New Milestone, a Shark Tank Lesson, and Should I Buy a Laundromat?

My life is moving so fast it is all a blur. And yet at the same time I feel like I’m not working as much as I should be, that I’m leaving too much work on the table by executing so slowly. The election derailed me and I’m making a strong effort to get back on track.

New Milestone

I just hit another milestone: broke $1,000 net sales in 1 week. But this is no cause for celebration. I’m still bleeding money every month and until I can get to cash flow positive, I am under constant threat of going out of business.

Also the $1,000 number doesn’t tell the whole story. I was not very busy at all because a big chunk of that business was dry cleaning, where my margin is pretty awful. I’m not even sure what my dry cleaning margin has been, but it is roughly 20%. I know that is something I need to work on. Not just getting a lower margin but actually knowing what it is.

To do that I have to categorize my expenses better. When I file my taxes at the end of the year I will have a much better idea how to proceed. I have been doing my own business taxes for my various startups for years now, but this is the first time I have to do them for an S Corporation, and also the first time I am writing off my car and the miles I’ve driven for deliveries, so there will be some new stuff I will have to learn.

As I’ve said before, the best way to do accounting is to model it off of the tax forms so that the numbers present themselves when it’s time to do taxes.

A Lesson from Shark Tank

The founder of Chi’Lantro Korean BBQ, whose Shark Tank pitch taught me a lesson.

On the most recent episode of Shark Tank (ep. 809) an entrepreneur was telling a story of how hard he worked on his first business but it got nowhere. The reason was he was spending all his time working for the business, so there was no time left to work on the business.

This is a trap that I’m afraid of as well. I’ve already had instances where I had no time left for marketing projects because I was spending all my time doing laundry. I can already tell this upcoming week is going to be a very slow week due to the Thanksgiving holiday. I’m actually looking forward to spending some time working on marketing projects to increase sales in December.

I want to begin outsourcing the actual laundry more often and making up for it by increasing sales dramatically. The plan is a massive marketing push for Q1 of next year. More on that in the coming weeks.

Considering Buying an Existing Business

One other development this week is that I’m beginning to entertain the idea of buying an existing laundromat rather than renting space and converting it. The difficulty in the former is the capital required which will have to come through a loan or an investment.

And again, the best way to secure either a loan or investment is to show growth in revenue. So I’m back to square one, growing the sales as best as I can. This is obviously not an urgent matter since becoming cash flow positive is a pre-requisite to a loan or investment in my mind.

The reason I’m considering going this route is that it would eliminate a tremendous amount of work. In my research I found a coin laundromat that is just below breaking even each year with roughly $60,000 in revenue. They are asking for $80,000 for the business. Simply adding my current revenue on top of that business would make it close to profitable.

I know it’s not that easy. I will say that branding and marketing are my strongest attributes and I think I can take over a place and increase sales much easier than I can build one from the ground up.

It’s not even out of the question that I may do both, meaning start with a small commercial space and make it profitable, then use that to move to the next step of buying an existing laundromat.

The most important and urgent matter is the next milestone, which is to become cash flow positive. To do that I think I need to increase net sales to at least $5,000 a month. My best month to date was last month (October), where sales were $3,647.

The bottom line is I’m going to plan and execute a major sales push this winter with the goal of being cash flow positive by March 2017.

That’s it for this week. I’m going to be going to Oklahoma City to spend Thanksgiving with my family. Have a great Thanksgiving everyone!