Changing Changers Consider Rear Loaders

Tax season is almost upon us again, and it''s the time of year when most laundry operators really take a hard look at their business to see if they have made money. They''re forced to do this review for tax considerations. Operators want to first find out that they made money, and then try to figure the most reasonable way of paying as little taxes to the IRS and state as possible. That is not what is considered tax planning, because it''s after the fact. Let''s call it operator reaction. We''ll do tax planning next year. While the things one can do to bring in more business is limited by how imaginative we are about promotions and advertising, one of the best ways to increase net income is to reduce our costs in the most practical ways. Here are some things to look at. Equipment Payments. If you have payments on your washers and dryers, or on the laundry itself, what rate is the interest? Can you refinance, reduce interest and lower monthly payments? Perhaps you could refinance to pay off the notes over a longer period of time. While that might prove to be costlier over all, it could reduce the payments to allow greater monthly net income. Most equipment financing costs are higher than would be paid using real estate as security. Is there room to save by taking a second mortgage on your home and paying off equipment notes? Lower payments should provide a higher net income. There are also some interesting tax benefits to financing using real estate as security. Check with your tax advisors. Expense Reductions. Benjamin Franklin said ''a penny saved is a penny earned,'' and boy was he right. It is true that every penny you can cut from your costs should fall to the bottom line as profit. One example is that of a small coin laundry owner who had kept half of his overhead fluorescent lights on each night for many years. He did this for security purposes. He decided to install two new energy efficient lights to burn at night instead. They illuminated the back of the customer area so that people could look in from the street, keeping his security level just as high as it was when all those fluorescent tubes were burning. As a result, his laundry''s electric bill fell by $63 per month. Look at these savings long term. In a year, it''s $756. In five years, this little economy translates to $3780 in the operator''s pocket. How much more valuable does this make his laundry when it becomes time for him to sell? A new operator purchased a coin laundry that had already been in business for a number of years. Unlike the previous owner, he decided to attend a local laundry association meeting where he heard a talk about how to do insulation for hot water tanks. It sounded like a good idea to him, so he wrapped both his storage tank and hot water lines. His gas bill dropped immediately by more than $100 under the previous owner''s average monthly bills. Later, he decided to lower hot water temperature levels. The settings had apparently been untouched since the laundry was built. He followed the advice he read in a Tips column found here in the News. He kept lowering temps until customers complained, kicked it up a bit, then kept it there. As a result of these moves, he lowered his gas bill by hundreds per month less than the bills the previous owner had been paying. The new owner was netting $3,000 more per year than the old owner, all by looking for savings. Other economies can be practiced without the loss of either customers or income. Water and sewer charges are among the greatest expenses faced by laundry operators, so it''s imperative that laundries be as water efficient as possible. Operators should become familiar enough with the billing process used by the local water company to see if there are any radical changes in use. By dividing the cubic feet of water used each month into the dollar amounts collected from the washers, should give you a comparison figure. So many feet of water used should translate into so much washer income. If there is a big change, you''ll quickly see it. One operator began to calculate what the water use should be according to the income of his washers. According to his washer income, something was out of whack. He began to investigate and discovered that the landscaping water used for the entire shopping center ran off of his water meter. This discovery of the landlord''s misuse of his water was no accident and he used it to garner a significant drop in his rent. In another laundry, there had been a faucet located in the rear parking lot that tenants and their employees used to wash their cars and trucks. They kept the hose running because they were not paying the bill. The laundry owner accidentally discovered that it ran off of the laundry meter, not off of the center''s as he thought. A bit ticked off, he capped the tap and saw an immediate drop in his water bill, without loss of income. He wasn''t as popular with his business neighbors, but his monthly savings were enough so he really didn''t care. Another operator called someone in to make a repair to his water heater system''s pump. The plumber turned off a line that appeared to be of no use to the laundry. He had ''accidentally'' turned off hot water to a restaurant next door. The laundry owner had been the source of the hot water for a business which used almost as much hot water as his laundry. It had gone on for many years, since the laundry was first built. Needless to say, the laundry''s gas bill dropped dramatically overnight. Again, without loss of income. The point being don''t assume about water and hot water use. It''s not likely that anyone would be able to tap into your water and hot water lines post construction. But how were things laid out before you owned the business? It could pay you nicely to check it out now and know for sure. You don''t need to be a licensed plumber to investigate. Follow the lines from your water meter into and around the laundry. If you have any questions, that''s the time to bring in someone who is an expert. A new owner took over a laundry that ran for years with the same topload washers. They looked and ran good, and the seller assured him they were easy to keep running and would last for years. ''Better than the new ones.'' The problem was that they used over forty gallons a load and sixty percent of that was hot. He checked on getting new washers and found that instead of using nearly 25 gallons of hot water, the new ones used eight or nine gallons. After making the change he soon discovered that his savings in natural gas to heat the water, plus the considerably lower overall water consumption just about paid for the monthly payments of new washers. On top of those savings, his business volume also jumped because the newer washers drew in new people and with that more dollar volume. Research, study and planning could raise the net income of your laundry. All you have to do is keep trying.