A Realistic Business Plan

[Palmyra Jim]

Thanks for all the posts to my threads and to all other threads. You have helped this newbie make a few big decisions!!

Tuesday I meet with my attorney to structure the offer. I met and reviewed the books for four hours the other day, discussed various options and we are moving ahead!

I just finished my business plan for an SBA Loan to cover the initial financing. It looks really really good on paper! It is the "on paper" part that my wife and best friend smiles about as we good over it. In a nutshell:

Two Laundromats grossing $210,000 and yielding $23,000 after expenses and debt service (the debt is almost 25% of gross!).
Two cleaners and closers working 2 hours a day (5 days)
I will close two days and manage the daily cleaning in one location.

Phase 1: Nov-Dec
Learn the business quirks for two months. No changes and keep the transition smooth.
Put up sign saying under new management
Put up information signs about different machines and saving money on the front loaders (most are using the top loaders)

Phase 2: Dec-Feb
Give a face lift ($15,000 in work) to the one location that has no competition for laundry or dry cleaning. New or repaired drywall (durrently under dark paneling)
Move a few Wascomat Jrs to a different location to free up a large sitting area
Build a receiving counter for Dry Clean Drop Off/Pick Up and Wash & Fold
Paint the old and stained ceiling tiles and metal supports
Put Banners and Signs up in January about new services coming

Phase 3: Feb
Advertise in a local weekly paper for three weeks (1/4 page ad at least) a Grand Opening for March 1st. and additional services with coupons.
Banner on the store for Grand Opening coming March 1st
Signs about the new services

Phase 4: March 1st and beyond
Grand Opening: I have a parking lot big enough for 30 cars. Music, door prizes, snacks, drinks.

I hope to add 20 dry cleaning customers per day or 140 per week. It would be nice to add an additional $20,000 to the annual net the first year.

So...am I crazy. Did I miss anything? Any major mistakes or false assumptions? Any wasted or unnecessary efforts?

Regards and Thanks!!!!
Jim

[Silent Roo]

Jim,

Yes you are crazy! Who in their right mind would take a leap of faith. So everyone who puts the money and their backside on the line is a little nuts.

Your timetable is realistic. It can be wise to wait 2-4 months before you start 'fixing' what you see as the biggest issue. Sometime you find a bigger issue!

I might be more aggressive with repairs that make the place 'Appear' cleaner. Clean Mats turn more. I can prove it.

A Grand opening the first week in March in NY? (not sure why I believe you are in NY) might not be the best time. Waiting a couple of weeks and weather might be better. However then you hit rain so.....

I would do door hangers, and flyers before a newspaper. I have seen much better results. For Similar price.

I would also have the 'what is about to change' stuff up from day one. yes 5 months is a long time however if you are beginning the process it is good that the regulars know to expect some disruptions.

[Palmyra Jim]

Thanks Silent Roo. It is good to know I have company in the crazy department...

I have read that a clean up will increase use by 10% especially if the competition isn't as nice!

I would be interested in hearing what results you have seen.

Your are right about March weather...May would be better....waiting until then would not necessarily mean I couldn't start up the services....by then I can donate clothes left or not picked up to community centers that can use it!!

Jim

[Boxer]

What would you do if all your employees walked out?

Can you run the whole Laundromat yourself?

It looks really really good on paper! It is the "on paper" part that my wife and best friend smiles about as we good over it. In a nutshell:

"Every war plan looks good on paper until you meet the enemy,” he said.
Donald H. Rumsfeld

Now of course the customer is not the enemy but your just speculating Looks good on paper and that's all it is PAPER!!!

My first Mat the distributors kept putting on paper the amount of turns each machine will get and that I the guy wet behind the EARS would have a slide...

Now 27 years later I have most of my hair either lost or gray and the pot of Gold,
Well let's say I either fine it in the dryers or the lint trap.

Just remember "IF IT WAS THAT EASY EVERYONE WOULD DO IT !!!!!"

All the luck at you.

[William]

Is the $210,000 what it is doing now? Or are you adding your "improvements" to that number.

You have to work on the assumption that you will be satisfied (i.e. profitable) if things remain exactly the same as they are currently. If you think that you are going to improve things to make ends meet, then you have failed already. If it cannot pay for itself right now, the way it is, then you will fail.

As far as the improvements go, I would not count on a lot of dry cleaning business. I don't know your market, but around here the dry cleaning customer is very different from the laundromat customer. I have heard mixed views on this board, some do well with dry cleaning, some don't.

I like the idea of fixing up the mat. I think the paneling should go as well. I am not against trying to get customers to use front loaders, but don't pull out the top loaders. If you are priced right, both are profitable.

I would give more thought to a newspaper ad. First, and this may sound weird, but can most of your customers read? Do they read the paper? Don't assume they have no education, but it is possible that English is not their language. Once again, I have no idea where you are, but I might consider the other ideas you have seen here, like door hangers etc.

You are buying existing, which means you have a good shot at success. You seem to understand the fundamentals, mainly a clean store. And you are trying to do other things to improve business, which is good also. I think you will do well, assuming you are seeing things as they are today, and not counting on the future being brighter. We all hope it will be, and we all work towards it, but as a buyer you have to pay for the reality, not the dream.

Good luck!

[Palmyra Jim]

Annual Gross has remained consistent over the last 5 years. Leases are in place (10,+5,+5 CPL (if the letters are right?). The $23,000 is enough to start. I will not have to take any officer salaries for 6 months.

We have an untapped 54% white collar population with no dry cleaning within 8 miles. I am betting on pulling in customers to improve the bottom line and lessen the debt burden.

Hope this doesn't sound defensive because the challenges are keeping my eyes open! I just read the posting on door to door pickup and may do some test marketing as I approach the closing to see if I can develop a couple of routes right off to help with attendant positions (busy hands are happy hands). Current employees would love to go full time. Hope I don't alienate them......

Jim