He did some research and found that customer service needed improvement. Geoff says every machine should have easily been doing five or six turns per day, but the average was only three. In the laundromat industry, the metric used is turns (i.e. Opportunity for growth: When Geoff acquired the two laundromats, he got just under 100 machines total. Geoff has a triple net lease with the property owner: He maintains everything within the laundromat, including issues like roof leaks and equipment breakages, in exchange for a better lease agreement and lower purchase price. More work, lower payments: One of the businesses is at a single-tenant facility, and the other is in a multi-tenant facility strip center. Geoff realized it made more sense to buy both of them and he worked out a business buyout with a long-term lease. Two-for-one: When the seller realized Geoff was more interested in the laundromat than the property, he mentioned he had another laundromat for sale in a nearby town, and offered a deal for both. Unintentional acquisition: Originally planning to invest in real estate with a friend, Geoff was looking into a property when he realised the laundromat operating out of it held the real value, not the building. He learned a lot about how to structure a deal and what’s important to the seller, the buyer, and the bank. Learning through lending: Geoff started his career in the SBA department at a regional bank, and was fascinated by the acquisition world. Existing laundromats, by contrast, are grandfathered and avoid these fees. At one point, Geoff says it was as much as $25K per washer, so it often doesn’t make sense to build. The city or water regulator will make an estimate based on how much water you plan to use. Some cities have regulations on laundromat permitting, so Geoff says it would be cost prohibitive to build a brand-new laundromat. Adding high-level services can produce high margins, but it also costs more because you need to hire more people. But the current trend is towards big box-style laundromats, in which your fixed costs are lower, which means higher margins. That’s fine as long as you're in an area that can support a minimum of five uses per day. Small laundromats like Geoff’s grow revenue by increasing the number of times each machine is used. When considering acquiring a laundromat, there are three main factors Geoff recommends looking at: □ Laundromats as investments: what to consider. So while he added a phone payment option, the machines still accept quarters, and the laundromats still have ATM and change machines on site. For example, the majority of customers at Geoff’s laundromats still pay with hard currency. However, Geoff recommends making sure you know your customers’ preferences before enacting changes, and how those changes can affect user experience. He also added a mobile payment system, which allowed customers to pay using their phones, and allowed the business to send refunds remotely. Those included an automated call system to help with customer service, and automatic locks so that the key employee wouldn’t have to physically drive to both locations to open or close. When Geoff took over the laundromat businesses, he knew he wanted to put some changes in place right away. Top takeaways from this conversation □ Know your customers’ preferences before instituting changes.
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