By Bob Nieman | Apr 16, 2009
Rich Heller is brutally honest.
“Without my commercial accounts and wash-dry-fold clients, I wouldn’t even be in business right now,” admitted Heller, who operates a 4,200-square foot laundry in Chandler, Ariz., and estimated that commercial work comprises about 40 percent of his total laundry business these days. “I think a lot of laundry owners who have gone out of business in the last year probably wish they were more proactive in these areas.
“It’s easy to be successful in the coin laundry business when there are a million people walking into your store every day. But when those million people dwindle down to 500,000, what are you going to do?
Those with vision and a strong desire to succeed as laundry owners are doing much like Mr. Heller. They’re not waiting for business to maybe someday find them and accidentally stumble through their doors – they’re going after the business that out there for the taking.
In the self-service laundry business, the ultimate goal is to keep your washers and dryers rolling from opening to closing time. After all, when a piece of laundry equipment is just sitting there idle, that's missed revenue for you. You want to have as many turns as possible.
Where the Clients Are
We know why many self-service laundry operators seek commercial work. The next step is to decide which businesses make for the best accounts.
“Our target market has been day spas, spa schools and chiropractic offices,” Heller explained. “We also service a large, high-end men’s barbershop that does a lot of straight-edge shaves – and we launder their facial towels.”
However, 80 percent to 90 percent of Heller’s commercial business consists of flat sheets, because they’re easy to wash and fold, and are cost-effective to process.
“It’s just light soils and sometimes we get some oils, but I’ve never seen any human blood or anything like that on anything,” Heller said. “For that reason, we avoid doctors’ offices. We don’t do any of that. We don’t want the blood problems. When you start handling that type of laundry, there are a lot more rules and regulations you have to follow.”
Gina Villi, who owns Salem 22 Drycleaning & Commercial Linen Laundry Services in Delmont, Pa., is a bit more varied in her commercial laundry services. Then again, she estimated that commercial work accounts for 75 percent of her total volume.
“I handle such accounts as restaurants, caterers, colleges, motels, spas and salons, and specialty linen rental companies,” Villi explained. “Some of the stains that we tackle are red wine, coffee and tea, tomato sauce, grease and food coloring.”
Jeff Gardner is more like Heller. The Minnesota laundry owner prefers to go after the smaller, “boutique-type” businesses that, as a rule, typically produce only lightly soiled items. Some of Gardner’s potential commercial targets include massage therapists, tanning salons, acupuncturists, chiropractors and cosmetic surgeons who handle procedures like Botox treatments and laser skin enhancement right in their offices.
Clearly, there are many potential targets for your new commercial laundry business, some more plausible for your particular situation than others.
According to Journal columnist Wally Makowsky of Lipke/Kentex in Skokie, Ill., here are some commercial accounts with the best potential for self-service laundry operators:
• Banquet halls
• Beauty salons
• Bed and breakfasts
• Colleges and universities
• Country clubs
• Dentists’ offices
• Doctors’ offices
• Food manufacturers
• Gas stations
• Health clubs
• High schools
• Hotels and motels
• Jails and prisons
• Massage therapists
• Nursing homes
• Private ambulance services
"The easiest laundry items to process are towels and linen," Makowsky said. "The most difficult would be mechanics’ uniforms."
Of course, this is just a starting point. Clearly, there are other businesses in your area that may be in need of your pickup and delivery services. In addition, there are probably accounts listed above that, for whatever reasons, aren’t a good fit with your particular coin laundry operation.
Makowsky breaks down commercial business into three broad, separate segments: industrial, institutional and general/personal.
Industrial Commercial Accounts
Industrial-type laundry is probably the most difficult type of commercial account for most self-service laundries.
This commercial category includes such clients as manufacturing plants of all types, distribution facilities, assembly plants, auto and truck repair businesses and print shops.
Some of the items to be washed within this category are shop towels, uniforms, overalls, mops, gloves, masks, floor runners, etc. In addition, most of the stains in the industrial category are greases, oils, chemicals, inks and some heavy earth soils, according to Makowsky.
“Because of the type of stains you’re required to remove and the type of laundry and finishing equipment you’ll need, this type of commercial laundry account is undesirable for a coin laundry owner, unless you have a separate facility attached to the laundry,” he said. “The washing procedures require water temperatures above 140 degrees, programmable washers, larger dryers, specialty chemicals for washing, and finishing equipment such as ironers, hot-head presses and steam boilers – which most coin laundries don’t have.”
If you decide to pursue commercial work in this category, you will need, at the very least, hotter-than-normal water temperatures, a built detergent emulsifier, bleach, softener and a sour. Also, some additional boosters may be necessary, depending on how heavy some of the soils are.
“Industrial laundry is very difficult for coin laundries.” Makowsky reiterated. “If you seek this business, be sure it’s on a small scale, and build up the business as you become more proficient at it.
“Before you make the proposals, check the type of stains that you will encounter. Make sure you can remove them and find out what type of finishing is required before you get involved.”
Institutional Commercial Accounts
Institutional-type laundry is much easier to handle within a coin laundry environment than the industrial business.
This category includes such clients as schools, hotels, motels, day spas, small nursing homes, retirement homes, doctors’ and dentists’ offices, restaurants, rehabilitation facilities and tanning salons.
The type of laundry these accounts generate usually includes facial towels, bed linen, kitchen towels, kitchen uniforms, mops, table linen and bar towels.
“The items washed in this category require less stringent chemicals, lower water temperatures and, in some cases, less finishing equipment,” Makowsky said. “It depends on how deeply you want to get into it. On a small scale, you might need only a bantam self-contained body press for finishing.
“And the chemicals and washing procedures are generally more compatible with the coin laundry. There will still be problems with removing grease and oils from the restaurant foods and butters; however, restaurant laundry is the most difficult type of laundry in this particular category, due to the grease and oil.”
Some larger institutional clients will require more elaborate finishing procedure, thus necessitating the purchase of ironers, hothead presses and steam boilers.
Again, as with industrial laundry, be sure to investigate the types of stains you’ll be asked to remove – and make certain you can remove them in a reasonable manner.
The linen and towels in hotels, motels and retirement homes will contain urine, lipstick, fecal and body stains. Therefore, you will require oil and grease removers for spotting, along with quality-grade detergent, chlorine bleach to be used on whites, oxygen bleach for colors and softener.
In nursing homes and geriatric centers, the laundry will include body oils and fluids, as well as fecal, food and medicine stains, such as iron and iodine. You will need the same type of chemicals as for hotels and motel accounts, but with the addition of an iodine and/or iron remover.
General/Personal Commercial Accounts
This is the easiest commercial category, according to Makowsky.
“You’re probably already doing this type of personal laundry as drop-off wash-dry-fold business,” he said. “The only difference is the pickup and delivery aspect, and some additional supply items, such as laundry bags for pickups and handling equipment like laundry carts and bushel baskets. The equipment, water temperature and chemicals you are already using will be sufficient to handle this type of business.”
If you want to branch out from this category into some specialty work, such as pressing shirts or pants, Makowsky suggested buying a bantam press that features a self-contained boiler in the unit and is ideal for light to medium work.
General/personal accounts can be found at retirement homes, large apartment buildings, colleges and some hotels that have permanent residents.
“We have a very large account with Arizona State University through a company called Valet Today,” Heller explained. “We are a subcontractor of theirs, and we handle about 260 bags of students’ dorm laundry per week, at $11 a bag.”
“As with all commercial business, it’s important to build a pickup and delivery route with these types of accounts,” Makowsky noted. “Packaging is very important. Shirts should be returned on hangers with plastic covering, and socks should be folded and banded in a separate bag.”
Here’s What You Need
Commercial business is clearly not the same as your retail, self-service business – different garments and items, as well as different types of stains. In turn, this may mean slightly different equipment requirements than you may be used to.
“At the minimum, you should have a 60-pound washer/extractor, a few 35- to 50-pound washers, 50-pound dryers and a flatwork ironer,” explained Villi, who added that the ironer should be 66 inches for small linens like cloth napkins, or 110 inches or larger if you are expecting to tackle items such a specialty table linens.
"You must have machines with flexible programs for different wash and rinse cycles," Makowsky suggested. "Different stain classifications require different washes and rinses, which can be programmed by your laundry chemical salesperson.
"If you’re going to launder sheets and pillow cases, you also will need an ironer. And if you’re going to finish shirts, you’ll need a shirt machine and a cuff-and-collar unit."
Other equipment-related and logistical issues include:
• Storage. You must have the proper storage for your separating, tagging and storing items until they are ready for delivery.
• Hot water. If you want to do restaurant or any type of foodservice accounts, shop uniforms, medical uniforms or similar garments, you must be sure you have a water temperature of at least 145 degrees. By contrast, most self-service laundries have water temperatures in the 110- to 120-degree range.
This is crucial because hot water accelerates the chemical action in detergents and bleaches, which is especially necessary for grease and oil removal.
• Packaging. Your packaging must be uniform. Try to be symmetrical in your wrapping. If you’re going to put 20 towels in a wrap, be sure you place 20 in every wrap. Also, you don’t want any loose ends or dangling items.
"When you buy a candy bar, you buy the wrapper first before you can taste the candy," Makowsky pointed out. "It’s true with your commercial business, too. If the packaging is not satisfactory, the customer will have a negative response before he even sees what you did."
• Tagging. Get an array of tags and invoice slips. Have your distributor set up the proper tagging system and invoice control system. After all, you don’t want to lose any items – that’s the quickest way to lose a customer.
• Pickup and delivery. Be consistent. No matter what problems arise, be sure that you have a consistent schedule. If your client is expecting a pickup or delivery on a certain day and you’re not there, it’s a major black mark on your record.
• Computer. Although it's not impossible, you probably shouldn't attempt to lure commercial business without a computer to help you track your billing, as well as to process your invoicing, monthly statements and receivables.
Attracting Commercial Clients
"In the coin laundry business, your customers come to you," Makowsky said. "In the commercial business, you have to go to them."
Before you can go to them, you must single out the markets you'd like to serve and then find customers within that niche. Excellent sources of this information are the Yellow Pages, your existing customers, hotel directories, trade magazines that focus on the industry you're interested in serving and so on.
Once you've got contact names and phone numbers, make some calls. "Approach it professionally," Makowsky suggested. "Print up business cards and brochures. Set up appointments with the right people. Look and talk like a pro. Describe your services confidently and in detail."
In addition to cold calling, laundry owners have found great success through their Yellow Pages ads. In fact, some report getting most of their new commercial business from these ads. Others actually place two ads – one ad is for their laundromat and a second for the commercial side of the business.
“The best ways to market your commercial laundry service is to join your local Chamber of Commerce, advertise in the Yellow Pages and, most importantly, create a brochure,” Villi said. “Then, go out and do some cold calling. You should be willing to travel approximately a 50-mile radius to capture business.”
But the key to getting and keeping accounts is your reputation and your ability to give excellent customer service. After all, you're dealing with these customers sometimes three or four times a week. You've got to develop a special relationship with them. And because they're spending money, they're always evaluating whether they should do it themselves.
Is the Price Right?
Of course, that relationship won’t even get off the ground if your prices aren't in the ballpark. The fact is that price is what most people look at in the beginning. If your price is out of line, your potential client will never give you a shot at the business.
Unfortunately, when it comes to commercial pricing, the only rule of thumb is that there is no rule of thumb – no pricing standard. Therefore, doing your homework and researching your particular market is crucial.
“The biggest mistake is pricing it too low to get the business,” Heller said. “If you’re trying to get the business just to get the business and you’re only making 3 cents a sheet, you’re wasting your time.”
Heller said he considers three main factors when pricing his commercial services – utility costs, employee costs and profit.
“As a laundry owner, you should know what it costs to run each one of your machines,” he explained. “We have to be competitive within the marketplace, so I look at those areas. I know it’s going to cost me $8 an hour, times two attendants, times five days a week, times eight hours to get this work done. Then, I divide it by the number of pounds of laundry, add in my profit margin along with my other expenses, such as utilities, and come up with a price.”
Heller is quick to point out that he does not sell his commercial services on price. “We sell on the fact that we’re a small business and can provide first-class customer service,” he said. “They have my phone number if there is a problem; they’re not dealing with salespeople. We’re going to be a little more expensive than the big commercial laundries, but we’re going to handle any problems a lot better than them, too.”
“Before embarking on commercial business, do some research,” Makowsky suggested. “Find out the dollar potential in your area. Find out the competitive pricing, the cost of equipment to handle the business, available room in your laundry. Also, find out about the chemicals that you would need to use, and the supplies you would need to purchase to do the job properly.”
The Linen Rental Business
An alternative way to price your commercial business arises if, like some laundry owners, you own the inventory being laundered – and lease it to the client.
In general, hotels, motels and nursing homes have one set of towels and linen being used, one or two sets in stock, and one being washed.
“If you’re going to get into commercial accounts, you may want to consider buying linen and, in essence, getting into the linen rental business,” Gardner said. “Of course, when you do that, you’ve got to factor that into your costs, as well as your storage space.”
“Some accounts will want you to supply the linen,” Makowsky agreed. “If so, be sure that they would pay for the replacement of lost items, and make certain you have a long enough time on the contract to pay for such linen and still make a profit.”
Here’s how it might work: Let’s say you purchase 200 hand towels for a beauty salon, at a cost of $1 a piece. Perhaps you get a $30 flat rate per week for those towels. Each week, the salon will be charged $30, because that inventory is theirs. They have 200 towels on premise. Theoretically, you’re cleaning 200 a week. In reality, when you pick them up, there might only be 150 towels to launder. Although you’re not processing a full order, you will get paid for the full inventory. It's almost like leasing a car – whether you drive that vehicle or not, you're paying that flat rate.
And, at $30 per week, it certainly sounds like a solid return on your initial $200 initial investment.
Five Costly Mistakes to Avoid
There are five common errors that laundry owners often make, and which can quickly derail a budding commercial business. These mistakes are:
1. Many self-service laundry operators simply wait for commercial clients to walk in off the street. Yes, this does happen on rare occasions, but it's certainly no way to build your business.
"If you're going to compete, you have to make calls," Makowsky stressed. "A big mistake is waiting for someone to come to you."
2. An unprofessional first meeting with a potential client can be a deal-breaker. Business cards, an informative brochure, professional attire and a businesslike attitude go a long way with prospective commercial clients. You’re dealing with businesspeople – you need to let them know that you are a peer.
3. Many coin laundry operations are not prepared to do the type of business they are seeking, whether the water temperature is too cold or the packaging too inconsistent.
You've got to make sure you live up to your clients' expectations. You've got to keep the same quality that you do for your residential wash-dry-fold accounts. If you're offering pickup and delivery, you've got to be there when you say you're going to be there and live up to what you tell them you're going to do.
“Don’t take on big accounts if you cannot deliver the finished product within 24 to 36 hours,” Villi warned. “And, please, don’t be in a hurry. You must make your company different from your other competitors. In my case, quality is our specialty. We make sure all items are perfectly cleaned, pressed and packaged correctly, and returned in a professional manner.”
The client has to have his tablecloths, towels or sheets. He's in business, and his customers have expectations, too. It's a customer service business.
To keep from making mistakes, some laundry owners ask potential commercial clients for items to "test" at no charge. This enables them to see what kinds of machines they’re going to need. It also lets them determine how much the items will weigh and what solvents will be needed to handle the job. Plus, the client can see what the finished product will look like so that there are no surprises on his end.
4. Some self-service laundry owners get involved in too many different types of commercial products – sheets, towels, robes and so on.
“We used to have a hotel account that had flat sheets, fitted sheets, robes, facial towels and bath towels,” Heller recalled. “It took us forever to do the laundry because we were doing so many different things.
“I like the fact that we do very few specific items. We have our niche. We can’t be everything to everybody. I don’t have folding machines and conveyor lines. I’m a big fan of the KISS method – the simpler the better. To me, if I can add 20 percent more to my revenue by having five to 10 commercial accounts all doing the same thing, that’s better than adding 30 percent more revenue but also adding 30 percent more labor to my bottom line.”
5. Lastly, some commercial operations can become victims of their own success. Storage space and lack of equipment can become an issue. Therefore, as you're growing this portion of your business, be sure that your facility is growing with you. If not, you may risk hurting the self-service segment of your business.
“We process our commercial accounts in the morning, when we are least busy,” Heller explained. “We have eight 50-pound washers. We use six of them for commercial business, and that leaves two open for our customers. However, we do most of our commercial washing between 7 and 10 a.m., Monday through Friday. That’s our non-peak time for walk-in business.”
“What indicates the type and amount of commercial work you’re going to do is how much space you have,” Makowsky added. “On average, for storage, you will need an area about 10 feet by 10 feet to get going. Of course, this would not be a big commercial business. For a larger commercial operation, you will need about 1,000 square feet for storage, ironers, presses, working space and so on.”
Diversify, Find Your Niche… Build Your Business
“In these times, especially in Arizona where we have the nation’s toughest employment laws, a lot of our Hispanic customers have left, and I don’t know one coin laundry owner whose revenues are up over last year,” Heller said. “The commercial end of the business allows me to diversify my income to make up for the shortfalls in other areas. It makes me less reactionary to the declining number of walk-in customers.
“You need to find that area that is your area,” Gardner said. “And those areas generally are places that are too small for the big commercial laundries to really be attracted to – and that are at a work level you are willing to accept and work into your profit margin.”
The nice thing about commercial accounts is that you can rely on them, Gardner explained. Unlike walk-in business or even wash-dry-fold customers, you can plan around commercial business. “I have no idea when Sally Smith is going to be walking through the door with her laundry,” he said. “It could be Tuesday this week, and she might not be back for three more weeks.”
“Sure, we want more coin customers, but I can deal with less coin customers as long as I have the commercial business coming in,” Heller concurred. “That’s why I think commercial accounts, along with wash-dry-fold business, are the most important aspects to any coin laundry owner right now.”