NEW ORLEANS — You’re familiar with the daily rigors of running a self-service laundry operation and now see the potential for local opportunities in providing commercial laundry service. But what’s involved in getting started and then building such a business?
Clean Show 2019 attendees got answers to some of those questions during a TRSA-sponsored panel session called Tips for Entering the Commercial Laundry Industry. Panelists were Lou D’Autorio, director of operations, The Laundry Company, Tampa, Florida; Dan Campbell, president of Wash Around the Clock, Tallahassee, Florida; and Julia Pooler, president, and Keith Pooler, vice president, Sacramento (California) Laundry Company.
While the panelists all currently run commercial laundry operations, how they arrived at this point differs.
D’Autorio’s background is in dry cleaning, having spent 30 years in that industry segment before transitioning to commercial laundry a few years ago through a mutual friend. The Laundry Company came about through an acquisition.
Campbell runs five self-service laundries and first entered the commercial laundry business nine years ago. He still considers himself to be “green” where commercial laundry service is concerned.
The Poolers started with coin-op laundries in 1999 and grew to running several stores within a few years. They built a 7,000-square-foot commercial laundry to support their own pickup and delivery service, then later a 60,000-square-foot facility when opportunities to serve large commercial accounts presented themselves.
Do your research before taking the leap into commercial laundering, D’Autorio suggests, and start small: “Find those small commercial accounts—massage studios, gyms, places like that—to build your volume to then be able to take that next jump.”
Julia Pooler says having a lack of operational redundancy early on was a mistake for Sacramento Laundry.
“Probably the most important thing you can do is have redundancy in your buildings,” she says. “If you’re in a dry cleaner or a coin-op, you always need more equipment. Something is going to break, something isn’t going to work. The biggest mistake we probably made when we first opened our smaller plant … you need a minimum of two of everything. If you have one boiler, you need two. If you have three ironers, you probably need four or five. Plan for one or two more of everything you have: square footage, employees, it doesn’t matter.
“You will not be happy when your one tunnel (washer) or washer breaks down and you cannot produce any linen. Your contingency plan should be the second boiler, the third ironer, the fourth towel folder, whatever else you can purchase to fill your buildings.”
As for financing such operations, Keith Pooler suggests establishing strong relationships with the banks you deal with, and reaching out to the Small Business Administration to take advantage of its programs.
“We’ve utilized SBA loan programs six or seven times now,” he says. “As we’ve grown from a coin laundry to a commercial laundry to an even bigger commercial laundry, the SBA has been an integral part of it. And so has our relationship with our main banker.”
He says there are third-party facilitators who can assist small businesses in compiling the needed SBA loan documentation, and he found that the service fees were well worth the cost.
What are advantages or disadvantages of growing through acquisition?
“I think one of the biggest advantages is that you have a book of business to start with, so you’re not outlaying for that equipment and you don’t necessarily have the business to operate that equipment,” D’Autorio says. “If you’re looking to acquire a company, due diligence is the single most important thing you can do. Spend time at that facility. … You have to look out for yourself, because you’re going to be taking over this company. You want to make sure the equipment is working properly. Get an understanding of the management team, of their employee personnel, and see what needs to be done after you acquire it.”
Julia Hooper urged the audience to educate themselves on business accounting.
“If you don’t really know how to read a balance sheet and a profit-loss statement, you really need to learn how to read one when you’re going to go buy a business. … Take accounting classes, basic ones, online, anything, because they’re trying to sell you a business and it’s going to be ‘fluffier’ and ‘prettier’ than what is going to happen once you get into it.”
Looking back on his start, Campbell says he didn’t take full advantage of the resources available to him through the Coin Laundry Association and other organizations.
“If you’re not prepared to do everything it takes to make that work, it can backfire on you quickly,” he says. “If you’re willing to do everything you can to make sure it works, it creates opportunity. … Gather as much knowledge as you can from people that have sort of paved the road.”
Taking questions from the audience, the first involved pricing when getting started: How can one justify the expense of taking on small accounts that contribute little to a plant’s volume?
“As we started doing exactly that, it was totally a side business. It was not our core business,” Julia Pooler says. “We were doing it just to see if it was viable for us. Once we saw there were people out there, you can start taking on those little ones because you’ve got bigger ones. Then you can start going, ‘Well, there’s a minimum. It’s $20, $30, $40.
“You don’t go into this business not making money. We are not a non-profit. Tell them what it costs, and that is what it costs. They will probably not be able to find somebody else.”
But don’t be afraid to say no to an account whose revenue doesn’t justify its expense, she adds.
“You price it as you see best for you and that business,” Campbell says. “I use the term ‘value proposition,’ because every business has a different value. The time that you’re saving every business varies from client to client. I was given the opportunity to look at some of my competitors’ pricing strategies and I realized very quickly that there was absolutely no conformity in the same industry across the board. It was basically ‘get what you can.’”
“Do our larger customers get a better price? Yeah, but they’re negotiated,” says D’Autorio. “You start with your point, they start with their point, and it comes down to how badly do you want the business and how badly do they need the service.”
If you missed Part 1, you can read it HERE.