Due Diligence ?

[Hadley]

I’m looking at building an attended mat with WDF and dry cleaning. When looking at the Proforma, what % of the gross revenue should the rent, utilities and wages be (individually listed)? And what % of the gross should the total expenses come out to? I know there isn’t an exact answer. Can someone help me with what range I should be aiming for?

[dram]

The rule of thumb that I have seen discussed here and other forums is rent should be <25% of gross and the total utility cost should also be <25% of gross. I have found with my mat's the rent is 12% on my small one and 16% on my larger mat. And the utility costs increase to ~30% in Dec-Feb due to higher gas usage to heat them.
Hope this helps

[Hadley]

So if my distributor is proposing 17% on the utilities, it's an unrealistic number?

[SecretarytoBraveDave]

Hadley,

The new equipment is very efficient and some brands are more efficient than others. 17% seems low, but it will depend on your equipment mix. A brand new building with efficient machines and water heater could certainly do 5% less than the average mat, especially if you have all fronts and no tops.

[Hadley]

This would include a mix of both. I looked at buying an existing. His ratio was 34% so I was concerned when I saw that my distributor was projecting 17%. I thought is sounded off.

[petefritz]

what ever the distrib proposes, you calculate another 25% more in expense, and at least 30% less in gross.
When you build plan on twice as much cost, 3 times for time....then smile if you beat it...

[MrsNewMat]

I would have never thought of doing fire code compliance during my due diligence.

I didn't and long behold, the fire dept. decides to inspect the mat after it's been in operation for 20 years. It's not even been six months since I have owned it.

Now, I am stuck with all the compliance expenses AND loss of working space that is just too costly to be made compliable.