Am I buying a laundromat?!
The unglamorous (but kind of fun) work of figuring out if it's worth it
One of the most tedious parts about starting something is the work of due diligence.
Give it too much time and you get caught in ‘analysis paralysis’. Too little and you pour your time and money into something doomed to fail.
Knowing when to stop is probably an art in its own right.
This week I’ve been heads down doing due diligence for my laundromat idea… and it’s not glamorous, but it’s shockingly fun.
Side note, I write every week about the behind-the-scenes stuff building businesses and brands. If you haven’t already, subscribe!
Here’s what that’s involved:
Visiting lots and lots and lots of laundromats. The laundromat scene in NYC is a little different to elsewhere because very few apartments have in-unit laundry, making it a necessity for far more people than is immediately apparent (this is particularly true in neighborhoods with walk-up apartments). Seeing these places for myself over and over and over has allowed me to get a good understanding of the opportunity from both a business and customer standpoint.
Signing NDAs to get into the financials of established businesses. (Note: I am exploring buying an established business, so I’m not just kicking the tires). This has been very helpful understanding the typical cost basis on which these businesses operate, but also identifying opportunities when it comes to improving business efficiencies (and in turn both topline revenue and margins).
Meeting with prospective partners. There is a whole host of suppliers you need to have in place for this kind of thing - tech platforms (e.g. POS), delivery, service / repairs. Every one you meet with has a little more intel that helps shape the idea.
Sending my own clothes out for wash and fold services. This is what it sounds like. I have lost a few soldiers in the process.
Things I’ve learned:
Laundromats in NYC are almost universally fairly gross (as you can see in the pics above). The fact they turn out clean clothes seems like a bit of a miracle. I’m kind of surprised people are OK sending their stuff here, but does make me think it might be a case of ‘don’t ask don’t tell’ and this at least part of the reason pick up and delivery is so big? For that matter, is it just that there isn’t really a better option?
Very few people dwell in laundromats in NYC. But is this a case of chicken-and-egg? ie. if the space was a lot nicer / safer / more hospitable, would they?
Modernisation offers so much opportunity. Few laundromats have a website, branding, any meaningful technology. Pricing is relatively static (off peak is the same as peak) and uniform (across the city, give or take). There’s a lot of low hanging fruit.
Convenience AND clean seems to be king. This seems obvious but I’m now questioning how “destination” the space needs to be… it seems that the overall experience plus effectiveness is what will win (which sounds kind of obvious but it’s not where I began).
So now what?!
All this info gets fed back into my concept and business model - some of this stuff impacts my financials and how I’m thinking about what a viable business could look like (but also how much I’m prepared to invest in building that).
I need to develop the concept further given the new intel, not just from a business model perspective, but also in terms of the customer experience, thinking about what will differentiate in a way people will care about.
Sourcing an appropriate business to buy is going to take considerable legwork. I had originally thought it would be a matter of using a website or broker… I now suspect I was wrong. I think the answer is going to be about locating businesses I think could be a good fit and then approaching them directly. Seems a bit daunting but y’know. I’ve done much harder things.
Funding. I need to chase down options in this regard because friends, your girl is not paying cash.
As you can see, there’s still a lot to do here! Next week, we’ll be talking skincare…
Til then,
Sam