USA
Keith Ware, vice president of sales with Lavatec Laundry Technology (LLT), was one of four panel members during a conference session at the Clean Show in Las Vegas. Titled “Tips and Lessons Learned for entering the Commercial Laundry Industry”, Ware offered practical advice and shared insights gleaned from his 30 years of success with laundry operations and, since 2014, with LLT.
Ware managed the operation of three facilities at The Walt Disney Company in Orlando for 10 years. He also supervised large industrial and multi-plant operations at Crothall Laundry Services, Tartan and others, so he was well prepared for the Q&A session.
Panel members took turns answering a variety of questions from the audience. Ware’s perspective centered on owners doing the right things and learning what was important, in order to drive and improve the bottom line for their businesses.
A coin laundry owner with a 6,000 square-foot operation indicated his business was growing and needed advice for the next step. He asked the panel members if he should fund the expansion on his own or seek outside investors?
“Growth is great but it is painful,” said Ware. “Bringing in outside investors usually means you will lose some control, but if you’re working 16-18 hours a day it’s time to look at that challenge. You have to evaluate certain costs such as start-up, construction, and more employees, in order to find the savings. Your engineering team also needs to be up to the task and up for the challenge of handling the growth.
“My advice is to look at the marketplace and find where the curve takes you. With healthcare, there is more consolidation. If there is a smaller niche market available to you, what kind of volume do you need to sustain the growth? You need to plan it out before making any decision to go forward.”
The owner of a small ‘mom and pop’ operation asked about how large operations calculate their pricing. He was thinking of expanding the commercial side of his business, which accounts for only 25% of the revenues. The panelists had to be creative in responding as the session moderator forbid any discussion about pricing.
“If you are in a small market, you can charge a bit more if you’re the only one,” said Ware. “Seasonality can be a factor; if your expanded commercial business is a resort, it could be dead in the winter and hot during the summertime. So make sure you know the market because those that try and chase everything have learned it can kill you.”
The owner of a Southern California laundromat asked what to consider about pricing. Explaining her expansion ideas, she said her business is located in a neighborhood that caters to the beauty/massage industry and has an overabundance of boutique gyms.
“By expanding, and without mentioning pricing, you have to know your costs and what you’re willing to do it for,” reasoned Ware. “What is your ROI and what is the market going to bear? I think you have to know specifics about the market – is the volume there, whether it is 100 or 10 customers? Too often people reduce their price because of competitors; over time, they wind up dying by a thousand pinpricks. That’s why you need to know what the market will bear.”
The final question came from a Minnesota operator handling hospitality clients with a 4,000 square-foot facility. An opportunity to add medical retail work would up their intake from 800 pounds to 3,500 pounds of laundry per day, but comes with a sizeable impact fee to upgrade their sewer requirements – nearly $1.8 million. Would the panel recommend taking on the additional business?
“Is this business guaranteed and do you have a letter-of-intent?” was the first thing Ware asked. “That’s very important and you have to be careful. Considering the competitive nature, you have to be open to looking at all the negatives before realizing the positives. Realise there will be some downtime when and after you add equipment. To take on this amount of work, there also will be a learning curve and it may take six months. And if you’re going with automated equipment, you may lose some employees so that’s another factor you have to consider.”
