This is Chapter 4 of the book ‘Investor’s Guide to Coin Laundries’, compiled in 2012 by Jay McDonald, Vice President, Distributor Sales for Alliance Laundry Systems.
An Investor’s Guide to Coin Laundries | Chapter 4 The Role of the Distributor
Alliance Laundry Systems is the largest manufacturer of commercial laundry equipment in the world and has over 50 years of experience in helping investors just like you, get started in the coin laundry market. This book is a compilation of experiences, ideas and input from hundreds of successful coin laundry owners and distributors from all over the world. Taking data and industry knowledge, it is a road map to help you succeed. At the end of it, you will have a general understanding of the industry and what it will take to operate a successful business.
A NOTE ON COIN-OPERATED LAUNDRIES IN SOUTHERN AFRICA
In Southern Africa, coin laundries are typically found in flats or townhouse complexes, caravan parks, holiday resorts and universities. Historically coin-operated activation systems have supported these laundries. However, this system is largely being replaced by our LaundryConnect Cashless Payment Gateway, which is convenient, hassle-free and the way of the future. It is easy to integrate or replace your existing coin mechanism in order to offer cashless payments or to use a card to activate machines.
“INVESTORS ALWAYS HAVE IDEAS AND PASSION, BUT MOST OFTEN, THEY DON’T KNOW THE LAUNDRY BUSINESS WELL. WE VIEW OURSELVES AS PARTNERS IN THEIR BUSINESSES. THIS MINDSET, TOGETHER WITH OUR INDUSTRY KNOWLEDGE AND NETWORK OF RELATIONSHIPS ENABLES US TO BUILD OFF OUR INVESTORS’ WEAKNESSES AND TURN THEM INTO STRENGTHS.”
– Rory Macfarlane, Joint MD Lead Laundry
The Role of the Distributor
Chapter 4 : BUILDING YOUR TEAM OF CONSULTANTS: THE ROLE OF THE DISTRIBUTOR
Once you have decided that a laundromat is a business you may be interested in pursuing, an equally important decision is selecting the best distributor that you feel can work closely with you through the process. In the early days of the coin laundry industry, the role of the commercial laundry distributor was simply to sell you washers and dryers, but today they are a far more valuable asset to both the manufacturer and the coin laundry owner/operator. With years of knowledge and experience in their arsenal of tools, today’s distributors are working with laundromat owners as consultants rather than just equipment dealers.
When investigating opening a coin laundry, the first step should be a call to your local authorized equipment distributor. These companies are going to serve as your partners in owning and operating a laundromat. The distributor can assist with business plan development, financing if needed, determining the proper location, choosing the right equipment mix, setting the vend price, developing a comprehensive marketing plan, and serve as a connection between laundry owners and the manufacturer should any equipment concerns arise. But even with all the experience, it still comes down to a matter of selecting the person that has the time, patience and expertise to help you with this new venture.
Before choosing a distributor, it is always a wise idea to do some research. Some of the key things you are going to want to look for include:
- DISTRUBTOR REPUTATION
Look at both their personal and professional reputation. Talk with existing and past customers to learn what their opinion is of the equipment distributor. This will give you an idea if the company is one that is knowledgeable and respectable. Also look at the length of time they’ve been a distributor for the equipment manufacturer(s) they work with. If they bounce from one company to another, the likelihood is there may have been other issues along the way and would need further investigation.
- EXAM RECORD OF SUCCESS
This one is important. A distributor needs to be able to put their money where their proverbial mouth is. Find out what the distributor’s record of success is. How many stores have they helped to open? What is the profitability of those locations? How long have those locations been in business? How long did it take for that laundry to begin making a profit?
- FINANCIAL STABILITY
Not only is it important that a distributor is a strong business partner with extensive knowledge of their territory, it’s important they know how to manage their bottom line as well. How long they have been in business is also important. A distributor that has been in business a long time and is financially solvent is more likely to be around for the long-term.
- ADDITIONAL SERVICES OFFERED
Does the distributor offer additional services like parts, education, equipment servicing and financing? Is there extra equipment and parts on hand to help out with emergency repairs and equipment replacement if needed?
Once a list of distributors has been created, there are some things that potential coin laundry owners want to bring with them to that first initial meeting. You will want to bring a list of needs and goals. Within that list, you want to highlight what your expectations are for your financial success and what your expectations are from your distributor partner. Also develop a list of questions to ask your distributor representative. Below is just a sample of the more common ones:
1. Do you assist with financing? If so, can you walk me through the financing process? How do you help with obtaining financing?
2. What is your role in the construction process?
3. How is your relationship with the manufacturer you work with?
4. Tell me about your parts and service department?
5. Do you provide education on preventative equipment maintenance and basic repairs?
6. How many coin laundries are you currently working with?
7. What is your process? Do you help in developing a marketing plan, developing the equipment mix, etc.?
8. What is your experience in lease negotiation?
9. Tell me about a time where equipment was delayed from the manufacturer, how did you handle it?
10. Tell me about the building codes issues that we might run into that could delay our opening?
11. What are the hours of your service department?
12. Tell me about a time one of your laundry partners had an equipment emergency and how was it resolved?
13. Can I get a tour of your service department? Do you have warranty parts on hand in case of an emergency?
14. Could you provide me with a list of current and past customers that you’ve worked with?
These questions might sound like those asked during a job interview, but that is what you are doing, hiring a business partner. And how they answer these questions will help determine which one to hire.
After that first meeting, the ball is in the court of the distributor. Armed with your goals and business objectives, they will come back to you with a proposal containing ideas for site locations, a cash flow analysis, a proposed mix of equipment, and some will even provide potential design options at this point.
Owning a coin laundry is a major investment. Its success depends a lot on the choices made including the location, the equipment mix, the vend price and so much more. The most important choice however, comes down to who you hire as a distributor. As a partner they will guide store owners in making the right decision when it comes to all the other choices.
ABOUT THE AUTHOR
JAY McDONALD has been active in the laundry industry for over 30 years. He is the Vice President, Distributor Sales for Alliance Laundry Systems, the largest manufacturer of commercial laundry equipment in the world. He also served on the board of directors for the Coin Laundry Association and received the Distinguished Service Award “in appreciation of his leadership in furthering the welfare and best interests of the coin laundry industry” in 2009.
SA’s FIRST COMPLETE CASHLESS PAYMENT SOLUTION
Laundry Connect offers an affordable and adaptable payment gateway that is fast becoming the system of choice. It is easy to integrate or replace your existing coin mechanism in order to offer cashless payments or to use a card to activate machines.