Valuing a Dry Cleaning Business
The 2020 pandemic caused a serious decline in the dry cleaning industry. Although conditions have been revamped, the industry is not expected to make a full recovery. Businesses switched to casual dress codes, and consumers use cheaper dry cleaning alternatives. For this reason, a decline will likely occur over the next several years. Furthermore, the dry cleaning industry is fragmented and competitive. One report estimates that 70% of dry cleaners operate as small businesses. Understanding how to value a dry cleaning business will allow you to succeed in this industry. Whether you plan on buying or selling a dry cleaning business business, it’s important to understand the fair market value of a dry cleaning business. Below we discuss some factors a business appraiser considers when valuing a dry cleaning business.
Receiving a business valuation is the first step in determining the fair market value of a dry cleaning business. Peak Business Valuation, business appraiser, works with individuals who are buying and selling dry cleaning businesses around the country. During a business valuation, we discuss key value drivers the business appraiser uses as they are valuing a dry cleaning business. The following success factors are only a guide. To learn more about the value of a dry cleaning business, schedule a free consultation below!
Market Multiples for a Dry Cleaning Business
Listed below are average valuation multiples for a dry cleaning business. A valuation expert uses multiples when valuing a dry cleaning business.
- SDE Multiple Average Range: 1.95x – 2.93x
- EBITDA Multiple Average Range: 2.49x – 4.14x
- Revenue Multiple Average Range: 0.47x – 0.89x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How to Value a Dry Cleaning Business
When a business appraiser at Peak Business Valuation is valuing a dry cleaning business, they use a variety of business valuation approaches. The valuation expert will use their knowledge to determine the best methods and multiples to apply to your dry cleaning business. Often the most applicable multiples are cash flow multiples or SDE and EBITDA.
By learning more about the worth of your dry cleaning business, you can take steps to increase its value. This is useful information whether you are buying, expanding, or maximizing the value of a dry cleaning business. Below are some useful tips that may increase the value of a dry cleaning business. For more ideas, see Value Drivers for a Dry Cleaning Business. Any further questions? Schedule a free consultation with Peak Business Valuation, business appraiser.
Key Success Factors for a Dry Cleaning Business
Peak Business Valuation, business appraiser, is proficient in valuing a dry cleaning business. Below are several success factors that may set your dry cleaning business apart, as well as increase the value of a dry cleaning business. For more ideas see Value Drivers for a Dry Cleaning Business.
Drop-off and Pick-up System
According to IBIS World, offering a drop-off and pick-up service is a huge success factor in the dry cleaning industry. Customers love fast and easy service. The drop-off/pick-up feature allows customers to take care of their dry cleaning without entering the store. On top of increasing efficiency, this system also lowers costs. Both of these factors add value to a dry cleaning business as a whole. At Peak Business Valuation, a business appraiser can provide more about increasing the value of a dry cleaning business. Schedule a free consultation today!
Another effective way to increase the value of a dry cleaning business is to have a strong online presence. Where will customers first look when searching for a good dry cleaning business? The internet. Creating a website, Google My Business page, or an app will make your dry cleaning business easy to find. This will increase revenue, which helps add value to your dry cleaning business. An expert at Peak Business Valuation will consider your online presence when performing a business valuation for a dry cleaning business. They will also compare your operations to competitors.
Equally important is competitive differentiation. As mentioned before, the dry cleaning industry is very competitive. What does your dry cleaning business offer that others don’t? Including services and products that aren’t common in the industry will increase the value of a dry cleaning business. With careful consideration, this will bring more customers and revenue for your dry cleaning business. Peak Business Valuation, business appraiser, can help you determine valuable services and/or products to include in your dry cleaning business. Schedule a free consultation to get started.
The last success factor for a dry cleaning business is using up-to-date machinery. Choosing to update dry cleaning machines could be a very valuable decision. Many dry cleaners today operate with PCE dry cleaning machines. These produce hazardous toxins which contaminate air and water. To avoid having to replace these machines, consider other eco-friendly options.
A business appraiser at Peak Business Valuation analyzes this factor when valuing a dry cleaning business. Staying up to date with dry cleaning equipment will increase safety and efficiency. While purchasing new machines may increase costs, it may add value to your dry cleaning business in the long run.
When learning about valuing a dry cleaning business, there are many factors to consider. It is beneficial to understand the value of a dry cleaning business whether you are buying, selling, or growing a dry cleaning business. Obtaining a business valuation can help you better understand the fair market value. And, it is useful for maximizing the value of a dry cleaning business.
Peak Business Valuation, business appraiser, helps individuals across the country learn how to value a dry cleaning business. We are happy to answer any questions about valuing a dry cleaning business. Please reach out by scheduling a free consultation below.
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