GLENDALE, Ariz. — They say hindsight is 20/20.
I’ve looked back at my career several times over the last few years, and while I’m happy that I was able to survive and prosper for 41 years, I do have some regrets.
And that’s the topic of my column this month: regrets, both big and small. I opened with my thoughts on not switching to high-efficiency boilers, not heating or air-conditioning my stores sooner, not building bigger stores, and more. Allow me to close with these others:
I regret not having my own dedicated utilities.
If I were starting today, I would make sure that my mat’s utilities are not branched off in a building shared with other stores. I had quite a few shutdowns due to either incompetence or downright stupidity of other businesses sharing the lines.
Case in point: My 2-inch water main was branched off the building’s 2-inch main after the meter. Every tenant had its own sub meter; mine, of course, was much bigger than the others.
One day, I got a call that the water had been turned off by a so-called plumber hired by the haircutter a few stores down. I rushed right down to the store to find that the other tenants had water but not me. So I went into the meter room and found that my water meter was shut off! I went up to the haircutter and told this unlicensed plumber that he shut off the wrong meter.
“No, I didn’t,” he replied. “I shut off the main to all the other stores.”
We went back and forth to the point of screaming. I had to take him downstairs, show him the correct water valve, and explain that my pipe was the same size as the pipe that supplies all the other stores combined.
I left but I get another call a half-hour later: my mat’s water had been shut off again! This guy was just plain stupid.
Lesson learned: If you are branched off and sharing the same water or gas main as other tenants, you will have interruptions in your supply. The best I could do was to clearly mark my meters and all my pipes.
Not all jurisdictions will allow separate mains in the same building, so check on this ahead of time.
I regret not considering bringing in a partner.
I ran my mats all by myself. I had no family or friends to help. That made it hard to feel relaxed when I would take a vacation, because things do go wrong. Emergencies do come up. Every time I took a vacation, I would cross my fingers that there were no burglaries, armed robberies, floods, fires, or utility interruptions while I was away. But I experienced every one of those on more than one occasion.
But I saw two problems with having a partner. One, it’s like a marriage, so hopefully both partners get along, agree on policies, and aren’t stealing from the other. Two, you have to split the profits, which obviously earns you less personal income.
I regret never “owning the dirt.”
I always leased my locations. Leasing has its advantages, especially in the beginning. Leases allow you to use less capital if funds are tight, and it’s easier to find good locations.
However, once I developed a winning business model, I should have pursued owning the properties.
Commercial leases can be brutal. There are fewer protections for the tenant compared to residential leases.
Many landlords will give you a decent lease initially, but once you want to renew, they know it’s not easy for you to just pack up and move across the street. So, you eventually end up at their mercy. One of my mats was in a high-demand area where landlords were only offering five-year renewals (and some wanted cash under the table). These people may also want your mat for themselves at lease’s end after you’ve made it profitable. You get none of these headaches with your own property.
You may have noticed that most of my business regrets involved investing money, sometimes big money. If I owned my own property, I would have had the confidence to make these investments. However, the money involved to buy my own buildings in less-trafficked areas scared me off.
I thought I didn’t have enough money to take that kind of risk. I didn’t realize at the time that laundromats could be a destination business. I always felt that having other retailers nearby would attract more people, and they do. What I didn’t know was that there is a whole class of customers with big families and big loads who prefer a big mat that can afford to charge lower prices due to the lower cost of real estate.
Years passed before I realized you could pool your money with other investors solely to purchase the property. If you don’t feel comfortable locating in a less-trafficked area, then I think the best scenario is to buy into a strip mall and become landlord. Every investor would have an ownership stake in the property but your laundromat, owned only by you, would benefit from a “sweetheart” lease written into the contract. In exchange, you could manage the whole property since you’ll be visiting your mat a lot.
If you decide to sell your mat, the lease converts to a more traditional commercial lease, but it should still be a nice, long lease with fair current rent to attract a good mat buyer at a good price (by all means, rely on an attorney to guide you through any legalities). Everybody wins. I wish I’d thought of this deal years ago.
I guess my final regret is not having had enough courage to believe in my abilities, blow the lock off my wallet and take bigger risks. There were times I played it too safe.
Miss Part 1? You can read it HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].