How to Decide Which Options Are Right for You and Your Business
When I entered the industry in 2010, two types of payment systems were being widely used – quarters and prepaid loyalty cards. And quarters were the overwhelming favorite among store owners.
In fact, quarters have been the workhorse of the laundromat business for so many years that even industry veterans can’t seem to pinpoint exactly when dimes and nickels finally gave way to quarters as the dominant denomination for store owners. No matter, by 2010 it was estimated that more than 95 percent of laundromats were using quarters as their payment system of choice.
It stands to reason then that roughly 5 percent or less of the stores in 2010 were utilizing prepaid loyalty card systems, despite that fact that these card systems had been around for several years.
The main objection to the loyalty card systems were their expense to purchase, install and maintain. In addition, some customers in some markets didn’t enjoy having extra cash (float) tied up on laundry card. As a result, the concept, for the most part, was a nonstarter with most operators for several years.
Fast-forward to 2021: We find ourselves in an entirely different dimension with laundromat payment systems. Today’s laundry operations can accept quarters, dollar coins, tokens, prepaid cards, apps, swipes at the machine, taps at the machine, and on and on.
The beauty of all of this recent innovation within the industry is that owners now have many different options – each with its own advantages and disadvantages.
I’ll attempt to walk you through the decision-making process and help you focus on which payment option tools and features are most important for you and your business.
I talk daily to other laundromat owners – everyone from small-store, mom-and-pop operators to those with large, sophisticated laundry business networks. And the reality is that we all have different needs and wants in the present, as well as in the future.
One of my coaching clients recently shared with me that he had been researching payment systems for three years and felt like he had developed “brain fog” when it came to this topic. He just couldn’t seem to make a decision as to what was right for his business.
My answer was a very definitive: “It depends.”
Although that may not seem very helpful at first, knowing the factors on which your future buying decision depends is. So, if you’re suffering your own case of payment system “brain fog,” here are the factors you need to consider:
- Revenue/Volume
- Simplicity/Management
- Investment
- Market Differentiator
- Future Ambitions
Revenue/Volume
The first factor is the revenue and/or volume that your laundromat generates. Many of these payment systems and their tools are great to have, but may be too large an investment for some small laundromats bringing in just a couple thousand dollars per week to consider.
If you operate a single store or two, simply converting from quarters to dollar coins or tokens may be the best answer for you.
Perhaps, if your vended laundry generates $5,000 to $10,000 per week, you likely can justify a payment system, but you may be concerned about customer acceptance, attendant training, credit card transaction fees, etc.
Now, if you are generating more than $10,000 per week, you likely can afford anything you want, but again that doesn’t necessarily mean you’ll make that decision.
Simplicity/Management
Once you’ve established what you can afford as far as an investment in a payment option, the second factor to consider is simplicity/management. Many owners are attracted to this industry because it’s a simple, cash-based business – and they have customers who love the ease using coins and not having additional money tied up that has yet to be spent.
Assuming you’ve got the financial ability to pay for a non-coin system and the willingness to bypass a very simple business payment system in favor of a slightly-less-simple option, what’s next?
You also need to consider your management style. If you’re a hands-on, non-tech type of person, a coins-only operation likely may be for you. Of course, that decision (like all business decisions) comes with a tradeoff. After all, collecting coins (even larger denominations like dollar coins) can have its own share of headaches and, of course, requires a good chunk of someone’s time.
Early on in your laundromat journey, you may decide that collecting coins is worth it to you. However, as you become more successful and your time becomes more valuable, you may change your mind. Never be afraid to pivot. What worked best yesterday is irrelevant to what will work best tomorrow.
Investment
The next decision point in this process is investment. There are many owners who have plenty of money to invest in a payment system, but they don’t see a modernized payment system as an “investment.” Instead, they view them as an unnecessary “expense.”
As long as your market (competitors) and your customers remain cooperative, you likely can get away without this modernized tool for your laundry operation. But my question for you is this: Are you playing with fire?
We often become complacent with regard to our means of operations, and this can open the door for a competing laundry to swoop in and do things better than we are.
Depending on the revenue/volume of your store, your management style and your tolerance to investing in your business, I’d encourage you to think a bit differently.
Although the first three factors should always be taken into account, when I make decisions for my laundry business, the outcome typically is weighed heavily toward the final two – market differentiator and future ambitions.
Market Differentiator
I see market differentiators and their implementation as the keys to my success. In business, we can choose to play offense or play defense – or we can choose to sit on the bench.
Personally, I encourage all laundromat owners to seek to operate their facilities at the top of the industry and for that mentality to drive every decision they make. Although this at times may require a short-term sacrifice in lifestyle or even profitability, I’ve discovered that nearly all of the leading operators in our industry make their decisions in this or a very similar manner.
Some owners “play defense” by waiting for their competitors to raise prices, install new equipment or modernize their payment systems – and then they follow suit. Although not my preference, it’s better than riding the bench.
I always choose to “play offense,” even if I think I can’t afford it. By playing offense, you are the market leader in modernized payment systems – and you are setting the prices. As a result, you can always afford a new, modernized payment system, especially when you are first to market. Use your payment options as a market differentiator.
Future Ambitions
We’ve all heard that old job interview question: “Where do you want to be in five years?” As tired and clichéd as it may be, you definitely need to ask that question of yourself and your laundry business.
If you own a couple of laundromats and are happy and content with the status quo, it’s fine to stand pat. Just keep in mind that someone will be leading your market – it just won’t be you. Then again, if you have business ambitions to be somewhere beyond where you currently are, I strongly recommend you look at the tremendous array of payment system options available through the lens of your future operations and try to plan accordingly.
In my experience, diligent planning for the future of your business is always a worthwhile investment.
