Is Outsourcing the Way to Grow Your Laundry Business… and Get Your Life Back?
Being an entrepreneur, you clearly enjoy wearing several different hats. In fact, the very minute you opened your store, you probably took on a dozen or more jobs all at once.
All laundry operators – and small-business owners, in general – occasionally feel like “I am the business!” However, it also stands to reason that you might not handle all of those business-related tasks equally well. What’s more, it’s dangerous for a growing operation to run this way for too long. You will surely fail to maintain the business over time, not to mention you can lose touch with your family… and your sanity.
“I wanted the flexibility this industry provides, but I found that, over the past year or so, I was falling into a ‘job’ mentality and just doing all the work,” said Ken Barrett, a laundry owner in Anniston, Ala. “Recently, I’ve been expanding to other projects and started running out of time for the laundromats and my family. I had fallen into the ‘Superman Syndrome,’ which affects most entrepreneurs. You’re afraid of releasing control, because you feel no one else can do it as well as you can. As it turns out, other people can do many things better and faster.”
Barrett is among a growing number of laundry owners who have looked to outsourcing to more effectively build their businesses. (The term “outsourcing” is sometimes confused with simply adding staff to handle daily tasks. This article will examine outsourcing as the practice of hiring independent individuals or firms from outside your business.)
Taking the first steps toward outsourcing can be time-consuming, but figuring out how to build your business with help from outside professionals can offer increased efficiencies and economies of scale.
“Progressive entrepreneurs realize the unstoppable power of outsourcing to handle aspects of their business that are essential, but simply don’t make sense for them to deal with personally,” said David Walsh, an entrepreneur and author of “Source Control,” an e-book on effective small-business outsourcing. “Small business, augmented by a global pool of human capital, can compete directly with the biggest players in their space, and win.”
What to Outsource
Chances are you’re already outsourcing some business tasks, such as payroll administration or background/criminal checks for employment. These days, almost any task can be outsourced, with many qualified professionals leaving the corporate world to work as freelancers or contractors. However, just because you can outsource a task doesn’t necessarily mean you should.
“Don’t outsource something just because you don’t want to do it,” explained Jim Lanzalotto, principal at Scanlon Louis, a marketing and strategic outsourcing company. “Sometimes there are things you don’t want to do but they are important to your core business.”
Consider what non-core activities you might be able to outsource. This will help you stop doing things you hate doing (and are probably not that good at), and it will free up your time to focus on the things at which you excel. Leverage the talents of others, rather than trying to do it all by yourself – after all, your time is most valuable asset.
Here are some of the most commonly outsourced small-business tasks:
Marketing: Marketing is the fuel of a small business. Your marketing efforts tie directly to your sales results. You can outsource your marketing efforts to a consultant or public relations specialist. Some marketing professionals will help you create an overall advertising and marketing strategy, develop downloadable content for your website, conduct email marketing campaigns, and pitch the media on your business.
Payroll: Unless you run an accounting firm, you shouldn’t be doing your own payroll. You can get in trouble faster with the IRS for not paying your payroll taxes properly than not paying personal income taxes. If you hire an outsourcing company to do your payroll, you can rest assured that you and your staff will have no issue when income tax season rolls around at the beginning of each year.
Social Media Marketing: There are plenty of marketing consultants and social media marketing agencies that can handle developing social media strategy, content development and social promotion for your laundry business. Just remember that social media is a long-term strategy, so be prepared to invest 12 to 24 months to achieve your goals.
Bookkeeping: Bookkeeping is the number one task that small-business owners routinely neglect and struggle with managing in their operations. Don’t let this happen to your laundry business. By the 15th of the month, you should know how well your business did last month so that you can make any adjustments. By outsourcing your basic accounting services to a seasoned bookkeeper, you will have the ability to use updated financial information to run your laundry.
Administrative Support: Utilizing “virtual assistants” is a cost-effective way to get routine tasks handled. You can use a virtual assistant for maintaining your personal schedule, database, preparing mailings, email newsletters, blog maintenance, invoicing, and voicemail and email management. You can even leverage a niche-focused virtual assistant to do bookkeeping and receipt management.
Of course, within the self-service laundry business, equipment maintenance and repair also are at the top of the outsourcing list. Here are some laundry owners who have lightened their loads by leaning on the expertise of others:
San Francisco, Calif.
We have an independent repair person come in and fix most of our equipment issues. He is new to the repair business, so he is getting his feet wet with us. For larger jobs, we use our local equipment distributor’s repair service. As for scheduling the repairs and maintenance, we have our repairman visit stores as needed, which is usually once every week or every other week.
For accounting, we have a bookkeeper who works in our office two days a week and enters all of our transactions into our accounting software. We also have a separate CPA who does our taxes.
Each store is run from a separate entity, and each entity has its own separate checking and savings accounts. All deposits and withdrawals from each company are recorded in separate registers. The bookkeeper enters all of transactions from the registers of each company into its corresponding set of books. All credit card statements and receipts are scanned and made available to the bookkeeper. Once a month, the bookkeeper and I go over the books and check for errors. Yearly, the books get sent to the CPA, and he does the taxes and makes adjustments to the books as needed.
Currently, our marketing outsourcing is limited to postcard campaigns. In the future, we will hire someone to oversee all marketing, including website development and maintenance, social media and advertising.
We use QuickBooks Assisted Payroll. In addition, we have recently automated the management of keeping track of the attendants’ hours by using a free app for up to 10 employees called TimeStation. With this app, each attendant clocks in and out when they arrive and leave work. We then simply review the report and transfer the data to QuickBooks and upload to their assisted payroll. QuickBooks calculates all of the taxes to be taken out of each check and pays them directly. Our staff is then paid via direct deposit, and we mail the statements.
In addition, all of our stores’ phones are transferred to a single Google Voice number, and that is forwarded to a staff member who answers the phones. I receive a text message of any calls that go unanswered, and we go over all the calls weekly to make sure that something hasn’t been dropped.
To be a true entrepreneur, you need to have the mindset of having others do the work so you don’t have to. The more tasks we have others do, the more time we have to focus on working on our business, rather than working in our business.
I outsource my bookkeeping. My accountant has a laptop at her office, which I supplied. This allows my files and programs to be separate from her other activities. The list of responsibilities includes:
- Confirming attendant times remotely in the time clock.
- Importing the times into QuickBooks.
- Running payroll every Friday – direct deposit and emailed paystubs eliminate the need to deliver anything to the employees.
- Payment of all state and federal taxes.
- Logging into the bank and adding comments to all transactions.
- Downloading all transactions to QuickBooks.
- Providing a weekly report of any attendant late clock-ins or any other abnormalities.
- Reconciling bank statements monthly.
- The next step will be to change the mailing address of the utility bills to her office so that they can make the payments directly from the bank.
My bookkeeper also handles my refund program. I scan all of the paper refund slips into a DropBox account, as well as any voice messages. The bookkeeper adds all of the information into a spreadsheet and checks for excess refunds to one name or specific address. When I stop by, I sign the checks and they get mailed out.
Doing the simple, day-to-day tasks requires little effort, and it’s easy to fall into a routine and forget why you got into this business in the first place.
I outsource accounting work for quarterly reports and year-end tax documents, as well as my snack vending, and any major electrical, plumbing or HVAC jobs.
Licensed plumbers and electricians are called when a job requires more than one person to perform a task, or for safety issues. I also use contractors when city permits are required. I have a great group of contractors.
Bakers Centre Laundry
We outsource our marketing to a local company we hired three months before we opened. They helped with our grand opening marketing campaign, as well as developing our logo and our website.
They assist us with all of our social media, putting new content on Facebook and Twitter on a daily basis. They also help design all of our ads, including television and testimonial videos on our website. In addition, they write blogs that appear on our site to help with search engine optimization. And they’re now pushing email messages to all of our registered customers.
It’s helped us build our business tremendously. I look at it as an investment in my business, which has proven to have enormous returns.
We outsource equipment maintenance and repair to an independent contractor who works for several laundries in the area. He comes two or three times per week and is on call 24/7.
We pay him a monthly retainer and for any parts required. This has been a wonderful relationship. His work is excellent, and he’s not a “parts changer.” He goes out of the way to make sure we don’t spend a nickel more than we have to on replacement parts.
We also outsource certain marketing activities, including website production and maintenance, and sign production. The bottom line is these people can do these things faster and at a lower cost than we can do them ourselves.
The goal is to have everything done expeditiously. Why struggle to do it all yourself?
Santa Clarita Laundry
Santa Clarita, Calif.
I outsource my arcade/video games and their servicing. That’s something I decided early on I didn’t want to be involved in – and nothing over the years has changed my opinion.
I’ve outsourced my accounting tasks from the very beginning. In turn, they set up a chart of accounts in QuickBooks so that we had impeccable records right out of the gate. I subscribe to QuickBooks Online and granted permission for the accountant to work in there as well.
Essentially, I enter/pay all of the bills, import all bank activity and payroll; they close the month out with journal entries by the 5th of each month. Since I accept credit cards and loyalty cards, the money is moving on a daily basis but not assigned to the actual account until the accountant closes the month out. In turn, the tax preparation is finished and handed over to another accountant, since we are an LLC, and our personal accountant takes over. They schedule all of the tax payments.
This way, I can focus on the things that make money – not on where it all went!
St. Ansgar, Iowa
The tasks I outsource are maintenance and payroll. Maintenance has been the most difficult to outsource, due to the knowledge required to perform the job. I hire a maintenance person for approximately 25 hours a week. I have built a system for my attendants to make maintenance requests that go through me – I send the information to the maintenance person, and it’s his responsibility to perform the maintenance and report back.
All payroll functions are performed by a payroll company. All of our attendants clock in and out on an iPad, located in each store; and all of the data is cloud-based, so it’s simple to collect the hours and prepare them for the payroll company.
Cost is always one of the major considerations when deciding to outsource or not, but the loss of time is almost more important. I consider the lost opportunities and the capacity to conduct strategic planning just as important, if not the most important consideration. There is usually a time where it makes sense to hire an outside company to help perform tasks that are manageable and not necessarily critical to the growth of my operation.
The Laundry Shop
The task I tend to outsource the most is equipment repairs. I do all preventive maintenance and most of the repairs myself. However, if I run into something that requires special equipment or is a two-person job, I will look to my distributor for service.
I look at what it’s going to cost – both out of pocket and in terms of time. If a repair is going to take me two hours because of staff and customers on the floor interrupting me, it might take a service technician an hour, because that individual doesn’t have the relationship with the customers or the responsibility of running the store.
Could I be doing something else that will get more customers into my store? If I gain one new customer, on average that customer will spend $500 a year in my store.
Finding the Right Partners
Before handing over the reins, be sure you’re working with the right partner. A good starting place is your own network; ask other laundry owners – or your accountant, lawyer or banker – if they can recommend a provider offering the services you need. Online networks like LinkedIn also make it easy to expand your personal networks and to ask for recommendations.
In the absence of a good recommendation from a friend or acquaintance, professional associations or trade groups often can recommend the right partner for your needs. In addition, a number of online services – such as oDesk, BidModo and eLance – service as virtual marketplaces for contractors and business owners to connect and begin working relationships.
Whether you use a web-based marketplace, a personal referral, or a personalized matchmaking consultant, the key to identifying the right contractor is to know exactly what you’re looking for.
“I don’t have a task that I would never outsource,” Brunckhorst explained. “Everything can be outsourced, providing there is enough money to pay for the work to be done and overseen. The key is to think big enough to be able to afford it.”
Reaping the Benefits
Although there are risks, outsourcing ultimately offers laundry owners great advantages. The process allows you to build a team of skilled professionals without adding the expense of full-time employees, and to avoid getting bogged down with tasks that can be completed without your attention. It’s an affordable, proven strategy for growing your business without letting it take over your life.
“Handing off work forces you to objectively, ruthlessly and systematically consider your activities and the steps taken to perform them,” Walsh said. “Defining a process flushes out inefficiency.”
Stop making yourself crazy by trying to do everything at your store. If you outsource just a couple of business functions, outsourcing can pay for itself in no time. Do your research, check their references and ask for referrals from fellow laundry owners before hiring anyone. Once you start outsourcing a few non-critical tasks in your business, you may wonder why it took you so long to do it.
“Outsourcing is frustrating, difficult, tiring, time consuming – and the best thing you can do to grow your business,” Barrett said. “You may actually be what’s getting in the way.
“Is there a task that I wouldn’t outsource? Yes, being the visionary and driving force of the business and deciding how I want to spend my time.”
“You can have the best stores and make tons of money, but if you lose your faith, family and health, you’re not a successful entrepreneur,” added Arron McCombs of McCombs Laundry Company in Greenwood, S.C. “You can only work 80 hours a week for so long before it takes its toll.”