CHICAGO — In last’s month column, I made the statement that patience is almost a prerequisite in this business. I encouraged new owners to take a slow approach to opening and ensure the store was totally ready for customers.
So you’ve done all that and your grand opening was a success. Congratulations. What now? Let’s go back to that all-important prerequisite — patience.
Sure, in developing new stores, there is the occasional grand slam, where an owner is doing unbelievable turns right out of the gate and needed a wheelbarrow to assist with collecting. However, such explosive entries into the coin laundry market are rare.
More likely you are sitting here a few weeks in and wondering how you did everything right up front but haven’t seen those wonderful returns forecast in your pro forma. My advice is simple — have patience and don’t panic.
SLOW AND STEADY?
I tell investors, plan for a gradual six- to nine-month ramp-up, and perhaps even a full year. You shouldn't panic with a slow start simply because you have the security blanket of preliminary research, demographics and market studies on your side. Take comfort in the fact that the success rate of vended laundries is extremely high — almost 100 percent after five years. Those who do their homework in the coin laundry industry succeed.
Another thing to note is that the national average for laundries is about four turns a day. While it would be great to hit that average out of the gate, if you’re managing just two turns after a month or two, things are OK and you’re in the ramp-up mode. The important thing is to be seeing consistent progress and increased traffic through the early going.
THE INQUISITIVE OWNER
New owners should view the building momentum of their stores as the hands-on portion of their industry learning. Active owners will utilize this period to begin analyzing their stores’ trends. You should look at your first year in the business as the construction of your marketing baseline data. As part of this data acquisition, ask these questions:
* What are your store’s busy days?
* What are its busy times of day?
* Are particular machines seeing more turns?
* What ancillary items are selling the best?
* When is the last wash occurring?
Hopefully, you’ve invested in management software to make retrieving valuable machine operation data easier. If you have, the benefits of the investment will become apparent immediately.
KNOWLEDGE IS GOLDEN
So how do you utilize the data you’ve collected? If your last wash is occurring well in advance of your closing time, perhaps you’ll realize cost savings by moving up your closing. Conversely, if your mornings are overly busy, opening an hour earlier may space out the rush and help bring in more business. Reviewing ancillary product sales will help you adjust ordering and reduce inventory of soap brands or other items that are slow movers.
Assessing busy times and days will enable you to begin marketing activities and special pricing to build traffic during slow times. Promotions and special pricing are immensely important. All businesses employ this approach to attract business during slow periods. However, I’ve noticed laundries often can be reluctant to offer such specials.
Again, remember to be patient and not panic if business is slow out of the gate. Focusing on those elements of the business you can control will help relieve some stress.
A SECOND LOOK
Ramp-up is a great time to assess staff. Evaluate their performance — Are they handling all their duties well? How are they with customers? Better to learn about your employees’ work ethics early, than to have their poor performance turning customers away.
Now might be a convenient time to review your utilities and see how they compare with your projections. You might also want to explore buying cooperatives that help owners harness group buying strength and insulate them from swings in the market by buying early. The Coin Laundry Association (CLA) is a great resource for information on this topic. Check out American Coin-Op and AmericanCoinOp.com for energy-saving stories. (Click here for a story on fixed-rate plans.)
This extra time can be utilized by reviewing wash-and-fold service as well. How is this aspect of your laundry business performing? How are advertising and marketing efforts faring? Some laundries have added ironing as an additional premium service. Perhaps this would be a great time to add the service and see how it does.
Have you considered other outside-the-box sources of income? Remember, your coin laundry has a large captive audience. Restaurant and other business owners might see great value in tapping into this commodity. Posting advertisements for other area businesses above tumblers or on top-loader lids could bring in extra revenue.
Obviously, everyone wants to make money out of the gate. But new investors also need to understand that even if things start somewhat slowly, there’s no need to panic. If you’ve done all your homework and research, the store will be successful. By exercising patience and working hard to record baseline data on your operation in this first year, you’ll be far better skilled to manage the business to high profitability in the years ahead.
You might have thought that after start-up, the work was done and the money would just pour in, while you concentrated on opening your second store. Well, welcome to the real world of coin laundries. Unless you want to hire a manager and let him/her run your business, responsibility for your store’s success rests squarely on your shoulders. And that means work.