdown]

Same here in Great Yarmouth

Which may be either Good or bad depending on the reasons they have closed

 

[RK15]

Thanks Chris,

This is interesting to hear. I am wondering whether anyone has any feedback more south, preferably the Surrey area?

Please let me know if there is a more relevant place to put this thread.

 

[Mr D]

The only person I know who purchased a dry cleaners ran it 7 days a week for over a year and took no wages, it went under.
If you can find one (or more than one) with good profit then you'll have usually multiple years worth of historical financial data to base decisions on. You would be wanting someone else to run the business?

 

[RK15]

Hi D.

Thanks for the input. I agree with you on that. I think I only see the value of this if there is more then one running at once. Of course with the greater reward comes the greater risk.

Yes, I would either look to purchase out someone who is selling their business, keep their team on board and make a new strategic vision for the company/advertising/marketing/pricing points etc. Or I would get a new team in. I do not plan to work there myself, as I still am focussed on my main line of business.

Of course, it does not necessarily need to be a dry cleaner, but I am looking for businesses like this or similar that can have synergistic effects if several are taken over at low cost. I am in a fortunate position to be able to fund low cost businesses quite easily, but as I said in the original post, the main goal is to fine some alternative steady cashflows.

 

[Ione]

Why don't you start looking to invest in small businesses in countries with stable developing economy? I mean non EU countries.

 

[RK15]

Hello Ione,

Thanks for your suggestion. It is something I have entertained, the issue is I have a tight knit team here who can help me on various projects in property development, and business sourcing. One of the advantages is that I can use my team to help me get these businesses running on the ground here. Going abroad will involve additional costs in seeking out foreign management and make keeping an eye on things more tough.

I will further look into it though as I have thought about It in the past.

 

[Ione]

One of the advantages is that I can use my team to help me get these businesses running on the ground here. Going abroad will involve additional costs in seeking out foreign management and make keeping an eye on things more tough.

Agree with you here. But life is a challenge and in such countries you might have better chances when come first

Anyway, if you need my advice in KZ I will be happy to help and be usefull.

P.S. dry cleaning in KZ is not good business to start with.

 

[Mitch3473]

Why just dry cleaning...??

 

[Clinton]

Good morning all,

As a brief background, I am an investment professional with relatively deep pockets capital wise.

So why, then, are you looking for "cheap" businesses?!

Pay proper money, buy something decent! (Maybe start by appointing a buy-side advisory firm on a retainer.)

I am interested to diversify our business cashflows into other small businesses that can be bought relatively cheap, low operating costs and most importantly that can (hopefully) provide stable cash flows.

I don't believe you understand how this works. If it's a profitable business with stable cash flow and low operating costs, you're not going to buy it on the cheap.

The primary aim is to bring in stable and steady cash flows with high volume.

Let me get this right. You want to buy on the cheap and get a large and stable cash flow?

How long have you been an "investment professional" and what areas of investment did you specialise in?

I wanted to know if anyone had any thoughts on dry cleaners...

I do have several, as I've owned dry cleaning shops, but I shall wait for your reply before commenting further.

 

[The Byre]

Pay proper money, buy something decent! (Maybe start by appointing a buy-side advisory firm on a retainer.)
I don't believe you understand how this works. If it's a profitable business with stable cash flow and low operating costs, you're not going to buy it on the cheap.

Or as Warren Buffett said "It is better to buy a good business at a fair price, than a fair business at a good price."

 

[Davlaa]

Hi there

A friend of mine also buys businesses and adds them to his portfolio of around £12m turnover. He recently bought two dry cleaning shops inside the M25, but out of London.

They lasted 4 months before he pulled out of the deal as they had a burn rate of around £8k per month and were going nowhere fast.

He tried all sorts of ideas, from using an app for booking free collection/delivery and making the process simple. He arranged "accounts" with local suit hire shops and funeral directors and offered a workplace delivery and collection "rail" with the idea being you've got to go to work anyway so let us pick up your dry cleaning from the office and free up your time at the weekend.

His simple feedback is: Whilst there are incredible margins to be made from dry cleaning, there is also a dry cleaning shop on every corner, so it's too tough to make it work.

This is only one experience, but thought i'd chuck it out there.

 

[RK15]

I have probably not made my original comment clear. I am looking at this from a PE angle. I am looking at smaller businesses that are distressed/for sale that can be acquired relatively cheap and has potential to provide steady cash flows with some re-strategising. I noticed that there is quite a large disparity between some very successful dry cleaning companies and others that go bust.

In many occasions, the business idea/concept is good but for example if say a family run dry cleaning business cannot afford to market themselves properly as they do not have the financial capacity to do so, they will probably have to be listed. Or perhaps, they were just missing a few critical ideas that could have turned the business fortune around.

Well Clinton from your bio it seems you have run and sold every business under the sun, so the whole forum can now pause and wait in suspense as we eagerly anticipate your 'several comments' on the industry... Who knows, maybe you will even drop the condescending tone. Let's see.

 

[Clinton]

I am looking at this from a PE angle.

What you then go on to describe as P/E modus operandi is ... not how private equity companies operate. UKBF's sister site has an article that should some light on what the PE angle is.

I am looking at smaller businesses that are distressed/for sale that can be acquired relatively cheap

That's completely different to what you described in the OP where you made no mention of distressed businesses and suggested instead that your aim when buying was to "bring in stable and steady cash flows with high volume"... not to buy a problem business and fix it to make it profitable.

... has potential to provide steady cash flows with some re-strategising

Your OP said hopefully, not potentially.

You're singing a different tune now that I've pointed out how silly the original expectations were.

In your latest post you say you know that some dry cleaning businesses are extremely profitable. In your OP you ask whether a dry cleaning business can be profitable if run properly. You don't sound like you have any idea about what you're doing. I suggest you take a step back and appoint as an adviser someone who has at least half a clue.
(And just in case you think I'm pitching for business, I'm very definitely not. I'm fully booked up and not currently taking new clients)

maybe you will even drop the condescending tone. Let's see.

It's my special tone for the crazy threads.