Q. HOW MANY HOURS WILL I HAVE TO SPEND IN MY LAUNDROMAT?
At first, you will spend many hours learning the business and getting familiar with the various pieces of equipment installed. In time you will be able to manage the Laundromat with between three and six hours of work per Laundromat location per week.
Q. HOW OFTEN WILL I HAVE TO COLLECT THE MONEY?
Once a week. Sometimes twice if you are extremely successful and to prevent the coin boxes from becoming
overly full and interfering with the operation of the machines. Usually it is best to collect the money in the early morning hours or when the store is filled with customers. Some owners believe in collecting while there are patrons in the store. However, if machines are emptied during store hours, it's a good idea to vary the time of collection.
Q. HOW MUCH SHOULD I EXPECT TO PAY FOR UTILITIES?
Your machines should be energy-efficient and of industrial quality. In general, total utilities cost will average 18% to 25% of monthly gross income on Laundromats designed and constructed in the era of the energy efficient commercial washer and dryer. New Super High Spin washers can provide even lower utility bills. Some of the older laundry equipment can push utility bills beyond 30% of monthly gross.
Q. SHOULD I BE CONCERNED ABOUT UTILITY SHORTAGES?
Certainly anything that can affect the supply of an essential element of your business should be of concern to a potential buyer. In the past, the washing of clothes, a health related necessity of life, has been be one of the least affected of businesses in southern California in times of water shortages and other utilities. Increased water and utility costs to the Laundromat owner have been more than offset by price increases in the vended wash price, with minimal or no loss of the customer base.
Q. IS THERE REALISTIC POTENTIAL TO IMPROVE INCOME?
The potential to improve a Laundromat is often observed simply upon entering the front door of the premises. Anything you observe that could discourage customers from patronizing the laundry may be seen as a potential for increasing the business. Outdated, old style, or ill appearing equipment may cause customers to seek better-equipped Laundromats, even if it causes them to travel a greater distance. Laundries that are not well maintained may cause some to seek alternatives. An inadequate number of a particular type of equipment, such as dryers or large capacity washers, may also reduce business. High Speed Spin washers will tend to increase income.
Q. WITH ALL THE EQUIPMENT, IS MAINTENANCE DIFFICULT FOR THE OWNER?
No store, no matter how large, should have more than a few inoperative machines at any one time. A machine not working is not generating income, but is projecting to the customer the image of a poorly run store. One operator who repairs his own machines maintains: "No equipment in my store is out-of-order for more than 24 to 48 hours." Although parts warranties are usually over one year (with extended warranties on certain components) top load washers will typically last seven to ten years or more, while large capacity washers and dryers are expected to last at least twenty years to thirty years. Operators sometimes choose to keep costs down by performing machine repair and preventive maintenance themselves. Free repair classes are available to help operators do their own troubleshooting and repair work. Operators attending these sessions also use the classes as an opportunity to pick up needed machine parts, sometimes at discount, and to meet fellow storeowners as well as equipment manufacturers representatives.
Q. WHAT ABOUT CITY AND COUNTY BUSINESS PERMITS, TAXES AND REGULATIONS?
A municipal or county business license, or both, must be obtained from city hall or the county courthouse. And if the store name does not include the owner's surname or implies the existence of additional owners, the fictitious name must be registered with the city or county clerk and must be published as a legal advertisement in a general circulation newspaper in that city or county. Personal property tax registration is accomplished at the city or county assessor's office, which annually collects taxes on a store's inventory and equipment. Each spring the owner is required to file a report listing owned property, original cost, and date of purchase. Store equipment and water usage will be affected by various local agencies. County sanitation districts may require new stores to pay a sewer hookup charge per washing machine. Municipal utility districts regulate sewer treatment charges. The charge can vary widely. The laundry owner who rents or owns the premises and who intends to remodel will usually need a building permit from the Public Works Department. If the building is an older one, this may involve bringing plumbing and electrical services up to code. Local building codes may limit the size and amount or facilities relative to power loads, plumbing, and venting. Parking regulations may affect access to the business site. Some communities require off street parking in proportion to the building
size. City sign ordinances may define minimum or maximum heights, ban certain types of signs, or approve only bonded installers. Fire regulations typically mandate well-marked exits, specific types of fire extinguishers, and other fire precautions. Inspections by local or state fire, safety and health officials are required in some areas: the owner may be billed for some of these. The city or county clerk's office or local planning agency can be helpful in describing the above requirements.
Q. HOW SHOULD I PLAN FOR MY GRAND OPENING?
You can erect signs and deliver direct mail to the neighborhood. We suggest you hire a local church, Boys-Girls Club or Boy-Girl Scout troop to pass out flyers announcing the opening date of your new Laundromat. Professional companies are also available for this service. Flyers should be passed out each weekend in the surrounding area for the first six months of operation. Advertisements in local shopping guides can also be considered or a joint advertising efforts with neighboring merchants. A brightly colored "Grand Opening" sign indicated your promotional pricing is also very effective. Check with local zoning regulators about the lawful display of signs and the distribution of flyers.
Q. SHOULD I HAVE A GRAND OPENING PROMOTION BASED ON PRICE?
Yes. We recommend that you open your new Laundromat with a discounted price on your wash prices. We suggest that you maintain this price for six weeks, then raise the price to a second level of discounted pricing for a second six weeks. Then raise the prices to your full retail pricing structure.
Q. SHOULD I KEEP A WEEKLY INCOME REPORT?
The weekly income report records seven-day revenue from all income-producing equipment and services in the store. Income categories might include dryers, washers, double load washers, drop-off laundry, or water machines, for example. A comprehensive picture of store business can be derived from this information in three ways: by assigning percentage values to each type of income, by figuring income in terms of the number of washers or number of loads washed per day per washer ("turns")or by figuring the cost of utilities as a percentage of gross dollar volume. The expense ledger, or cash disbursement journal, tallies rent, utilities, vendor supplies, payroll and any other store expenses. Daily work sheets are used in attended stores that offer drop-off services. After writing in the shift, date, and cash on hand at the beginning of the shift, the attendant can keep track of work performed by order number and work picked up. Work tickets identify the customer and the work to be performed. Employee records may include employment applications, timecards or sheets, and daily checklists for janitors and attendants. The general ledger details all business transactions for the month and summarizes the information from all other ledgers. The income statement, balance sheet, and cash statement are all derived from the general ledger.
Q. WHAT KIND OF FINANCIAL STATEMENTS DO I NEED TO KEEP?
Three other records keep track of the flow of money through the business: the income statement, the balance sheet, and the cash flow statement. The income statement, also known as the statement of earnings or the profit and loss statement, lists:
1. Monthly income sheets;
2. Financial statements;
3. Records from other applicants owned Laundromats, if any;
4. Applicant's savings account books and verification authorizations;
5. Copy of applicant's federal income tax return for previous 2 years;
6. Summary of applicant's past management experience.
Q. IS MAINTAINING BUSINESS RECORDS IMPORTANT?
No single factor, including location, equipment or management makes or breaks a Laundromat business. Industry leaders concede that while careful management is a factor in success, many storeowners are poor managers when it comes to maintaining records. Knowing they have few or the inventory or receivables problems or other small businesses, many operators fail to realize their all-cash trade actually mandates a good income control system. The farsighted owner looks beyond the coin boxes and closely monitors the store's cash position and credit standing. Record-keeping systems need not be complex to be efficient. You, or your accountant, can design one that is simple, efficient, and tailored to your exact needs.
Q. WHY SHOULD I KEEP RECORDS?
The balance sheet records assets, liabilities, and the capital of the business for the reporting period. The cash flow statement is the most current of these three statements and shows sources and uses of cash. Accurate, consistent records do more than satisfy the tax collector, they also enable the operator to:
-Compare fixed operating costs to income;
-Determine which equipment generates the most income;
-Detect income fluctuation and take preventive measures;
-Reveal seasonal fluctuations in business, so you can step up promotions;
-Evaluate the success of new services;
-Analyze income and expenses for the current period vs. Previous periods;
-Show the net profit or loss of the business.
Q. WILL I HAVE EMPLOYEES?
Part of a store's standing results from its cleanliness. Therefore, the Laundromat should receive at least two cleanings per day: one during the day and a more thorough cleaning, including mopping the floors at night. Nationally, about 50% of Laundromats hire employees. The majority of stores in California operate with no employees, or very limited employee hours. Most Laundromats choose to use the services of a part time cleaning person. The cleaning person and the employees work may appear to be the same, but the cleaning person sets their own hours and can hire a family member or friend to provide cleaning services. The cleaning work is contracted to an individual or firm who provides the needed cleaning services. Using a cleaning person under contract may eliminate the need for any employees. If you elect to hire employees, the owner should formulate a policy describing duties, job descriptions, hours, wages, benefits, training, vacation time and rest/lunch breaks. Owners may advertise for employee in local newspapers, advertising circulars or post "help wanted" signs in the store itself. At a minimum, the cleaning contractor wipes machines and folding-table tops, mops the floor, cleans machines, cleans lint traps and disposes of trash. If you elect to hire employees, they can be used for filling vendors, refunding change for machine malfunctions, handle customer complaints, refund
money, keep currency in bill changers, stock vendors and teach customers about the benefits of using the Laundromat. Employees should be trained to recognize and help customers with their laundry needs and be able to teach customers how to best operate and use the Laundromat equipment. As stores expand their services into areas such as drop-off laundering ("fluff and fold" services) it may become necessary to hire employees.
Q. HOW DO I SET MY PRICING FOR WASHERS AND DRYERS?
Store owners set prices for many reasons: to maintain a competitive price position, to generate more profit, or to adjust to increasing operating costs. In developing a pricing philosophy, the more sophisticated owner must look increasingly at higher costs. Machine pricing varies greatly from area to area, city-to-city, neighborhoods to neighborhoods. A frequent survey of local competition will provide information. Operators should always note the date of price increases in the store's records, for later use in interpreting gross volume figures and cost percentages.
Q. IS THERE A RIGHT SIZE OR DESIGN FOR A LAUNDROMAT?
Store size varies greatly among Laundromats. The size should be tailored to the specific business or residential environment. For instance, one area might support a forty-washer establishment, while other areas might support eighty washers or more. While smaller stores are less than 1,600 square feet, 60% of all Laundromats are between 1,500 and 2,500 square feet. Proponents of the large-store, or "supermarket" concept, are building Laundromats up to 5,000 square feet in size. Exterior design is of limited importance to a Laundromat, provided the store contains sufficient windows and appears well illuminated. More and more owners are concentrating on making the interior attractive and comfortable for patrons. In fact, stores now feature schemes: coordinating paint, wallpaper, canopies, flooring, equipment color and accessories. In addition, the following are some common standards for Laundromat design:
2. Acoustical tile is the most widely utilized ceiling material.
3. Lighting. Good lighting is imperative for making the customer feel secure.
4. Light Levels. Light intensity of about 50 foot candles provided by fluorescent lights.
5. Combination. Artificial lighting and natural lighting will complement each other.
6. Time clocks. Better coordinates natural and artificial lighting and save utilities.
7. Flooring. Vinyl or tile floors are economical, durable, resistant to water and stains.
8. Entrances. Multiple entrances provide customer convenience.
9. Visibility. No hidden areas or dark corners inside the store.