Put Another Log on the Fire

By Bob Nieman | Apr 15, 2009

Mark Wagner’s personal philosophy would probably extol the virtues of diversifying one’s business interests… if he ever stopped to think about such things. However, chances are, Wagner is probably too busy with said interests to even consider something so esoteric.

Wagner began his professional career in the late 1970s, operating a steam turbine generator for a local paper mill in northern Wisconsin. However, by the mid-1980s, he saw bigger entrepreneurial opportunities in the booming Northwoods real estate sector, and quickly shifted his focus.

“In 1984, I got my real estate license and bought an existing real estate company,” he said. “I’ve been involved in real estate ever since.”

Along the way, Wagner has used his real estate knowledge and connections in Park Falls, Wis., which is about 50 miles south of Lake Superior, to gather up some additional revenue-generating properties of his own.

“I’ve got several other business entities going in Park Falls,” he explained. “Rental units, a small hotel, a car wash – I’ve diversified into a few different things.”

One of those things is 2,400-square-foot Valley Laundry, which Wagner opened in 2002.

“What really attracted me to the coin laundry business was the fact that our community needed one,” Wagner said. “We have a strong tourist trade here during the summer months. There are a lot of cottages in my market, and I learned, from my years in the real estate business, that a lot of these people don’t have proper septic systems to do their own laundry at the cabins, or else they simply don’t desire to do it there. They’d rather bring it off-site to a laundromat. And, of course, we also have the locals who are my core business. That’s what got me going in the coin laundry business.

“And with the current economy, I’m glad I did,” he added. “The laundry seems to do well in this challenging economy.”

Valley Laundry is a stand-alone building that was constructed from the ground up in only about 90 days, according to the owner.

“We designed the building to be a laundromat,” explained Wagner, who worked with Minnesota-based distributor BDS Laundry Systems on the project. “However, I naturally did have a little bit of fear when I first built this store, as to whether or not it would be successful. As a result, it’s built on a four-foot crawlspace, which would have allowed me to retrofit this building into something different had Valley Laundry not taken off. We’ve engineered a floor joist system; we’ve got solid concrete in the center, where my 35- and 50-pound washers are. I didn’t spare any dollars when I built it.”

The laundry is located in the center of Park Falls, which has a year-round population of slightly less than 3,000. Wagner had purchased the land years earlier on the hunch that it would eventually turn into a solid, high-traffic area through the town.

“I’m on Highway 13, which is a main highway through the corridor,” Wagner explained. “I’ve got the laundromat, the car wash, my real estate office, the motel and a beauty salon that I don’t own but rent out on this road. I can look either way down the highway and see my properties. And it’s easy to manage because it’s small town America.”

In addition to his own real estate holdings, Wagner noted that there is a fast-food restaurant across the street from Valley Laundry that has helped boost his walk-in business.

“That helps me a lot,” he admitted. “People will come in, put their laundry in the machines and then walk across the road to have something to eat. Probably one-third of my customers do that.

Wagner pointed out that there is also a Department of Natural Resources office nearby. “That’s a place where the sportsmen will go to buy their hunting licenses and to get maps and other information about the area,” he said. “It helps my business because, when they get out of their cars and look across the road, they see my laundry and often they’ll come back when they need to.”

Of course, the tourist trade boosts Valley Laundry’s revenue from Memorial Day through Labor Day. Then this out-of-town business tends to tail off a bit, despite the popularity of the fall hunting season and the influx of winter snowmobilers.

However, the laundry’s core customers are still the year-round residents of Park Falls and the surrounding areas. According to Wagner, the locals tend to skew slightly older – in their 50s and 60s, on average – and fall within what would be considered the middle income bracket.

“Some of my walk-in customers own their own homes,” said Wagner, who is also considering adding some commercial accounts in the future. “I don’t know why they don’t have their own washers and dryers in their homes. Is it because they can’t afford it? I don’t think that’s the case. Some of these people just like the social aspect of going to the laundromat. In fact, for my regular customers, I can tell you which day of the week they’re going to come in.”

With one other coin laundry in the marketplace, Wagner sets Valley Laundry apart with a strong emphasis on cleanliness. And his father, Frank, comes in every morning and every evening to keep the store spotless.

“He’s on my payroll,” Wagner chuckled. “And I’m lucky to have him.”

Wagner is also a stickler for timely equipment maintenance, much of which he had learned to handle himself.

“At first, I thought I could just hire it all out,” Wagner admitted. “However, some of these things are basic, five-minute maintenance fixes. They’re very simple once you’ve done them a few times. Sure, I could hire someone to do those routine things, but it would still cost me a $75 service call. And I have to wash a lot of clothes to recoup $75.

“Plus, we’re also very good at preventive maintenance, as far as keeping the internal workings of the machines clean, not just the exteriors.”

A third element for the success of Valley Laundry that Wagner has identified is energy conservation.

“We’ve tried to conserve energy every step of the way,” he said. “For example, I installed all frontloaders in 2002, and I am so happy I did, because my water costs are probably more than my natural gas costs right now. We’re running close to $800 a month for water and sewer costs. If I had less-efficient machines, it would cost twice that amount.

“You’ve got to look into the future,” he added. “I’m at the point where I’m starting think about a water reclamation process. That would be my next goal. It’s going to happen – 10 years and we’re going to be there.”

However, at present, Wagner is using “wood power” to keep his costs at bay.

Four years ago, Wagner was ready for some relief from the high natural gas bills he was paying. Living in the midst of Wisconsin’s Northwoods region, he found a solution using waste from the area’s active lumber industry. Wagner installed a large wood furnace and boiler, stoking it with wood waste he purchases from a local veneer mill. The unit now heats the laundry – and three of the adjacent buildings Wagner owns – and heats the water for the washers and the air for the dryers.

“It’s located about 300 feet from my laundromat, and all of the lines are insulated and buried underground that feed into the laundry,” he explained. “The first place they go when they enter the laundromat is to my back room. Imagine three radiators. When someone puts a quarter into a dryer, the vents open to let outside air in – that air is pulled through the radiators, pre-heating the air before it hits the dryers. That saves on natural gas consumption right there by pre-heating our air. From there, the glycol goes over to a heat exchanger and heats the hot water that is used for the machines. So, basically, we supplement our hot water cost. I think we’re hitting about 70 percent in the winter months.”

The system, which uses 70 to 80 cords of firewood per year, cost approximately $30,000 to install. And it not only takes care of Wagner’s laundromat, but it heats his real estate office as well.

“In the community I live in, we can run the wood stove five months out of the year,” he explained. “My gas bill will probably go from $500 to $600 a month down to maybe under $100 a month for gas.”

In addition, Wagner replaced his store’s interior lights with 32-watt high-efficiency fluorescent fixtures, which are saving him about $50 a month on lighting alone. What’s more, he’s installed motion sensors on his lighting.

“We shut off half the lights when there is no one in the laundry,” said Wagner, who expects additional saving of $25 a month. “I would suggest every laundry owner do this.”

Another suggestion Wagner might have for some of his fellow laundry owners would be to get their vend prices up to a reasonable level.

“Right now, I’m the price leader in my market,” Wagner said. “My 50-pounders are at $8.25 a load, and I’m at $6.75 for a 35-pounder. When I look at what other people in the marketplace are charging, I’m way above that.

“I might lose a few customers because of it, but I think you have to charge a reasonable rate in order to maintain a good facility. You can’t do this for nothing. Natural gas costs are high. Maintenance costs need to be factored in. You’ve got to figure that a machine has a finite life, too. At some point, you have to replace it. Don’t fool yourself.”

From his cost-saving conservation initiatives to his proactive vend pricing strategy, it’s clear that Wagner is in this self-service laundry business for the long haul.

“I’m not afraid to try new things, to jump into something,” he said. “You can never quit experimenting with different things or ways to try to make your business more profitable. You’ve got to be hands on in the business.

“In my real estate business, I list and sell properties. I own the company, but I’m not afraid to take a buyer out and sell a home or a piece of property. That’s part of my job. I don’t sit back. I’m active in the marketplace.”

Above all, don’t ever give up, Wagner advised.

“There will be times when you’ll have slow day and you’ll say, ‘OK, what happened here? What’s going on?’” he said. “But you can’t give up. You can’t base your business on a short time period. You’ve got to take a long-term look at the picture. Persistence and longevity are the keys. Keep pushing. You don’t get rich in the laundromat business overnight. It’s not get rich quick. It’s a steady stream.

“I’m 48, and I look at my laundromat and my car wash as my 401(k) plans,” he added. “My generation knows that we’re going to have to be working retirees.”

How many self-service laundries will Wagner have accumulated by retirement age? Wisely, he’s not speculating on that at the moment.

“If the opportunity arises, I would open another laundromat,” Wagner said. “But at this point in time, with the downturn in the economy, it’s been a good slap in the face. You can’t ride that wave forever. Right now, I’ll just concentrate on what I have – and make it more profitable.”