Store Owners Share Some of Their Laundry Business Miscues
“We should not look back unless it is to derive useful lessons from past errors, and for the purpose of profiting by dearly bought experience.” – George Washington
Even successful, long-time laundry owners make mistakes. The key is in recognizing these missteps and taking timely action to turn things around.
Below, a number of self-service laundry operators – some new to the industry, some seasoned veterans – have put aside their vanity and provided first-person accounts of the biggest blunders of their laundry careers. These miscues range from employee issues to equipment mix mistakes – and everything in between.
If you’ve made any of the following gaffes, take heart – because you’re certainly not alone.
I consider my mistakes to be painful learning opportunities. Learning opportunities that are not painful are not mistakes. That’s known as “school.”
The first of our three laundromats is on a “city acre” of land (that’s 40,000 square feet.) The initial building plans included three additional spaces for leasing, in addition to my primary project of a laundromat. The bank said, “We love the business plan for the laundromat. We’re not so crazy about you wanting to be a landlord,” and refused to loan me the money for the other spaces. We negotiated some, and I wound up with one additional space, but no money to finish the interior.
After sitting empty for three years and no bites on getting a tenant, I decided to borrow some money and put in some kind of business myself. “After all,” I reasoned, “I’ve been in business for three years now and have a pretty good track record. How hard could it be to take the good business practices I’ve instituted in my laundromat and apply them to some other business?”
So, showing off my intellectual prowess and business acumen, I decided to turn my 900-square-foot space into… a beauty salon!
I’ve had finer moments.
I’m not a hair stylist, but I thought I could be successful by simply renting booth spaces to stylists. I thought, like with the laundromat, that if I built an exceptional place the world would beat a path to my door. I found out having stylists as my “customers” is not at all like having laundromat customers.
American Style was a beautiful facility, nicely appointed with a lot of cherry wood cabinetry and mirrors. But keeping the booths rented out proved to be difficult. After a couple of years I leased the space to a nail salon. Two years later, I leased it to a couple who turned it back into a hair salon for a few months, then skipped out in the middle of the night.
Between complaints from tenants, watching my beautiful creation get abused, and dealing with an outbreak of roaches while begging for rent money, I decided being a landlord is not my true calling. The bank was right.
There is a silver lining, however. Now that we have three laundromats with about 25 employees, it was time to establish a corporate headquarters instead of just a little back room in the first laundromat. The space now serves as my office, is used for weekly Monday morning meetings with our managers, and for interviewing and training new hires. We even have a spare point-of-sale unit installed for that purpose.
In addition to not wanting to be a landlord anymore, I think this “learning opportunity” probably also taught me a little something about humility. Not all of my ideas are golden. Anyway, I’m glad to have a nice office.
Wash It Kwik
Hands down, borrowing money has been the worst thing we could have done for our business. And we did it all – borrowed from family, as well as taking out a 401(k) loan, an interest-only loan and an SBA loan.
If the only answer is to borrow money, you aren’t asking the right questions. Whatever you’re trying to do, scale it back to where you won’t have to borrow to do it and just grow slower. Slow and steady wins the race.
I know I’m in the minority with my views on debt, but I don’t mind being weird one itsy bitsy bit.
El Dorado Hills, Calif.
Two mistakes immediately come to mind:
First, I bought an “affordable” security camera system but quickly realized that the cost of high-definition cameras is money well spent.
My second error involved my equipment mix. I regretted installing toploaders and double-load machines. Going forward, I’ve stopped installing the toploaders. Also, I should have purchased more large-capacity equipment.
Adrian Image Center
I failed to “trust but verify” and, thus, I had a “trusted” manager steal tens of thousands of dollars from the company over several years by manipulating the POS system and her portion of the pickup system. We prosecuted and received restitution for most of it, but it was a horrible experience.
Always run checks and balances on everyone on a regular basis. We now have our CPA come in annually to review our systems and make recommendations for improvement. This has been very helpful.
Here are a few other mistakes I’ve made over the years:
• Not buying enough new equipment fast enough.
• Thinking my store was better perceived that it was – the customers vote with their feet.
• Sometimes not paying attention to industry trends, or not listening to the experts, such as the CLA, the distributors and other smarter operators.
• Not raising my vend prices quickly enough when I had an excellent product to sell.
The biggest mistake I made was signing a retail lease for my pickup and delivery business, when I could do all of the pickup and delivery from a warehouse space. It would have saved me at least 50 percent a month on rent.
Vero Beach, Fla.
The biggest mistake I made was buying a store in May 2008 right across the street from one of our busier stores as a defensive move. Then the recession hit in the summer of 2008. That store, which was grossing $120,000 annually, ended up grossing $55,000 during the depths of the recession. We lost $125,000 over the six years of the lease.
Also, you know how you’re supposed to always change out the coin boxes when you buy a store? Well, I changed out all but 15 dryers. I was waiting to replace the last 15 boxes when we converted one of our other stores from coins to cards, at which point I would bring over the remaining 15 coin boxes. Makes sense, right?
As it turned out, a previous employee of the previous owner still had an extra set of keys and had been helping herself. We found out when the coin boxes were empty one morning, and the attendant then told me that he had seen a woman walking out of the laundromat just as he pulled up, holding a bucket under her arm. She got us for about $600 over the course of a month – that’s 15 dryers at $25 per coin box. We would have been better off buying the 15 new coin boxes. That was a rookie mistake.
The Laundry Room
West Hills, Calif.
One thing I learned when I took over my first laundromat and was new to the industry was to not make too many waves as the new owner of an existing store until you know the ins and outs of the business and the marketplace. Each location has its own culture and customer base. Get to know your customers before you make any changes.
Here’s my story: there is an outdoor market across from my laundromat, and a lot of locals go to this market every Saturday and Sunday. Some vendors also would sell their wares in front of my store. Well, on the first weekend I was in business, I told these vendors they weren’t welcome to set up in front of my laundry, and I pushed them away. Also, before I took over, the previous owner has let the previous team of attendants go – and I brought a completely new staff.
As it turned out, those spurned vendors and former employees began talking bad about me and the store to my customers – trying to drive business to competing laundries.
Those mistakes cost me a few months’ worth of paying out of my pocket to cover the business expenses until the situation slowly turned around, thanks to my marketing efforts and bringing in a quality team of attendants. I’ve since talked to the customers, and I give them great respect. But this was an expensive lesson for me.
As a new owner, I haven’t yet discovered many blunders that I can share; however, something tells me that my learning curve is just beginning and, in the future, I’ll have a bushel full of them.
With that said, the one point I would make is to know your clientele. In an effort to get the word out about my new laundry business, I had door hangers printed and had been distributing them throughout the area. They look great, but as my wife pointed out after we purchased and distributed 500 of them, “Boy, we should have printed them in Spanish, too.”
My customer base is 40 percent Hispanic, and many don’t speak or read English. Such a simple change would have made my advertising efforts so much more effective.
Wash Day Laundry
Here are four major missteps we’ve made along the way:
• We purchased two laundromats within three months of each other. Never underestimate the number of surprises when you buy an existing store. We really stretched ourselves financially, and in hindsight, would have been better served had we waited, although circumstances were such that we may not have ended up with both stores, and now we are glad we have them.
• Our employees have always been our most important asset. We have wonderful employees now, but we compromised in one important instance and let ourselves be talked into hiring someone we later had to fire because of stealing. Lesson learned is to have checks and balances and to act quickly if you are the least bit concerned about an employee’s integrity, honesty or attitude. Their poor behavior can really hurt your business – be it dishonestly or poor customer relationships.
• We set our pricing at a decent starting level, but watched many competitors start out with very low pricing and then really alienate customers when they had to raise rates soon after opening or renovating a store. We would have priced ourselves even higher (knowing that our business model was the “Cadillac” of the market), but were uncertain because there had never been a laundromat in our first location, so we didn’t know what the market would bear. Looking back, we delivered the service and quality that was worth what we charged, and although we waited several years for our first price increase, we believe we could have started just a bit higher. The lesson is to really know your market and where you fit, and do not underestimate your business.
• We used an attorney for all of our lease negotiations, and in spite of that precaution, we still feel as though our relationships with our landlords are difficult. Don’t ever believe a landlord who tells you not to worry and that something is “a detail that can be worked out after all the paperwork is signed.”
Fluff & Fold
One of the biggest mistakes I’ve made in running my full-service laundry revolves around employing qualified staff. I took the easy way out and hired a family friend when I was in a jam, instead of spending the time to find a qualified team member. Because this individual was a family friend, it ended up being difficult to let this person go and caused me to lose business.
Although it can be challenging to find truly good team members, it’s well worth the search. When you look at what a poor team member will cost you, versus what a quality team member can bring in, at the end of the day it pays to make the effort to find a truly qualified individual. Never hire someone simply to fill a space.
Washin Anniston Coin Laundry
Pell City, Ala.
I got into the self-service laundry business at a very rapid pace – three stores in seven months. The first laundry was a renovation of a closed-down store; the second was an operating, unattended store; and the third was an operating store, which was attended by the owner.
The last store provided my biggest challenge, as I jumped into running it myself – 12 hours a day, seven days a week, while renovating it at the same time.
My business plan was set up for unattended laundries only. That was a big part of the decision to get into this industry – no employees, no inventory and flexible hours. But the third store was three miles from my first store, had a solid drop-off business and was a good investment – but it was not built to be unattended.
So, I started to hire attendants and train them, but it was mainly just “follow me and watch what I do, and I’ll tell you if you do something wrong.” It was frustrating for them and me. I was moving fast and making things happen, and my attendants never seemed to have the same enthusiasm. Of course, many other owners will already know why – attendants are employees and don’t have the same investment in the business.
Finally, one of the employees I hired fit well into the business. In fact, she recently celebrated her four-year anniversary. This woman created some stability, and I was finally able to get the training processes in place and documented. Currently, I employ three attendants, working individually to cover 11 hours a day, seven days a week.
The biggest mistake here is that my work background includes more than 20 years with a major automotive manufacturer – where every step in the manufacturing and maintenance process is based on specific operational standards. I’d even been involved in developing these standards, but I initially didn’t believe that the same systems could be used in any size or type of business.
Today, my training has been reduced from weeks and endless phone calls with endless questions to only about five working shifts before attendants are capable of running the store themselves.
Also, giving my employees the ability to make the decisions regarding customer issues has given them more confidence and a sense of ownership. They all have more of a “manager mindset,” rather than an “employee mindset” now. Whenever an attendant brings an issue to me, I always ask, “What do you suggest we do?” This changes their mindset.
Family Laundry II
Kansas City, Mo.
I’ve probably made more mistakes in this business than most store owners. However, the worst blunder was looking at a store location 150 miles from home and my other business locations, and also becoming so enamored with this location that I entered into a partnership that just didn’t work out.
I didn’t do my due diligence with regard to this partner. Once I realized he wasn’t a team player and didn’t want to learn about the laundry business, I should have bailed out. But I kept overlooking these major flaws until I had sunk so much of my income and retirement fund into the location that it almost put me out of business altogether. I allowed this location and this business partnership to create issues for me with the IRS, which have taken me 10 years to solve. At age 64, I’m now trying to rebuild my retirement fund.
My advice to any potential laundry investors is to not let a supposedly great location, fast talk or strong demographics cloud your view of the big picture – and also to understand that a large percentage of business partnerships never work out.
EZ Coin Op
San Jose, Calif.
My first laundromat was purchased in 1992. I sold it in 1996 for a nice profit of about $100,000. In 1993, I replaced 15 single-pocket 30-pound dryers with 14 new 30-pound stack dryers; and I only mention the equipment upgrade because it exacerbated my problems after the sale.
During the years I owned the store, I used a tax preparer I had met several years earlier. He was not a CPA but a licensed tax preparer. Each year, he was able to zero or almost zero my federal and state income taxes. He considered this to be a huge benefit to me. I didn’t realize he was using accelerated depreciation and taking the big write-offs in the year the equipment was purchased.
When I sold the store in 1996, my tax preparer had moved, so I sought advice from a local CPA who was a referral from a friend. I asked the CPA about the tax ramifications of selling the business.
She gave me a rundown on the sale price being broken into categories and how each was taxed. Escrow closed and I netted about $50,000, after paying the agent’s commission. The balance of my profit was in the form of a five-year note with regular principal and interest payments.
In February 1997, I took all of my tax information to the CPA. After two days, she called and told me I had a “real problem.” I owed nearly $70,000 in federal and state taxes. Apparently, all of the recaptured depreciation was taxed as ordinary income. When I asked her why she never mentioned this during our initial meeting before I closed escrow, she said that I had asked about tax consequences of selling a business and that she didn’t know I was referring to laundromat, which had a huge amount of depreciation.
So, I was stuck with a tax bill higher than the net received in escrow. A profit was still realized on the sale, but it was much smaller than the original estimate. Plus, it required digging into the “sock” to pay the tax bill and then replenish that money as the monthly payments came in.
Yvette Morton Williams
Wash & Spin Coin Laundry
We purchased a large, existing laundromat six years ago. The previous owners were selling after totally renovating the vacant space two years earlier. They had a 10-year lease with two five-year options, so there were eight years remaining. We agreed to have their lease assigned to us without an attempt to negotiate our own lease. We later learned the real reason they were selling was because they were unable to turn a profit. I will always attempt to negotiate my own lease in any future deals – the landlord can only say “no,” but as we know, once the lease (or assignment) is signed, your leverage nearly dissolves as the ink dries.
Listening to the seller and looking at the competitor across the street encouraged us to hold our prices steady. It took a full year and a half before we raised prices. I should have raised them immediately after the purchase.
Initially, things were very tight. We operated with a negative cash flow for a long time and were very stingy with refunds. In hindsight, I would be more liberal with refunds early on. Great customer service goes a long way toward retaining and building customers. Today, all of the employees are empowered to refund up to the price of our most expensive washer without any prior approval, and they are encouraged to make the customer happy. Many times, if we strongly believe the refund is needed because of something the customer did, we’ll at least offer to meet them halfway on the price of a re-wash.
We also took too long to make important personnel changes in the early days. We retained several employees for longer than we should have. One of our earlier managers displayed an obvious annoyance at any new policy we implemented, and some of our earlier attendants received more negative feedback from customers than I would tolerate now. Managers in particular help set the tone for all employees, and it’s important to feel as if any member of management is an advocate of store policies.
Another significant blunder was waiting too long to begin advertising online. We maintained a large truck in the parking lot of the shopping plaza that had been imaged with our store information, mostly because the previous owners paid for it since they opened their business. We could have purchased the truck for the price of the four years of advertising that we paid. An equivalent amount spent on online advertising (mainly Google Adwords and Facebook) yielded immediately higher and measurable results.
Associated Services Corp.
About 10 years ago, I was approached by a company that offered to place ATMs in some of my stores. The company gave me total leeway as far as which locations would feature their machines.
When I decided on the locations that would receive the ATMs, I didn’t look at market demographics as much as I did at the dollar volume of the stores. This was a mistake. After three months, there were already problems. There were issues with vandalism of the ATMs at some of the unattended stores, while at others the number of transactions was very light.
I focused on the wrong metrics, as far as choosing which stores would receive ATMs. This was a blunder.
However, it opened my eyes to then aggressively figure out what my customers wanted, relative to payment. It allowed me to focus on the cash aspect of the business and to figure out how to make it easier for my consumers to get the cash needed to use my laundry equipment.
Today, I offer a hybrid system in about 15 percent of my stores, where customers can use either cash or credit/debit cards.
Value Clean Laundromat
One big mistake occurred up on the roof of my store. We built the place ourselves 15 years ago. Unfortunately, we placed the air conditioning unit too close to the exhaust of the dryers; as a result, we had all kinds of problems with the AC. We ended up installing a sheet metal barrier between the two, which has solved our problems.
Another smaller mistake is that I would like to have installed gas meters on my boilers and my dryers so that I could get a better handle on where my natural gas is going. I still may do this, but it would have been a lot cheaper to do so right from the beginning.
By contrast, the one thing we did very well 15 years ago was to put in additional utility hookups in three different area of the laundry that weren’t used initially. However, over the years, we’ve ended up using all of them as the business has grown. For a few hundred dollars 15 years ago, we were able to save thousands of dollars in utility installation costs.
Peanut’s Coin Laundry
During the summer of 2000, a friend of mine who owned a laundromat and carwash told me he wanted to sell it. I had always wanted a carwash, but I knew absolutely nothing about the self-service laundry business. My friend assured me that there was nothing to the laundry business except to collect the quarters, so I bought the business and felt pretty confident about it.
I was a laundry owner for a week when I started to get good taste of the business. In fact, I can remember it like it was yesterday. We had just gotten out of church, and I thought I’d swing by the store to check on things – and, as I walked in, customers everywhere were complaining. I had more machines broken down than were running.
The next day I got on the phone to start finding parts and technical help. The laundry limped along for a month or two, and I knew I had made a huge mistake. All of the equipment was 20 years old and had been poorly maintained.
I had to make the tough decision to pull out all of the old equipment and replace it with new machines – or possibly fail in the laundry business. I also had to go back to my banker and say, “Do you remember all of that equipment we just bought in this laundry deal? Well, the value was way overstated, and it’s got to go.”
In January 2001, I replaced all of the washers and dryers with new ones. The revenue immediately increased, repairs and complaints disappeared, and utility costs dropped drastically. In fact, my utilities decreased enough to offset the payment on the new equipment.
The advice I would give anyone looking to get into the laundry business is to first do your homework and research it well. Also, find a good distributor and be sure to have a good banker. Don’t wait until after the purchase to do this.