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Reinvesting in Your Coin Laundry Business

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2013
Photo: ©iStockphoto/Olivier LeMoal

Matt Miller |

Why 2013 is the year to invest in equipment upgrades, increase vend prices, and market your business

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.

About the author

Matt Miller

Coin-O-Matic Equipment Corp.

President

Matt Miller is president of Coin-O-Matic Equipment Corp in Alsip, Ill. He has more than 28 years of experience assisting vended laundry owners in finding solutions to increase profitability and maintain successful operations. He can be reached at 708-371-9595 or millerm@millerlaundry.com.

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