Monday, January 6, 2014
Since the first coin-op Laundromat opened - approximately at the end of World War II - American has needed and used Laundromats. This has been good for America and good for the Laundromat business owners who have had a chance to participate in the American dream of business owership, earn money for entrepreneurs, and provided a way for families to escape traditional employment and become their own boss.
In some cases the Laundromat business has become the primary source of income for a family, in others it merely adds to their other household income. Laundromats can be managed on a part-time basis and do not require the expenditure of a great amount of time by the Laundromat operator. The better it is managed, the less time needs to be spent inside the Laundromat itself.
Some Laundromat sales persons have called them "recession proof" businesses, but this recent recession our country continues to face, has shown the best description should be "recession resistant." However, even in times of financial uncertainty, Laundromats have performed better than most other businesses. A source to wash and dry their clothes is an ongoing, repetitive, necessity of life, closely related to health and self-respect of all economic levels of our society.
There are those that argue that economic downturns can even increase Laundromat revenue, since people are less willing to spend a lot of money on home washer and dryer repairs or take the stepse to purchase new replacement washers for their homes.
While the costs for starting a Laundromat are not small, nearly anybody with a decent amount of equity in their home and some cash in the bank can afford to open a coin-op laundry center. Your primary up-front expenses will be the costs of leasing and remodeling your retail space. As for the most expensive part, the actual coin-op washers and dryers, most commercial laundry manufacturers offer attractive lease terms which will require little money up front and payments spread out up to 7 years.
One of the attractions to owning a Laundromat is that it can be a family-run business, and require as little or as much time as the owner would like to commit. As a family affair, different members of the household can take care of the different chores in operating the store. Generally, the 3 biggest time requirements of the Laundromat owner are janitorial, maintenance, and money handling. If you are envisioning a smaller, non-staffed type of laundry operation, these requirements could require as little as 10 to 15 hours per week. If you plan on opening a larger staffed store, you might spend even less time, though you’ll have to pay for an appropriate level of staffing to accomplish this (and especially at the beginning, you’ll want to spend as much time as possible “on-site” to train employees and cultivate your growing clientele).
Today's modern laundromat systems have eliminated much of the risk associated with what was previously an all-cash business that invited employee fraud, criminal theft, and IRS audits. Computerized laundromat equipment and "smart card" payment systems eliminate the need to count endless stacks of quarters and insure that all income is easily accounted for, and make your daily accounting chores a breeze.
Remember, Laundromats are unique in the business world. There is no inventory to sell. Customers pay for services up front, so you never have to chase receivables. And your customers will provide most of the labor!
A well-run Laundromat business in a good location can be a very profitable endeavor, and many a coin-op laundromat owner have gone on to open multiple locations and leave their normal 9-to-5 job far behind.
In California very few Laundromats are fully attended. The Laundromat concept was sold as a business that could be operated while still maintaining another full time occupation. The most successful advocate of this concept was PWS, the Speed Queen - and also Huebsch - distributor in Los Angeles.
While much of the rest of the country has more involved owners - allowing a wider range of services such as Fluff and Fold - Southern California retains it's mostly partially attended operational model.
This business model allowed Laundromats to be marketed to investors who could benefit from the tax incentives (including at one time very favorable tax credits) that could make a Laundromat a smart investment, even if it only broke even on the balance sheet. If you made enough money from another source, owning a Laundromat that neither made money nor lost money would provide up to a 12% return on investment, funded, of course, by the government.
The character of the Southern California Laundromat still benefits when it is well run and justifies a cash return on money invested. Even "investment Laundromats" require owners to ensure their Laundromats run well and keep their customers happy.
If you want to run a partially attended (or I'll call it a Southern California style Laundromat) the following six rules of operation should be always used:
1) Hours of Operation. Most Laundromats are open from 7AM to 10PM. A few, keep their Laundromats open a little longer, and a very few keep them open 24 hours a day. I recommend that 24 hour stores - and extended hours - be closely monitored for potential vandalism. The hours should be set to accommodate the needs of the neighborhood and the profit potential versus increased maintenance cost.
2) Keep Your Store Clean. A Laundromat is where people from the neighborhood come to wash their clothes and they should be able to expect that you will keep your store clean. You need to hire attendants - either or part time - who understand how to clean. Just time some people have to keep their homes neat, organized, and clean, you need to find a cleaning person who understands and enjoys keeping things neat, organized, and clean.
3) Provide The Right Cleaning Supplies. Clean can only be accomplished if the proper tools are provided. You need to buy Pine-Sol, stainless steel cleaners, mops, buckets, mop heads, window cleaners, hand soap, towels, hand towels, and restroom supplies.
4) Keep Your Washers and Dryers Running. You need to keep your equipment working, and a very effective way to reduce your business is to fail to keep your equipment working, and then fail to provide a cheerful refund if your machines do malfunction. If you are not skilled enough to repair a machine, call a serviceman. A good rule of thumb is "no machine is out of order for more than three days." Repairman will either work on an hourly or monthly contract basis.
5) Monitor Your Contractors. If your Laundromat has vending machines, video games, or other items owned by others, you must monitor their response time. You many not own the equipment - and only earn a percentage of the proceeds - but your customers will consider you 100% responsible for the failures. Make sure your vending contractors treat your customer’s right, or have them pull their machines.
6) Monitor Your Bill Changers and Card Vendors. The most important - and perhaps easiest thing to do - is keep money in your bill changers. If you have a card operated store, make sure the card dispensers working.