In addition to veteran laundry owners looking to stay one step ahead with regard to the latest trends and technology, the Clean Show has always served as a starting point for potential investors doing their due diligence.
However, as the economy improves and with a good number of under-performing laundromats available in strong markets, the number of corporate dropouts and other entrepreneurs eyeing the self-service laundry industry as a solid investment opportunity has increased.
To accommodate this growing trend, the Coin Laundry Association’s fourth day of education at Clean 2015 in Atlanta was all about the basics – featuring “Top 10 Secrets Potential Laundry Owners Should Know,” an hour-long session presented by CLA Chief Operating Officer (and a former store owner himself) Michael Sokolowski.
Sokolowski kicked off the morning’s presentation with a quick snapshot of the approximately $5 billion per year industry, offering a number of reasons potential investors would want to consider entering the business, from recession resistance and a strong average return on investment to schedule flexibility.
“There is tons of flexibility in your schedule,” he explained. “That’s why the laundry business is great for entrepreneurs. But you can’t get into this business expecting to be an absentee owner; you can’t neglect it.”
Sokolowski also presented the flip side of the argument for getting into the business – offering the large capital investment required, rising operating costs and strong competition in many markets as reasons potential investors should do their homework first.
“There is definitely a scarcity of locations,” he admitted. “There are not a lot of undiscovered locations.”
This exhaustive session also covered the pros and cons of building a new retail, self-service laundry, versus purchasing an existing store. Essentially, Sokolowski noted, the final decision comes down to two main factors: the availability of stores in your desired market and your financial picture.
The detailed discussion also touched on energy-efficiency questions, maintenance and repair considerations, and the due diligence required for the selection of a quality laundry site.
“If the seller doesn’t want to negotiate, be prepared to walk away from the deal,” Sokolowski added.
He also included a number of best practices for those looking at getting into the business. Among the top suggestions were: being the price leader in the marketplace, maintaining an energy-efficient store, marketing and advertising the business, paying employees well and focusing on preventive maintenance.
So, what’s the No. 1 “secret” potential laundry owners should know?
It’s all about location, location, location.
“When you find the right location, you can make a profit,” Sokolowski said. “Take your time and use the resources available to you. This is the greatest business to be in when you’re doing well.”
The CLA began the morning’s laundry business education with a 60-minute panel discussion on the hot topic of acquisition financing, moderated by Sokolowski. The panelists included Carol Dang, Elite Business Systems; David Nolan, Firestone Financial; Matt Westphal, Alliance Finance; and Jennifer Whitney, Eastern Funding.
“In general, the climate for acquisition financing is exciting,” Whitney said. “More and more resources are available than just five years ago.”
“It’s a strong market,” Nolan concurred. “Banks are opening up now.”
The session delved into seller financing, buyer profiles and the documents required to secure financing.
“Be sure to get in touch with your lender early on,” Westphal suggested. “This way, you can move quickly once you find a location.”