All you need to know!

[Lar Hylobates]

http://www.coinlaundrysales.com/7questions.html

[Kitty]

"Coin Laundries have a very predictable income stream" If you enter the right location. Not every location is viable for a mat.....you see many large stores opening and never coming close to breaking even.

"Most Coin Laundry owners use a repairman who is on call as needed and charges an hourly fee. Service contracts are rarely used." How many on this board hire a service man??? Most guys do it themselves and this is where a bunch of money is spent if the owner cannot or will not fix the machines.

I have found that these associations and brokers like to cnonvince people how easy it is to find and run a mat. Granted the easy part is the managment and customer service, the hard part is actually making money doing it. How many mats are grossing over 100K. Personally I think mats that gross under 100K are really not worth the time and effort. Of course this is because I believe in an attended mat....Buyers beware in laundry land...not all mats can make money.

Having been looking, so many mats for sale are for sale because they will never make money, those that are really making money, are rarely for sale.

[kyle mcpeck]

Kitty,

You really need to watch generalizing that 100K and under mats do not make money. I'm going to make quite a bit this year in two small mats for the effort involved. You do not need to be attended in many mats to be successful.

I actually have been installing vending machines this week in a competitor's laundromat. It is an attended mat that is immaculaate but I have determined it really was the owner's that kept it this way not the attendants. They do so little.

I've got PT employees that clean my mat better than these full time attendants do. My PT employees even collect my cash for me!

My point is that as you are buying a mat you need to look at these mats as possible opportunities. When I am looking at a mat I really don't care what their numbers are. I care more about my projections. Often, I can see the many cosmetic problems when I first walk in that will improve the gross and net when they are fixed.

Most mat owners sell when their businesses are worth the least. Isn't that interesting? The best way would be to sell when they are worth the most.

[Fred50]

My favorite quote:

"Coin Laundries lend themselves very easily to absentee-ownership."

Is this the best distributor line, or what??

How many people actually make money running completely absentee? I have had a few distributors tell me that you only have to show up once or twice a week to collect $$$$!!

[Anonymous]

Well if that works you should encourage them to sell larger cash boxes so maybe you only have to go in once a month or so. :~:eek::eek:

[Kitty]

Kyle, I am sure that these mats can and do make money. But, I feel when I venture into the biz, I want an attended mat. So therefore the mat that grosses 100K would not net me a good enough profit to make it worth my while, pay a note, maintain, and make me some money. I am sure those who have mats that gross that amount and do not want attendants then a profit can be made. Of course, 2 or more mats can net you more money. But surviving off of 1 with no other income? I think it is tougher than one may admit to.


As far as the absentee owner bit, it makes me laugh! Dave and I rotate weekends so he may maintain some sanity, and have family and golf time. Weekends are the businest. This morning, not my weekend, Dave is unavailable and Number1 mat has no water. Absentee owner??? handle that issue.

[Gary C]

Kitty
It might do you well to at least consider unattended mats. They can do quite well, mine does. If your in an area where it is possiable to be unattended you may find it's more profitable. Just my 2 cents worth Look at the mats you run now if you back out all related costs to employees take out the WD&F where are you at money wise You and Dave my be quite suprised. Be sure to count all employee costs Payroll, you, ss tax, bennies, vacation time, theft of services extra accounting services etc.

Gary

[pete f]

Kitty... 100k l'mats are not the norm, well sort of.
I have 3 that do less, 1 in the 50k range, yet I cash flow near 40% of that little mat. Buy a few mats. The dense urban areas have some big numbers, and some big numbers expenses. Check your CLA reports. 50% were under 100k, and many of those had w/d/f and drop dc. You may not find the "gross range" you want in an urban area does not mean it is not profitable.

SC/HL
I like the part about, well all parts. I wish I had seen this before I bt my first mat, I feel I am doing something wrong now...I mean, I actually go to my mats. just yestersday I had to mess with a lint trap overflow and a coin changer problem. Twice on the coin changer, I had to get up this AM at 7 to screw with it again.
I wish I had read how easy it is to run a mat first.

[Kitty]

Ok I would do ok to purchase an unattended mat that grossed 100K? Suppose I can net 40%? The mat being unattended, the exception of me, doing whatever is needed. Would I work 40+ hours? Would I have to? You never know until your in there, but I know how I am, Id live there, for 40K??? Is that really worth it? By taking all the profit, where would my future reinvestment capital come from?

What is your idea of unattended? Youd either have a cleaning service or yourself. How much work do you unattended guys do?

[Gary C]

I probably spend 20 hours a week at mine. That is at least double what I need to, but I enjoy it so I never rush out when I am there. That figures out to being attended 18% of the time. Say I net $50,000 a year that would figure to about $48 an hour not to bad for a cleaning man(low stress job). I also run another business. So I belive it can work well. Then you have to factor in the tax bennies.

Gary

[Lar Hylobates]

I spend 3-6 hours per week there. 1 scheduled trip per week plus whatever else comes up. Each visit 3 hrs. long.

Of course there are those projects that require more attention, but these are typically large scale upgrades that are planned well in advance.

I am attended mostly for this reason. I like to leverage my money and more importantly MY TIME! The extra money I spend on attendants pays 10 fold considering what I am accomplishing elsewhere.

Kitty, I also have that contract mechanic service that they mentioned. It currently costs me about 225.00 per month plus parts which honestly haven't been more than 500.00 total in the last 12 months. I'd pay this just to have somebody to yell at when I feel like it. He clears jammed coins, drains...all the small stuff too.

[Kitty]

Do any of you guys leave funds for reinvesting? Do you have schedules of equipment replacements? Do you always carry notes, buy a little at a time or finance whole new rows of machines at a time?

[CharlieS]

WoW. Good thread.

Kyle - You're my type of guy. I agree completely with your approach.

Hylobates - I can't believe we actually do something similarly!

Kitty - Your thoughts are rooted in your great concepts of customer service. This is not a bad thing. At the same time, when its time to switch to the entrepreneurial cap, you must be prepared to fully analyze, assess, and change the existing situation.

Kyle is right on the money. Most mats are sold when the owner is losing money, sick of the business, things are going wrong. Of course, they want the price it would command if it was a cash cow and everything was perfect.

I would never have built my attended (center city) mat if I knew how well my unattended mat was going to turn around. I purchased this mat for $15K 2 years ago. It was doing 24K a year, and losing $15K. I fired the attendants, fixed the equipment, put everything on timers, painted, repaired, spent about $30K including some new and used Maytag washers. I was the 5th owner in 8 years. None had ever made money, and all had sold for a loss.

I netted $11K last month on this mat. I visit it once every 5 days, for about 8 hours. It will gross $150K this year, unattended. The only difference was in doing exactly what Kyle said. Clean it, fix it, make it attractive. Do the basics.

No, I don't set aside reserves. However, between my apartments and mats, I spend about $5K per month on reserve type items. If I am a little short, I don't do it that month. If I've got cash, I might do more than I expected. If it really needs new equipment, use financing, but not the high dollar kind. Be aware of your financing costs. I have yet to see a leasing deal that was very favorable when compared to direct financing.

Everything is an investment. The key is make sure that your investment serves one of two purposes. 1) Creates new cash flow that covers the cost of the investment 2) protects, extends, and furthers existing cash flow.

Kyle has it right. Buy the right mat, when its down, for the right price. Make sure its down for the easy stuff, what I call remediable repairs. If the market is there, and you present a good mat, the market will respond to your efforts.

As your mat creates cash flow, use that cash flow to further its growth and improvement. Make it better next year than this year. Don't just rape the money and rape the mat. Otherwise, like many mat owners, you'll find that it is no longer profitable, you can't sell it for what you have in it, and you are unwilling to make further investment (which is good, because an owner in this position has demonstrated an inability to make good decisions).

One last thing that i find interesting about succesful laundromat owners. They don't look it. Most live modestly, drive older cars, wear older clothes. However, they often make far more than their more prosperous appearing neighbors.

Charlie

[CharlieS]

Kitty -

to answer your second question about reserves.

I just spent an additional 25K on new washers, and am preparing to spend 40K on new dryers. Financing over 3 years, this will cost me about $2K per month. I'm financing 100%. My money is worth more than theirs. (explanation available)

I could go longer and reduce the monthly, but I don't want to spend the interest, and the mat can handle the payment.

Do I need to do this? Hmmmm. Clearly the mat is doing well. However, I do get complaints about the dryers, which are 15 year old SQ slimlines. They look old.

My washers are ok. However, we just had an extended drought, and still have low groundwater. Switching to Neptunes will reduce my water consumption by 25 to 35%. Plus, I replaced my used washers I bought 2 years ago, that were 4 year old toploaders then.

So, I spend $2K a month for 3 years, but extend the cash flow life of the mat for at least 7 to 10 before I need to spend more money. Plus, I get more efficient, better looking equipment that will cost me less to operate, and probably increase my business.

Ya gotta give a little to get a little.

[Rondo]

Charlie just said it all, he's got the whole business summed up.
I just invested over $40,000 on new equipment on one of my mats and as he said make sure the equipment saves you a little on your expenses and adds value to your business while your competitors do nothing. After it's paid for and the utilities cost rise your completely ahead of the game.





Ya gotta give a little to get a little. [/B][/QUOTE]

You got to spend money to make money

[pete f]

Geez Charlie, good points. I just bought my first new car in 25 years. Well, my problem was I spent more on my boat, but you are somewhat correct there anyway.

Kitty, I work about 10 hrs per mat per week. That includes the 8 hrs I work that I get "paid" to sweep the floor, pick up, etc. Yes, I work more hours when something happens, but overall not to much.
You seem to snuff at 40k a year. You have to remember that your income will be based on what your cash investment was for at least 5 years. If you invest 25k, then expect to put 5k in your pocket. If you pay 100k then 20% is 20k. This leads into your other question about reserves... I figure about 10% of cash flow is going to be spent on inprovements, equipment, etc. What better than to invest in your own business. So the 50%, 40% cash flows end up in the pocket at 40%, 30%. Probably less with the good operators who are really upgrading alot.

The l'mat biz is not get rich quick by any means, and not even get rich slow. But a few well run stores can add up, like owning rental property, only more intense.

[Anonymous]

Be careful that upgrades are viewed as upgrades by your customers. I have 5 Wasco W124 washers and 2 Wasco W125's, my customers for some reason prefer the 124's, even though they are very happy with the W75's, W185's and W245's. I make this point because I have two of the W124's that are starting to make noise and need new bearings. Most people would replace them with new Gen6's or lightly used Gen5's - but since I know my customers I will get the bearings fixed. It will be cheaper and the customers like these machines.

My point is if you buy a place that needs work you should run it a little as is and get to know your customers before you decide what they want without really knowing what they want.

[mike]

Kirby, do they perhaps prefer your w124's because of price? or maybe because they are manual instread of emerald ? or location ? (closer to dryers, or the door ?)

I have both, they get about equally used (the W125's are emerald)

As i understand it, the w124's are 30lbs. and the w125's are 35 lbs.