MARIETTA, Ga. — You know what’s really great about the vended laundry business? Ultimately, you decide how simple or complicated to make it. During my years in the business, I’ve seen investors install the equipment, switch on the “open” sign and put things on auto pilot.
I’ve also seen owners taking a huge interest in their store’s day-to-day operations, always looking for ways to generate additional income. Often, as Craig Dakauskas wrote in this column last month, laundry owners turn to drop-off service — a great idea for laundries seeking to make good use of a labor component that is already part of the operating expenses.
I think it makes sense this month to look at commercial accounts. While commercial accounts are an excellent way to bring in additional revenue, I’ll caution again that it’s your vended customers who’ll carry the most weight in your store’s success. Don’t lose sight of that. Make sure they are receiving top-shelf service in a clean, professional environment. Minus that, you are not ready to move on to offering another service.
A BALANCING ACT
Commercial accounts take the drop-off service concept a bit further. For example, you’re likely putting people on the road more to pick up dirty linens and drop off clean ones. Thus, we have added expense right out of the gate for a vehicle, gas — which given today’s rising prices cannot be minimalized — and insurance. Make sure you set a rate schedule that takes these factors into account.
Now here’s the delicate part: If your laundry is using an attendant to perform the service, who is watching the store while pickups and deliveries are being made? This is where an active owner has an advantage by either tending to the store or making the drops. I believe this is a major consideration. If you are really focused on your core customer base, leaving your laundry unattended for certain periods of time doesn’t quite mesh with that goal.
Probably one of the reasons you got into the vended laundry game is because it is a cash business. Owners should be comfortable with the fact that commercial accounts add a credit component, as serving commercial accounts will include invoicing. That means additional management.
SEEKING OUT BUSINESS
Sure, there are a few considerations owners must deal with ahead of time, but I don’t want to push you away from this extra profit center. Commercial accounts can be a great, steady revenue source. In addition, they’ll help you maximize your labor and equipment resources.
So what commercial accounts should you be targeting? Motels, bed and breakfasts, and other small-lodging providers in your area are a good place to start, as well as resort condominiums. Clinics and dentist’s offices also are good customers, but you must be careful that linens with blood-borne pathogens are not part of the loads.
Owners may want to target restaurants and clubs, beauty salons, spas, athletic teams (recreational, college, high school, semi-pro) and supermarkets (perhaps the stores have employee aprons, towels, etc.). Surely your area has many other possible customers, such as animal hospitals (again, no blood-borne pathogens), which are likely doing laundry all day long using home-style equipment. You might even look for a dairy utilizing cloth dairy towels.
When crafting your commercial account list, I think it’s important to go after businesses that are generally around the same size. Don’t overshoot your market and court accounts too large for your laundry to effectively manage. Remember, you aren’t competing with large linen-processing plants. Your audience is the smaller accounts not efficiently served by those businesses. Besides, do you really want customers coming in and seeing you taking up a whole wall of tumblers with commercial account loads? The key is balance.
Customers you may want to steer away from will be restaurants such as pizzerias, where there’s a heavy use of oils. When the heat of drying tumblers is added, there’s always a risk of combustion. Linens from clients using petroleum products, such as garages or maintenance shops, may run the risk of combustion as well.
GETTING THE WORD OUT
In building a client base, you’ll want to do advertising in the phone book as well as perhaps targeted direct mail and even some good old-fashioned, face-to-face sales. Stress to potential customers that this is a service that frees up their employees to be more productive in other areas. In addition, they no longer have the equipment, water and utility costs associated with operating a laundry.
This can be a very persuasive message, particularly if potential customers are using home-style equipment.
Owners might even want to work with their equipment distributor to generate calculators to determine customers’ actual savings in water and/or gas. Along with that, don’t underestimate the value of “green” marketing — your equipment likely is far more efficient than that of prospective customers. Many prospective customers may like the idea that they’re doing something good for the environment. Don’t forget to remind them of this.
Like anything you do in the laundry business, success is determined before you ever collect your first dime. I can’t stress enough that you should take a thought-out approach and carefully review the expenses involved in adding commercial accounts to your business model.
I’ve seen investors have great success by starting this service. But those who have been most prosperous have effectively balanced their vended laundry focus with this additional source of income. It’s your business; make sure you’re involved in it with a plan focused on its overall profitability.