Thinking of opening a dry cleaning business? Here's your budget to start.

dry cleaner profitability

How much does it cost to open a dry cleaning business? What are the main expenses? Can we still do it with a low budget? Which expenses are unnecessary?

This guide will provide you with essential information to assess how much it really takes to embark on this journey.

And if you need more detailed information please check our business plan for a dry cleaning business and financial plan for a dry cleaning business.

How much does it cost to open a dry cleaning business?

What is the average budget?

On average, starting a dry cleaning business can cost anywhere from $20,000 to $500,000. This wide range is due to various factors influencing the startup costs.

The most significant factor in determining these costs is the location of your dry cleaning shop. Rental costs in a busy commercial area will be substantially higher compared to a more residential or less frequented area.

Another major expense is the equipment. Dry cleaning machines vary widely in price, depending on their capacity and technology. A basic machine can cost between $15,000 to $40,000, while high-end, environmentally friendly models can exceed $70,000.

The budget per square meter for setting up a dry cleaning business is typically between $800 and $4,000. This variation is influenced by the location, size of the space, and the extent of renovations needed.

Renovations and interior design are also important cost factors. A simple, functional design can be achieved for a few thousand dollars, whereas a high-end, customer-friendly interior could cost much more.

Legal expenses, including permits and licenses, are essential and vary by location. These can range from a few hundred to several thousand dollars.

Initial inventory, such as cleaning chemicals and hangers, and operational supplies will also contribute to the startup costs, potentially amounting to several thousand dollars.

Marketing expenses, including signage, branding, and advertising campaigns, should be considered. A modest budget for these could be a few thousand dollars.

Is it possible to start a dry cleaning business with a minimal budget?

Yes, but starting a dry cleaning business on a very tight budget requires careful planning and compromises.

For a minimal setup, one could consider a home-based or mobile dry cleaning service. This could significantly save on rental costs.

Investing in a second-hand or smaller capacity dry cleaning machine could reduce equipment costs to around $10,000 to $30,000.

Renovations may not be necessary if operating from home or a mobile setup, saving a substantial amount of money.

Reducing the range of services offered initially can lower the inventory and operational costs significantly.

Marketing can be done cost-effectively through social media and word-of-mouth, with a small budget allocated for online ads and basic branding materials, potentially costing a few hundred dollars.

In this scenario, the total investment could be as low as $15,000 to $50,000. However, this approach may limit growth potential and service capacity, and as the business expands, reinvestment will be necessary for equipment and facility upgrades.

Finally, if you want to determine your exact starting budget, along with a comprehensive list of expenses customized to your project, you can use the financial plan for a dry cleaning business.

business plan cleaners

What are the expenses to open a dry cleaning business?

Please note that you can access a detailed breakdown of all these expenses and also customize them for your own project in the financial plan for a dry cleaning business.

The expenses related to the location of your dry cleaning business

For a dry cleaning business, selecting a location with good visibility and access is crucial. Consider areas with steady foot traffic such as commercial districts, near office buildings, or residential areas. It's important to assess the area's traffic at various times to understand the potential customer flow.

Ensure the location is easily visible and accessible to both pedestrians and drivers. Look for spots with good signage opportunities and easy access from main roads. Parking availability and proximity to public transport are also significant factors.

Consider the logistics of receiving cleaning supplies and handling deliveries. Being close to suppliers can reduce operational costs.

If you decide to rent the space for your dry cleaning business

Estimated budget: between 2,500$ and 9,000$

Leasing space involves initial expenses such as security deposits and possibly the first month's rent. Typically, a security deposit is equal to one or two months' rent and is refundable.

For example, with a monthly rent of $800, expect to pay around $1,600 initially for the security deposit and first month's rent. Additionally, plan for the next three months' rent, totaling $2,400.

Understand the lease terms thoroughly, including duration and rent increase conditions. Legal fees for reviewing the lease can range from $400 to $900. The real estate broker's fees are generally covered by the landlord.

If you decide to buy the space for your dry cleaning business

Estimated budget: between 90,000$ and 550,000$

The property cost varies based on size, location, and condition. It might range from $45,000 in less urban areas to $500,000 in prime urban locations.

Include closing costs like legal fees and loan origination fees, usually between $4,500 and $18,000.

Renovation costs to adapt the space for dry cleaning operations could be 10-15% of the purchase price, or between $9,000 and $82,500.

Professional property evaluations may cost from $0 to $3,500. Property taxes, depending on location, typically range from 3% to 12% of the property's value, equating to $2,700 to $66,000 annually.

Property insurance might range from $150 to $1,800 per month, depending on the property's size and location.

Is it better to rent or to buy a physical space when you open a dry cleaning business?

Renting a space offers lower initial costs and more flexibility but can include unpredictable rent increases. Buying a space requires a higher initial investment but offers stability, potential tax benefits, and ownership.

The decision should be based on your financial situation, long-term business goals, and the local real estate market.

Here is a summary table for comparison.

Aspect Renting a Dry Cleaning Space Buying a Dry Cleaning Space
Initial Costs Lower upfront investment Higher upfront cost
Location Flexibility Easier to change locations Fixed location
Maintenance Responsibility Generally landlord's responsibility Owner's responsibility
Quick Startup Quicker to start operations Longer due to property acquisition
Customization Limited customization options Full control over customization
Stability and Branding Less stability, limited branding Greater stability, better branding
Tax Benefits Possible deductions More tax benefits
Asset for Financing No collateral of property Property as collateral
Market Risk More adaptable to market changes Risk of market fluctuations
Long-Term Investment No equity growth Potential equity accumulation
Monthly Expenses Ongoing rent payments Mortgage and associated costs

Equipments, furniture and interior design

Estimated Budget: approximately $50,000 - $100,000

Opening a dry cleaning business requires a strategic investment in key equipment to ensure quality service. The most crucial component is commercial dry cleaning and laundry machines.

Dry cleaning machines, which use solvents to clean fabrics, vary in price from $15,000 to $40,000. The cost depends on capacity and features like solvent recovery systems and computerized controls. Laundry machines, essential for washing non-dry-clean-only items, range from $2,000 to $10,000.

Investing in both types of machines allows you to offer a full range of services. Higher-end machines often provide better efficiency and fabric care, justifying their cost.

Pressing and finishing equipment is another necessity. Commercial presses, which range from $3,000 to $8,000, are vital for giving garments a crisp, professional finish. Steamers and ironing stations, costing between $1,000 and $5,000, are also important for wrinkle removal.

A conveyor system for organizing and tracking garments is crucial. These systems, varying between $1,000 and $5,000, help in efficient handling and reduce the risk of misplaced items.

For packaging and presenting cleaned items, a garment bagging machine, costing around $500 to $2,000, adds a professional touch and protects garments during transportation.

A point-of-sale (POS) system is essential for transaction management and can cost between $1,000 and $3,000. Opt for a system that integrates inventory and customer management for streamlined operations.

Optional but beneficial equipment includes a water treatment system, priced around $1,000 to $5,000, to ensure water quality for cleaning, and an air compressor, ranging from $500 to $2,000, to power certain types of pressing equipment.

In terms of budget prioritization, focus on high-quality dry cleaning and laundry machines as they are the core of your service. Reliable pressing equipment is also crucial for customer satisfaction.

Mid-range options can be sufficient for items like conveyor systems and garment bagging machines. Be cautious with low-priced items, as they may incur higher maintenance costs over time.

Starting a dry cleaning business involves balancing your initial investment with the quality of equipment. It's advisable to begin with essential, high-quality items and expand your equipment as your business grows.

Equipment Estimated Cost
Dry Cleaning Machines $15,000 - $40,000
Laundry Machines $2,000 - $10,000
Pressing and Finishing Equipment $3,000 - $8,000
Steamers and Ironing Stations $1,000 - $5,000
Conveyor System $1,000 - $5,000
Garment Bagging Machine $500 - $2,000
Point-of-Sale (POS) System $1,000 - $3,000
Water Treatment System $1,000 - $5,000
Air Compressor $500 - $2,000
business plan dry cleaning business

Marketing, Branding and Communication

Estimated Budget: $4,000 to $8,000 for the initial months of operation

In the detailed and customer-oriented world of dry cleaning, branding, marketing, and communication are crucial elements for standing out.

Branding in a dry cleaning business isn't just about your logo or the colors of your signboard. It's about creating a sense of trust and reliability with every garment you handle. It's in the meticulous care you provide, the environmentally-friendly detergents you use, and the promptness of your service.

Do you want your dry cleaning service to be perceived as luxurious and premium, or efficient and affordable? This branding decision influences everything from the uniforms your staff wear to the layout and cleanliness of your reception area.

Marketing is your avenue to inform people about your exceptional dry cleaning services. In this competitive market, customers won't just walk in; they need to know why your service is superior. Effective marketing helps your business become the go-to place for garment care in the community.

For a dry cleaning business, successful marketing might include attention-grabbing flyers in high foot traffic areas, partnerships with local businesses for mutual promotion, or targeted online ads focusing on your specialty services like wedding dress or leather jacket cleaning. Local SEO is essential - you want to be the top search result when someone needs "quality dry cleaning nearby".

Avoid overspending on broad-scale advertising. Your focus should be on the local community, not an audience far from your service area.

Communication in a dry cleaning business is about building trust and rapport. It's in the way you interact with customers when they drop off their clothes, the care you take in addressing their concerns, and the follow-up communication for pick-up reminders or customer satisfaction surveys. Good communication fosters a loyal customer base who rely on you for their wardrobe care.

Regarding your marketing budget, for a dry cleaning business, this might range from 1% to 5% of your revenue. Starting conservatively as a new business is advisable.

Allocate your budget wisely. Consider investing in high-quality signage, a user-friendly website, and community engagement activities like sponsoring local events. Also, think about offering opening promotions or loyalty discounts.

Adjust your budget based on the response. If certain marketing strategies like local partnerships or online advertising bring in more customers, consider allocating more funds there.

business plan cleaners

Staffing and Management

Estimated Budget: $12,000 - $25,000 for the first month

When opening a dry cleaning business, the budget for staffing and management plays a crucial role. This budget varies based on the size of your operation, the range of services offered, and the operating hours of your business.

Let's delve into the specifics.

Running a dry cleaning business solo is doable but demanding. The operations include garment handling, customer interaction, and managing business logistics. For one person, this can become overwhelming. Hiring a team is often more practical for efficient operations and maintaining a healthy work-life balance.

Essential roles in a dry cleaning business include a skilled dry cleaner, a customer service representative, and an assistant for handling garments and managing the cleaning process. These positions are vital from the outset to ensure service quality and customer satisfaction. If offering specialized services like alterations or delicate fabric care, additional skilled staff may be necessary.

As your business expands, consider roles such as a store manager, marketing specialist, or more specialized cleaning experts. These positions can be filled after your business is established and you have a better grasp of your operational needs.

Staff should be compensated from the start of their employment. Postponing payment could lead to staff dissatisfaction and high turnover rates.

Beyond wages, factor in additional costs like taxes, insurance, and employee benefits, which can increase total staffing costs by 25-35%.

Training is also key in a dry cleaning business. Initial investment in training your staff in garment care, customer service, and specific cleaning techniques is crucial. This improves service quality and contributes to the long-term success of your business. Allocate a budget for training, which could range from several hundred to a few thousand dollars, depending on the training's scope and depth.

Job Position Average Salary Range (USD)
Front Desk Receptionist $20,000 - $30,000
Dry Cleaner Operator $25,000 - $35,000
Pressing and Ironing Specialist $22,000 - $32,000
Delivery Driver $18,000 - $28,000
Customer Service Representative $20,000 - $30,000
Manager $35,000 - $50,000
Quality Control Inspector $24,000 - $34,000

Please note that you can access a detailed breakdown of all these expenses and also customize them for your own project in the financial plan for a dry cleaning business.

Professional Services

Starting with a lawyer, for a dry cleaning business, this isn't just about general business setup.

A lawyer can help you understand and comply with environmental regulations specific to dry cleaning, such as the proper handling and disposal of chemicals and solvents. They can also assist in negotiating leases, particularly important as you might need specific clauses related to equipment installations or ventilation systems. The cost will depend on their specialty and location, but a small dry cleaning business might spend around $1,500 to $4,000 initially.

Consultants for a dry cleaning business are invaluable if you're new to this sector.

They can offer advice on efficient layout of the cleaning and pressing area, choosing the right equipment, or even help in developing a business model that caters to local market needs. Costs vary, but a specialized dry cleaning industry consultant might charge between $50 to $200 per hour.

Bank services for a dry cleaning business are essential for managing business accounts, loans, and setting up payment systems. As a dry cleaner, you'll need efficient ways to process transactions, especially if offering additional services like delivery. Loan interests and account fees will depend on your bank and the services you use.

Insurance for a dry cleaning business needs to cover specific risks such as chemical spills, equipment malfunctions, and customer property damage. You'll also need to consider general liability insurance. The cost of these insurances can be slightly higher due to these specific risks, potentially ranging from $800 to $3,500 annually, depending on your coverage.

Additionally, for a dry cleaning business, you'll have environmental and safety certifications which are not just a one-time expense. Regular inspections and renewals are necessary, and you might need to continually invest in maintaining or upgrading equipment to meet these standards. This is a recurring cost but crucial for the legality and reputation of your business.

Service Description Cost Estimate
Legal Services Compliance with environmental regulations, lease negotiations $1,500 - $4,000
Consultancy Advice on layout, equipment, and business model $50 - $200 per hour
Bank Services Business account management, loans, payment systems Varies
Insurance Coverage for chemical spills, equipment, customer property $800 - $3,500 annually
Certifications Environmental and safety standards Recurring costs

Ongoing Emergency Funds

Estimated Budget: $15,000 to $75,000

When you're opening a dry cleaning business, having an emergency fund is absolutely crucial.

It's like having a safety net when you step into the world of garment care and cleaning; you hope you won't need it, but it's essential for your peace of mind and security.

The amount you should set aside can vary, but a common rule of thumb is to have enough to cover at least 3 to 6 months of your operating expenses. This typically translates into a range of $15,000 to $75,000, depending on the size and scale of your dry cleaning business.

Remember, these figures can fluctuate based on your location, rent, utilities, employee salaries, and the cost of purchasing and maintaining dry cleaning equipment.

One of the main reasons you need this fund is the unpredictability of cash flow in the dry cleaning business. For example, you might face unexpected equipment breakdowns, fluctuations in demand for dry cleaning services, or changes in the cost of cleaning solvents. These situations can significantly impact your cash flow if you're not prepared.

To avoid these potential challenges, it's wise to not only have an emergency fund but also to manage your operations efficiently.

Overstaffing can lead to unnecessary labor costs, while understaffing can result in delays and customer dissatisfaction. Regularly reviewing and adjusting your staffing levels based on demand can help you avoid these pitfalls.

Additionally, building strong relationships with your suppliers and equipment maintenance providers can be a lifesaver. Sometimes, they might be willing to offer discounts or extend flexible payment terms if you're in a tight spot, which can help with cash flow challenges.

Another key aspect is to keep a close eye on your finances. Regularly reviewing your financial statements helps you spot trends and address issues before they become major problems.

It's also a good idea to diversify your services. For instance, if you're primarily focused on dry cleaning, consider offering alterations, garment repair, or specialty cleaning services to attract a broader customer base.

Lastly, never underestimate the power of excellent customer service and community engagement. Satisfied customers are more likely to return to your dry cleaning business and refer others, providing you with a stable source of revenue and a strong reputation in your local community.

Franchise Fees

Estimated Budget: $30,000 to $80,000

Only if you decide to join a franchise!

When considering the establishment of a dry cleaning business, particularly if you're contemplating joining a franchise, you'll need to factor in franchise fees into your financial plan. On average, these fees can range from $30,000 to $80,000, but the specific amounts may vary based on the brand's recognition, market presence, and the level of support they provide.

The franchise fee is typically a one-time upfront payment that you make to the franchisor. In return, you gain the rights to operate your dry cleaning business under their established brand, and you gain access to their proven business model, training resources, and ongoing support systems. However, it's essential to understand that the franchise fee is not the sole financial commitment; there are ongoing expenses, including royalty fees, marketing contributions, and other operational costs.

It's worth noting that not all dry cleaning franchises structure their fees in the same way. Some may require a higher initial franchise fee but offer lower ongoing expenses, while others might have a different fee structure.

Unfortunately, negotiating the franchise fee itself is often uncommon, as these fees are generally standardized for all franchisees within a specific brand.

However, there may be room for negotiation in other aspects of the franchise agreement, such as the duration of the contract or specific terms and conditions. Consulting with a franchise attorney or specialist can prove invaluable when it comes to understanding and potentially negotiating these terms.

As for the timeframe to recoup your investment and start generating a profit, this can vary significantly. It hinges on various factors including your dry cleaning business's location, the brand's reception in your area, your business expertise, and the overall economic conditions. Typically, it may take anywhere from a few years to several years before you see a profitable return on your investment in a dry cleaning franchise.

Please note that you can access a detailed breakdown of all these expenses and also customize them for your own project in the financial plan for a dry cleaning business.

business plan dry cleaning business

What can dry cleaning businesses save money on in their budget?

Managing your expenses prudently is crucial for the long-term success of your dry cleaning business.

Some costs can be unnecessary, others might be overspent on, and certain expenses can be delayed until your business is more established.

First and foremost, let's address unnecessary costs.

A common mistake in the dry cleaning industry is over-investing in high-end cleaning equipment and luxurious customer lounges from the get-go. While quality service is key, your initial customers are more concerned with the cleaning results and convenience, not extravagant amenities. Begin with reliable, mid-range equipment and a comfortable, but not lavish, waiting area, focusing primarily on the efficiency and quality of your service.

In terms of marketing, avoid excessive spending. In today's digital era, there are economical ways to promote your dry cleaning business.

Instead of costly advertising initiatives, leverage social media platforms, build a user-friendly website, and use email marketing. These strategies can be quite effective without requiring a large budget.

Now, let's discuss expenses that are often overspent on.

One area is inventory, such as cleaning solvents and hangers. It's crucial to balance your inventory to prevent waste and overstocking. Start with what is necessary and adjust based on customer volume and demand. This approach also aids in better working capital management.

Also, be mindful of hiring. While a competent team is necessary, excessive staffing leads to elevated labor costs, particularly during slower periods. Begin with a core team and expand your staff as your customer base and workload increase.

Regarding delayed expenses, consider holding off on business expansion and major renovations. Expanding or renovating your premises too soon can be financially risky. It's advisable to wait until your business has a steady income flow before undertaking such significant expenditures.

Another postponable cost is investing in specialized, high-tech cleaning equipment. Start with essential equipment and gradually invest in more sophisticated machinery as your business needs evolve and grow. This strategy allows for more efficient allocation of funds and the ability to adapt to market changes.

Examples of startup budgets for dry cleaning businesses

To provide a clearer picture, let's examine the budget for three different types of dry cleaning businesses: a small dry cleaner in a rural area with second-hand equipment, a standard dry cleaner offering additional services like ironing and alterations, and a high-end dry cleaner with top-tier equipment and premium services.

Small Dry Cleaner in a Rural Area with Second-Hand Equipment

Total Budget Estimate: $20,000 - $40,000

Category Budget Allocation Example of Expenses
Equipment (Second-Hand) $8,000 - $15,000 Used dry cleaning machines, pressing equipment
Lease and Renovation $3,000 - $8,000 Lease deposit, basic renovations and setup
Cleaning Supplies $2,000 - $4,000 Initial stock of cleaning solvents, hangers, garment bags
Permits and Licenses $1,000 - $2,000 Environmental and business permits
Marketing and Advertising $1,000 - $3,000 Local ads, signage, flyers, business cards
Miscellaneous/Contingency $5,000 - $8,000 Unforeseen expenses, small repairs, utility setup

Standard Dry Cleaner with Additional Services

Total Budget Estimate: $40,000 - $80,000

Category Budget Allocation Example of Expenses
Equipment (New and Efficient) $20,000 - $35,000 New dry cleaning machines, advanced pressing and alteration equipment
Lease and Renovation $10,000 - $20,000 Better location lease, interior setup for customer service and alterations
Cleaning Supplies and Additional Inventory $4,000 - $8,000 Diverse cleaning supplies, threads, needles for alterations
Permits and Licenses $2,000 - $4,000 Environmental permits, business license
Marketing and Branding $3,000 - $6,000 Website, social media, branding materials
Staffing and Training $5,000 - $10,000 Skilled staff for dry cleaning and alterations, training programs
Miscellaneous/Contingency $6,000 - $12,000 Insurance, utilities, emergency funds

High-End Dry Cleaner with Top-Tier Equipment and Services

Total Budget Estimate: $70,000 - $150,000

Category Budget Allocation Example of Expenses
Equipment (Top-Tier) $30,000 - $60,000 State-of-the-art dry cleaning and finishing equipment, specialized machinery
Lease and High-End Renovation $15,000 - $30,000 Premium location lease, upscale interior design, customer lounge
Exclusive Cleaning Supplies and Services $8,000 - $15,000 High-quality solvents, luxury garment care, specialized services
Permits, Licenses, and Insurance $4,000 - $8,000 Comprehensive insurance, various permits for specialized services
Marketing and Premium Branding $7,000 - $14,000 Professional marketing campaign, high-end branding, exclusive promotions
Staffing and Expert Training $10,000 - $20,000 Highly skilled technicians, specialized training for luxury garment care
Miscellaneous/Contingency $8,000 - $15,000 Luxury supplies, contingency fund for unforeseen expenses
business plan dry cleaning business

How to secure enough funding to open a dry cleaning business?

For a dry cleaning business, securing adequate funding typically involves a combination of personal savings, bank loans, and possibly contributions from family and friends.

This mix is often chosen because dry cleaning businesses, usually being small to medium-sized enterprises, are not generally targeted by large-scale investors like venture capitalists, who prefer rapidly growing, scalable companies. Moreover, grants, while available for various sectors, are less common for service industries like dry cleaning, which may not align with the primary focus areas of grant programs such as technology or health.

When seeking a loan from a bank or attracting investors, a well-crafted business plan is essential. This plan should include comprehensive financial projections, a thorough market analysis, your unique selling proposition (what sets your dry cleaning service apart), and a detailed operations strategy.

It is crucial to demonstrate a deep understanding of your target market and a clear pathway to profitability. Lenders and investors look for a solid grasp of the business’s finances, encompassing projected revenues, expenses, and cash flow. They also assess your commitment and ability to successfully manage the business, which can be indicated by your experience or partnerships with individuals experienced in dry cleaning or business management.

As for the portion of the total startup budget you should contribute, it typically varies. A personal investment of about 20-30% is often viewed positively, as it shows commitment to your venture. However, this is not strictly necessary. If you can convincingly demonstrate the viability of your business plan and your ability to repay a loan, securing funding without a significant personal financial contribution is possible.

The timing of securing funds is also critical. Ideally, obtaining financing around six months before launching gives you time to set up the dry cleaning business, purchase equipment, hire staff, and manage other pre-launch expenses. This period also provides a cushion for any unexpected challenges that may arise.

Expecting to be cash flow positive from the first month of operations is generally unrealistic for most new businesses. It often takes time for a new business to reach profitability. Therefore, it is wise to allocate a part of your initial funding to cover operating expenses for the first few months. A common strategy is to reserve about 20-25% of your total startup budget as working capital to sustain cash flow until the business becomes self-sufficient.

You might also want to read our dedicated article related to the profitability of a dry cleaning business.

How to use the financial plan for your dry cleaning business?

Many aspiring dry cleaning business owners find themselves struggling to present a coherent and compelling case to investors, often due to disorganized financial presentations and a lack of structured financial planning.

If you are looking to establish a successful dry cleaning business, securing funding is a critical step. This requires building trust and confidence with potential investors or lenders.

To aid in this, presenting a well-structured business and financial plan is key.

We have developed a user-friendly financial plan, specifically designed for dry cleaning business models. This plan provides financial projections for a three-year period.

Our financial plan includes all the vital financial tables and ratios, such as the income statement, cash flow statement, break-even analysis, and a provisional balance sheet. It comes with pre-filled data, including a detailed list of expenses relevant to a dry cleaning business. You can easily adjust the figures to match the specifics of your project.

This plan is not only compatible with loan applications but is also beginner-friendly, offering full guidance. It requires no prior financial expertise. All calculations and modifications are automated, allowing you to simply input information and make selections. We have streamlined the process to ensure it is accessible to all entrepreneurs, including those who may not be familiar with Excel or financial planning tools.

In case you face any difficulties, our team is available to provide assistance and answer your questions at no additional cost.

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The content provided here is for informational purposes only and does not imply endorsement. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the advice or strategies presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.

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