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URL:  https://boards.fool.com/i-forgot-another-point-indicated-by-stanley-and-16275660.aspx

Subject:  Re: Laundromats Date:  12/13/2001  9:46 AM
Author:  FinancialFemme Number:  196 of 220

I forgot another point indicated by Stanley and supported by laundromats: the business person has a large amount of net worth invested in the business.

Once while sitting in a laundromat I overheard the owner talking to another customer. He said he'd had horrible problems with people breaking into the change machine (and possible others). He said he had to stop by a couple times a day to empty it else he would lose too much money. It may not take much time, but it sounds like quite a commitment.

Not all laundromats offer change machines, but those who do usually use these to report revenue. Overall, break-ins don't seem to be a problem for most and some are beginning to use cash cards/debit cards. This simplifies accounting, satisfies the IRS, and makes burglary less of a problem. As for time commitment, even assuming one has to stop by 3-4 times a day (most stop by once or twice/week)it still leaves a lot of available time to persue other sources of revenue.

I'd also wonder about the costs--capital and maintenance. You'd have to either buy the entire business, or buy all the washers and dryers. Keep them running. Pay rent on the place. Have some sort of insurance. And probably some other costs I'm not considering.

The costs are primarily in the purchase of the building and equipment ~$200k. It is definately advantageous to buy a building already equipped -- not only are you immediately ready for business, you are buying an operational business with a proven record rather than speculating on new locations and gauging the potential market for services. Those who rent are less likely to succeed unless they have a very long lease (10 - 20 years), but I would think this is similar to any business. Practically any location-based business renting a business is assuming higher risk: if the landlord decides not to rent at the end of the contract, the business owner is out of luck and often not only loses a local clientele, but also must unload a lot of equipment/product, depending on the type of business. I know of a business that rented a warehouse and over the course of 15 years, built up a beautiful gardening and supply store. At the end of the lease, the building owner opted not to renew and instead decided to use his building to open a beautiful gardening and supply store. I'm sure he appreciated the clientele his former tenant had built up for him.

And also like any other business, it is not unreasonable to assume costs of insurance coverage. With any business inviting the public onto premises, you'd be crazy not to have insurance.

A fellow in my former office was part owner of a batting cage. He'd gone into it to supplement his income. I guess it was quite lucrative, and since he had a partner, not as much a commitment.

This is very interesting to me, too. I have long wondered about driving ranges. Seems to me the largest expenses would be the purchase/long-term lease, electricity and of course, insurance. I do not include staff costs in either scenario because I am assuming owner/family-operated.


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