Profit Question

[anonymous]

I have a question concerning the amount profit being made by a store. I mean by the time you take into account the cost of an attendant being there, plus rent and all of the utilities, plus money to upgrade equipment when necessary, it doesn't seems like there would be much if anything left over in the form of profit. I was thinking, if there was enough WDF that the money from that would cover the workers pay, but please fill me in because it just doesn't seem like it could be possible to make a lot of money with a sucessful laundry

[Kari]

And IF you do make a profit - most of that goes to Uncle Sam.

[anonymous]

I agree with you if you are attended you must have wfd
to pay for the attendant.
If you have to repay loans and interest it is even worse.

go count quarters

[Anonymous]

If you guys feel like that why do you want to be in this business. I have owned other kinds of business and have found that the laundromat in a very good business. The best I have ever owned and the most profit too.

[dondwyer]

BWP you don't indicate if you own are considering buying an existing business which would be key to an appropriate and more targeted answer. However, let me first say the unless you are going to grow or invest in a chain you won't become a Donald Trump from the profits. But, business is business is business. By this I mean that you must know or learn why a business is not making enough money and then focus on methodologies to increase gross sales via marketing or additional revenue sources. Frankly, I am just getting into this business and have spent a great deal of time learning the ropes, and focusing on the key indicators. I have been a business executive for many years and applying this experience there are many factors to consider, hence my first point on clarification of status, do you own or are you buying?

If you are buying and looking at a particular store's revenue and find that the expenses leave small net, why? Is the store run poorly, dirty, and an unpleasant atmosphere for the customer? What would you do to change that? How much revenue is produced by WFD? How can that be increased? Focus on your demographic and consider methods that would increase the desire to do business at your location. It may also be a fact that because of new competion in the area the store is outdated and it has lost customers to newer locations. If this is the case, what can you do to win customers back? Direct mailing of free coupons is one of many effective methods. But, you have to give customers a reason to prefer your location. In some cases it may not be feasible to increase your profit margins and may be more prudent to shut it down, but this is the last resort if faced by drastic demographic changes that alter the landscape such that there are no longer enough customers within a one mile radius to support the operation, in which case I'd focus on developing commercial accounts before throwing in the towel. Finally on this point, if you are considering a purchase, and don't see how you can increase the margins then this is not a good acqusition and you should continue searching.

If you already own the store then you must be imaginative and focus on ways to decrease expenses and increase generated revenue via some of the previously mentioned methods. Can you reduce debt, renegotiate your lease if you don't own the property? Take a survey and see what your customers have to say. What do they want? It may be necessary to increase the cost of your washers and dryers. Cost increases do not scare customers away if they are getting what they want. Are you a member of CLA? They are a great source of educational material and assistance. According to one of their survey's here is what customers want in order of import: Enough machines available, Cleanliness, Feeling safe and secure, Distance from home, Store hours, Big machines, Parking, Vend price, Attendant on duty.

Over the years I've grown tired of playing "boardroom ping-pong" and began considering what business would be good to invest in and drive to success. The laundry buisness is a sustained type since it will not go away but will continue to develop. As with any business the focus must be well placed and deliver what the customer wants, that is the key. Laundry mats are a sound business and profitable but it takes work as with anything worthwhile. You get back what you put in. Good luck.

[alesser738]

I know many mats that lose money every month and to the other extreme I know of many mats that net 50% of the gross every month

[Anonymous]

Here's my perspective as an unattended mat owner since last October.

I paid 80k cash for my mat. My profit after all expenses, for the last few months, is running:
$1726
$1757
$1900
$1518

After being in a normal, W2 wage-slave job for years and years (still am), it is a great feeling to have money coming in regardless of whether I'm there or not.

Suddenly you understand what is so cool about business ownership, when you think about those quarters pumping into your machines while you are off doing something else.

I can re-invest 500 bucks a month into the mat, if I so choose, and still have over a grand per month to route into an investment account, or against my mortgage, whatever.

Of course I like the mechanical aspect of fixing stuff, so that helps. Right now I have a dead dryer motor ($145 to replace myself), dead gas valve on another dryer ($55 to do myself).

If I was hiring all that out, I might not be so happy with my profits :)

So no you won't become Trump, but hey it's a start.

- John

[anonymous]

I have been in this biz for a few years,some stores make money,some don't,some can be turned around to make money,some can not.
It depent on your location and how much effer you want to put in.I saw store was doing 250k a year,sold to new owner ,a few years later,the store only do 40k a year.

[pete f]

There are very few really good stores. I wonder if the 80/20 rule applies to this biz as well... 20% of the stores make the most money.

"profits" is a grey term. It is the American way and dream to increase revenue yearly while decreseing taxable profit.
I think the best way to look at any mat is with cash eyes.. You add up the revenue from machines, subtract the rent, utilities, insurance, repairs, supplies and other needed items. Writing off your cell phone, car, health ins, employee if you should have been doing it yourself, etc are just line items. Take the hard core expense from the reveune, that is the trure profit. If you leverage the mat, IE, finance, then that is not taken out of profits, only for tax reasons. The mat did not need the loan, you did. If you have a location that can provide a decent return on the assets, or purchase price, then you have a good mat. I have good mats, I have not as good ones.