Business Simulator

The Cash Machine

You closed on Wash Line Laundry Tuesday.

$219,000: an SBA note, a seller note, and the $22,000 of your own that closed it. Twenty-six washers, a lease, and a payment due on the first.

You did not start this business, you bought it, and that changes everything about how it can kill you. Leverage multiplies a good year and executes a bad one: roughly $2,900 of debt service leaves this account on the first of every month whether the dryers ran or not. The number your lender actually watches is DSCR, the ratio of what the business earns to what the debt costs. Below 1.00 the mat does not pay for itself and the difference comes out of your pocket.

The other half of this world is what the seller did not tell you. His collection sheets were optimistic, his maintenance was deferred, and his lease has a clause in it. Some of that is discoverable in the first month for a few thousand dollars; all of it is discoverable eventually, at emergency prices, in the month a water heater dies. Every year plays out differently, with different situations and different numbers, but the outcomes are not luck. If the account is empty in September, the decision that emptied it was probably made in January.