CHICAGO — I get several calls every day from investors in all walks of life asking me if the coin laundry business is a good business, and if they can get a good return on their investment. Let me tell you what I tell them.
Having been exposed to, and also experiencing first hand, both national and international distribution, as well as being directly involved with the development of more than 500 laundries, I can say that our industry is a wonderful investment opportunity. Where else in our economy can someone — anyone — get a return of between 10% and 30% (national average) cash-on-cash return by simply working hard and smart?
TWO KEY FACTORS
Is it fair to say that this is a recession-proof industry? Well, that answer is “yes” for two reasons, one being that everyone has dirty clothes, and two that the industry continues to attract (as I mentioned in my last column) the new breed of investors who are saving the industry (click here to read that column). The laundry business has been a sleeper and has also stayed well below the radar, but with these types of cash returns on your money, we are likely to see a much more visible and higher profile view on the industry in the future. It’s about time!
With the average family spending between $500 and $700 a year doing laundry, it’s easy to see just what kind of money we can gross on an annual basis. If you are catering to about 800 customers, using the numbers mentioned above, you should be grossing between $400,000 and $560,000 on your washers and dryers.
I like the idea that if a laundry owner decides to give himself/herself a raise, all that is required is to go out and get more customers. If you can attract 50 new customers (it shouldn’t be that hard), you have just given yourself a raise between $25,000 and $35,000. How’s that? I am only using a small number in this example. For you ambitious operators, the sky’s the limit when it comes to increasing your base business. (Remember, the secret weapon to success in this industry is marketing.)
In addition, you can go with a full-blown, over-the-counter vending and service program, and explore items such as food, bags, phone cards, Internet terminals and bulk sales products (such as big boxes of soap and large bottles of bleach). There’s also drop-off service and commercial accounts to go after. All of this, in some cases, could mean an additional cash flow of up to 30% of your gross income. Wow! Being an entrepreneur allows you to go out and dictate for yourself just what type of income position you want for you and your family.
EFFORT IS REQUIRED
Pulling the trigger on such a plan and deciding that you are ready to be part of the laundry industry means you must be willing to put in the necessary time, and also pony up the dough. That’s what the new breed of investors is doing. Do not venture into this industry if you are thinking that it will be as easy as stirring up some powder in glass and, presto, getting a pocket full of dough. There is a time commitment involved. A dedicated effort is required when it comes to starting up a new laundry or purchasing an existing one. There is also a fair amount of insanity that goes with not just starting up a laundry business, but any business.
Sound a bit overwhelming? This is where a seasoned and experienced distributor or laundry broker with a successful background can make a world of difference. This person can help and guide you in order to not only meet your financial objectives, but to exceed them! Of course, we can talk location, location, location and washers and dryers, but only someone with a proven and tested track record can run this race with you and get you to the finish line, where you will find the pot of gold.
It’s imperative that you do your due diligence and seek out true experts who have been there before and will help you to avoid any land mines. This is a good industry if you follow some simple rules and KISS (Keep It Simple Stupid). You don’t need to reinvent the wheel. Treat your customer like a king because the customer pays your bills and allows you the opportunity to live out the American dream.