Originally posted – Sep 29, 2014
The ultimate goal is to keep your washers and dryers humming from opening to closing. After all, every piece of laundry equipment sitting idle is missed revenue that will never be replaced.
For certain laundry owners, the answer may be in adding some commercial work to the mix.
“Based on your demographics, there is only going to be X amount of walk-in traffic – it’s going to be limited at some point,” said Ryan Magruder, who owns Smartwash Laundry Center in Bourbonnais, Ill. “However, with commercial accounts, you can make it almost infinite. We will go 25 miles away for a good commercial account, whereas someone 25 miles away is not going to walk into my laundry.”
In today’s competitive climate, added commercial income may be the difference between success and failure.
Here are four types of commercial accounts that can be found in virtually every community:
Hair/Nail Salons
“My leading commercial accounts, as far as just the sheer number of them that I have, are hair salons, along with a few nail salons,” said Ron Lane, who owns Oasis Laundry in Sacramento, Calif. “They don’t represent my highest volume per account, but I have the most of them.”
In fact, Oasis Laundry currently services 20 to 25 salons. These accounts consist mainly of small hand towels, which is relatively easy work.
“There aren’t a lot of stains on the towels,” Lane explained. “It’s simply washing and drying them – just freshening them up.”
Lane’s laundering arsenal for these accounts is similar to what would be needed for most wash-dry-fold accounts, which is why landing a few salon businesses is a great way to break into commercial work.
“We use quality detergents,” he said. “Some accounts will require bleach or some spot removers, but nothing out of the ordinary. Most stains will typically come out with Shout; you don’t have to use anything special.”
The salons also require that their finished towels be folded, so there is some labor involved; however, it’s certainly not going to be as labor-intensive as even your typical residential wash-dry-fold accounts, where you’re folding personal garments.
For Lane, most of his salon accounts are weekly – although he does have a few that request only a biweekly pickup and delivery. And the typical load is about 40 to 50 pounds, Lane noted.
The main costs with this type of account are labor, utilities, materials and pickup/delivery.
“I’ll run a route where I pick up at the salons in certain areas all at the same time, which makes it easier,” Lane said. “Generally speaking, I try to get to them once a week. I charge by the pound – I offer free pickup and delivery, but I require a 30-pound minimum.
Lane charges his salon accounts $1.20 per pound.
“If I pick up several accounts at a time, the margins can be pretty good,” he said. “For instance, a 30-pound minimum order is $36. If a walk-in customer did a 30-pound load of towels in the store, he or she could do that in a larger machine for $6. So, there is $30 built into the commercial order. And, don’t forget, I also would make money on that $6 walk-in customer. It can be fairly profitable, if you get enough of salons going at once.”
Lane explained that one big advantage of doing salon work is the fact that hair and nail businesses typically are open long hours and later into the evening, making for more flexible pickup and delivery schedules.
The biggest disadvantage is that they are smaller accounts, so they don’t represent a huge dollar amount and, therefore, it takes quite a few salons to make it worthwhile.
“Some of them can be a little slower to pay, if their business is down,” Lane added. “I’ve never lost any money, but sometimes they’ll go a few months in arrears on me. And I’ve also had a couple of them close down on me or move.”
Lane explained that most of his salon business comes from positive word-of-mouth promotion.
“What very often happens in the salon business is that stylists will build up a solid clientele and then move on and open their own shops – and then they’ll call me to do the towels for that new business,” he said. “It’s a domino effect. They’ll leave one business and go to another.”
Lane also advertises in the local phone directories and has a strong internet presence.
Some of his other commercial accounts include catering companies (table clothes), small hotels (sheets and towels), nursing colleges (sheets and towels) and dental offices (smocks).
Ron’s Best Advice:
“To begin with, you’ve got to have a system set up to do wash-dry-fold. First and foremost, you’ve got to have employees and be able to do the work.
“Also, you must realize that doing commercial work is a separate business. It’s not retail, self-service laundry business. You’re dealing with businesspeople. You’ve got to be willing to pick up from and deliver to these accounts. You’ve also got to be willing to bill them, because that’s important to them. They want their laundry when they want it, so you’ve got to be disciplined. It’s definitely not like waiting for walk-in business.
“A lot of laundry owners want to get into the commercial business, but when it comes down to wanting to do the extra work, then it’s another story. It’s not more work than running your self-service laundry, but it’s a different type of work – it’s running a different and separate type of business under the same roof.
“Of course, the big advantages are that you get a lot more machine utilization and productivity out of your employees.”
Chiropractors’ Offices
One of Tyler Blair’s favorite commercial accounts is a chiropractor’s office.
Blair, who owns the Washboard Laundry in San Diego, will launder fitted sheets, flat sheets and massage table headrest covers for a local chiropractor.
“The reason I consider it our top account is because we pick up from them every Wednesday night, and it’s a decent-sized order,” Blair said. “It’s about $100 a week, and it’s pretty easy to do. We know what we’re washing, and the predictable frequency enables us to schedule the labor to get it done.”
Typically, the items Blair is taking in may have some massage oil or body oil stains. However, those issues are easily treated, he explained.
“We use an organic type of detergent on the sheets and other items, because some people have sensitive skin and we don’t want to send out finished products that not everyone can use,” Blair said. “We also use OxiClean and fabric softener, and that’s about it.”
As with the hair salon towels, the chemistry required for these sheets is minimal, and probably includes items you already have on hand for your wash-dry-fold business.
“The only special request with this account is they ask us to package things up separately – so that all of the fitted sheets are together, all of the flat sheets are together and all of the headrest covers are together,” Blair noted. “But that’s not hard, and it doesn’t take too long. The account has large laundry bags they we pick up. The items are all mixed together when we pick up, and we deliver them cleaned, folded and sorted.”
For this chiropractor account, Blair estimated the cost of washing and drying the items to be about $5 per order.
“A couple of machines, some water, a little bit of natural gas – actually, $5 might be a bit liberal,” he said.
Next, he budgets $20 for the labor, as it take on average about 45 minutes to an hour to fold and package the sheets and headrest covers.
“Every Wednesday, we know we need an extra set of hands for when that account comes in,” Blair said.
When calculating his costs, he also adds an additional $5 line item for “other costs,” to include miscellaneous overhead and the cost of delivery.
“It costs us about $30 to do,” Blair explained. “Yet, pretty consistently, those tickets are $90 to $110. So, we’re working on a 65 percent to 70 percent profit margin. And they pay every week – on the Wednesday we pick up, we get a check from the week before.”
Blair listed among the advantages of his chiropractor account the fact that he and his staff know what they’ll be washing each week, when they’ll be washing it and approximately how much will be included in each order.
“Of course, one of the challenges is that it’s clearly based on their volume,” Blair admitted. “If they have a good week, there is more to wash. If they have a slow week, there will be less to wash.”
Also, the fact that this particular account owns its own linens can have pros and cons.
“A couple of weeks ago, they bought some new sheets that had different thread counts than what they had been using,” Blair said. “So, we had to figure out at what temperature to dry them and for how long, to keep them from coming out wrinkled.”
He added that another constant drawback is the possibility of damaging a client’s items.
This particular account found the Washboard on Yelp and proceeded to the store’s website. “Probably 90 percent of our commercial accounts have come from online activity,” Blair explained.
Another one of Blair’s favorite commercial accounts is processing sheets, towels, blankets and yoga mats for area yoga studios.
Tyler’s Best Advice:
“Start small. We learned that the hard way. We set up all this labor, thinking we were going to back-fill it with business, but it took longer than we thought. So, then we started to schedule our labor based on the volume – and that’s made all the difference in the world.
“Also, train your employees well and treat them well.
“And, lastly, online, nobody knows the size of your business. Above all, you need to be good at building relationships. Make an appointment to visit the prospect on-site, see what their needs are and see if you can meet them.”
Small Restaurants
Slightly more involved than salon towels or “light medical” sheets are restaurant accounts, at least as far as the washing process is concerned.
But, for Paul Pettefer of Laundry World in Lake Charles, La., the extra work required to clean the bar towels he receives from local restaurants is worth it.
“The towels I take in are going to have a lot of food on them, as well as carbon from wiping down the grills,” he said. “I’m dealing with food, oil, grease and burn marks.”
Pettefer uses a high-quality detergent with alkali to cut through the oil and grease stains his staff is sure to encounter.
“The bar towels require multiple washings,” he explained. “So, during the first few rinse cycles, you don’t need to add any chemicals, because you’re just trying to get off any surface dirt and soil.”
Some restaurants’ bar towels also may require a pre-wash soaking to loosen any stains, and your washers’ water temperature becomes crucial when dealing with these more heavily soiled commercial items. So, these added costs must be built into your pricing structure for any restaurant accounts.
The finishing work is simple, said Pettefer, who has landed most of his commercial work through strong word-of-mouth advertising.
“It’s not complicated or labor-intensive to produce,” he said. “And there isn’t a lot of packaging to be done. It’s consistent.”
Many restaurant accounts, including Pettefer’s, will require the laundry to supply the towel inventory for them.
“I do supply the towels, which I purchase from a linen supplier,” said Pettefer, who picks up and delivers to his restaurant accounts three times a week. “Above all, these clients cannot run out of towels.”
Although restaurant accounts are a bit more complicated to wash, they should still be considered within the realm of possibility for most laundry owners – the key is keeping track of your labor and materials costs.
The finishing is extremely simple, the margins can be high and there is no scarcity of restaurants that could use your laundry services.
Pettefer also processes bed linens for a couple of MRI centers, as well as comforters for local temporary housing facilities.
Paul’s Best Advice:
“Find one or two smaller local restaurants, and learn how to do these types of accounts before you try to land the biggest restaurant in town. Coffee shops and independent eateries are great sources of commercial business. Learn this niche – and then expand.”
Schools
Smartwash Laundry Center, located in Bourbonnais, Ill., handles a good portion of the laundry for the 13 schools that make up the area’s elementary school district, as well as doing some work for the local high school.
“For the elementary schools, we mainly do cafeteria rags and towels, along with mops and janitorial rags,” explained Smartwash owner Ryan Magruder. “At the high school, they have a P.E. uniform rental program, where students who have forgotten their uniforms can rent one rather than getting an ‘F’ in gym for the day – and we wash those uniforms.”
Magruder explained that his toolkit for these school accounts is nothing out of the ordinary: laundry soap, bleach and some stain removers.
“It’s the same as doing wash-dry-fold laundry,” he said. “We use clear bags for packaging and make sure everything is folded nicely. We have laundry bags we provide them, which are identified to each school. We clean the towels and the laundry bag, and then fold the laundry bag up on top so that when it’s packaged and sealed in a clear bag, they can actually see what school it goes to by the laundry bag inside.”
Magruder charges the schools $1 per pound.
“With delivery, you’ve got to calculate mileage,” he suggested. “I try to build a 25 percent margin into the delivery, to make the accounts worth it for us to do.”
On average, these school accounts are providing Smartwash with approximately 170 pounds of laundry per week per account.
However, each account is different and set up based on its own needs. For example, Magruder has one school that needs a pickup twice a week, while another location is on an every-other-week schedule; but most of the schools prefer a weekly laundry service.
“With commercial work, your margins are a lot better than with self-service laundry,” he said. “Plus, we’re able to put more into the machines and better utilize those machines.”
Of course, some schools already have their own laundry equipment and laundry centers, so not every school will need your services, Magruder pointed out. In such cases, you need to be able to show them that you can do their laundry cheaper and better.
In addition, there is a lot of competition vying for those school accounts, including some of the large commercial companies, which can provide a more complete service, including items like toilet paper, rugs, floor mats and so on.
“I was able to take a school account away from one of the big commercial players,” Magruder mentioned. “This company would only pick up on Mondays. So, when school holidays fell on Mondays, that company would go two weeks before picking up and delivering. Of course, the school needed a laundry service with the flexibility to deal with their holiday schedule. Purely for the convenience, they went with us.”
To acquire commercial work, Magruder, like the others, is a big fan of building relationships and developing positive word of mouth.
“It’s no different if you’re selling laundry services, mortgages or cupcakes,” he said. “It’s all about making sure that everybody you talk to knows what you do. My wife and I are very active in the community. We know a lot of people, and every time we’re out, we make sure that everyone we talk to knows what we do. And, if everyone knows what you do, they’re going to think of you when they have a need.”
Ryan’s Best Advice:
“You’ve got to be prepared. One of the most important things is doing your research and being prepared so that when you go in to pitch your advantages, you’re already anticipating what they’re going to ask you. You need to have a system – and you’ve got to have it lined out and itemized for the client, because they don’t want to have to think about the logistics of it. They want you to say this is how it works, these are the advantages and here’s the cost.
“You can’t go in and say, ‘This is my first account. I’ve never really done this before. How do you want it done?’ You’ve got to be firm and have some confidence in what you’re doing.”
The four commercial account examples above offer varying degrees of difficulty – and possibility – for laundry owners looking to get into this segment of the industry. And, no, not all accounts are going to work for all store owners in all cases.
However, many of today’s smaller commercial accounts – which are looking for flexible scheduling and service with a personal touch – might be ripe for the picking.
“The big laundry companies won’t do small accounts,” Blair said. “Cintas isn’t going to come to a yoga studio and pick up 20 towels once a month; that’s not their business model. They want 500 chef coats from a five-star hotel.
“If an account is less than $200, the big companies won’t even touch it, because it’s not worth their time. As a result, there is a ton of opportunity out there to service these smaller accounts – a lot of low-hanging fruit.”
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