Veteran Laundry Operators Dispel Some Popular Industry Misconceptions – And Share Their Own Personal Business Surprises
The good news is that today there in more information available to new laundry owners and prospective investors than ever before. The bad news is that there also is a lot of potentially dangerous misinformation swirling around.
Unfortunately, small-business owners – including many laundromat operators – believe a lot of myths and “urban legends” about how to run their stores. Clearly, these misconceptions can have a negative impact on the owners’ success, reinforcing or encouraging bad decisions by these aspiring entrepreneurs – decisions that can be critical and sometimes fatal to the growth of their operations.
Although the list is long, we asked a few veteran owners to share the most common laundry industry myths and misconceptions, while also highlighting some of the surprises they personally faced in this business:
The biggest myth I held was that all laundry owners had to do was sweep and mop the floor once a day, and empty the coin boxes once a week. Of course, I realized that wasn’t true before I actually bought my laundromat 10 years ago – but that was the original thought process that got me headed in this direction.
(C.J. Swoboda, The Clothesline, Bozeman, Mont.)
After 25 years in the laundry business, I continue to be surprised at my naivety and miscalculations. When I started in 1989, I was shocked by how expensive machinery was for an entire store and how expensive the financing could be. I later realized it was a long-term investment, and there were good and bad sources of money. After seeing what I’ve spent for both, it was worthwhile shopping for a good price, but not at the sacrifice of quality. After all, you can buy oats at either end of the horse!
I was further surprised by the habits of my customers – and not just their inability to find the trash can within arm’s reach, or why they have a favorite dryer that does the same as the other 79. I was enlightened when I first attempted a 24-hour store in a suburban neighborhood. My anticipation was that it would be a waste of personnel and electricity; however, the store thrived during the off hours and became the leading store in the area. And customers continue to appreciate the convenience of coming any day, at any time and find a safe, working store.
Another “moment of apprehension” occurred when my distributor approached me with the idea of using loyalty cards in lieu of quarters. And I later was pleasantly surprised to discover how much float could accrue from lost cards. When credit cards arrived on the scene, I again turned up my nose, certain that my customers didn’t have them – or, if they did, they would not use them for laundry each week. This was yet another foolishly held misconception. In fact, 45 percent of our revenues in one store are derived from credit card usage.
I entered the laundry business in hopes of divesting my way off the hamster treadmill and enjoying other pursuits. That did work out the way I had anticipated. I was able to visit Hawaii for two weeks with my son’s Boy Scout troop and was able to build several income properties, neither of which would have been possible in my past occupation in the construction field. Though my stores require my time, it is much easier to plan other interests because this business is so consistent.
I’m sure I will be met with other misconceptions and surprises in the future. Hopefully, the past has taught me to have an open mind.
(Dan Marrazzo, Laundry Depot, Morrisville, Pa.)
There are a number of incorrect laundromat myths floating round. I think some of the most common involve:
• Absentee ownership: I’m at the store five days a week. I can’t imagine running my store as an absentee owner. I’d have been out of business 10 years ago.
• Equipment repairs: Yes, you should have some very basic mechanical skills but about 90 percent of the issues can be fixed either by unclogging a drain or changing an inexpensive part. You just need to dive in and figure it out. But I leave the big stuff to the pros.
• Marketing: “If I build a nice store, they will come” and “I have an established location” are both lies. Twenty-five percent of the population turns over every four to five years, so it doesn’t matter how long you’ve been there or how new you are; these people still have never heard of you.
• Free dry is a great way to attract new customers: That’s completely bogus! Fry dry is a cancer. It will eat you from the inside out. Charge a reasonable price and make no apologies. If you start a free-dry war in your market, it will erode everyone.
• Coins/cards are the only way to do business: There is more than enough room for both types of stores. Neither are the “best,” and both have their merits.
• Drop-off laundry/pickup and delivery won’t work in your market: Maybe not, but it works well in mine. In fact, I earn thousands of dollars in the markets of my competitors, who say it won’t work in their market.
(Bruce Walker, Wash It Kwik, Denton, Texas)
Getting into the laundry business 32 years ago, I bought into the myth that this is a simple, effortless business – customers just fill up your coin boxes, and if a machine breaks, you fix it. My biggest problem, I thought, would be handling all of the quarters. In reality, I found that my ROI is directly proportional to time invested and experience gained.
Another partial myth is that success is all about convenience, location and cleanliness. Yes, it’s about those things, but more broadly it’s about the customer experience, down to the smallest detail.
Lastly, the concept of one dryer per washer is a myth. The proper mix has more to do with moving customers through at peak usage times. If customers are waiting for any one piece of equipment at those times, you don’t have enough of them – and you’re locking the potential of your facility into an artificial cap.
(Jim Whitmore, Sunshine Express Laundry Center, Lynn, Mass.)
I think one of the larger misconceptions about the coin laundry business is that – because it’s a “cash business” – you have the right to steal from your store’s sales. This is controversial but I think, as a whole, a sizable portion of the general public thinks that a “cash business” doesn’t count all of its sales; therefore, reducing its net income to avoid paying its full share of income taxes.
I have purchased several self-service laundries over the years that have done just that. When I would confront the owners regarding their seemingly inflated asking prices, the truth would come out: “Well, you know, nobody reports all of their sales…”
I can gauge, within $1,000 per year, what a laundry’s sales are, simply based on its water usage. As store owners, we all pay more income taxes to help make up for those laundry owners who still subscribe to the myth that it’s OK if it’s a “cash business.”
(Bob Frandsen, Maytag Laundries, Duluth, Minn.)
I faced a major misconception, or surprise, after purchasing my first store in June 1992.
According to all the paperwork and collections I did with the store’s previous owner, the laundry was grossing $4,000 per week. We closed escrow in mid-June, and my first collection was right on target. The second was about $150 lower, but the third one bounced back up.
Then August rolled around, and the first collection of the month was down $800. The second, third and fourth collections were down nearly $1,000 each. I was panicked! How would I be able to meet all the monthly expenses with these kinds of numbers?
Just as I was about to call the seller and start yelling, September arrived. The first week was up $250 from the original $4,000 target. I was puzzled, as each week in September continued to climb. It never occurred to me that there would be a seasonal cycle to the volume of business. I had assumed it would be steady all year, since people always need clean clothes – but I was wrong.
A smaller but similar surprise was that the first week of the month was busy while the last week was slower. This is a result of the timing of welfare payments, Social Security checks and other government assistance programs.
Two other common laundromat myths involve the importance of marketing and employee training. Most owners feel there is no reason to market their businesses; however, I spend about $2,500 to 5,000 per month on various types of print and online marketing. What’s more, some operators think the attendant’s job is so simple that training isn’t required – also, very misguided thinking.
(Ron Kelley, EZ Coin Op, San Jose, Calif.)
Although we largely service a demographic that needs laundromats, these customers still have options. A friend’s house or apartment may have a washer and dryer. Mom and Dad might live nearby and have machines at their house. A big-box retailer may have toploaders on sale for $399. And, of course, the local Rent-a-Center will always offer an attractive payment plan for washers and dryers.
Yes, our customers have options – so we should run our stores like they do and not pretend that they have to use our stores. The moment I take my customers for granted is the moment they will start looking to wash their clothes elsewhere.
(Tom Rhodes, Sunshine Laundry Centers, Vero Beach, Fla.)
One of the biggest issues I discovered was how hard it was to get standard bank financing. Most banks don’t understand the business and, as a result, are unwilling to finance laundries in a way that makes financial sense to the operator.
In addition, your demographics report is only as good as site selection. I know of several stores that have had amazing demographics; however, due to a divided highway, they failed.
Also, alternative payment options are one of those mystical profit centers that seem to be much more complicated than typically reported. The ability to accept credit cards is no doubt an important part of the proper operation of a store today, but credit cards being a significant reason for a store’s growth is not entirely accurate – personally, I think this business is too complicated for just one factor to make a significant difference.
Multi-store success is not a slam dunk either. You need to have good systems to make a profit; inefficiency in your systems can – and will – eat you alive. Just because you own several stores doesn’t necessarily mean you will be successful; all it means is that you can either make a bigger profit, or dig a deeper financial hole.
The best advice I can give is to do what you do better than everyone else, and don’t let the latest, greatest shiny thing get you distracted as the be-all and end-all to huge profits – there is no such thing.
(Daryl Johnson, Giant Wash Laundry, Saint Ansgar, Iowa)
Of course, the most common and inaccurate myth is that the laundry business is all about counting quarters. However, my surprise within this myth was how long it actually takes to count that money – and then to stand around at the bank as the teller counts it all again. This is a good problem and I’m not complaining, but it makes me less than popular at the bank, especially if I show up at 10 minutes before closing on a Friday.
(Ken Barrett, Washin’ Anniston, Anniston, Ala.)
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