Avoiding ‘Dogs with Fleas’
Take Advantage of Key Data in the CLA’s New Quarterly Reports to Better Run Your Laundry Business
By Tom Rhodes
In May 2008, I purchased a rundown laundromat for $25,000 from a part-time operator who wasn’t reinvesting in the store. The plan was to rehab the laundry.
One month later, the housing bubble popped in Florida and the Great Recession began. Our income fell 40 percent within a few months.
This store, which I was hoping would be at least a “low B” store ended up being an “F.” We had net operating income of -$15,000 that first year. And it got worse.
From the time we took over the store to when our lease ran out six years later, we suffered net operating losses on that one store to the tune of $100,000. I don’t know about you, but I could have done a lot of other things with that money than watch it go down the drain.
While we were waiting for our lease to expire, we converted from attended to unattended to minimize overhead, but we also incurred the following unusual expenses: a $600 slab leak, a dryer fire with an $800 small claims court settlement and an $800 loss from a thief who strung our changer twice, even after we upgraded the verifier; talk about adding insult to injury.
However, my point isn’t to talk about what to do when you own a dog (a dog with fleas, in my case) – but, rather, how to avoid owning a dog in the first place. As a small-business owner, my only information on how the economy was doing came from the TV and radio. I wish I’d had an economic prognosticator who could have told me, “Hey, Tom, don’t buy this laundromat NOW. We’re getting ready to go into a recession. Wait a few years, and then the owner will probably GIVE you the store.”
At the Coin Laundry Association’s Excellence in Laundry conference in Palm Springs two years ago, economist Alan Beaulieu spoke to us about the importance of knowing where your industry is in the business cycle so that you can make informed decisions. As it turns out, I bought that rundown laundromat at the worst time possible – “Phase C” of the business cycle.
To make matters worse, we were slow to lay off our long-time bookkeeper, thinking things couldn’t get much worse. And in doing so, I violated another management objective of Phase C: be slow to hire and quick to fire. (Just because someone owns seven laundromats doesn’t necessarily mean they’re smart.)
Sitting on the CLA’s Board of Directors, I persuaded my fellow directors to commission Mr. Beaulieu’s firm, ITR Economics, to provide the CLA with a quarterly report that will tell us where the self-service laundry industry is within the business cycle. I don’t know about you, but I will pay close attention to this information – knowing this data could have saved my company $100,000!
Also included in these quarterly reports will be management objectives specific to our industry. If you want to maximize your profits and operating strengths, pay close attention to these. And, before you assume that our industry is unique and doesn’t track with the general U.S. economy, think again. When we overlaid my company’s sales with charts for personal consumption and industrial production, our sales moved in tandem, almost perfectly. Ignore this data at your own peril. As Alan Beaulieu says, “you can’t change the wind, but you can trim your sails.”
It’s my hope that these new reports – which will be free to CLA Premium members and available for a nominal fee to Laundry Professional members – will keep you from making a $100,000 mistake that I did.
Tom Rhodes owns and operates the Sunshine Laundry Centers chain, based in Vero Beach, Fla.
Coin Laundry Association members can access the new quarterly reports prepared by ITR Economics by visiting our store at coinlaundry.org. These reports are available at no additional cost to the association’s Laundry Professional Premier members. Laundry Professional members may purchase an annual subscription to all four quarterly reports for $99, or may buy individual reports for $45 each. This publication is not available to non-members. For more information, please call (800) 570-5629.
