The problem seems to come up in here about every other day that having a wood working business and a positive cash flow seem to be at odds with each other. I think I have found an answer to this conundrum, at least for me. I have been looking to buy a business for several years since my main money maker ( not wood working) is on a downward slide. People have said that I should focus on wood working as my livelihood because I seem to do a halfway decent job at it. Great! but doing this would take about 3 years of income out of my war chest that HOPEFULLY would produce a break even point after year 3. I’m not a gambling man. So in my search to buy a business I chanced across one that has a positive cash flow ( very positive when you consider its all cash) and requires at the most 8 hrs a week of attendance. The business is a laundry center. The net cash flow to the owner currently is easily sufficient to maintain my lifestyle which means I can concentrate on wood working and still eat and keep the lights on. This fact will sure help the “Wal-Mart Pricing problem” that woodworkers always seem to face. It may not work for everyone , but its an answer…………..
I wrote this back in September when I was contemplating the aforementioned business purchase. There was quite a bit of discussion about my Idea and what many seemed to think was my naivete at the time. Many said it isn’t as simple as I think and I will be spending more time then I anticipate at this business and not allowing the free time I think I will have. Well here it is, 3 months after the purchase, and i am writing this to bring you up to date on the realities of the venture as opposed to the perceptions. In three months I am getting my self familiar with many parts of this business. Its a relatively simple business if you have some degree of mechanical ability and some basic business experience and acumen( and you don’t go off and have a total hip replacement 2 weeks after the purchase!).
First of all, time required on the job. Right now I am doing 5-6 days a week and about 2 hrs per day on the job. I was lucky to inherit a good crew who likes their jobs and seem to do it well. In any cash business, stealing by employees is a constant worry but with the right procedures and checks this is not a problem in a manned laundry. I said I spend 2 – 3 hrs a day at the laundry but that doesn’t count the 45 min each way to get to it. If I could, I would like to have had one a bit closer to home but you buy ’em where they are not where you want them to be. My hours on the job are 10-12 hrs per week not including travel. Generally speaking at least one weekend day on the job ( 2-3 hrs) is going to be required as these days are our busiest. I think I will be getting the time on the job down to 4 days a week in a couple months with some of the new procedures I will be implementing. Someone reported that laundries are closing down all over the country. Those laundries must have been placed in areas where people don’t wash clothes or all have their own washers at home. Even if you do have a Super Maytag at home I bet you don’t have 85# capacity washers like I have that do quilts and comforters and even some rugs. People with their own washers at home use mine all the time. Like any business proper location is extremely important. The one I bought has been in operation for 20 years and the neighborhood is all lower income housing. Washing is a necessity, not a luxury, in a social environment.
Income has been exactly as reported in the pre-purchase disclosure as well as the expenses. I figure that my time on the job pays me about $56/hr after all expenses are paid and that figure seems to be growing nicely with recent newspaper ads and promotions but I wont know this for sure until 6-8 months have passed. So I guess the 2 days a week I was told hasn’t matured but I don’t think that a guy working 10-12 hrs per week and making close to $50 large, all cash, is anything to sneeze at. In addition I have found a place to display some of my woodworking. Wooden toys??…….maybe.
Wicked Decent Woodworks
(oldest woodworking shop in NH)
Rochester NH
” If the women dont find you handsome, they should at least find you handy……..yessa!”
Replies
Hi John ,
So pleased to hear the positive outcome you are experiencing .
I was hoping that when you said you are becoming familiar with the parts of the business , that you did not mean washing machine parts.
I'm glad you proved us nay sayers wrong
best of luck and happy holidays to you and yours
dusty
Oh yea. Im experiencing all the parts .including the mechanical type. You can run this type of business by outsourcing repairs but......for the long term, doing some of your owm maintenence is a necessity......... if you like making money.Wicked Decent Woodworks
(oldest woodworking shop in NH)
Rochester NH
" If the women dont find you handsome, they should at least find you handy........yessa!"
John,
Glad to see your venture is working out. I read your original post some months back, and I didn't seem to think it was a bad idea then. Nice to see you proved the nay-sayers wrong. As someone who is in business for themself doing woodworking (kitchen cabinets), I would agree that it takes quite a bit of cash to get off the ground. I didn't start with near enough, and am paying the price, as some months are a bit leaner than others. However, a bad day working for yourself is much better than a good day working for "the man".
Best wishes,
Lee
I assume your $56/hour number is your net income divided by your time. How does the capital you invested factor in?
It has always seemed to me a little tricky to figure return on investment vs. equivalent pay for an owner operated business. This is relevant whether you are buying a laundry, buying a cabinet shop, or putting up a shop to earn money in. Say you invest $200,000 in a business, work 40 hours per week, and net $40,000 per year. Are you (rounding the year to 50 weeks for simplier math): getting a 20% return on your investment and working for free; or getting no return on investment and earning $20 per hour; or some combination of the two say 10% on your investment and $10 per hour
Remember the theme of this post " Maintaining Cashflow". It is less about return on investment and more about keeping the lights and heat on at home. The only part of the whole equation that is important to me is what amount of money do I actually bring home and put in the bank every week. I look at this business as a retirement business. I have determined that we can live well on very short money. My kids are gone and the wife has a good job so all I have to do is keep finding things that keep the money flowing in. I am 56 and I have been semiretired for several years by having " ventures" that contribute to the household kitty and do not take much of my time ( which has allowed me to putz around out in my shop and act like, if not be, a real woodworker) As I originally stated in my first post, one of those "ventures" was sinking at an alarming rate and I needed something that was going to fill the monetary void. This business seems to have done that When I say the income is about $56/hr it is figured on the amount of money left over after all business bills are paid at the end of the month ( 4.3 weeks) divided by 12 hrs/week of being onsite. ( time I spend at my desk here counting cash isn't factored in thats because I don't look at getting my hands dirty with money as work). The $56/hr is irrelevant but it puts into perspective the time spent to gain the reward. It is not a hard business to run and it is fun most of the time. It is fun to come up with programs that you think may stimulate the business and see how they, hopefully, add to the bottom line. As I said before, it might not work for everyone but it seems to be working for me.Wicked Decent Woodworks
(oldest woodworking shop in NH)
Rochester NH
" If the women dont find you handsome, they should at least find you handy........yessa!"
Glad to hear things are working well for you John. Have you had the chance to showcase any of your woodwork in the laundry mat, and if so, have you seen any interest from the customers coming and going?
I seem to recall that being mentioned in the original post, though I didn't go back to read it.
"Have you had the chance to showcase any of your woodwork in the laundry mat, and if so, have you seen any interest from the customers coming and going?" I'm sorry, but as a former retailer, I find that humorous to say the least. The clientele who frequent laundromats are not well-heeled enough to be buying much in the way of nice woodworking pieces. No disrespect to his clients, it's simple demographics.
There are certainly exceptions, maybe 1% of the total, such as the ladies who wash their horse blankets in the big washers. Since they probably spend $6,000 or more per year on their horses, they do have some disposable income. But the ones with quite large sums of extra cash pay someone else to do the washing.
Nothin' wrong with throwing a few pieces in a display case (as long as it's humidity controlled, LOL), but I sure wouldn't be expecting much.
Yep, I was one of the naysayers in the original laundry thread. But that was when the story was pretty much "just stop by and pick up the bags of money." Nice to hear there's a little more to it than that. Best of luck to cherryjohn.forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
I have not had the time to make anything to showcase at the Laundry for a couple reasons. First off, two weeks after I bought the place I had total hip replacement surgery that put me down for 2 1/2 weeks. I have owned it , now for about 3 months now and my time there has been spent learning the business and my customers. The hip replacement has limited me to the amount of time I can stand at my bench so I havent done much of anything in the shop. I have been instituting some changes at the laundry that will free me up in the near future so that the 20 hours a week I put in now will be coming down to about maybe 10 hrs a week. (If all I wanted to do was the bare minimum to keep the place going, that time on the job would be about 4 hrs a week) This is when I will be feeling stronger and have the time to get back to my shop and make things that the customers might want. I am leaning towards making things like wooden toys and things that people who live in apartments would like.Wicked Decent Woodworks
(oldest woodworking shop in NH)
Rochester NH
" If the women dont find you handsome, they should at least find you handy........yessa!"
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