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How accurate are Proforma studies

  • 1.  How accurate are Proforma studies

    Posted 12-19-2016 11:45

    I'm looking to open a new store. This will be my first. The distributor I'm working with has provided me with a Proforma. My question is from your past expirences how accurate is the Proforma. 

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    Ed
    Future owner/ operator
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  • 2.  RE: How accurate are Proforma studies

    Posted 12-19-2016 16:36

    Ed, why not share the proforma, of course the good stuff you can black out, name address. 

    But, due remember, a proforma is only as good as the individual who wrote it. I have scene good ones and bad ones, due remember what the cla claims as national average for turns per day. Than look at your proforma, not sure the cla catalogues population with turns per day, it would seem to me that, i would wanna be able to coralate the 2 statistics together. As someone with 15k people in 1 mile, might throw off a buisness plan of someone with 5k people in 1 mile. Just sayin

    Show us the proforma

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    Ben Gottlieb
    Store Owner/ Employee
    Laundry City
    Jacksonville FL

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  • 3.  RE: How accurate are Proforma studies

    Posted 12-20-2016 11:52
      |   view attached

    Here you go Ben. I'm interested in what you think.

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    Ed
    Future owner/ operator

    Attachment(s)

    pdf
    proforma.pdf   92K 1 version
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  • 4.  RE: How accurate are Proforma studies

    Posted 12-20-2016 13:13

    I'd be a bit weary of said pro forma / studies. If you are new to the business industry I would suggest you perform additional due diligence. 

     This business is peppered with lots of new stores with lost dreams.

     Good luck sir.

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    Juan
    Store Owner/ Employee
    Coin Laundry Super Center
    Cocoa FL

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  • 5.  RE: How accurate are Proforma studies

    Posted 12-20-2016 15:39

    Juan 

    I'm not new to running and promoting a business, I have done it for years (it was not a laundry). I have done my due diligence with the surrounding stores. What I really wanted to know is, does the  proforma accurately represent what a store could produce if run properly. Going by the demographis provided. I'm just a little unsure about the figures. After all they are given to you by a salesman.

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    Ed
    Future owner/ operator

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  • 6.  RE: How accurate are Proforma studies

    Posted 12-20-2016 15:50

    ed,

    first thing you should do, is check local stores, and vend prices, do they match this proforma, nearest 2 stores from this location, scale down if the proforma is a little high, dont forget the dryer revune also

    rent, for 36 washer store, over 5k??? WOW, we all know that number is only going up!

    dry clean at net 2k a month, well thats a well greased buisness, you will need to see if the "market" is right for it, and then you will need to build it,. not unlikley, but not easy, not always attanable

    4k a month in WDF, not hard, again, if the market needs it, if this is in the ghetto, probably not, depends on the market tho,

    thier labor rate is kinda high per hour, unless thats the rate by you???? you in ca or NY?

    this is a proforma, besides the items above, the paper you have is for a exsisting buisness, what COULD happen, as others have stated, many dreams and bank accounts have been destroyed, from bad decissions. their are 4 stores within 2 miles, and 5 within 5 miles, and thats JUST a simple google search, some stores arent even on those search engines, makes sure, their are no other stores, if you need this NEW store for revune to pay the commercial loan, and also pay hard costs, you better make sure you know what your doing!

    i am just curious, what kind of investment dollar amount is this?

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    Ben Gottlieb
    Store Owner/ Employee
    Laundry City
    Jacksonville FL

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  • 7.  RE: How accurate are Proforma studies

    Posted 12-21-2016 11:57

    First thing that jumps out at me is how they are framing the pro forma in terms of turns per day -- they show you a range from 3 - 7, but check that small footnote that shows the national averages for top loaders and front loaders between 3 - 4. So unless the store is currently doing well above 4, I wouldn't put a lot of stock into those outsized projections (or I certainly wouldn't pay based on a multiple of anything more than what is shown in the 3-4 range). 

    As others have mentioned, check the pricing assumptions vs. other competition in the area to see if it is realistic. 

    The utilities assumptions look okay, assuming you have all brand new equipment and boiler/water heater. 

    On labor, it is assuming ~425 labor hours per month (the monthly cost divided by $12 per hour rate). That comes out to ~14 hours per day. Does that align to how you will run your store? That assumption makes it look like you will be unattended for some portion of your opening hours (which is fine, but you need to be comfortable with it). It also assumes you can produce the $4K in drop-off service + your normal janitorial with that amount of hours. Feels okay but will depend on your pricing and turnaround times. 

    On the other cost line items: $100 per month for advertising is bare minimum. If you are planning to do anything more that Google/Facebook ads, you need a larger budget. Other costs to consider are local permits/licenses and unsecured property taxes. Also need to understand terms of your lease to know if it is gross or net. If net, need additional expense items to cover things such as CAM. Repair and maintenance looks conservative if brand new machines -- your monthly expenses should be quite low, especially if you have a warranty from your distributor/manufacturer. 

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    Scott Gladstone
    Store Owner
    Los Angeles CA

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  • 8.  RE: How accurate are Proforma studies

    Posted 12-22-2016 10:42

    Observations:

    1. They don't even include the possibility that you will do less than 3 TPD... Believe me, that possibility does exist, and happens all the time. 
    2. As I and many others have said, it is 100% YOUR RESPONSIBILITY to build a case for what your revenues will be. Expenses are far easier to project, and you will need to do work to get those on paper as well. But Revenues are the hard part. DO NOT TAKE ANYONE ELSE'S WORD - build the case for your self that you are confident in because you have moved from guessing to knowing.
    3. Building a good projection is done through hard work, not spreadsheets. Hard work like: 1.) washing in every store in the market, for hours at a time, multiple times, 2.) paying someone to count baskets going in and out of your future competitors, 3.) learning a ton about the business so you aren't the least educated person on your transaction. 4) Building your own proforma from scratch.

    Have fun!

    paul

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    Paul Pettefer
    Store Owner/ Employee
    Laundry World
    Lake Charles LA

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  • 9.  RE: How accurate are Proforma studies

    Posted 08-03-2019 18:28
    i just joined this association and was looking for opinions on the proforma done by the equipment vendors.
    my question to you Edward is since you asked this question in 2016 did your bussiness did as shown in your proforma?
    please let me know. i also have spent a lot of time studying my competition and i am ready to take the next step.

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    Rajesh Bhakta
    Rajesh Bhakta Person
    San Antonio TX
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  • 10.  RE: How accurate are Proforma studies

    Posted 08-04-2019 00:23
    You have already received excellent advise and Ben and Paul are spot on in my opinion. My only addition would be the dryer revenue. It seems high to me. Are you doing 200g machines? What are they proposing you charge per min? My stores are probably closer to 25% but every market is different.

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    Peter H. Mayberry
    Anytime Laundry
    Omaha, NE
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  • 11.  RE: How accurate are Proforma studies

    Posted 08-04-2019 10:39
    Doing 200 g machines and as for the dryers we are working with the vendor on it
    But thanks for the help

    Sent from my iPhone


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  • 12.  RE: How accurate are Proforma studies

    Posted 08-05-2019 23:50
    All of my new stores are 200g so people dry their clothes a lot faster in my stores. That 45% dryer income from washers number seems more to me like revenue for an 80g store.

    In my humble opinion 200g are the way to go because you move people through faster which keeps them coming back to your store. However, on the flip side I do think it makes your dryer revenue lower.

    I have one single store I purchased that has low g machines and I make the most dryer % income in that store.

    If it were me I would assume $0 drop off and dry cleaning revenue and go with 2.5 turns per day. If I am in the black with that number I wouldn't think twice about building it.

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    Peter H. Mayberry
    Anytime Laundry
    Omaha, NE
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  • 13.  RE: How accurate are Proforma studies

    Posted 08-06-2019 23:32
    My salesman provided me a Proforma in an Excell spread sheet. This allowed me to tweak numbers such as my build out was estimated at $75K. I changed that number to $80K which adjusted my bank payment. It also allowed me to change pricing, machine matrix of 20, 30, 60 lb washers and dryers. It also allowed me forecast Wash n Fold, interest rates, ect.   I had to make a few adjustments in the cell formulas for some changes.

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    ROY JACOBS
    ROY JACOBS Person
    Rolla MO
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  • 14.  RE: How accurate are Proforma studies

    Posted 08-14-2019 15:12

    Hello Roy,
    Check your PM
    Thank you



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    Dr. Kienkara Jo Tekura
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  • 15.  RE: How accurate are Proforma studies

    Posted 08-14-2019 15:12

    Wednesday 14, 2019        12:20 Greenwich Mean Time (GMT) Central Time

    Hello Roy,

    Check your PM

    Thank you



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    Dr. Kienkara Jo Tekura
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