opened mat 5 months ago, not doing that well

[mikenyc]

Hi,
I opened a new mat with over 60 machines total.The first month it did 2500/week and now 5 months later it only does $3000/week which is about break even.The mat is in one of the bouroughs of nyc and its densely populated with tons of buildings nearby with only one small laundry in the area.We have a below market rent but we are only breaking even after 5 months.Is there potential for more growth as we dont hae parking and all of our customers live nearby??Is there anything we can do to increase the growth?The mat is beautiful and extremely clean.We dont do any wdf because were in a lower income area and not enough people want that service.Perhaps the employees have a way of stealing?WE dont have cameras.
Any help would be appreciated.

[Gary C]

First off I think cameras are a must. Next if you are breaking even after 5 mths in any business you are doing well. I hope you went into knowing it will take time. Let us know your equipment mix and do you have any employees?

Gary

[William]

Don't assume that you can't make money on fluff and fold. My main customers are single working class men. Painters, carpenters, etc. They happily pay to have the ladies do their clothes for them. Not exactly high income types.

[mike]

mikenyc, are YOU spending some days at the mat ?

You should spend a complete day there, (even if you have another job !)

You should be able to get "a feel" for employee theft.

And while you are there for that day, talk to every customer, they will know, you just have to average out all their information.

I have one store with 49 machines, opened 16 years ago, I would love to do $3,000. a week, as I'm sure PeteF would at his stores.

You said you are "breaking even", if that includes all new machinery payments, and installation costs for utilites, you're doing okay !

You will increase a few % each year.

Any chance to raise prices ?

[Neil]

If you have all new equipment, you should be able to take readings off of them to protect yourself against theft. My machines are from 1998 and I programmed them all so that when I do collections, they tell me how much money dropped through the coin drop. It let me know right away that my employee was 100% honest (and that my mat was doing much worse than I was hoping) but that's another story.

[mikenyc]

HI,
When I used the word " break even"after all the bills are paid, including utilities,note payment which is over 4k, there is nothing left to pay myself.Of course, I spent over 200k in construction so I didnt make my money back.
Also for all those who would be glad to make 3000k a week, would you be glad to make that much if it only went to paying bills??
WE have a mix of 18lbs,25lbs,40lbs,and 55lbs.We charge 1.50-4.00, there really isnt room to change prices at this time.In an urban area how long does it take for a store to reach its peak?

[Neil]

Most new businesses do not begin to show a profit for the first 12 - 24 months. If you are breaking even now, you are well on your way to making a profit. Most new businesses fail because the owner was no expecting to go without a salary for that extended time.

[mikenyc]

Lets talk about laundromts , not other businesses.Does it really take 2 years to turn a profit with a laundry?I have a certain amount of people in my neighborhood, I dont think it should take that long.How can I increase my gross?

[Anonymous]

I would cut my losses and run. Tell the next guy how the place is still growing. If I could get out what I put in I would be happy at this point. A year from now when you are still doing the same business what are you going to tell prospective buyers then.
Live and learn.

[Neil]

Well, I guess I would need to know what your business model is? Are you an attended mat or an unattended mat? You do have employees, why not try WDF? It can't hurt. You have no parking. What about offering pickup and delivery as part of the WDF?

Check out the small mat in the area. How busy are they? What is your competitive edge? How can you let people know you have that edge?

If you feel people in your area do not know you are there, have a "grand opening". Make it worth peoples while to come in during that grand opening. Give free dry for that week or if you can't afford that hit, just discount the prices. Be there to greet each customer and give free detergent during that week.

[Gary C]

mikenyc
It sounds like you did not do your homework here. The coment

(Lets talk about laundromts , not other businesses)

Shows how new you really are. Step back and listen to what some of the people here have to say there is alot of knowledge here and we are all willing to help. There are a lot of simmilarities in many businesses. Neil was right on. It takes a while. How much time do you spend their? That's really important your customers like to know that the owner is there and cares. Remember it is truly a neighborhood business. I had one business that took over a year before it broke even let alone made money. Money out of pocket for 12 months now that hurt but when it turned around it was good.

Gary

[Glenn]

"densely populated with tons of buildings nearby with only one small laundry in the area"

Sounds like their was no need for a new laundromat in the area. Breaking even after note payments in 5 months in a market already well served is remarkable. Don't know if there's any growth potential though.

[Kitty]

Mikenyc,

Tell us from start to present time on your mat. Everyone here will be glad to assist you. You may get some comments on what you should have done and some comments on what you can do to make this venture more profitable. If you are currently breaking even, you may have hope to increase your revenue. Tell us the whole story from the start

Kitty

[mikenyc]

Hi,
Thanks, I believe I did tell the whole "story"What else can I say/?

[Kitty]

The whole story being what brought you to this business, what you want to gain, where your strengths lie, and your competitions weaknesses lie as well.

Where was your determining factor on location and equip mix, why did you pick the location and what made you think you could succeed in the biz and this area?

Please do not think this is questioning is confrontational. The question is presented to you, so you can get the advise you seek. Please be forthcoming. Kitty

[MSKLAUNDRY.]

The question is this. Before you got in to this business what was you expectations? What was your time horizon on turning a profit? Did you expect to live of the profits of this venture or do you have other sources of income. Did the distributor give you a unreasonable expectation of profit and now that isn't happening?
(not uncommon)

Like most have said here, it is common to not show a profit for quite some time. It depends on many factors most of which you cannot control such as competition and rising expenses.

The best thing you can do in focus on putting more day to day attention to it and hope you do better in time. Many people on this board can and will provide many ideas on how to enhance you income. After your note is paid off then you be making money.
The first few years are the hardest. Many don't make it because they have the wrong mindset from the beginning. If you have a long term approach you will do fine.

If you don't want to wait it out then try and sell out but don't expect someone else to pay top $ for something that isn't there.

[MyLaundry]

A laundromat is never an easy business. When I told my friends that I am in the coin-operated laundry business, they always thought I didn't have to do anything, just collect the quarters when it is full. However, I had very busy schedule and spent a lot of time working there. I had to admit, at first, I was not comfortable to deal with the laundry customers. But I gave them respect anyway.

In my first two years of operation, I did not break even. I remember those days I had to borrow money from my relatives just to keep the store running. I felt bad and stressful, but I never complained. I retained hope and was optismistic about future. And indeed I broke even in the third year, my sales was up 10% every year. After paying off the note in the fifth year, I was happy with what I got $$ every month. Finally, just a month ago, with the sales at the peak, I sold my mat for top $$$.

[pete f]

The money going to note payments IS YOUR paycheck. Sweat equity at best. I would say you are very lucky, I know of an owner dumping 400k down the drain to have a mat do 7k a month, barely enough to cover his satellite TV payments, let alone equipment. "great demo" hehehehe I would say you hit your largest potential after 6 months, so what you have is what you have. If it is not enough, dump it and move on. This business is not about building the biggest, pretty store and ego tripping, it is about LOCATION, LOCATION, LOCATION.

I have a mat with about 1/2 of the machines you have doing 90% of that business, unattended. What were you thinking??
at another mat my comp across the street has about 60 or 90 machines, I can't remember. who cares, his rent is more than my gross, yet I make money and he does not.. Bigger is not mean more money made, only more money spent.

Thanks for the reality check.

[Neil]

Originally posted by mikenyc
Hi,
Thanks, I believe I did tell the whole "story"What else can I say/?

I am not trying to be confrontational here but with a statement like that, I really do wonder what sort of research you did before you opened.

Did you write up a budget? What numbers are you not meeting? Did you do a survey of the area to see what the demand was? Did you study the competition and see if they were over capacity?

As far as what you are doing now, Kitty and MSK raise some good questions. Are you working at the mat? How many hours a week? Do you have another job to keep an income coming in until things pick up?

I think you were hoping for quick profits and now you may be looking for an easy answer. Things in business are never that easy.

To give you some history on my business. I paid cash for my laundromat and it was in operation for 6 years before I bought it. I trusted numbers given to me by the seller and I did a budget. It was in a state of disrepair and I took that into account. I surveyed the competition and determined what my competitive strengths could be. I based my budget on reasonable expectations of improvements. Due to having no debt, I expected to make a small profit my first year. Due to the old owner over staing income numbers, I am losing money every month. I am not however giving up. I am spending even more money with some marketing ideas that have helped a small amount. I am also working more than I expected to and I have taken on another project to create a revenue stream for myself. I would be happy to offer you some of my insight but if you think what you have told us so far is the whole story, your problems may be deeper than you think and the business may not turn around as quickly as you need it to.

[Jim]

As far as I can see...you are not giving yourself enough time to see if the business grows....5 months is nothing....like everyone else has said...Give it time.

The best mat I ever owned lost money for the first 2 1/2 years... I knew it would turn around, I just had to wait it out...when it did, the payoff was great...I would still own it if it wasn't as far as it is from my home. (approx. 40 miles)

Take your time and feel free to pick everyones brain here...I have learned alot in the short time I have been a member, and I have owned mats for over 20 years...

Good Luck and be patient.

[detlaundry]

I have only been in the biz a couple of years, but i don't know that i would run just yet.

The fact that you are breaking even without any ancillary services such as wdf shows some potential. Sounds like the next step is profit! I would agree that spending time at your mat and getting to know your customers is very important. However, if you are breaking even and have someone already there, your time may be better spent elsewhere.....Such as marketing (flyers, etc) your mat to all of those "buildings" nearby. If there is only one other mat, what is your competitive edge? Why did you choose to open there? WHat are you doing better or what can you offer? (i.e. nicer place, newer equipment, comfortable, safe atmosphere, etc)

I once thought that most of the $$ spent on marketing a mat was unnecessary.... Not so for a new biz.. I have customers daily/weekly who live nearby and say that they just "never realized we were there".
((I know, you just built a beautiful new store, how could they not realize your there??? But they may not))))

Also, if i have read your post correctly, you are charging 1.50 for an 18 lb and 4.00 for a 55#. Seems low in NYC, but i am not that familiar with your area.

And Pete is correct, you are at least building some equity in the store....Not to mention the tax advantages of all that depreciation on the new equipment against any other income you might have come April 15.
If you are truly breaking even right now and there is only one other mat in your area, you maybe on the right track.

[n175h]

I wish I could do 3K per week. It took me 2 years before I broke even. It sounds like you are doing better than I ever did.

I hope your distributor didn't promise milk and honey would flow after just a few weeks in the business.

David

[CharlieS]

Well, you have some major issues. No parking automatically limits your market area. I have three mats. I built out one. After two years, that mat is barely break even. It hit its monthly peak at about 9 months out. You are close to your final numbers.

My mat does pay $4500 a month in loan payments, and still breaks even. I had expected more, but really can't complain with a 100% financed mat. So I'll work for free for several more years. Not really free, just for equity, not cash.

You may have overbuilt for your market. Without an in depth knowledge of your market and the demographics, no one here can answer that.

What I can tell you is that unattended mats are generally more profitable. If you can harden your machines, and get rid of your attendants, you may start to make some decent money.

There are no guarantees in this business. Its not that easy.

Charlie

[Pete_tx]

What's your ROI?

If you're breaking even with a huge note, long term you'll do good.

You'll be putting 4k in your pocket once it's paid off. (I'm assuming a short term note.)

Do you own the building?

Either way stick it out at least a year so you have some decent numbers when you decide to sell.

pete

[MichaelCa]

I think many on this board will would be interested to know the answer to one question:
Did a distributor set this up for you ?

(if so, in many ways, this is like lending your brain to someone else and letting them install ideas & answers )

Otherwise, your own sense of caution, circumspection and due-diligence would have you on some better footing.

Your area sounds very much like mine:
"densely populated with tons of buildings nearby with only one small laundry in the area"...."no parking".
I can tell you that everyone there did not wear dirty clothes.

Understand how ppl on YOUR 'blocks' behave. Take a close look at each of those buildings...walk the streets - SLOWLY.
WATCH, then watch some more.
You will find out a lot, if you let things sink in.
As Mike said: Spend a WHOLE day in your store - then spend another one - converse with them, find out why & what drove them there. Do this as often as you can for a while.

If i could throw a baseball hard, i'd hit 5 (FIVE) Mats in EVERY direction.
98% of my customers walk to me - and many say: 'you're 1/2 block closer walk than so&so.

I've got several cool-looking Neon signs, STILL i get customers saying "oh, i didn' know you were here" - so yes, some sort of marketing is important.

One (Parking) idea that i'm about to try:
You can BUY a white zone (green,purple, whatever) by the foot from your city, for temp. loading/unloading. You set the time.
Parking here is a precious commodity even for residents. (almost no garages).
What will this do? If your store is as nice as you say, ppl WILL drive past others.
For now, i have a Hydrant in front of mine, where a Half-dozen brave customers do pull up from other areas, because they think my place is newer/cleaner/safer/cool-looking/classy... etc.

Take the collective advice of the ppl on this board - it's unvarnished reality.

[smellysocks]

it all comes back to location , location, location. Why would you build a mat without any parking even in NYC. I am assuming you have dexter equipment since you have a 55#. What numbers did your distributer give you for your location. How many sq ft is it. What percent of full capacity are you at( calculate if all your machines where running all day long the time you are open, then divide that by how much you are doing) You might only have the equipment mix to do that much a week, how many turns per day are you doing. If you are attended mat you are crazy for not offering WDF, in NYC you should offer pickup. I have friends who have store in the bronx, they do a ton of pickup. How much did you spend on advertising with the grand opening till present. are you 24 hrs on fri and sat night? we can only help if you give us info, alot of people would be happy to break even in three months, others want to make money from the start.