CHICAGO — I get many e-mails regarding building a laundry in today’s market. The messages usually touch on issues such as financing and the future of the industry.
Financing a new self-service laundry is doable, but it’s more difficult than in the past. It’s not unusual for banks to want 40% to 60% cash in the deal. This excludes many from the game.
The bank is also going to require assets from those looking to build. This is a key issue for investors who might not want to give up the farm or their portfolio to build a new store.
I suggest avoiding building new in today’s marketplace. It’s too risky, and you are going to give up too much exposure. The bailout for banks didn’t help us, it helped the banks with their financial exposure. Now, banks are looking to tie you up. If you make one mistake, you’re in deep trouble.
Seriously, consider remodeling or rehabbing an existing store so you don’t have to put out so much money. Yes, you still have to be aware of slimy brokers, but this can be overcome with due diligence and dealing with a full-line distributor. It’s also important to get some references from the person you’re doing business with. Don’t believe what they say — verify it.
Even though I don’t advise you to build new, you shouldn’t shy away from the industry. The Laundromat business is shrinking, meaning laundries are closing due to the economy. But the shrinkage means growth for those still in business.
What’s happening, in a sense, is recycling. It’s the “evil” of business, when more and more stores open, and areas are oversold.
The laundry business, on average, is down about 10-20%. There are many reasons for this, one being fewer immigrant customers.
As you look ahead, the formula for success hasn’t really changed. You need to put together the best store possible and market like a madman or madwoman! If you do this, you can bring in enough bodies to make up for the lingering recession and secure a healthy future.
Yes, you can still make money in this business. However, you must work harder than ever before, and actually get out on the street and sell yourself. If you don’t do this, the competition will. Those who build relationships are the ones who reap the dollars and become the future of the laundry industry.
As always, if you have questions, please contact me.