Lowering Those ‘Absentee Owner’ Expectations
Running a laundromat can’t be as “easy” as potential investors may believe it is, can it? Let’s paint a realistic picture of self-service laundry ownership and what’s involved.
Q: Before you opened your first laundromat, how easy or difficult did you expect ownership to be? What influenced your expectation?
A first-time purchase often brings with it uncertainty of time and money that will be involved. As far as operating the laundromat, the number of keys and what they open is a surprise. Multiple keys to the same locks, keys to locks you can’t find and realizing which key opens coin boxes or service locks, dryer lint screen doors and those padlocks to the ladder on the roof, can take more time than initially anticipated. It’s not rocket science, but not as easy as popping corn. In most cases the time involved and the additional expenses exceed the projections made before purchase. New mops, buckets, soap inventory, lease deposits, utility deposits, coin for the changers and insurance payments often add a significant amount to “start-up” costs. Expect to spend three times more time than you will later at your laundromat in the first three months of ownership.
Q: Was it originally your plan to be a “hands-off” or “absentee” owner, and has that plan changed over time?
The general rule at the time I started in the business, buyers of laundromats expected to provide “hands-on” management and labor for the operational success of their business. In the last several years, a different type of owner has entered our business who have an expectation that through the use of card systems and employee management their time can be so reduced as to their activity that it can be described as “absentee” ownership. The reality is that fewer than five percent of current laundromats are actually operated as fully absentee operated. Keep in mind that someone has to read the paperwork, the lease, negotiate the agreement for insurance, collect the bills, deposit the bills, pay the bills and file the required IRS paperwork on a yearly basis. Absentee is more likely defined as “not needing to spend much time in the facility” and not that someone else can do absolutely everything in your laundromat.
Q: In your first year of ownership, what was the biggest surprise or challenge you encountered?
The wide variety of people who use a laundromat was a surprise. Since my first store was in California the use the Spanish language was, and continues to be, a challenge for me. The low income, poor, medium income and occasional well-off user all blend together in the shared experience of self-service washing and drying. With the advent of more fluff and fold (WDF) and pickup and delivery, the extended personal contact has diminished, but the self-service customers certainly are a display of size, shapes, colors and modes of dress exhibited during their laundromat visits.
Q: In all the time you’ve been a laundry owner, which aspects of your business turned out to be more time-consuming or require greater resources than you originally thought?
Nothing is really time-consuming if you find you love the laundromat business. It’s certainly not for everyone. Once the basics of laundromat operation are mastered, the additional time spent is usually in areas of personal choice. My preference was in conversations with customers, promotions and keeping an eye out for areas that needed attention. Once you’ve been operating for a while, it’s easy to overlook a few machines being out of order, a soap dish that hasn’t been properly cleaned, entry rugs that need to be washed and those noisy bathroom fans. Familiarity can cause you to overlook the obvious. Keep in mind that although you have repeat customers, some customers are entering your facility for the first time and you need to make a great first impression.
Q: What adjustments did you make once you realized the business was different than what you expected?
The first surprise I overcame is that repair folks were making thirty percent on more on the parts they used in repairing machines if it came off their truck. Much better to shop for the half dozen parts that are frequently replaced on your models and buy them online at lowest possible prices. Have these in your stock so you’re not paying a premium on equipment repair parts from your service people. The second thing I realized was that being super clean and relatively clean depended on the marketplace of your customer base. You can chase away customers by being too aggressive in the cleaning processes of your staff in certain neighborhoods. This was a surprise to me. Third, I marketed to the children of my customers by always having a basket of tootsie rolls and tootsie roll pops available for the children (and the moms.) This requires asking the moms if their children are allowed a piece or two of candy.
Q: If you could give one piece of advice to a new laundromat investor who assumes the business is “easy” and “low-maintenance,” what would it be?
Always pay attention to the fact you are operating a business. If you are handling and making a lot of money running a successful laundromat you need to be careful. Most folks are not used to receiving their salary or payments in cash. The mistake about ten percent of new owners make is not following the simple rules of operation: “collect the money, pay the bills and spend what is left over.” If you start to spend the money too early, it can get away from you and then you find yourself “hoping there’s enough left over to pay the bills.” Second, learn to do some of the repairs, even if you don’t intend to do them in the future, so you can accurately calculate how much repairs should cost. Nothing gathers money without effort or knowledge in any part of the world I’ve seen.