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  • Anita Kibunguchy-Grant

3 big mistakes we made when starting the laundry business

Starting a business is exciting, but nothing can prepare you for all the ups and downs that come from this experience. It’s important to do research, talk to owners and experts, join forums, visit other laundromats, the more you know, the better you’re prepared. That said, there are things you’ll only learn once you’ve decided to take the plunge. We’ve had incredible triumphs, but also made a lot of mistakes on this journey. For us, these 3 stand out as our biggest ones, mostly because they cost us money and some cost us relationships.


#1

Business Formation: How many times do you hear that you need to work with a business lawyer to form a business i.e. partnership, LLC, S Corp? Also, how many times do you see people on social platforms glorify how easy it is to own an LLC for tax purposes, for example? Very few of them caution you on what that decision truly is and means. Each entity you select has different requirements and business repercussions, and if you’re like us, you wouldn’t know those repercussions until it’s too late. When we initially set up our business, we did most things ourselves, and never consulted an expert. We went online, studied things ourselves, and then thought we knew what we needed. Where we erred was that we didn’t file a few important documents related to forming an S Corporation. We didn’t know what we didn’t know. So when things went south with one of our partners, we didn’t have necessary documentation to fall back on and it appeared like we were trying to mislead that partner. Long story short, lawyers were involved, it cost us a lot of money, and relationships were severed. We learned the hard way. For things that you’re not an expert on, get the help you need from a professional. Yes it will cost you money, but it is money well spent. Let’s just say that we ended up re-forming the business from scratch the right way, and now have lawyers we consult for important business decisions. We also have a bookkeeper and CPA to manage our monthly books and yearly taxes. We’ve heard too many IRS horror stories to take any chances.


#2

Lease Negotiation: Our current business location was a laundromat for 20+ years. When we first saw the space, though torn down, we quickly fell in love with it because it had the bones for our vision. We could rebuild the space into what we wanted, and the existing infrastructure was there for us to take advantage of. Also, since the laundromat had existed for many years, we knew that there was business in the area. Looking back, one of the mistakes we made was ‘falling in love’ with the location very quickly. We wanted it so bad, that we didn’t take enough time doing our research and due diligence especially when it came to the lease. I now know that we could have negotiated a better lease, with better terms and gotten a lot more from our landlord. For example, we just didn’t understand how much Common Area Maintenance (CAM) factors into a lease payment. And because laundromat leases are long term, you can imagine how much this can have an impact on the business’ bottom line. We should have taken more time talking to an expert or even other laundromat owners in the area to understand what a lease entails and what it means for us in the future. With all this said, it has meant that we’ve needed to really hone in on our marketing, and be different from other stores around the area. Our goal is to make our rent + CAM be about 15-19% of our monthly revenues to feel like we’re truly building a profitable business. We’re well on our way there, but still have work to do.


#3

Construction Expectations: Our laundromat had the bones from the previous store, that said, we needed to do a full construction. All the machines and piping had been removed before we took it over. We gutted everything and pretty much built a brand new store in its place. I have to say that we loved this model and will look to replicate it in the future. Electricity, water and gas lines were all in place, including all the plumbing needed for the sewer. We worked with Dexter Financial for financing and Western State Design (WSD) for the machine purchase and build-out. It was incredible working with experts because this was an area we weren’t familiar with. And this is where the mistakes came in. You always hear about trust, but verify, and we did a lot of trusting, but not enough verifying especially on all the work that was ‘outside’ the contract. Our contractor didn’t really keep good paperwork, some change orders weren’t submitted and towards the end of the project ~1 month out, our construction bill had ballooned way beyond our expectations. Don’t get me wrong, I know that most big projects always get delayed and go over budget, that said, when we started looking back at the communication, there wasn’t really anything concrete we could point to for evidence of work agreement. It ended up being that we needed to escalate our concerns to the owners for a resolution. Long story short, this severed our relationship with the contractor and left a bad taste in our mouth.


So what am I saying, business is hard! That said, it is absolutely worth it. Be nimble and be ready for the unexpected. Seek expert help as much as possible especially if this is your first time getting into any business. There are many other mistakes we made, but these 3 stand out. We’ve also accomplished many incredible things and it’s all part of the journey. So dust yourself off and get to live another day.


Please tell us in the comments what have been your biggest business mistakes and what you have learnt from them. And if you’re ever interested in talking to us more about our laundromat journey, we can be reached at info@safilaundry.com

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