What Would You Do?

[Xiong]

i've been on this forum long long before many of you are on, or before it became laundryplanet.com as i've said before.

i wasn't even an owner then, and i felt that many many users on there were saying that i spend way too much time on this forum asking too many questions, that some of those questions are riduculous too as well as annoying the heck out of some of the users.

sure i could have been an owner of a dozen laundries, should i just keep buying laundries since my interest begun in this industry. well, i didn't regret waiting so long though. i learn a great deal how to swim well before i put my foot in the pool, and thanks again to all the experts on here.

perhaps i have said before that the only major obstacle/huddle of entry into this industry is money, and lots of it...every thing else can be learning on the job. that means anyone with money can enter

there are not many variables to differentiate one laundry from the others, other than machines and services, owner's personality, location of the laundry.

to me, this question has been on my bplan from the conception period. also this question relates directly to that post/topic we discuss about distributors too, that's if you can see thru or beyond what's in front of you. how so? every business needs a certain number of consumers, and each consumer needs to spend a certain amount of money in your laundry. otherwise, you won't have a laundry or there would be no need for a laundry.

so really, how do you keep your consumers (customers)?
price is just one marketing variables, there are still other variables as well. no matter how good you think you are, there will always be someone who think he/she is better than you so they will come into the game. say if you consider that your consumers are you team players, how do you keep them on your team instead of going of to the competitor's team?

well before jumping into being an owner, i studied the credit card industry and the question is how do they get customers hook unto using credit cards. i'm not sure whether they went after the consumers first or the retailers/providers first, but i'm sure they went after the consumers first. a need was created for the consumers, a pull strategy (rather than push strategy).

in some other posts on here, i've probably said that we, mat owners, are merely middlemen/women, if we don't add value to this chain of distribution then soon we would not exist. so what value to do you think you add to this chain?

my theory on survival in this industry is yet to be deployed, so verification is yet to be seen. but many of my calculations in the past have turn out better than expected. i think it all have to do with developing a system, that your whole operation can run on. if there is no system in your operation, then you will continue to do battles with someone else who think he/she can do better than you.

so how would i react to new competitors?
if my system is in place, then i would only need to twit here and there to make the system fit the situation at hand. if i don't have a system in place, then i am very sure that i will try to grab whatever i can to stay afloat the water whenever i have competition.

this question somewhat does go back to why some people will buy only bwm throughout their lifetime, while some will only buy toyota vehicles throughout their lifetimes. in that case, you have to look from the end point of the customer, not from your end point as owner.

hmmm....to me, there is still much much room to grow, develop in this industry. just look at the nation's population in relation to the number of laundromats in the nation....i.e. some 30k laundries to 300m population in america? when the time comes that humans no longer need to wear clothes, or that everyone can have their own laundry machines at home, then perhaps this industry will die out.

oh well, probably more than some of you wanna know in my thoughts
as the saying, talk is cheap. gotta walk the talk for people to respect you.

this is perhaps a hypothetical question, but it will be real for every owner when the time comes. if you don't plan to succeed, then you're planning to fail.

[Adamski]

Originally Posted by Xiong

...this is perhaps a hypothetical question, but it will be real for every owner when the time comes. if you don't plan to succeed, then you're planning to fail.

Xiong,

That was one of your most thoughtful posts ever and the final sentence wrapped it all up perfectly.

Finally ... thoughts in stead of questions!

[MrMachine]

John,

I remember years ago back in 1976, I took over an old Mat and rehabbed it.
I was so naive that I wasn't even thinking about the Mat 3 blocks away.

The other mat began running a "buy one wash and get one free" promo even before I opened.
At that time I didn't think I was a threat to that other mat, especially since I was just fixing up this mat that I just bought. Obviously, they did.
Still, I was able to break even after about 3 months.

Several months months later I got to speak to the owners of the other mat. 2 partners who owned 5 mats.
You know what they told me? They were really worried that my mat would hurt them badly, but because they did the 2 for one wash deal, they ended up making more money than ever. After that, they stopped their promo, and we both co-existed peacefully. In fact, later on they actually helped me with my first tub bearing jobs.

Things were different in those days though. The margins were MUCH fatter than they are now. Now, the price we charge here in NYC is frighteningly close to our costs.

[silver56]

Tell ya what, after participating on this board for a few months as I investigate buying my first 'mat I'm starting to come to the conclusion that maybe I should just be a distributor. There seems to be a lot of money thrown at this industry by dopes who don't realize that you need revenues > expenses. Build some 'mats on 'spec, sell them to fools and then broker their sale when the original owner goes bust.

In all seriousness, One X-factor that I think people might not appreciate - if you have an attended 'mat - is the quality and friendliness of the attendant. I've visited some 'mats where it seems as if the entire success of the place rests on some lady attendant having a lot of friends, who hence do their laundry there. I've already scouted out my future attendant who I know is a "pillar" in her community and would instantly bring huge business.

[jh]

Originally Posted by MrMachine

John,

I remember years ago back in 1976, I took over an old Mat and rehabbed it.
I was so naive that I wasn't even thinking about the Mat 3 blocks away.

The other mat began running a "buy one wash and get one free" promo even before I opened.
At that time I didn't think I was a threat to that other mat, especially since I was just fixing up this mat that I just bought. Obviously, they did.
Still, I was able to break even after about 3 months.

Several months months later I got to speak to the owners of the other mat. 2 partners who owned 5 mats.
You know what they told me? They were really worried that my mat would hurt them badly, but because they did the 2 for one wash deal, they ended up making more money than ever. After that, they stopped their promo, and we both co-existed peacefully. In fact, later on they actually helped me with my first tub bearing jobs.

Things were different in those days though. The margins were MUCH fatter than they are now. Now, the price we charge here in NYC is frighteningly close to our costs.

Paul,

It is interesting to know that one of your mats once became a new threat to the existing nearby mats. Yes, in NYC, mats 3 blocks away are considered direct competitors. My mat is even competing with the ones 5 blocks away. I have regular customers from 8 blocks away because the mats down there do not provide the quality that they need, which gives me a chance to become their competitor.

Your situation was slightly different than a new mat arriving in the market. You rehabbed a place that already had a customer base to start with. I guess you closed up the place to fix the machines? That gave the competitors a reason to do a promotion to get your customers' attention. They should also be worried about the improvement you were making as they benefited from having an old mat nearby. Like Larry posted - I feel I need my competitors to help discourage new competition. That is a very smart move.

I'm very curious about what you did after you rehabbed the place. Did you raise the vend prices? If not, was that due to the competitor's ongoing promotion? Did you run a heavier promotion? If not, why did you think it was not necessary? Like I said, every case is different. If you are facing a tough fighter like Paul, you better don't assume that you will win with one move.

[MrMachine]

Originally Posted by jh

Paul,

It is interesting to know that one of your mats once became a new threat to the existing nearby mats. Yes, in NYC, mats 3 blocks away are considered direct competitors. My mat is even competing with the ones 5 blocks away. I have regular customers from 8 blocks away because the mats down there do not provide the quality that they need, which gives me a chance to become their competitor.

Your situation was slightly different than a new mat arriving in the market. You rehabbed a place that already had a customer base to start with. I guess you closed up the place to fix the machines? That gave the competitors a reason to do a promotion to get your customers' attention. They should also be worried about the improvement you were making as they benefited from having an old mat nearby. Like Larry posted - I feel I need my competitors to help discourage new competition. That is a very smart move.

I'm very curious about what you did after you rehabbed the place. Did you raise the vend prices? If not, was that due to the competitor's ongoing promotion? Did you run a heavier promotion? If not, why did you think it was not necessary? Like I said, every case is different. If you are facing a tough fighter like Paul, you better don't assume that you will win with one move.

John,

Well the point of my post was that those competitors actually ended up doing BETTER than before because of their 2 for 1 promo.

To answer your questions, I did have the place closed for about 2 weeks for the rehab. I'm pretty sure that I simply re-opened with the existing prices on the machines. I know I didn't do a free dry promo.
I probably didn't run any promos at the time because I was so green that I just wasn't aware I could do things like that. (I had just turned 24yrs old, so what the hell did I know? lol).

I do agree about having SOME local competitors to help discourage new competitors.
Now, the rents near one of my mats have gone SO high, that I think I'll be protected by the rent. This mat of mine is just off the main shopping street in a very heavily populated area. My rent is high, but the only places that a competitor can open would be right on the main drag where the rents are freakin astronomical! For instance, the landlord has a vacant store on the corner. 2400 sq ft, and he's asking $18,000.00 a month!!! He'll probably end up actually getting $15,000. These kind of rents, along with NYC liberal EPA whacko water bills, and a vend price of $1.75 (and dropping) will discourage mat owners from opening right by my mat which has a much greater rent advantage because I'm just off the main drag.

[jh]

Originally Posted by MrMachine

John,

Well the point of my post was that those competitors actually ended up doing BETTER than before because of their 2 for 1 promo.

Paul,

I think that worked for you and your competitor was because your mat was not doing enough damage to their business. You did not do a certain number of things they worried the most. You did not try to grab all the customers from the competitor. You did not turn your mat into a charity center. You did not run a heavy promotion like any new mat would do nowadays. All these left room for a healthy conversation. The owners of two competing mats can be friends.

Originally Posted by MrMachine

I do agree about having SOME local competitors to help discourage new competitors.
Now, the rents near one of my mats have gone SO high, that I think I'll be protected by the rent. This mat of mine is just off the main shopping street in a very heavily populated area. My rent is high, but the only places that a competitor can open would be right on the main drag where the rents are freakin astronomical! For instance, the landlord has a vacant store on the corner. 2400 sq ft, and he's asking $18,000.00 a month!!! He'll probably end up actually getting $15,000. These kind of rents, along with NYC liberal EPA whacko water bills, and a vend price of $1.75 (and dropping) will discourage mat owners from opening right by my mat which has a much greater rent advantage because I'm just off the main drag.

I've been thinking about that, besides discouraging newbies from building a mat nearby, it may also be practical to discourage the landlords to lease space to build a mat. Once there is a vacant space big enough and close enough to become a threat, write a letter to the landlord to state the fact that the market is saturated and that I will declare war to any new competition. At the end, if the competitor loses the game, he/she will fail to pay the rent.

[MrMachine]

Originally Posted by jh

Paul,

I think that worked for you and your competitor was because your mat was not doing enough damage to their business. You did not do a certain number of things they worried the most. You did not try to grab all the customers from the competitor. You did not turn your mat into a charity center. You did not run a heavy promotion like any new mat would do nowadays. All these left room for a healthy conversation. The owners of two competing mats can be friends.



I've been thinking about that, besides discouraging newbies from building a mat nearby, it may also be practical to discourage the landlords to lease space to build a mat. Once there is a vacant space big enough and close enough to become a threat, write a letter to the landlord to state the fact that the market is saturated and that I will declare war to any new competition. At the end, if the competitor loses the game, he/she will fail to pay the rent.

John,

Well another hidden advantage to this area.....Most of the landlords around here don't want to give leases more than 5 years. Some are even doing only 3 years!!
This $18,000.00/month location is one of them. 7 years max for that spot, and only for the "right" tenant.
Since our industry is a capital intensive one, a 5 year lease would be just plain dumb for a laundromat investor. Even most newbies would see the problem with that.

[Xiong]

Originally Posted by Adamski

Xiong,

That was one of your most thoughtful posts ever and the final sentence wrapped it all up perfectly.

Finally ... thoughts in stead of questions!

yeah, even with so much planning i don't think i have dotted all my "i" and cross all the "t" too

imagine just trusting the distributor's figures
i have never yet met a distributor that would said an area is bad for a laundromat.