December 7, 2020 at 9:16 pm #2656
As a investor considering entry into the laundromat business I am strategizing. One important question comes to mind; what would you all say are the drivers of uncertainty in the Laundromat business?
That breaks down into four factors;
1. Isolating the key drivers
2. Is there a coherent combination of these drivers? (example, do they play of each other?)
3. How would we vividly describe these scenearios (combination of drivers) in real time?
4. What will be the impact those scenarios be?
Ok, so this may be a bit too much and I may be rambling, but the essential question is at the core and I’m looking for any takers… what are the drivers of uncertainty in the Laundromat business?
December 11, 2020 at 10:46 pm #2692Bryan WilsonParticipant
Simply put there arent many uncertainties but no guarantees
Poor location and demographic (meaning your store isnt needed in that area anymore)
Poor Street signage to help direct people to your store.
Bad equipment as this runs customers off and raises usage of water and electricty which eat into your take home.
A brand new location being built within a mile radius of your store
Are some factors that could play in a store failing
There are very few franchises and most businesses models vary per location
Some stores run themselves some need store managers 6-12 hrs a day.
The business of laundromats is pretty simple customer service is key good equipment clean store keep people coming back.
December 12, 2020 at 8:24 am #2693Jason DodgeParticipant
There are no certainties in any business which you are aware of. In the laundromat business a constant concern is competition. Is a new owner going to build across the street on bad advice? I don’t know, maybe. Can we both survive? I’ve had new laundromats built near me twice and we found a way to survive both times. Both locations are doing better now than they were before the competition opened. But its still on my mind.
Another would be a bad lease. If you can own the property that is the way to go. I’ve seen many laundromat owners be forced out of a location for varying reasons. Maybe the landlord decided to raise the rent at renewal, maybe the landlord wants to own your laundromat, or maybe the landlord is a goof and won’t fix that leaking roof.
Can utilities skyrocket all of sudden? Sure can, 2008 or 2009 if I remember right. The news was all over gasoline prices, but natural gas took a huge increase.
Employees can make you or they can break you. Finding and retaining good quality help is a huge challenge and should never be over looked. If you have wash & fold, you will be there folding clothes when someone calls in or quits. If you are unattended, you will be there cleaning that location. If you own 10 locations, you will be cleaning all 10 if that same employee cleaned multiple locations.
Bad customers are real and it can be a tough getting rid of them, especially in a unattended store. I had a crack head shooting up in my bathroom last week. Dude was screaming and punching holes in my walls as I was standing right outside the door. If he keeps coming back that will turn off my customers, they won’t feel safe.
Maybe the great location you bought in is changing. It could become a better neighborhood by the means of new developments and high rent. Those are not self service customers, they are wash & fold customers though. Maybe the neighborhood gets worse. This could be good for the self service end but will create challenges keeping the location clean and safe.
Every business has a set of challenges and unknowns that could be its demise. COVID for example is killing restaurants, bars and a ton of other industries, who saw that coming two years ago??
I hope I didn’t scare you off. There are a ton of positives as well.
December 19, 2020 at 10:49 pm #2771
Thanks Bryan and Jason for your great input. Here’s what I gathered from both:
Key Drivers of Uncertainty
2. Bad lease
4. Bad Customers
5. Bad employees (attended)
6. Equipment (inefficient, worn)
7. Utilities rate increases
If y’all would allow, I have one follow up question; Would you say the order above is from highest impact to least? If not, what would be the order?
Lastly, my guess and sincerest hope is that Laundromat Resource is here to help hedge against those key drivers of uncertainty. Thanks to folks like you, Bryan and Jason.
December 20, 2020 at 7:49 am #2773Jason DodgeParticipant
I try not to concentrate on the negative and I simply do my best to focus on what I can control. So competition is a concern but I can’t control that. If you’re leasing, make sure you have a good lease, hire that attorney, get the advice and create a win/win. Spend more time finding the right people to work for you. Pay a little more and get good help. Utilities are a concern but I can’t control that. What I can control is having newer equipment that is efficient and will keep the utilities as low as possible. Demographics you will know before you buy. Spend time in the laundromat you are looking to buy or in other businesses that are very close to the laundromat. Your equipment distributor or the CLA (for a fee) can provide demo reports. Learn how to interpret those reports and project revenue from them.
I don’t like to rate uncertainty, do your best at what you can control and everything else will fall into place. I like to be aware of what can go bad but I focus on what can make everything go really good. Buy or build in a good spot, hire great people, have newer and working equipment, and provide superior customer service.
January 5, 2021 at 11:32 am #2917
Jason Dodge, thank you for such EXCELLENT advice! I supposed the rating part is more of a way to weigh key drivers, as a form of business strategy. But I am of the same thought, I am not in the mind of allowing these factors lead to inaction. Rather, being fully aware and concentrating on what’s most important.
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