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NEW YORK — Eastern Funding LLC reports that it has launched a new, easy-to-use online credit application on its main website. The business financing company has a special focus on the coin laundry, convenience store, and specialty vehicle industries.

Along with new graphics and recent updates to the company’s website, online visitors will find the streamlined credit-application process that Eastern Funding management says “can expedite the credit approval process by removing much of the preliminary dialogue between new customers and Eastern Funding representatives.”

“We have a consistent commitment to deliver the best possible customer experience,” says Michael Fanger, Eastern Funding’s founder and president. “When someone first arrives at the Eastern Funding website...our enhanced credit app technology will make the whole process of submitting information and applying for financing much smoother and easier to use.”

Operating as a direct lender, Eastern Funding provides leases and loans with both fixed and floating rates. The company reports it has provided more than $700 million in laundry business financing since its inception in 1997.

ALSIP, Ill. — As we move into 2013, there are three areas that store owners should be ready to consider: equipment upgrades, marketing, and vend price increases.

All three are completely controllable and warrant a look in the coming year, especially if owners want to remain profitable. A large issue that’s impacting all three is the cost of water—a significant portion of a Laundromat owner’s monthly expenditure. In 2013, owners can expect water costs to become an even bigger challenge.

Water rates have surged in the past 12 years, according to USA Today’s study of 100 municipalities. The study noted that in more than a quarter of these municipalities, water prices at least doubled, and even tripled in a few. As the cost of water continues to trend upward, working with your distributor to find a solution that helps reduce water usage and keep utility costs as a whole from eating away at store profits will be essential in 2013.

Some owners are still on the fence about replacing their equipment because of current economic conditions. In many cases, however, monthly water savings can cover the cost for monthly equipment finance payments. For example, owners who operate a 2,800-square-foot facility and continue to use older equipment risk losing as much as $10,000 a year in profits due to unnecessary water usage.

EFFICIENCY UPGRADES

Washers that were replaced a decade ago can be considered inefficient. Manufacturers have invested significant resources into upgrading equipment with advanced technologies that enable store owners to spend less on utilities. With the right machines, owners can reduce water costs by 25-50%.

Controls also play an essential role in utility management. Newer control platforms have the ability to customize water levels, with some providing as many as 30 different options. The flexibility to change water levels allows owners to further decrease their water expenses and continue to provide customers with the best wash performance.

If reduced water expenses and revenue enhancers weren’t enough to encourage upgrading of machines, maybe the ability to operate their store from anywhere in the world will excite operators. Advanced controls are networked to a central computer, which means store data can be accessed remotely to monitor store activity and usage as long as the operator has a computer with Internet access.

Controls can be programmed with a single command, rather than going from machine to machine. Consider the management time savings. Manually, it would take hours to program 20 20-pound washers compared to seconds using an online data system. In addition, owners can see up-to-the-minute data on store activity, capture the history of each machine, and view maintenance reports to help decrease machine downtime.

VEND PRICES

Once an operator has replaced his or her equipment mix to help manage increasing water costs, he or she needs to consider raising vend prices, which will also contribute to overall profitability and cover the costs associated with monthly business expenses.

Many municipalities continue to raise real estate taxes to help cover the expense of rising deficits. In order to remain successful as a business owner, you need to make necessary adjustments.

Price increases depend upon the market, so there’s no real rule of thumb when deciding how much the cost of services should go up. But with new equipment in place, customers will be willing to pay a little more to use state-of-the-art machines.

Advanced controls also offer revenue enhancers. Some control platforms allow owners to create their own medium- or heavy-soil program, adding wash options like pre-wash, longer agitation time, and additional hot or cold rinses. Owners can in turn increase vend prices based on the cycle modifier selected. The benefit is an additional 10-15% increase in wash revenue. Controls can also offer time-of-day pricing, which allows owners to change vend prices to optimize profit around peak hours.

If you intend to raise prices, the best practice is to inform customers before doing so; this gives them time to plan for the increase.

style="margin-bottom: 0in; line-height: 100%;">Use a number of communication mediums, including the store website, newsletters and in-store signage. It’s important to provide information on why you’re increasing costs, so customers have a clear understanding that the raise is necessary to continue providing the high-quality services they’ve come to expect. Be sure to reiterate that with the new controls, they will maintain full control over their wash and how much they spend.

SMART MARKETING

To attract more business, and further improve profitability, it is critical to market your store. Few store owners are taking full advantage of marketing opportunities, but even on a small budget it can be done effectively.

As 2013 begins, make sure to budget accordingly for marketing programs. As a rule, I recommend 1% of profits be used for internal programs, while 2-3% is used toward external programs such as advertising and social media.

Social media continues to increase in popularity. Opening a Facebook page to promote your store is easy, and best of all, it’s free. Use your Facebook URL (example: facebook.com/yourstore) on direct mail pieces, on store signage, or pass out a flyer to customers in the store. Once you’ve captured their attention, you can promote in-store specials on your page.

More than half of the population today obtains its information from the Internet. If you don’t already have a website, get one. You can draw your customers online by including the website address on local advertising pieces and through your social media program. Likewise, your website can also direct viewers to your Facebook page to view specials.

If you’re willing to spend additional time investigating, you’ll likely uncover several other opportunities to participate in marketing programs on a regional level, such as community newspapers and billboards.

While 2013 presents some challenges, there are many solutions that offer opportunities for profitable outcomes. Contact your distributor and learn how to maximize profitability.

NEW YORK — Most family business owners expect their thriving enterprises to transfer to the younger generation with minimal fuss and bother. Reality, though, can be far different. Absent a carefully designed plan, misunderstandings and disputes can turn any business transition—including ownership of coin laundry stores—into a costly train wreck.

Parents must analyze the skills and proclivities of their children before assigning future management roles. While such assessments can help smooth the transition, even the best of such plans needs the support of legal documents that ensure power flows to the right people and sufficient cash is available to make everything happen on cue.

AVOIDING PROBLEMS

Successful buy-sell agreements include provisions that anticipate and head off common problems. Here are some tips from John J. Scroggin, a partner at the estate planning law firm of Scroggin & Company, Roswell, Ga., who has studied the hidden pitfalls of family business transitions:

Non-Compete Agreements — Suppose one family member desires to exit the business but wants some compensation in return. The buy-sell agreement may include a clause that specifies the value the individual will be paid for his or her shares. That sounds fine on the surface, but it can backfire if the individual then goes out and starts a business pursuing the same customers.

“If an individual is paid a lot of money for their share of the business, but nothing stops the person from competing for the very business that was purchased, why should the amount paid be any more than the value of the hard assets?” poses Scroggin.

The way to avoid this pitfall, says Scroggin, is to include a “non-compete provision” that prohibits the departing family member from engaging in a similar business for a set period of time. The agreement can also specify that the departing owner may not solicit the organization’s current customers or vendors, or utilize any of its trade secrets.

Tax Implications — “Never provide for a business transition without having a tax expert review the documents and the plan,” advises Scroggin. “Proper planning can substantially reduce the tax cost of the transaction.” In many cases, for example, the sale of the business to family members can create substantially more taxes than a gift.

Funding — It’s important to set up vehicles for funding the buyout. Often, life insurance provides funds for buying the shares of an owner who has died. And if the owner is retiring, there can be provisions for installment payments over time.

Exit Strategy — Suppose one child wants to leave the laundry business after some time passes. How much will that individual be paid for his or her shares? This should be spelled out in a legal document that you can think of as a kind of pre-nuptial for business owners. “Two people who own a business together are even more likely to divorce than a husband or wife,” says Scroggin. “There should be an agreement that defines their relationship and obligations and describes how they can exit the relationship.”

Protecting Funds — Suppose your laundry business has accumulated a large amount of money over and beyond the amount required to fund operations in future years. How can these funds be transferred to the member of the next generation? The answer often poses a puzzle: On the one hand, you want to make sure the funds stay in the family. On the other hand, you do not want to give so much money to individuals—particularly very young ones—that they will lack incentive to do anything productive with their lives.

In many cases, the answer to the puzzle is to establish what is called an incentive trust.  This vehicle provides for the incremental transfer of funds to the next generation, but only when those individuals have reached specified parameters such as finishing their education.

“Incentive trusts are perfect for liquid assets,” says Wayne Rivers, president of the Family Business Institute. They can be written so that rewards are given for performance in or outside of business. And the reward formulas can be flexible. “Suppose one child decides not to remain in the business,” poses Rivers. “The trust can be written so that it rewards the individual who goes into a public service to be a public defender, a missionary, or similar work.” The trust might pay 40 cents for every dollar earned in such pursuits. Any number of such parameters can be written into the trust document.

STARTING EARLY

Before legal documents are drawn up, the proclivities and skills of new-generation members must be assessed. The process should start with individual interviews, assessing the goals of each family member. Then goals should be incorporated into documents that ensure the smooth process of business and wealth transfer.

Many family business owners hesitate to draw up transition plans because of the current uncertainty in tax laws. Such hesitation is not necessary, says Gregory Herman-Giddens, a board certified specialist in estate planning at the law firm of TrustCounsel, Chapel Hill, N.C. “A qualified attorney can create a flexible plan that anticipates many different tax scenarios. So put a plan in place now and have some peace of mind that you and your family are protected. You can always update your plan in a year or two.”

Indeed, delay can be costly. “Don’t wait until one of the owners is sick or gets ready to retire,” says Herman-Giddens. “There can be an unexpected incapacity or death at any time.”

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations. Consult an attorney or financial adviser for advice regarding your particular situation.

Click here for Part 1!

ARDMORE, Pa. — Things go a lot easier when potential lenders, suppliers and partners can decide to take a risk based on a laundry business’ credit history and capability of repaying obligations. With strong business credit, a business can borrow at a lower cost, with more favorable terms. In fact, many small businesses with good business credit have discovered it is possible to get loans without an onerous and often embarassing personal guarantee.

Obviously, business credit is quite difficult to get. For any small-business owner, navigating the credit and lending world can feel like a vicious Catch-22. Most commercial banks and traditional lenders are reluctant to loosen their purse strings until would-be borrowers have proven themselves with a strong credit history. But it’s difficult to develop that good record when no one will lend in the first place.

TRADE CREDIT

Suppliers often allow their customers a grace period before requiring payment for the goods or services they provide. This is called vendor or trade credit and it permits every laundry business to generate at least some revenue from sales before they have to pay for the supplies, goods or products. Vendor or trade credit is also often easier to obtain than bank credit because it doesn’t require collateral. Unfortunately, trade credit can be quite expensive.

Terms of 2% 10 days, net 30 days (2% discount if paid within 10 days, the net [full] amount due in 30 days) translates into a 36% or 37% annual interest rate if the cash discount is foregone. While trade credit may be appealing to laundry businesses looking to save money, beware when opting to take these discounts.

BUILDING MORE CREDIT

It is important to remember that business credit cannot be built overnight. Everyone should think about the business credit of his or her laundry operation from day one. Having access to credit can help any business adapt to changing conditions and position itself for success. But what steps can a coin laundry owner take to improve the creditworthiness of his or her business?

• Always pay on time. An operation’s ability to repay loans promptly has the greatest impact on its credit score. On-time payments are the most direct way to improve a credit rating.
• Ensure creditors regularly report the operation’s payment history to the credit bureaus. If timely payments to suppliers and lenders are not included in its profile, the laundry business may not get the credit it deserves for paying bills on time. It goes without saying that the credit profile should be monitored at least twice per year to ensure that all vendor payment relationships are included.
• Maintain good personal credit. After all, well-managed personal finances can indirectly impact the business’ creditworthiness. Personal and business credit ratings are separate, however, and do not directly affect one another.
• Contribute to the business’ credit profile. The more information provided to credit bureaus, the more robust its credit profile will be. In addition, wherever possible, choose suppliers and vendors that report their experiences to credit bureaus, which will also help boost the operation’s profile.

As already mentioned, the best place to start building or rebuilding business credit is with suppliers. Many types of suppliers, including major brands, extend lines of credit that give businesses the opportunity to finance purchases and conserve their cash.

In addition to goods and merchandise for resale, a laundry business can obtain products such as office supplies, computers and marketing materials with payment terms ranging from net 30 to net 60 days. Of course, the focus should remain with applying for credit with suppliers that provide products and/or services needed on a regular basis, in order to make regular purchases using the operation’s credit line. By paying invoices on time, every laundry business can build a credit history and increase the operation’s creditworthiness.

With a strong business credit report, a coin laundry owner can stop relying on personal credit to qualify for needed financing. Because creditors, lenders or suppliers can now easily determine the operation’s risk level with a business credit check, qualifying will be a much easier process.

Building business credit can also improve a store owner’s image, protect the owner’s personal credit, limit liability, and increase credit capacity since businesses can obtain 10 to 100 times greater financing than an individual. But the time to think about credit for your laundry business is now—before it is really needed.

Information in this article is provided for educational and reference purposes only. It is not intended to provide specific advice or individual recommendations. Consult a financial adviser for advice regarding your particular situation.

Click here to read Part 1!

CHICAGO — Fire, liability or a worker injury is a risk that a coin laundry faces every day. If the business doesn’t have the proper insurance protection in place, an incident could be difficult to recover from. In a worst-case scenario, it could even put it out of business.

American Coin-Op invited representatives from the industry’s major insurance providers to answer some questions that the average self-service laundry owner might have about protecting their business investment.

ACO: What specific coverages do you believe are absolute requirements for any coin laundry, and why?

Adam Weber, president, Irving Weber Associates: There are many coverages that are industry-specific, such as bailee coverage for operations that offer attendant service (as well as those that don’t) such as wash and fold, but may experience an equipment malfunction that damages a customer’s clothing while being processed.

Other important coverages are water damage caused by sewer system backups, signs, general liability, parking lots, and equipment breakdown (including equipment and/or boilers and machinery if present). Also, business property coverage should be considered not just for machinery but also folding tables, TVs, chairs, vending machines, computer systems, card readers, etc.

Anne Hawkins, senior underwriter, NIE: At a minimum, every coin Laundromat should carry these coverages: 

• Building (when owned by the business owner) — If it’s an older building and you wouldn’t rebuild, insure for actual cash value. If you would rebuild, insure for replacement cost.
• Improvements and Betterments (when the business owner is a tenant) — You will need to replace the building owner’s property that is part of the building if you have a loss due to your negligence. This would include flooring, lighting, paint, wallpaper, etc.
• Business Personal Property (at replacement cost) — When you determine the replacement cost, be sure to include delivery, installation and taxes because these are included in the loss amount.
• Loss of Income (for minimum of three days) — This pays your profit and continuing expenses while you are out of business due to a covered cause of loss that occurs at your location.
• Utility Services-Time Element — This pays your profit and continuing expenses while you are out of business due to a covered cause of loss that occurs away from your premises, i.e. downed power lines due to windstorm.
• Utility Services-Direct Damage — This pays for damage done to your equipment due to a covered cause of loss that occurs away from your premises, i.e. when the power comes back on, some or all of your equipment is not working.
• Equipment Breakdown — Even if you do not have a boiler at your location, there are many other pieces of equipment that can fail due to an accident such as a power surge that is not caused by a covered cause of loss, i.e. power company equipment failure.
• Bailee — If you are doing drop-off dry cleaning and/or wash/dry/fold, you need to have coverage for your customers’ items that may be in your store overnight or for any length of time.
• Liability — Coin laundries have high liability exposure due to the volume of customers who enter their store and stay on the premises while doing laundry.

Larry Trapani, president, Brooks Waterburn Corp.: While a Laundromat owner needs many types of coverage, here are what I feel are the most important:

• Business Personal Property (AKA Contents) — This coverage protects your washers/dryers, vending machines, coin changers, basically all your stuff inside the building. Make sure the coverage is valued at “Replacement Cost” rather than “Actual Cash Value,” because if there is a claim, you want what it cost to get new machines, not the value of a 10- or 15-year-old machine. When you buy this coverage, think of how much it would cost you to replace all of your equipment if you had to buy it today.
• Tenant Improvements (AKA Build-out) — This is the cost that you put into the space you are renting. It includes electrical, plumbing, lighting, flooring, etc. Sometimes, these values can be $75,000 to $100,000. It is by far the most overlooked coverage when I review competitors’ policies.
• Liability — This covers slip-and-falls, children running into tables, or any other type of incident that might get you sued. Standard coverage is $1 million but some landlords require $2 million or more.
• Workers’ Compensation — The truth is, the Laundromat industry is a cash business. Many store owners pay workers “off the books.” The IRS is cracking down on small business. In most states, employers are required by law to carry workers’ comp insurance. And classifying employees as “independent contractors” will not fly. More than one of my customers has been caught doing that and paid significant fines. 

Steve Brodie, senior vice president, Wells Fargo Insurance Services USA: Key insurance issues are property coverage and adequate liability protection. Within these two broad segments, you want to make certain on the property side that you have full replacement cost for both equipment and tenants improvements, along with business income protection. Get your distributor involved by asking, “What would it cost to rebuild my store today?” Once you have that answer, discuss it with your insurance broker. Many times, fees (sewer hookups are a good example) do not have to be paid again.

On the liability side, review your lease as a minimum requirement, then discuss your own personal net worth, or that of the LLC, corporation or partnership that owns the store.

Last item of importance, but by no means should it be forgotten, is workers’ compensation. Laws differ in each state based on labor codes. Do not have a person in the store, even if advised by your CPA, that you call an “independent contractor” who is not covered by workers’ comp. If you have that exposure, take out a minimum premium compensation policy, evenif your CPA gives them a (Form) 1099 and classes them as independent. The only time this is questionable is if you hire another company (janitorial, for example). Make sure they supply proof of insurance and a “waiver of subrogation” from their workers’ comp carrier.

ACO: What are the biggest insurance risks in a coin laundry setting, and why?

Hawkins: The biggest risk is the liability exposure due to wet floors and/or damaged floor tiles from water leakage, plastic furniture that can collapse, lack of supervision of children, stools used to reach equipment controls, and improper maintenance of equipment. 

Burglary is another big risk. When someone burglarizes a coin laundry, they usually destroy the coin boxes on each machine and vandalize coin changers. This gets expensive and happens frequently.

Trapani: The biggest risks in a coin laundry setting can be broken down into two areas:

• Property Losses — The largest and most frequent claims are dryer fires. It usually has to do with not cleaning lint traps or ducts. As you can imagine, most fires cause significant damage because the dryers and washers are closely grouped together and the fire easily spreads. A good housekeeping procedure can help reduce these types of claims.
• Liability Losses — While trips and falls are common, lately, I see more children getting hurt in stores. Parents don’t always pay close attention to their kids, who run into things, pull down tables on top of themselves or fall from carts. I always suggest that a store owner bolt down tables to minimize some of the risk.

Brodie: Fire and liability claims are your biggest exposures to loss and cost the most when they happen.

Weber: Fire is probably the most common and easiest to avoid. Fires can easily begin in these businesses due to buildup of lint in dryers/exhaust vents, poor maintenance of heat-limiting safety devices (switches on dryers), combustible material stored near dryers or water heaters, washing materials soaked in flammable liquids such as gasoline, and buildup of oxygen agents (bleach, for example) through overuse.

Additionally, liability claims for alleged slip-and-falls are prevalent with this industry group.

ACO: How does the status of a store—unattended or attended—affect its insurability?

Trapani: The status of a store has a significant impact on insurance premiums. Unattended stores obviously are not as closely watched as attended stores. If something goes wrong, nobody is there to minimize the damage. Insurance companies know this as well and charge accordingly. The premium can be up to 40% more for an unattended store.

A note of caution here: If your store is unattended, make sure your insurance company knows it. If there is a loss, you may have trouble collecting because the insurance company can state that if it had known the store was unattended in the first place, it would not have written the account and thus deny the claim.

Brodie: They are both insurable; the attended store might get a little bit less premium based on someone attending the store during operational hours. Around-the-clock operations, as sometimes can be found in cities like New York and Las Vegas, pose different risks and must be 100% attended, usually with two people on duty at a time.

Weber: Unattended stores are at a higher risk of theft, vandalism and claims in general. Any time a business is left unattended, it is at a much greater risk of incidences that would require the use of your business insurance policy and generally are not as desirable to insurers.

Hawkins: It may depend on the individual insurance carrier. It’s been my experience that the unattended Laundromat pays more premium than the attended Laundromat due to the vandalism issue and the lack of a witness when someone reports an injury.

Check back tomorrow for Part 2!

WASHINGTON — For the sixth quarter in a row, the apartment industry improved across all indexes in the National Multi Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions. The survey’s indexes measuring Market Tightness (76), Sales Volume (54), Equity Financing (58) and Debt Financing (77) all measured at 50 or higher, indicating growth from the previous quarter.

“The apartment sector’s strength continues unabated,” says NMHC Chief Economist Mark Obrinsky. “Even as new construction ramps up, higher demand for apartment residences still outstrips new supply with no letup in sight. Despite the need for new apartments, acquisition and construction finance remains constrained in all but the best properties in the top markets.”

Key findings include:

• Financing is available, but only for top markets. Only 16% reported acquisition capital being available in all markets at all times. Even fewer (10%) stated that construction capital was available across markets.
• For the first time in a year, more than half (55%) of respondents said that markets were tighter. By contrast, only 2% reported the markets as loosening and 43% reported no change over the past three months.
• Nearly one quarter (24%) of respondents reported increased sales volume, compared to 16% who indicated decreased volume and 55% who reported conditions as unchanged since the last quarter.
• Equity financing marked 12 straight quarters of positive activity (Equity Financing Index at or above 50).
• Debt financing was the highest it’s been in two years. Only 2% reported borrowing conditions as being worse from the previous quarter.

PEMBROKE, Mass. — Laundromateurs tell me if they only could get their hands on $100,000, they could build a great business. And I occasionally meet individuals who say, “I would love to open a Laundromat, but I just don’t have the money.” Both types are missing the boat.

As a starting point, I’m not sure existing operators would use that $100,000 effectively. That is, after using the money, their business might be more or less in the same position as before the money was spent.

Second, and this is the point of this column, I disagree with the notion that obtaining money is hard these days. Yes, even in these cautious, recessionary times, money can always be had for a good investment.

Let me tell you a story. In 1968, I was a callow young man, fresh out of college and a year in the working world, wanting to start a business. I computed that I would need $25,000. Since I only had $2,000 to my name, how was I going to raise the rest?

First, I did my research. I obtained a warehouse job at a company in the field I wanted to enter. Down in the basement, I learned about product, processing, delivery, and staffer work patterns. I learned about the guts of the business. I would submit to you that my two months of being a warehouse worker was far better experience than being an executive.

Secondly, I went to several business owners and interviewed them. I told them that I was doing a graduate thesis about the industry. These businessmen opened up, providing in some cases more than I wanted to know. I took copious notes. In the process, I learned some strategies about winning and maintaining customers. For example, I learned one businessman’s theory about giving price breaks.

Thirdly, I spoke to customers and asked what they liked about their service and what they didn’t like.

Using that research, I wrote up a seven-page business plan. Nothing fancy, but it basically explained what I needed in capital and how I was going to use it to get my business started. Then I sent my business plan out to 10 individuals. These people included successful business owners from the town where I grew up, moderately rich relatives, and one college buddy who had money. I also sent the business plan to my local banker, who I had dealt with when I was a young boy minding my miniscule savings account.

Basically, I asked for a debt and equity investment of equal increments. In other words, whether they invested $1,000 or $5,000, it had to be 50% debt and 50% equity. The equity was the individual’s ownership stake. If the business prospered, the investor’s value would be increased by the success of the business. The debt portion was a three-year loan, which would be paid back at 4% interest each year, until the balance was paid off in full.

Why this necessity of equal debt and equity? Because I would contribute my $2,000 (my life savings), and if every investor contributed equal debt and equity, then I would, by arithmetic, own more than 51% of the business and therefore have effective control. I could do what I wanted and wouldn’t have to answer to anybody.

To illustrate, say there were five investors, and each contribution went like this:

• Ricky — Total contribution of $1,000: $500 in debt, $500 in equity
• John — Total contribution of $3,000: $1,500 in debt, $1,500 in equity
• Susan — Total contribution of $4,000: $2,000 in debt, $2,000 in equity
• Mike — Total contribution of $5,000: $2,500 in debt, $2,500 in equity
• Jose — Total contribution of $10,000: $5,000 in debt, $5,000 in equity

So, their total contribution was $23,000: $11,500 in debt and $11,500 in equity.

I add my $2,000—all equity—to reach the $25,000 required capital investment. So, my ownership stake is the $11,500 debt and the $2,000 personal contribution, for a total equity stake of $13,500. That’s 54% ownership ($13,500/$25,000).

For many years, the Ford family owned exactly 51% of Ford Motor Co., so therefore it had full control. Sure, the Fords had to share profits with the minority 49% stakeholders, but they could manage the business any way they wanted. That’s the importance of obtaining equal debt-equity contributions.

One by one, I visited these potential investors, presented my case, answered questions, and showed them how serious and determined I was. Several days went by, and nobody budged. Then one prospect called, saying he would put in $2,000 according to my stipulations. I called two others, and both agreed to put in money. In one week, I had the necessary commitments.

Altogether, nine prospects agreed to invest in my business. Even the bank came through, which I had to refuse because its interest requirements were higher than my debtors’ arrangements. In short order, I gathered my $25,000, and started to set up my business. I was 24 years old.

The point of this story is not to boast. Rather, it’s to show that there are unlimited ways to obtain funds. In my state, Massachusetts, 6% of families have more than a million dollars in capital. Many of these individuals are earning precious little on their money. A number of them could be persuaded to invest in a business enterprise.

Consider the following options:

• Attend a Rotary meeting and present your business investment idea. Describe how investors can make money from your proposition.
• Approach members of your family, asking them to invest a sum of money, which will be rewarded with 10% interest a year. If you believe you can take that money and put it to good use, you can certainly pay high interest. I know a woman who built a giant bus company by giving investors 20% annual interest for their $10,000 investment.
• Visit your two wealthy retired relatives with your idea and pitch them on the debt equity deal that will make them part-owners again. Play one against the other to encourage them to invest. Or do the same with neighbors, friends, or members of the same organization you belong to.
• Post an ad on Craigslist for a partner. Set up some sort of partnership role, without you giving up control. Who knows, perhaps some wealthy individual will become intrigued by your proposal.

If you need money to take your business to the next stage, it’s out there. Saying “I can’t find investors” is no longer acceptable.

RONKONKOMA, N.Y. — Irving Weber Associates (IWA), which has provided business insurance protection to the fabricare/dry cleaning industry for many years, says it is expanding its services to owners of coin-operated and self-service laundries.

“We have been working on this request from brokers and the Laundromat owners for some time now,” says IWA President Adam Weber. “The extra time it has taken us was to ensure the Coin-Op Advantage Program™ was as exceptionally suited for the diverse and advancing Laundromat industry as our Fabricare Advantage Program™ has been for dry cleaners.”

IWA will continue to work with local insurance brokers to offer the coin-op program. “The design and benefit of this program will only be seen by the above-average Laundromat operations,” says Weber. “We will be offering the Coin-Op Advantage Program to owners that are involved with up-to-date, technologically advanced, clean facilities in emerging communities.”

He says this is being done to keep insurance costs down, while providing comprehensive coverage to Laundromat owners “who have invested in the long-term success of their business.”

JOHNSTON, R.I. — Are you prepared should a natural disaster strike your coin laundry? Would it be safe to be in your store? If you run an attended store, what do your employees think?

An overwhelming majority of Americans do not feel their employers are well prepared for, or might not recover quickly from, a natural disaster, according to research reported by property insurer FM Global.

The firm’s Business Risk Pulse Check finds 75% of U.S.-based workers feel their employer is not well-prepared for a natural disaster, and 72% of those polled would not feel totally safe in their workplace during such an event. Additionally, the study finds 71% of U.S. workers are not fully confident their employer could bounce back quickly. The survey comes on the heels of a record year for natural disasters in 2011.

The research, commissioned by FM Global and conducted by global research firm TNS, polled more than 1,300 U.S. workers nationwide to gauge perceptions about natural catastrophe-related risk in the workplace.

“Business resilience is more than just about getting back on your feet, it’s also about doing the right things to make sure you don’t get knocked down in the first place,” says Jon Hall, executive vice president, FM Global. “The findings demonstrate how critical it is that business leaders better prepare for natural disasters and ensure those efforts are understood within the workplace.”

CHICAGO — Credit is the oil that lubricates the machinery of business. Whether it’s a loan to buy supplies, to support expansion, a capital purchase, or just the need for a short-term loan to meet payroll or other operating expenses, most coin-op laundry owners need to depend on credit at some point. Unfortunately, the upheaval in today’s economy has resulted in a credit crunch that seems to have made it tougher than ever for business owners to swing a loan.

Still, for those in the know, there are enough options available to make the task a little easier. Money may be tight, but business loans are being made every day to those who know how to ask.

What Happens When the Bank Says No?

When your best efforts fall on deaf ears at your local banks, all is not lost. Here are some alternate sources of business financing that may meet your needs:

State Government Programs — Most states have loan programs designed to provide small-business financing. Some of these programs provide loans at lower-than-market interest rates, provided the business will create jobs in the state.

Some states have collaborated with local banks in lending arrangements designed to attract, retain and expand businesses. Typical of these is a partnership between the State of Ohio and Huntington Bank. Known as the Ohio Huntington Business Loan Program, it has provided more than 2,000 small and medium-size Ohio businesses with loans totaling $465 million.

For information on small-business financing programs in your state, contact the office of your state representative or state senator.

Federal Government Programs — The federal government also has loan programs available to assist small-business owners. The most popular of these is the Small Business Administration’s guaranteed loan program that guarantees as much as 80% of the loan principal. This program gives your bank an incentive to lend to a borrower who does not otherwise meet the bank’s lending guidelines.

Among other SBA loan programs available to small-business owners is the 504 loan. Established in 1980, the 504 Loan Program provides long-term, fixed-rate financing for major fixed assets, such as real estate, facilities construction or expansion, or other fixed-asset needs.

If you decide to seek an SBA loan, your best bet is to work through a certified or preferred lender. The SBA’s guaranteed loan process is rather complex, so you want a lender who has experience working with them. To find certified or preferred lenders, visit the SBA website or call your local SBA office for guidance.

The SBA has local and regional offices in every state. You’ll find their phone number in the federal government section of your local phone directory. For detailed information on all SBA programs, log on to sba.gov.

Small-Business Investment Companies (SBICs) — SBICs are private investment firms licensed by the SBA to provide investment financing and long-term loans to small businesses. Some SBICs make only equity loans, others provide debt loans, and some provide both. As a rule, SBICs will require the same level of collateral and credit ratings as banks.

For information on how to contact an SBIC, check with your local SBA office or log on to sba.gov/inv.

Local Economic Development Organizations — Your local Chamber of Commerce or other business group may have some revolving loan funds available to businesses specific to your community. Generally, these funds come from local resources and have specific guidelines for their use.

Begin by contacting the director of your local Chamber of Commerce to see what help might be available for the specific purpose you have in mind.

Angel Investors — When conventional financing options seem out of reach, many business owners have had success seeking out individuals or commercial lenders willing to invest in a business expansion, with either debt financing or by taking an equity position in the business. When you find an “angel” investor, you’ll probably find that this option is more flexible than a bank loan or government program.

If you don’t know anyone with the economic firepower to fund your loan, don’t give up. There is an entire industry of professional investors looking for opportunities to invest in growing businesses. For more information on how to match up with an investor who might be interested in your situation, log on to entrepreneur.com/article/52742.

Keep in mind, though, that unless you’re willing to give up an equity position in your business, working with a professional investor is not for you.

When All Else Fails

Depending on the size and economic health of your business, the only source of expansion money available to you may be what you can dig up on your own. Be advised, however, that each of these money sources carries special risks.

Friends and Family Members — If you have a friend or family member able to help finance your growth, you may find this to be the easiest type of loan to obtain.

But use caution. Most financial experts agree that mixing business and personal relationships can lead to destructive problems in both your business and personal life. If you do take a loan from a friend or family member, make sure that all details are carefully spelled out in a written contract.

Credit Card Financing — If your needs are modest, you may have credit cards with lines of credit substantial enough to fund all or part of your financing needs. While it can be tempting to simply charge everything, this is arguably the riskiest and least desirable of all financing methods. The burdensome interest rates charged by credit card issuers these days can become impossible to meet if your business hits even a minor bump in the road. The result could be a severely damaged credit rating — or even the loss of your business.

When you need to raise money for your business, say most experts, a thorough and detailed business plan is the key to the safest and most desirable types of financing. While other than conventional sources of money may seem the easiest to find, they are seldom the wisest choice.

PITTSBURGH — Congratulations, you’re a successful laundry owner. You have a great location, a solid customer base and well-maintained machines—but now what? It may be time to look at expanding your business and opening a second store.

By now, you know the basics of running a laundry business. Unfortunately, a complete replication of your first store may not make for a successful second store. It is important to go back to the basics and look at everything from location to equipment mix and store naming.

LOCATION

Here’s a challenge for you: don’t just find a location as good as your first one, find one better. Understand that this is no easy task and will require lots of time and research.

The first thing you should consider when looking for a location is how far away from your original store your second one should be. Carve out an area of no more than an eight-mile radius from your original store and use that as your market. Having your stores in close proximity—no more than 45 minutes from each other—allows you to easily move between stores. Also, if your stores are all close together, it can be a great way to corner the market from your competition.

Now it’s time to talk with your distributor. Since you already have a successful store, you most likely are already working with an experienced distributor. Make sure to continue to cultivate that relationship, as it can be a great benefit when looking to purchase an existing store or build a new store.

Distributors typically have information on existing Laundromats coming up for sale and will approach you to judge your interest. The distributor can easily identify whether this laundry is a potential good investment, knowing the performance and location of the store.

Rehabbing a store has its pros and cons, but can make a great second store if proper due diligence is done. A benefit to choosing a store to rehab is that utility company charges and codes are more likely to be grandfathered in, meaning you will not have to deal with the hassle of obtaining multiple permits from the city and retooling plumbing or electricity to meet building codes. This varies between municipalities, so make sure to ask your distributor before assuming this is the case.

If there are no stores for sale in your target area, it’s time to start scouting other possible locations. Get in your car. Learn about your surrounding neighborhood. Look for areas where there are many apartments or maybe even a college campus. Once you’ve identified an area, it’s time to consult with your distributor. Your distributor will be able to pull detailed demographic reports that will be able to provide you with an idea of the surrounding population near the proposed location. If the demographics look favorable, it may be time to buy the land or storefront and start your second store.

ADVANCED CONTROL OPTIONS

Whether rehabbing a store or building one from the ground up, it’s time to rely on what you’ve learned from your first store. You already know what works—now it’s time to make it even better. Look at the machines your distributor has to offer; there are probably new advancements since you last purchased equipment. It may also be time to look at investing in advanced controls if your previous store doesn’t have them. Advanced controls can be a great resource for multi-store owners.

Certain manufacturers produce controls that allow an operator to program a machine right from their PDA. With the control, you can alter the time-of-day pricing and retrieve audit data right from the palm of your hand. Reports pulled can detail how each machine performed throughout the day. If a machine is taking too long to drain or is not filling with water to the appropriate level, the report will show this. Without these reports, it may take days or weeks to catch problems like these. In conclusion, these reports help prevent wasted energy and water.

Specific controls can give owners the option of choosing from up to 30 water levels, which can save thousands of dollars a year in water and energy savings when compared to older machines without advanced controls. Customers can benefit from having up to 24 cycle selections with these controls, keeping them happy and in turn giving your store a good reputation for being technologically advanced.

THE INVESTMENT

Although the rewards and return on investment can be great from owning multiple stores, the initial investment for a second store is not inexpensive. It’s important to work with your distributor and commercial laundry machine manufacturer to develop a financing plan that is suitable to your needs. Some commercial laundry manufacturers will allow you to finance directly through them, which streamlines the financial process.

Financing through a laundry manufacturer is far better than using a bank. Manufacturers not only understand the industry better than anyone else, but can also tailor a financial solution that meets an individual laundry owner’s and/or facility manager’s needs.

Choosing a financial service provider that is unfamiliar with the commercial laundry industry can lead to unnecessary risks and costs, including overpaying for services, hidden fees, slower response to time-sensitive opportunities, and limitations on the long-term success of the business.

Another financial area to consider is the cost of employees in your new store. Many stores in the Pittsburgh area are unattended, for example, but the trend is moving toward attended stores. Customers want to be able to interact with someone when they have a problem. This is a great benefit for customers who want face-to-face interaction and for you, having the peace of mind of someone always being on-site to deal with any issues that may arise. If you do choose to open an attended store, you will need to factor in this additional cost.

If looking at an attended store, I would suggest a credit/debit card store. Although the upfront investment of a card system is more than a traditional coin system, the ROI down the line may be higher. Along with that, card systems save busy multi-store owners time since they do not have to empty coin boxes regularly, or make multiple trips to the bank on a weekly basis.

FINISHING TOUCHES

After you have all your logistics figured out, it’s time to name your store. I suggest that multi-store owners keep the same type of name for each store. Customers will make the connection between your stores; if you’re already known for running one successful business, why waste time rebuilding your reputation?

Throughout the whole process of becoming a multi-store owner, it is important to have confidence in your distributor and your equipment manufacturer. They will be your go-to source during this transition and before you know it, you could be opening your third, fourth or fifth store!

TEXARKANA, Texas — A 35-year-old Texas man has been sentenced to federal prison for his role in a 2008 fire that burned a northeast Texas laundry, according to U.S. Attorney John M. Bales.

Justin Rodney Glenn pleaded guilty in December to conspiracy to commit arson and was sentenced earlier this month to 60 months in federal prison by U.S. District Judge David Folsom. Glenn was also ordered to pay $169,517.12 in restitution.

According to information presented in court, from about April 1, 2008, to June 5, 2008, Glenn conspired with others to burn down commercial buildings in order to submit fraudulent insurance claims and collect insurance proceeds.

He recruited and agreed to pay individuals to set fire to the Washtub Laundry, also known as Gary’s 24 Hour Wash and Dry, which burned on June 5, 2008. This caused a fraudulent insurance claim to be submitted to Certain Underwriters of Lloyds of London, resulting in a loss to the company.

Glenn was remanded into custody following the sentencing hearing.