SUN CITY WEST, Ariz. — In Part 1 of my column this month, I shared five success factors, and if you adhere to most or all of them, you should do very well with your laundromat business.
But where there is success, there is also failure. I also have five reasons for failure to share now, and if you have experienced even just one of them, your mat may be headed for trouble.
Some of the reasons behind failure are doing the exact opposite of what’s needed for success. You could call these the negative factors.
NEGATIVE 1. LOCATION
Failing to study the market before you buy or build is a no-no. You may have found a reasonably priced location with parking and visibility, but have you studied whether it’s in a neighborhood that even needs a laundromat?
If most people living in the target location have their own washers and dryers, or their apartment complexes have really nice laundry rooms, the location will most likely fail.
Even if there are enough potential customers, if the neighborhood is saturated with competing mats, your location will most likely fail unless you build an awesome mat that can draw some customers from competitors.
But the existing mats won’t just stand idly by. Most of the time, they’ll drop their prices to keep customers from leaving them. Other mats will get renovated, either by their existing owners or by the new ones.
Too many novices think all they have to do in this situation is lower prices. If this happens too frequently, the entire neighborhood of mats suffers. All you need is one competitor who feels threatened to decide to start the infamous “free dry” promotion.
Of course, check the local building codes to make sure a laundromat is even allowed in the spot you are considering (is it zoned for it?), and determine how much the local government will charge in connection fees, which can be an outrageous sum.
NEGATIVE 2. NEGLECT
Neglect is by far the most preventable reason for failure. It’s closely related to a true lack of effort on the owner’s part. How many mats have you seen that look terrible?
Contrary to popular belief among the public, laundromats don’t run themselves. Unsuspecting investors think running one takes only minimal effort and look at it as a side job while their “real” job gets most of their attention. This is a sad misconception.
There is a tipping point where a mat becomes so neglected, it loses money. Then, they’re usually put up for sale. The seller can start to get desperate. This can be a good opportunity for a buyer, provided that a big, brand-new competitor isn’t slamming the place.
A neglected mat can be a dangerous mat, with higher risks of fire, flood, shock hazard, and slip-and-fall, for instance. These mats also tend to attract more crime and loiterers.
NEGATIVE 3. NOT KNOWING HOW TO DIAGNOSE AND REPAIR EQUIPMENT
While it’s not a must you know how to fix your equipment, you greatly increase the odds that your mat will fail if you don’t. A surprising amount of newbies interested in this business simply don’t get that.
Machines fail all the time. Most laundry owners do have at least a basic knowledge of what’s involved, and you’ll be competing with them. If you can’t diagnose and repair your equipment, customers will quickly lose faith in your mat and find another where the equipment is working well. If you have to pay someone to fix equipment in every situation, it can get expensive and your competitors who know how to keep their equipment running will have the advantage.
Displaying more than a couple “Out of Order” signs is a bad image. If customers see too many, they’ll get paranoid about the equipment they’re using, causing them to be on the lookout for anything that doesn’t seem right.
NEGATIVE 4. A BAD LEASE
Many laundromats are leased. Some landlords can be extremely difficult. In fact, some mats could be on the market due to a bad lease. Commercial retail stores don’t have protections like residential renters have, and the landlords can abuse you if you didn’t sign a good lease to begin with.
To invest hundreds of thousands dollars on a mat with a short lease is extremely risky. Smart mat veterans will ask for at least 15 years on the lease, if not more. They’ll also insist on a reasonable assignment when it comes time to sell.
If the proposed lease terms aren’t to your liking, find another mat for sale. I’ve met owners who had to literally walk away with nothing at renewal time, so get yourself an attorney who’s experienced with commercial leases. It’s money that’s well-spent.
NEGATIVE 5. A LACK OF MARKETING
Having an online presence is more important than you may realize, especially if you don’t have a great location.
Your online presence is just like your storefront. You want as many people as possible to know your mat is there, and how great you made it for them. You’ll be able to get customers who don’t regularly drive past your mat.
If your profitability is borderline, good online marketing with tempting offers can make the difference between success or failure.
So, there it is, folks, in simple form. For a long, profitable career like I was fortunate to have enjoyed, focus on the five reasons for success and avoid the five pitfalls of failure.
If you missed Part 1, you can read it HERE
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
