PlanetLaundry and Supplements West Supplement Spring 2016 : Page 1
Supplement to the PlanetLaundry Magazine BUSINESS PROFILE BY STEVEN GOULD Spring 2016 | planetlaundry.com | coinlaundry.org ‘I Like Simple Businesses’ L.A. Entrepreneur Diversifies with Two Self-Service Laundries Jacques Stambouli’s Three Kids Laundromat business grew from one to two stores in just a matter of months – with one location in Los Angeles and another about a mile away in Inglewood. Although that may not be the typical growth pattern for a new small-business venture, Stambouli doesn’t necessarily do things in the usual way. In fact, when he received his MBA from Harvard Business School, he didn’t follow the path that the majority of his graduating classmates were on. “I’m probably the only one of my friends who didn’t end up on Wall Street or at a big bank,” he said. “I started my own business right out of school.” That entrepreneurial spirit continues to thrive in Jacques today. Along with the two self-service laundries, he continued on page 3 ADVERTISERS: Coin Laundry Insurance | 13, Continental Girbau | 05, Continental Girbau West | 11, Electrolux | Inside Front Cover, Excellence In Laundry Conference | 07, Laundrylux | Back Cover, Setomatic Systems | 09
‘I Like Simple Businesses’
L.A. Entrepreneur Diversifies with Two Self-Service Laundries
Jacques Stambouli’s Three Kids Laundromat business grew from one to two stores in just a matter of months – with one location in Los Angeles and another about a mile away in Inglewood.
Although that may not be the typical growth pattern for a new small-business venture, Stambouli doesn’t necessarily do things in the usual way. In fact, when he received his MBA from Harvard Business School, he didn’t follow the path that the majority of his graduating classmates were on.
“I’m probably the only one of my friends who didn’t end up on Wall Street or at a big bank,” he said. “I started my own business right out of school.”
That entrepreneurial spirit continues to thrive in Jacques today. Along with the two self-service laundries, he also runs a wholesale liquidation company.
“We liquidate for the big retail chains,” he explained. “We’ll liquidate returns, excess merchandise and marked out of stock goods for the likes of Walmart, Target, Costco, Shopko, Macy’s and pretty much all of the big chains.”
Although that has been a successful business, Jacques began looking for some diversification and passive income.
“My existing business does pretty well and leaves me with a little bit of spare time, and I wanted some additional cash flow to redeploy,” he said. “So, I began researching a passive investment stream. The usual things came to mind like the stock market or real estate. But I’m not a huge fan of being a landlord and having to chase down rent or having idle properties. One of the things that kept coming up was the laundromat business, which I really hadn’t thought about.”
The more Jacques did his research, the better a self-service laundry sounded.
“I like simple businesses, where you don’t have to overcomplicate things,” he explained. “A laundromat just seemed to make sense. You set up an infrastructure, and you have a relatively targeted customer base. I know it’s not that simple, but you don’t have big decisions to make every single day.”
Jacques spent about two years research the industry. Then, while having a conversation with a friend, the subject came up and his friend mentioned he had just purchased a couple of laundries as an investment. That was the final push – and Jacques made the decision to get into the vended laundry business.
He reached out to brokers and took a serious look at his options. In April 2014, he purchased his first store, and then in September, he purchased the second one.
Although location is always critical when looking to purchase a laundry, Jacques had another item on his priority list.
“I was looking to buy ones with the real estate, because for me this was going to be a long-term equity play, rather than just a monthly income generator. I also wanted something for my kids – I have three, hence the name Three Kids Laundry.”
Of course, the location did matter as well. The first store is conveniently situated between Jacques’ home and office. He also wanted a store that would be relatively turnkey and hassle-free, and the first laundry was only about a year old.
The acquisition of this store went smoothly. It took Jacques only about six months to actually find the location and put his name on the door. The total cost for the store and the land was approximately $1.7 million with 15 percent down and the rest financed through the bank.
“It’s afterward, when you actually get it, that you start seeing all of the surprises,” he said. The first store experienced some initial billing issues.
“The bills were incorrect,” Jacques explained. “The one thing I never saw on a bill was the sewer charge – and the previous owner told me the store was in an enterprise zone, so there was no sewer charge. Things went fine for a while, and then I got a large sewer bill. I called up and was told that everybody must pay a sewer charge, with no exceptions. So, that brought down the store’s cash flow by about $30,000. That was quite a surprise.
“There were a few other surprises in the beginning, but they were mostly my fault. For instance, the previous owner had a very small insurance policy, and I now have a much better one, but the cost was increased.”
Jacques also gave all the employees raises when he took over. However, he failed to consider the corresponding overtime and payroll tax increases.
His first laundry is located in a relatively low-income area surrounded by renters. The majority of the rental properties are townhouses and low-rise apartment buildings, with not much in the way of large apartment complexes. There is an appliance repair shop on one side of Three Kids Laundry and a convenience store on the other. Jacques’ second store is situated next to a Big Lots, with a restaurant on the other side. He added that there are several competitors in his marketplace.
“My two stores are about a mile apart, and there are half a dozen laundromats between us,” he explained.
To stand out from the competition, Three Kids Laundry regularly advertises its services and holds promotions to draw attention to both stores. At Christmas, Jacques will give away a flat-screen TV to a lucky customer. In addition, Three Kids features a loyalty program where customers earn points based on the services they use; and the points can be redeemed for rewards.
Both of the Three Kids Laundry locations are open 24 hours and are fully attended by a staff of 12 employees. The stores offer wash-dry-fold services, as well as catering to a few commercial accounts; although the commercial segment currently represents just a small portion of the overall business.
Jacques commented that if he has a business strength it’s the fact that he doesn’t get too caught up with his own ego nor is he very image-conscious. He simply looks for a good business with a solid ROI and that is relatively straight to run. He’s very analytical in nature and a firm believer that if you look after the pennies, everything else will take care of itself. He added that his business philosophy is, if you set up systems properly and have trustworthy people to run them, things will go well.
Now that Jacques has acquired some valuable experience in the laundry business and has grown more comfortable with the industry, he is definitely looking to expand. He admitted he would like to build a chain of self-service laundries. So, it would seem that the Los Angeles area will soon begin to see more Three Kids Laundry locations popping up in and around town.
Steven Gould is a freelance writer based in the Chicago area.
Read the full article at http://digitaleditions.walsworthprintgroup.com/article/Business+Profile/2442788/295977/article.html.