Content about Management

CHICAGO — The specter of ever-rising utility costs should be enough to spur the average laundry owner to track this expense and explore ways to minimize it.

In response to a series of questions from American Coin-Op, Gary Dixon, national sales manager for Huebsch, and Kent Walters, national sales manager for Maytag® Commercial Laundry, discuss the role that tracking energy usage and maximizing its effectiveness plays in a successful self-service laundry, and offer some important tips for corralling costs.

Often, the battle against rising utility costs starts with your equipment.

Q: How may a coin laundry owner track their operation’s level of energy efficiency?

Walters: Owners looking to determine their store’s level of energy efficiency need to compare the cost of utilities vs. revenue. If the cost of the store’s utilities is above the industry average—20-25% of total revenue—a store owner should investigate ways to decrease the cost of utilities, starting with equipment.

Dixon: First, I would suggest that the laundry owner establish a baseline. Many manufacturers, along with the local distributor, can provide an estimated energy usage per turn. The laundry owner could then adjust these calculations to reflect their specific energy costs and turns per day.

Second, compare utility bills after every change that is made to the store’s operation. If utility rates and the number of turns remain constant within the period in question, but you notice the bill increasing or decreasing, it is a quick indication that the changes you made may have had a negative or positive impact.

Q: Is tracking energy efficiency as simple as comparing this month’s utility bills to last month’s?

Dixon: It can be, but you will always have to wait for the bill to arrive. However, control technology has really advanced over the last five years. There are features such as advanced leak detection that can help you get an early jump on problems before they impact your utility bills.

Walters: No, comparing month to month isn’t the recommended way to determine a store’s energy efficiency. Usage varies by time of year and other factors. It is better to look at your utility bills over time and compare them to the net income and what percent of revenues the utilities make up.

Q: In your experience, how likely is it that a laundry owner is tracking his or her store’s efficiency?

Walters: Those who have become owners in the last four or five years seem to better understand the need to track a store’s energy efficiency, and how it affects the bottom line. The more efficient the operations, the greater the revenue for the store owner. The significant increase in utility costs has also caused long-time owners to pay attention to the costs.

Dixon: In the April issue of American Coin-Op, survey results indicated that “utilities” topped the list of problems causing business owners the most grief (State of the Industry: Operators Soldier On Amidst Lagging Economy, Increasing Costs). So, based on that feedback, I believe the majority of store owners are cognizant of the impact that utilities have on their bottom line. Yet, many are not tracking their store’s efficiency. I don’t believe it is because they do not want to, but more about how they can utilize available tools to do it effectively. Here is where a good relationship with a local distributor can be priceless.

Q: Why is it even important to track this?

Dixon: There are two reasons: first, there is the obvious impact on a store’s profitability. We can probably expect utility costs to continue to rise. Therefore, tracking a store’s efficiency is a variable that is important to monitor. The second is customers.

Again, in the April issue, survey results indicated that “lack of customers” and “equipment maintenance/repair” were on the top-five list of problems causing business owners the most grief. A great story to differentiate a business may be to announce that it is concerned about natural resources and is going “green.” This may attract customers who are like-minded. In addition, this may require the purchase of newer equipment that will allow the store owner to track and tweak energy consumption. Newer equipment certainly is more energy-efficient and may attract customers to a location. In addition, newer equipment tends to command a higher vend price.

Walters: Tracking energy efficiency is essential for store owners looking to increase revenue and improve their bottom line. By educating themselves on utility costs and what percentage of their current revenue is going toward energy, water, etc., an owner can determine the store’s energy efficiency.

Q: Discuss some of the laundry equipment features that contribute to greater efficiency today. What features have been improved over the years?

Walters: Regarding dryers, a tempered glass door, better seals, and a solid dryer drum help keep warm air in the drum, which forces more heated air through the load to reduce dryer use. Fast-drying axial airflow system, increased insulation and double-paned windows keep heat contained in the dryer basket, enabling clothes to dry more quickly with a lower Btu output.

Looking at washers, a higher spin speed, or G-force, removes water from clothes. The more water extracted during the spin cycle, the less time (and energy) is needed to dry a load of laundry.

Meeting energy- and water-efficiency standards (i.e. Modified Energy Factor (MFE), CEE Tier, Water Factor (WF) and ENERGY STAR® requirements) play a considerable role in washer energy efficiency.

Dixon: Laundry equipment has and will continue to evolve as technology becomes available. Today’s products use less electricity and Btu. Some of these changes have been mandated by government regulation, but most have been developed by manufacturers to offer product differentiation. However, the real excitement is in the control technology.

It is now possible to regulate up to 30 different water levels, the temperature of the water, spin speed and detect leaks. Auditing software makes it possible for the laundry owner to make changes quickly if necessary. You no longer need to wait for the utility bill to arrive to discover that you may have a problem.

Check back Monday for Part 2!

CHICAGO — Phil Arvin and his two partners opened their first Maytag-equipped coin laundry in Memphis, Tenn., last March. The 5,000-square-foot attended store is equipped with new energy-efficient 60- and 80-pound washers that are much larger than those in competing stores and thus could command a higher vend price, Arvin says.

But the group followed the suggestions of distributor Justin Laundry and established prices that are comparable to the laundries nearby, Arvin says. “Even though we’re offering a much higher quality product, we didn’t want to be perceived as the higher priced place.”

This is just one example of how the market can influence a laundry’s pricing strategy. But other factors are at work, too, and there are some basic premises that the self-service laundry operator should keep in mind when establishing or changing vend prices.

Your Competitor Has Undercut You – Now What?

And whether it happens intentionally or not, there is likely to come a time when a competitor will undercut you in price. Then you have a decision to make.

“If an owner is convinced that for the type of wash and dry they’re offering, the atmosphere, the other services, that they’re charging fairly, they should probably make the decision to give it some time and see if customers recognize that value and come back,” says Kevin Hietpas, vice president of sales and marketing for Dexter. He suggests giving it a month before acting.

Like any battle, a price war requires a strategy, Gauthier says. Neutrality is one strategy that allows the store owner to focus on their strengths while letting the competitor take the financial hit. But, neutrality isn’t always an option.

“Strategies are best developed after understanding a competitor’s strengths and weaknesses,” says Gary Gauthier, national sales manager, vended laundries, Milnor Laundry Systems. “For instance: Is their equipment mix weak? Maybe offering—and promoting—the right size machines for your market is the key. In a margin-based industry like vended laundries, price decreases should only be considered as a last—and short-term—step.”

“A store owner needs to provide his customers with assurance that they are getting the best service, equipment and experience money can buy,” says Kent Walters, national sales manager for Maytag/Whirlpool Commercial Laundry. “If a competitor in the area is charging less for a similar service, the store owner needs to tout the reasons why his/her store is worth spending the extra money.”

In this type of situation, the opinion of a neutral third party is invaluable, he says.

“Ask someone to visit your store, talk to the customers and provide feedback. Why would a customer pay more for your coin store? What are the perks of your store vs. the competition? This information can help an owner accurately illustrate the experience customers receive at his/her store.”

Click here for Part 1.
Click here for Part 2.

CHICAGO — Phil Arvin and his two partners opened their first Maytag-equipped coin laundry in Memphis, Tenn., last March. The 5,000-square-foot attended store is equipped with new energy-efficient 60- and 80-pound washers that are much larger than those in competing stores and thus could command a higher vend price, Arvin says.

But the group followed the suggestions of distributor Justin Laundry and established prices that are comparable to the laundries nearby, Arvin says. “Even though we’re offering a much higher quality product, we didn’t want to be perceived as the higher priced place.”

This is just one example of how the market can influence a laundry’s pricing strategy. But other factors are at work, too, and there are some basic premises that the self-service laundry operator should keep in mind when establishing or changing vend prices.

Criteria for Setting Price?

Upon what criteria should a laundry owner base his or her wash and dry vend prices?

“It really comes down to two issues,” says Kevin Hietpas, vice president of sales and marketing for Dexter. “No. 1 is what’s happening to his costs. How have costs impacted the viability and profitability of his business? Owners should have a good sense of where their business is tracking from a performance standpoint.

“No. 2 is where is he competitively. None of us exist in a vacuum, so you want to understand, ‘I might want to get to a certain point, but as of right now the market won’t let me go there all at once.’ That’s a secondary concern, because I think if the owner is providing good value, it’ll be reflected in his costs. He’s not going overboard with what he’s charging, nor is he under pricing for his service.”

“We have a lot of ‘rules of thumb’ in this industry,” says Gary Gauthier, national sales manager, vended laundries, Milnor Laundry Systems. “When it comes to pricing, it’s typically recommended that gross monthly receipts from washer/dryer revenues should be at least four times the monthly rent and at least five times the monthly utility expenses.”

A store owner needs to be aware of and factor in the competition’s prices when determining his or her own washer and dryer pricing, says Kent Walters, national sales manager for Maytag/Whirlpool Commercial Laundry.

“The owner’s goal should be to produce the best experience for the customer from ambiance to equipment and services—and the costs associated with washing and drying play a large part in this equation,” Walters says.

How Do Your Front-Load Prices Compare?

American Coin-Op surveyed its e-mail subscribers about their November 2011 front-load vend prices — their lowest and highest, and whether the prices had changed since the previous November. Those polled were not asked to identify machine capacities.

Results from the anonymous, unscientific StatShot survey show the lowest and highest prices varied quite a bit among the four regions.

In the West, customers could get a front-load wash for as little as $1.50. The lowest-priced front-load washes ranged from $1.50 to $3.75. Nearly 88% of these prices were unchanged from November 2010. The remaining 12.5% of respondents had raised their lowest-price wash during the 12 months.

The price range for the most expensive front-load washes in the Western region was $2.75 to $7.89. Every respondent reported these prices were unchanged from a year earlier.

Low-end front-load prices in the South ranged from $1.75 to $4.25. Approximately 62% of respondents had kept the same low price since November 2010, and 31.6% had raised the price. Just 5.3% had lowered the price.

Southern customers faced the widest price range of all regions — $2 to $17.50. Nearly 58% of operators reported having raised their high-end price since November 2010, and the remainder were unchanged.

In the Northeast, the most inexpensive front-load prices were $1.50 to $5.50. Just 6.7% of operators had raised their prices in the previous 12 months, while the remainder had kept the prices unchanged.

When it came to the most expensive wash, Northeastern customers were paying $2.25 to $8 in November. Approximately 21% of respondents had raised this price compared to November 2010, while the remainder had stood pat.

The most inexpensive front-load prices in the Midwest ranged from $1 to $4.50. Just 5.9% of operators had raised their prices since November 2010, while another 5.9% had lowered them. The remainder had kept prices unchanged.

On the high side of front-load prices, Midwestern customers faced a range of $2.50 to $8.79 in November. Some 12% of respondents had increased prices, with the remainder keeping the status quo.

Tuesday: Should you announce a price change?

CHICAGO — Recent developments in our troubled economy have served to dramatize how credit can be a valuable friend or a dreadful foe. Used sensibly, credit can be a powerful asset in your business life. Use it carelessly and it can become your worst enemy.

You may not need to use credit every day, but when you need it, you can’t afford to have the door closed in your face. Here are nine ways to put credit to work for you and your laundry and not against you:

Be Aware of Your Credit Report

If your credit score is “good,” it will be easy for you to get credit when you need it. If your score is “bad,” you may find it impossible to get credit from anyone.

If you are operating your store as a sole proprietor or partnership, it isn’t possible to separate your personal credit from your business credit; your score for both will be the same. To learn more about how your credit score is calculated, visit www.ftc.gov.

The three credit reporting agencies (CRAs), Equifax, Experian and TransUnion, are required by law to provide you with a free copy of your credit report once every 12 months at your request. You can order your free report online at www.annualcreditreport.com, or by calling 877-322-8228.

If your business is incorporated, you may want to register with Dun & Bradstreet using your legal business name. Registration will provide you with a DUNS number, a unique nine-digit sequence recognized as a universal standard for identifying and keeping track of the more than 120 million businesses in the D&B database. There is a fee for this service, but a DUNS number will help to establish your credibility with suppliers and vendors.

Improve Your Credit Score

You can improve your score by:

• Paying your bills on time. This is the smart way to handle credit. Late or missed payments are a sure way to lower your score and incur hefty late fees and finance charges.
• Avoid large balances. Outstanding balances larger than about 25% of your credit limit are a red flag to financial institutions.
• Avoid closing out an account and transferring the balance to another credit card. This can hurt more than it can help. Each time you close an account, you lower your overall credit limit. Thus, your existing debt becomes a larger percentage of your credit limit.

Avoid the Minimum-Payment Trap

Whenever possible, don’t charge more than you can pay off in full when your monthly credit card bills arrive. When you pay the full balance on your credit card bill each month, you’re taking advantage of an interest-free loan from the card issuer. That’s the smartest way to use a credit card.

If you make only minimum payments on a significant balance, it can take years, and sometimes decades, to pay off the full debt. Once you fall into the “minimum-payment trap,” it can be difficult if not impossible to dig your way out.

Don’t Cancel Unused Credit Cards All At Once

If you have a number of credit card accounts but use only a few of them, it’s best to close out the unused ones. However, be sure to keep the cards that you’ve had the longest and cancel the newest cards. The CRAs like to see a long record of prompt payments. Too many new cards will tend to lower your credit score.

If you have more than one or two unused cards, spread out the cancellations over a period of several months. A rash of card cancellations in quick succession is another red flag for the monitoring agencies.

Think Twice Before Opening New Accounts

If you and your laundry don’t already have a long and favorable credit history, opening a new credit line will tend to lower your score. New accounts lower the average age of your accounts. That, in turn, affects your credit score.

Wednesday: Consolidating card balances is not a cure...

CHICAGO — Simply put, an outlook is an expectation for the future. But no one has the ability to see the future, so the best you can hope to do is to gather as much pertinent information as possible, prepare yourself for what you think will come, then have the flexibility to adapt your business to what actually comes your way.

There are reasons to be optimistic that the self-service laundry industry will continue to bounce back in 2012. But that optimism will be tempered by a lagging economy and ever-present high unemployment rates.

In speaking with experts around the industry, it’s clear that an operator’s best course of action in 2012 will be a continued emphasis on running an efficient operation and taking whatever opportunities are available to promote their business.

DEMAND FOR LAUNDRY SERVICES

Renters—the primary users of coin laundries—are a fast-growing population segment and thus a reason to be optimistic about the demand for laundry services remaining high. According to the 2010 Census, of the 116.7 million occupied housing units, 40.7 million—or 34.9%—were occupied by renters. In the 2000 Census, 31% of the nation’s households were renter-occupied.

“The good news is that the apartment industry is doing great, and that many younger people are going back to work,” says Dick Ruel, national sales manager for Whirlpool and Maytag Commercial Laundry.

Raymond McMurry, owner of Pat’s Washtub in Lawton, Okla., predicts his Oklahoma laundry will see 5% growth next year. “Due to the number of new customers we are seeing and retaining in the last half of 2011. … Unemployment creates new customers.”

“I think the economy will continue to be slow as we adjust to the reality that we have shipped many of our jobs overseas,” says Larry Larsen, who has more than 30 years of experience in the ownership, management and construction of Laundromats. “I don’t see any political proposals that will greatly increase demand for non-government workers. I think the current status will continue as long as unemployment benefits blunt the effect of the lack or loss of jobs.”

“Until California can make some headway on the unemployment problems we are facing, especially in the Southern California marketplace, we are in for another bumpy year in 2012,” says Andy Wray of ACE Commercial Laundry Equipment.

ATTRACTING BUSINESS IN 2012

Larsen says laundry owners must concentrate next year on reducing operating costs and coming up with promotions that will draw more people away from the washers and dryers located in their apartment buildings.

Ruel suggests getting back to the basics. “Keep the store clean and safe. If you have not been advertising, now is a good time to start, and make sure you are taking advantage of all the free social media. At the very least, make sure you have a website.”

Setomatic Systems’ Jeff North, who owns the Newport (N.H.) Car Wash and Laundromat, agrees. “This is the way that today’s youth communicate, and it cannot be overlooked. In addition, a website is going to be a must. Direct mail (target mailing) can also help with exposure. Laundry customers are a transient group, and it is important to continually get the word out about offerings and hours of operation.”

Wray urges laundry owners to resist the temptation to lower their operating standards. “When times get tough, it’s easy to neglect maintenance issues or skip repairs, but now is the time to be running your store better than ever.”

“Be 100% different from your competition,” McMurry suggests. “Do not be afraid to be the highest price in town. Customers only compare top loads. Get rid of top loads, therefore no price comparisons.”

Every new customer to McMurry’s store receives a free gift. “Show the customer they are the most important thing in your life.”

Click here for Part 1.

CHICAGO — When was the last time you walked through your store as if you were seeing it for the first time? If you’re in and out of your store all the time, you might take its appearance for granted.

But your customers—and prospective customers—sure don’t. They’re drawn to a particular store by its convenience, yes, but also by appearance.

Laundries that are clean, comfortable and brightly lit have a leg up on those that aren’t. Where does your store fit?

Once you’ve toured your store with your “first time” glasses on, you’ll no doubt have seen at least one or two areas that could use sprucing up that goes beyond the normal maintenance and cleaning routine.

Here are some key areas to examine with a critical eye:

EXTERIOR

To start, you need to be concerned with your visibility from the street. Is your signage large enough and easy to read? Does it stand out from other nearby signs? Is it vibrantly colored and well lit?

Having signage that is unique is important when your store is located in a strip center, especially if any of the surrounding businesses are vacant.

And it’s vital that the public can see that you run a “Coin Laundry” or a “Laundromat,” so make certain those terms stand out.

If you have a freestanding store, maximize the use of signage in your windows. You might be tempted to take a do-it-yourself approach and use tempera paint, but invest in having the signage done professionally.

Is the area around your store landscaped or at least well maintained? Just about any exterior can benefit from a fresh coat of paint on occasion.

Do you have ample parking available? Is the lot lit well? Does it have cracks or potholes? How accessible is your store to the average person and to the handicapped?

Are your windows clean and free of chips or cracks?

If your store doesn’t look so great from the outside, why would someone want to venture inside? They might equate a partially lit sign or some chipping paint outside with the quality of the service they can receive inside.

INTERIOR

Give your store a good cleaning. Often, an owner can improve their store’s image simply by wiping down their machines and keeping the floor clean.

When was the last time that you painted inside? Painting is one of the easiest and least expensive ways for a business to update its décor.

Neutral colors will broaden your decorating choices over time, but taking the plunge and painting in fire engine red or kelly green will bring excitement to the space.

Whatever color you decide upon, make sure the kind of paint you choose will be easy to clean. Select a paint that’s washable and doesn’t show dirt easily. White is symbolic of cleanliness, yes, but it may not be the best color choice for such an active environment.

A well-lit store showcases your equipment and creates a more secure setting. If your store is dim, it might be time to invest in new lighting. Good lighting with new ceiling tile can make a huge difference.

If your store happens to use T12 fluorescent lamps, now is the time to replace them: they will no longer meet efficiency standards that go into effect in July, says the National Lighting Bureau. The most commonly used 4-foot, 8-foot and 2-foot, U-shaped T12 fluorescent lamps will be disappearing from distributors’ and retailers’ shelves soon.

People don’t want to drop their clothes on a dirty floor, so keep it clean. Virtually any type of flooring can work in a laundry setting, as long as it’s maintained. Cement floors are easy to put in, and sealing the floor will make it easier to clean.

Vinyl tile is a bit more expensive but can last for years if properly maintained. Ceramic tile wears well and doesn’t require quite the level of upkeep, but you’ll pay more for it upfront.

From floor to ceiling, you have an opportunity to create a space that’s functional but comfortable. Your customers—and your bottom line—will thank you for it.

CHICAGO — With large-capacity washers and dryers more common in today’s coin laundries, offering some type of commercial service seems to make more sense than ever before.

But taking on commercial accounts is a much different animal than running a vended laundry. There are staffing and equipment issues to consider, contract and billing matters to attend to, and you can’t sit back and wait for customers to come to you.

“(Running a) Laundromat is more of a consumer business, a retail service, whereas commercial is more business to business,” says Andy Wray, sales manager for ACE Commercial Laundry Equipment, a full-service commercial laundry distributor headquartered in Westminster, Calif.

And a coin laundry owner must be intimately involved for their commercial service venture to be successful, advises John Sugg, president/CEO of SAMCO, a Fayetteville, Ga.-based commercial laundry distributor serving the coin laundry, multi-housing, hotel, education and healthcare markets.

“You have to be hands-on,” says Sugg, who is a store owner and route operator himself. “If the owner is actively involved in that segment of the business, it can be very profitable.”

To fine-tune your commercial laundry service, it’s important to coordinate it properly from the get-go.

BUSINESS CONSIDERATIONS

You must have the proper equipment and facility to handle such an endeavor, the distributors say.

“Some of these places are so tight and cramped, to bring on any more work, they might have to adjust to (working) after hours,” says Wray, a third-generation laundry professional. “Obviously, where there’s a will, there’s a way.”

Most of the standard 40- to 60-pound washers will “get you by,” he says. “Depending on some of the cycles that you require, you can make it up a lot in chemicals, using quality products.”

Equipment design and operational capabilities also factor in, according to Sugg.

“You can’t do one size fits all and make it work,” he says. “You need versatility as far as your equipment is concerned. … If you just have a basic machine that has hot, warm and cold as a selector, then you don’t have a very effective model for doing good commercial account business.”

“It might be that you have idle machines sitting there, but if they’re all top loaders, it’s going to be difficult to do some of the requirements from some of the hotels and stuff like that,” Wray adds.

With the right equipment in play, there should be no need for you to segregate machines for commercial accounts, Sugg says.

But there are limitations to the scope of commercial service that a traditional self-service laundry can offer. When you make the decision to take on commercial work that involves ironing or other special treatment, it’s probably time for you to branch out.

“Then you really are getting into a whole other segment of business,” Sugg says. “We’ve seen it done, but at the point that you’re going to bring in a roll ironer, you probably should be looking at setting up an industrial laundry to do that.”

“When you start getting into pressing and stuff like that, you step into the commercial/industrial arena,” Wray says.

From a management standpoint, serving commercial accounts requires knowledge in contract negotiations, invoicing and other areas. You may also want to review your insurance coverage to make sure it’s sufficient for the changes you’re looking to make.

“Somebody who doesn’t have organizational tools in the first place probably should shy away from (commercial work),” Sugg warns.

Monday: Identifying opportunities that make sense...

CHICAGO — While buying Laundromat insurance may be a less-than-glamorous task, few things are as important to your survival as a self-service laundry owner as protecting your business. Your investment must be looked after. For example, could you afford to rebuild after a disaster? Gambling is for Las Vegas, not the self-service laundry industry.

Have you changed insurance carriers lately? Have you looked for a better deal? Do you know what questions to ask when shopping for insurance?

Take a moment out of your busy business life, and think about the last time you reviewed your coverage. Are the limits adequate? Think about the laundry. Have you made any changes to the store? Have you added any washers or dryers? All of these things have an impact on your coverage.

There’s another way to look at your insurance coverage. Has your carrier contacted you lately? If not, maybe you should ask yourself why. It’s never a bad idea to give a new carrier a chance. The worst thing that can happen is you get to compare prices and coverages. A new deal may be beneficial for your operation.

Before you rethink your coverage, be prepared. Larry Larsen, an industry insurance veteran, offers tips on how best to shop for Laundromat insurance.

Avoiding Key Mistakes

Insurance shopping poses a unique challenge, says Larry Larsen, a 30-year industry veteran and agent for Crusader Insurance Co., Woodland Hills, Calif.

“Everybody wants to save money in the Laundromat business, but when it comes to insuring your Laundromat, you have to be careful you don’t save so much money that you increase your risk,” he cautions.

The most common mistake Laundromat owners make is the failure to properly value their business, Larsen says. “The starting point of any Laundromat insurance policy is the evaluation of what it would cost to rebuild the Laundromat in the event of a total loss.”

Trying to save money by lowering the amount of your property insurance means there could be major problems if you experience a total loss, Larsen explains. “No insurance company is going to pay you more money than the face value of your insurance policy at the time of a total loss.”

You can carry lower insurance amounts, he adds, when you have made the decision to close down and quit the business if you have a total loss. “This applies to people who only have a short term left on their lease, or are leasing on a month-to-month basis. If your store burns and is declared a total loss, your long-term lease may not be cancelled and it will be your obligation to rebuild the Laundromat.”

Confusion often exists when owners buy replacement-cost insurance with the belief that their store will be replaced regardless of how much face-value insurance they have purchased. It’s quite a “surprise” when an owner discovers that the insurance only covers up to a maximum of the insurance purchased, Larsen explains.

Do you know what it would cost to rebuild your store? Read your lease or look at your other building insurance (if you own the building), he says. “As a tenant, many of the items will be covered by the building owner if there is a loss. Absent a lease provision to the contrary, all fixtures you will be required to leave behind at the expiration of your lease may be covered by the building owner’s policy.” This can include the bathroom, water-heating system, water softeners, heating, air conditioners, swamp coolers, electrical panels, gas lines and interior walls.

The lease plays a crucial role in any shopping experience. No one can give you the proper assistance unless the lease is reviewed, Larsen adds.

“The valuation of your Laundromat is not the responsibility of your agent! Your agent probably has not seen your Laundromat, and is only as aware of the condition of your store as you have provided in answers to a few questions.”

Your agent may be the expert in Laundromat insurance, but you’re the expert when it comes to knowing the value of your own business, he notes.

“The second most common mistake is the failure of owners to take the time to understand their insurance. Most owners spend hours evaluating the income-and-expense potential of a Laundromat purchase, but only spend minutes evaluating their insurance coverage. Spend more time evaluating your insurance.”

How does an insurance “amateur” evaluate coverage? “Read the insurance provisions of your lease, learn the definitions of insurance terms, and discuss your potential insurance with your potential agent,” he advises. “A professional agent has allocated up to one hour for each new client to engage in a question-and-answer session. No question is silly, and any agent who avoids your inquiries should be crossed off your list of agents worthy of your business.”

If you have any questions or comments about this article, contact Larry Larsen at laundromat123@aol.com.

Click here for Part 1.

ST. LOUIS, Mo. — I’m no meteorologist, but I can see what’s been happening since the year began: We’ve been hit with record ice and snowstorms in places that rarely receive it.

And this troubling weather “report” doesn’t end there. The country has experienced more than double the usual number of tornadoes, record-breaking rainfalls and hailstorms, and flooding. And hurricane season only recently began!

Since we have no idea if these weather occurrences will continue or subside, it’s better to be safe than sorry when it comes to taking care of your self-service laundry.

Loss of Business

If you feel a bit lost when it comes to understanding insurance matters, you’re not alone. There are some items of coverage that most self-service laundry owners just don’t think about. For example, most of you have loss-of-business income, but that only applies when there is a direct physical loss at your location. When you are out of business due to power failure from a storm, you need a coverage known as utility services-time element.

If you’re a store owner in a coastal area, you are probably aware of utility services-time element coverage due to the probability of hurricanes. After a major hurricane, a city may be without power for weeks.

Utility services-time element coverage is an extension of your loss-of-business income due to damage that occurs away from your premises, like downed power lines or a damaged water supply. Again, this coverage is usually not that expensive, but it’s important not just in coastal areas, but in any area due to the variety of weather events that may occur.

Things may not improve when the power returns. You may turn your washers and dryers on and discover that some of them are not working. The equipment may be damaged by a power surge. To deal with this problem, you should carry utility services-direct damage coverage, which pays to repair equipment that has been damaged due to a loss that occurred away from your premises. This coverage is not expensive, and I believe it’s worth the investment.

Flood is an exclusion on virtually all commercial insurance policies. Flood coverage for building and personal property can be purchased through the National Flood Insurance Program. If you are near a body of water that could flood, ask your agent to get you a flood quote.

Earthquake is another exclusion, but it can be purchased from most insurance carriers. If you are concerned, simply call your agent and you should be able to get a price for earthquake coverage.

Think about your customers in these situations. If you have a true bailee policy, and not just personal property of others, the clothing in your laundry is covered for flood and earthquake. If you are doing drop-off service or farming out drycleaning, you should have bailee coverage included in your insurance package and not just personal property of others.

Bailee also covers the clothing when it is away from your premises, such as when it is being transported to the drycleaner you are partnered with. Personal property of others is only covered at your premises.

Most of you are probably aware of Mark Twain’s famous saying, “Everyone talks about the weather, but no one does anything about it.” That may be true, but if you give your insurance situation some thought and are prepared, you reduce the odds of weather getting the best of you.

Click here for Part 1.

Tomorrow: How the SBA steps in to help after disasters...

CHICAGO — Are you looking to make a larger splash in the laundry industry? Are you ready to go beyond self-service laundries? If so, you may be thinking about exploring opportunities in the multi-housing laundry industry. The two industries are similar in some ways (The Same Only Different, American Coin-Op, April 2011).

Having experience in the self-service laundry industry is one thing, but expanding into the multi-housing laundry side is far different, says David DeMarsh, BDS Laundry Management, St. Paul, Minn.

Moving Forward

Like any business, the multi-housing laundry industry is not without its challenges. Instead of visiting laundry rooms, people prefer to have in-unit hookups, he says. However, installing in-unit washers and dryers can be cost-prohibitive on many fronts for the building owners, especially when it comes to utilities cost. Apartment owners may also buy inefficient equipment (leading to higher utility costs) to save money, he adds.

“People have a tendency to do one piece of laundry at a time, especially if they are not paying for the utilities,” DeMarsh says. “It’s up to the multi-housing operators to convince apartment owners that it’s far more efficient to offer laundry rooms and efficient equipment using 12-13 gallons of water per cycle, than buying in-unit equipment that can use nearly 50 gallons of water per cycle.”

The industry hopes that the growing emphasis on going “green” will prevent more in-unit hookups, DeMarsh says. “We have been competing with in-unit hookups for 15 to 20 years, and it’s a struggle.” The goal is to educate apartment owners, architects, etc., about the importance of conservation, he adds.

Government legislation aimed at conservation may also prove beneficial to route operators in their business quest.

Multi-housing operators keep a close eye on apartment vacancy rates. During the housing boom, more apartments were unoccupied. Things are changing, and the industry likes to see apartment vacancy rates of less than 5%, DeMarsh says.

Still thinking about investing in the multi-housing laundry industry? Then think about soliciting business, DeMarsh advises. “The fight [for business] is over the laundry rooms in buildings existing from 1990 or earlier. These are the bread-and-butter buildings [from a business standpoint]. Almost all the buildings built in the last 15 to 20 years have some in-unit hookups.

“The experienced route operators are competing for business, and they are dug in. This is an extremely difficult business for newcomers.”

Do it Right: 10 Laundry-Room Tips

Being a successful self-service laundry owner means knowing what customers want. Route operators face a similar challenge—the need to make the laundry facilities appealing to residents, while providing property owners with a valuable leasing tool.

Here are 10 ways from the Multi-housing Laundry Association (MLA) to keep laundry customers happy.

Convenience is the key. The primary design consideration of a laundry room must be convenience to residents. Community-area laundry rooms should be located near main traffic areas. A good rule of thumb is to place laundry facilities within 250 feet of any unit, and preferably on the same floor. This may mean having several smaller rooms, rather than one large, centralized one.

Safety counts. Just as with a self-service laundry, taking a few extra security measures, such as placing the community-area laundry room in a well-lit and adequately visible location, goes a long way in promoting resident safety. Also, consider making the room accessible only to residents by placing locks on laundry-facility doors.

Keep it clean. Arrange regularly scheduled cleaning of the facility, and provide plenty of lined trash cans to encourage resident participation in keeping the area clean.

Make sure the equipment works. Equipment needs to be checked regularly to ensure it’s in proper working order. Encourage residents to immediately report when equipment is not working properly.

Keep costs down. By charging reasonable fees for washers and dryers, you’ll see an increase in resident business.

Supply enough machines. Having the right amount of washers and dryers in a community-area laundry room reduces wait time and increases resident satisfaction. The demographic makeup of your property will help determine the number of machines you’ll need. The equipment mix will differ in number and capacity from self-service laundries.

Add technology. Technology makes doing laundry easier and more convenient for residents. Card systems are something to consider.

Don’t ignore the social element. Community-area laundry rooms are a place where residents socialize. With a few added amenities, like ample seating, you can promote a sense of community and develop the social aspect of the community-area laundry room.

Make it brighter. A fresh coat of paint will go a long way in brightening up a laundry room. Select a color that goes with the overall design and color scheme of the property. Also, by simply updating lighting, you can increase security and enhance the appearance of the laundry facility.

Accessorizing matters. Laundry rooms, like self-service laundries, don’t have to be boring places! Add a TV or stereo, and make the facility a more enjoyable place to be while clothes are getting clean.

Click here for Part 1

CHICAGO — If you finally have a handle on running one self-service laundry, have you thought about adding a second, or even third, store? Are you worried about overextending yourself? Does experience make the store-add-on process a bit easier?

Three owners share their views on the various challenges that running more than one store present.

How Many is Too Many?

How many stores one operator can handle by himself depends on the type of stores, says John Brennan, a multiple-store owner in the Tampa, Fla., area.

“If the stores are unattended, four is good for me,” says Brennan. “Four to five attended stores (2,800 square feet plus) is also about what I can handle. After that, repairs become an issue.”

“How many stores one can handle is a difficult question, because it depends on the way the stores are set up,” says Jimmy Brinkley, a multiple-store owner in South Carolina. “If the stores are less than 3,000 square feet and attended, one person can handle as many as four. After that, you need a repairman or another person to help, unless you want to work yourself to death.”

Phillip Viccinelli, a multiple-store owner in Texas, looks at it a bit differently. He operates two large, fully attended stores (3,500 and 3,800 square feet), and says three stores of this type would be enough for him.

Problems/Benefits

With multiple stores, dealing with employees is the biggest challenge, Viccinelli says. “I vastly underrated the employee issue. I have two children, and I voluntarily inherited six more by opening two stores.”

Other than gaining experience from the first store, Viccinelli says there are no benefits gained from multiple-store ownership.

Brennan says dealing with employees and “bad” timing when it comes to certain issues are his key challenges. “Problems at stores never happen at a convenient time. Problems can pop up at two or three stores at a time. You have to manage your time and visit the stores.”

Multiple-store ownership has meant taking advantage of some supply and part specials (buying in bulk), Brennan says. His marketing efforts are also made a bit easier. “You can list two or three stores in one ad in the same weekly newspaper.”

While incurring no major damage to his stores, Brinkley says vandalism is a major challenge, despite utilizing surveillance cameras. He believes vandalism can occur at any store, regardless of whether it is attended or unattended.

“Challenges are the reason we are in business. We thrive off of these things.”

Brinkley is also involved in the snack, car wash and storage businesses. He has been able to take advantage of “bulk” purchasing and even integrates some of his equipment from other businesses into his laundries.

“The car wash business is five or six years ahead of laundry in terms of technology.” It’s not uncommon for him to buy changers for his car washes, and eventually use them in the laundries.

Creating a Chain

Brennan has thought about establishing a chain, but knows that this hasn’t worked for others.

“Each area is different; not all areas are set up for the same type of operation, such as with McDonald’s.”

Franchising would be a problem, he adds, because the service you would be selling is not unique enough.

Brinkley agrees with Brennan. He says you can’t take a plan like McDonald’s and put it into effect; you have to cater to the clientele of the market. “None of my operations are alike. Then you have to put someone in charge, and they won’t know what they’re doing. A group of investors wouldn’t care about the laundries. Laundromats don’t run themselves.”

Viccinelli has a somewhat different take on the subject. “I’m sure a chain could be done.” He’s even thought about franchising. But he also sees some problems with these concepts.

“The down side would be creating a mid-layer of management controlling the money. The equipment mix would also have to be considered.

“The profitability of this business doesn’t justify extra layers of management.”

Click here to see Part 1 of this story.

CHICAGO — Has the financing industry changed during the recession? What should an operator know when trying to obtain financing?