0:00:00.0 Announcer: The financial views and opinions expressed by the host and guests on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University or Certified Wealth Management And Investment. The material discussed is not designed to provide the listeners with individual financial legal or tax advice.
[automated voice]
0:00:25.5 Announcer: It’s time to grow your bank as 107.7 The Bronc presents Master Your Finances with Kurt Baker, a Certified Financial Planner Professional with Certified Wealth Management And Investment. Kurt and his team of financial guests will help you turn those singles into seas of green and plan your financial future accordingly. Now, here’s your money managing host for the hour, Kurt Baker.
0:00:52.3 Kurt Baker: You may be one of the many seriously considering the path to entrepreneurship. When you make the leap from Corporate America to self-employed the options can be overwhelming. Cathy Neilley has made the transition from corporate management at several Fortune 100 companies to starting her own business. She will show you how you can lower your risk and increase your success. She will walk you through the process that helped her found Spin Doctor Laundromat, which is a perennial best of award winning high end full service facility in an industry that has a 95% success rate and 30-40% gross margins. Who knows, once you are armed with the tools, you may decide to step out on your own. Welcome Cathy. And you’ve done this. So this is really cool. I always admire people that have gotten into the security blanket or sometimes they call it the golden handcuffs of big Corporate America, where they kind of got you, they’re treating you really nice.
0:01:55.2 Cathy Neilley: That’s so true.
0:01:56.6 Kurt Baker: Why did you decide to step out of that “safe environment” and head out on your own?
0:02:03.2 Cathy Neilley: I think that I probably experienced some of the many things that corporate people do, is feeling that it’s not a creative atmosphere for them., they’re not being paid enough, the 24/7 global economy is impacting their work-life balance. Seven o’clock in the evening, it’s Asia time. And so people looking, especially now that the pandemic is upon us, that there’s other things in life that you need to just embrace and fulfill your life.
0:02:49.8 Kurt Baker: So that’s great. So what specific… So what timeframe were you answering? So What were you doing in Corporate America? I know you had many high end jobs at these big companies and so there had to be a little more of a… I mean, that’s great. I understand that. So you must had a kind of a person who would say, “Hey, look. I’m gonna… ” I mean, you started at a high end Laundromat. So that’s a big difference from probably what you were doing in Corporate America. So give me kind of an idea of what turned on and what the creative thought process was when you finally said, “Hey, maybe I need to go start doing this,” and what kind of planning did you do to make that transition? ‘Cause you can’t just quit one day and start the job the next, right?
0:03:24.0 Cathy Neilley: That is true. I did start out in doing hospital work, clinical laboratory and working in the emergency room. And I really enjoyed working with patients and making a difference. And when I got my master’s and I moved into marketing and operations at the big pharmaceutical companies, the gap between myself and those patients widened. And I didn’t really feel like I was making an impact and I knew I was a creative person. I just didn’t wanna be a starving artist. And so I gravitated towards the marketing and the sales operations of these big companies. And I realized that the companies have their own culture, they have their own strategy to make a success in the marketplace, and if you don’t keep your head down and just go along with the plan, there’s implications to that.
0:04:23.1 Cathy Neilley: And I wanted to really be able to use my creative juices to start my own business and make my own decisions. I was also pretty much aware of myself and what I was interested in doing. And, you know, you hit that glass ceiling certainly as being a female and a woman of color. It’s a little difficult to kind of navigate up to the high echelons of some of these companies unless you fit that mold. So those things in combination said to me, maybe I should think about moving on to something else using the talents that I have and make an impact.
0:05:03.5 Kurt Baker: So once you made the decision, you’re at work saying, “Okay, I’m gonna do this.” So what steps did you have next as far as the transition process, as well as what you were actually gonna do when you got out? ‘Cause the idea that you’re gonna be a creative and go out and do something is great, but creativity almost includes everything out there. That’s a big universe.
0:05:22.4 Cathy Neilley: It certainly does. I think…
0:05:23.4 Kurt Baker: So how did you kind of get that broken down to an actual business plan from being in Corporate America, business plan, and stepping out and taking that risk?
0:05:31.0 Cathy Neilley: I went to a number of seminars about starting my own business or starting your own business. And some of the characteristics of an entrepreneur… Many people don’t really want to do a self-evaluation of themselves and try to decide whether or not they’re really cut out for being in their own business. And some of the characteristics are someone who’s not risk averse. It’s a high risk proposition to go into your own business.
0:06:04.4 Cathy Neilley: Secondly, you needed to have some skills and tech savvy from wherever it is that you’re coming from in the corporate world and also be a hard worker. And I don’t mean just ’cause your friends say that you work hard, I mean you are a workaholic. And also, you are really examining why it is that you want to leave. It’s not really your boss or the industry or something else, you just really have to do some self-reflection. And I took Myers-Briggs test. I went to the library and learned a little bit more about myself, did that mirror technique, and I said, “Yeah, I do have those personality traits. I think I can function there.” And then the next step was, what do I like to do? I love music. I’m a tennis fanatic. So maybe I can just try my hand at some of those things while I’m still working my full-time job.
0:07:00.7 Cathy Neilley: And so the first step was I started designing tennis bags and gym bags and those types of products for some of the girls on my team, and it grew enough that I was sponsoring some local tournaments and had a little success at that. And so the next step was doing a little bit of reading, research on what gaps there are in not only the sporting goods industry, but the music industry. I liked real estate. I had owned real estate before. And some of those businesses that are recession-proof. And you need to start checking off a couple every year or two, and…
0:07:36.9 Kurt Baker: Okay. So you got a really big funnel and you started working.
0:07:39.9 Cathy Neilley: Yeah. She got a big funnel and I started working. Yes. Yes.
0:07:41.5 Kurt Baker: You started working it down.
0:07:43.0 Cathy Neilley: I started working that funnel down.
0:07:44.5 Kurt Baker: Well, I’m getting music and tennis and real estate, and all that, but we ended up… I’ve been to a laundromat. It’s been a while, but I don’t remember playing tennis in the laundromat.
0:07:56.4 Cathy Neilley: Okay. I’ll tell you…
0:07:56.5 Kurt Baker: I do remember there might have been some music.
0:07:58.1 Cathy Neilley: I will tell you how…
0:08:00.7 Kurt Baker: I’m trying to get to the high end laundromat right now.
0:08:04.3 Cathy Neilley: I will tell you how I got there.
0:08:06.4 Kurt Baker: Okay.
0:08:06.9 Cathy Neilley: I was working for Bayer at that time in West Haven, Connecticut doing a tremendous amount of traveling for the sales organization, going to their meetings and that type of thing as a product manager. And I would come back to my apartment and I’ve got a suitcase full of dirty clothes. I’d go down to the basement of the building and somebody else’s stuff is in there. Maybe been there…
0:08:32.8 Kurt Baker: Always.
0:08:33.1 Cathy Neilley: Yeah, always.
0:08:35.4 Kurt Baker: Always.
0:08:35.9 Cathy Neilley: It’s been there forever.
0:08:36.1 Kurt Baker: They turn the machine on, they forget it’s there.
0:08:38.1 Cathy Neilley: Yes. Things starting to move in there, that kind of thing. And I’d have to pack and go to another trip and I said, What should I do about this? And I was driving out to the supermarket and I passed this laundromat. And it said, “Wash, dry and fold.” And I said, “What the heck is that?” So I pulled in and I spoke to the attendant. And so she said, “Hey, yeah. Just put it on the scale, whatever, you can come back in about a day.” And I said, “Oh, let’s see how this works.”
0:09:07.9 Kurt Baker: Oh.
0:09:08.8 Cathy Neilley: Yeah. And I came back and the clothes were shrink-wrapped up and in a little block. And I said, “This is a game changer.”
0:09:20.2 Kurt Baker: You like that, huh? Yeah. I go, this is nice.
0:09:23.2 Cathy Neilley: So yeah, I have the same feeling about laundromats that most people do. It’s a low income thing, It’s crime ridden, and this… The coins are on the floor. People coming in there with their kids and throwing stuff around. I didn’t wanna be in that atmosphere, but this was not that. I wouldn’t say it’s as glamorous as what I offer now, but I knew that here it is, I’m a professional person and I’m using a laundromat. There’s no shame in that.
0:09:55.3 Kurt Baker: Oh, no.
0:09:56.3 Cathy Neilley: And so as the concept evolved and I got my business plan together, I said, “What kind of laundry would I want to go into? What kind of services do I need?” Because the reasons why a lot of businesses fail is that you really haven’t found that gap. And so I’m thinking, what would I do? And I have colleagues that could probably be able to use this as well. And that’s how the Spin Doctor concept came about, is this growth from… I’m gonna put as many bells and whistles as I could possibly afford.
0:10:32.5 Kurt Baker: So you kind of found a niche. So that’s a common entrepreneur thing. It’s like, people think as an entrepreneur, you have to reinvent the wheel. No, you can just make the wheel a little better.
0:10:40.4 Cathy Neilley: That’s correct.
0:10:40.9 Kurt Baker: Little shinier, a little smoother. Maybe do a little… Maybe it’s already off wheel, off road, or maybe it’s a fast wheel, whatever.
0:10:46.6 Cathy Neilley: Yes. The lipstick on a pig thing.
0:10:48.3 Kurt Baker: Well, it’s kind of amazing. You hear about all these successes out there and you research it and you’re like, well, they actually got the idea from here and they just moved it over here, but they really focused on that part of it significantly. So you’re focusing on like the high end, how to make it a great experience. And we’re gonna talk about that, but we’re gonna take a quick break. You’re listening to Master Your Finances. We will be right back.
0:11:13.3 Announcer: This is Master Your Finances with Kurt Baker, Certified Financial Planner Professional. Learn about tax efficiency, liability, owning, managing, and saving your money and more from Kurt and his experienced panel of guests. Master Your Finances is underwritten in part by Certified Wealth Management and Investment and Rider university. Rider university offers flexible education for adult learners. For more information, it’s rider.edu/nextstep.
0:11:42.2 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m here with Cathy Neilley and we are talking about laundromats for professionals, right? Not just… Not your typical one, as you were saying, where the kids are running around and they’ve got the dog in there and they’ve got the coins on the floor and you’re wondering what’s going on? This is a little nicer, right?
0:12:01.2 Cathy Neilley: Yes. Way nicer.
0:12:02.2 Kurt Baker: Why wash, dry, fold? I can’t say that I’ve ever been able to use one of those. When I was using them, I was one of the ones with the coins on the floor kind of person. So it’s like… But I could definitely see how that would be very appealing, especially if you’re traveling and you have somebody kind of help take care of you. You just drop it off, you come back, it’s there, you’re done. Don’t have to worry about it. And that’s the end of it. So you kind of took that experience and you’re putting your own creative aspect to this. So we’ve now got something a little better. Can you describe to us what you have now and how you decided to form this thing, and what you decided to put into it and how it’s different than what most people like myself would envision if you’re walking into a laundromat? What you’re thinking about.
0:12:43.2 Cathy Neilley: Great question. The first thing that I did is started visiting other laundromats, looking around and seeing what I liked, what I didn’t like, what was making me feel comfortable, uncomfortable. And I also took visits to some of the manufacturers of commercial laundries and they would in turn looking to have a customer out of me would allow me to visit some of the commercial laundries that they had outfitted with equipment, so I could see how the new technologies are working for those customers. And just looking around and just taking a little piece of this, a little piece of that, and I formed a vision in my head about what I wanted. So some of them were 8,000 square feet, 9,000 square feet. I knew I wasn’t gonna go…
0:13:45.4 Kurt Baker: Wow. Laundromats that big.
0:13:46.4 Cathy Neilley: Oh yes, yes…
0:13:46.8 Kurt Baker: Wow, that’s a big laundromat…
0:13:49.4 Cathy Neilley: And I knew I didn’t want to go quite that big, but I said, what can I use with a space maybe half that size and still allow people to do their own laundry as well as have wash dry and fold. And so the short list was I wanted to have a play area for the children, so they wouldn’t be running around.
0:14:08.8 Kurt Baker: There you go… They have a little place…
0:14:10.7 Cathy Neilley: Yeah, so they have a little place to be with books, educational toys and a TV and a bean bag chair, and they’re super happy in there and so much so that their parents forget that they brought them and…
0:14:25.3 Kurt Baker: I hope they’re not leaving them there.
0:14:26.7 Cathy Neilley: They have to drag them out, which is not so bad.
0:14:30.3 Kurt Baker: I’m kidding. [laughter]
0:14:31.2 Cathy Neilley: And we keep lollipops sitting around too. That helps a little bit. But then you realize how important the children and other members of the family are in choosing the laundry, because the parents tell me that the kids says, I wanna go back there and, that’s amazing. And the other thing is the big screen TVs. We have a workstation, a charging station, understanding that technology is important. We wanna kind of fit that niche. We are eco conscious. And so there’s opportunities for people to learn a little bit more about recycling. The equipment that I chose was water saving, ’cause that’s important to me and less impact on the environment. A lot of people think that laundromats, for whatever reason, expel more water into the public sewer system, but because of the water saving capacities, we’re actually doing less than many houses on the block.
0:15:27.4 Kurt Baker: I’ve heard that, yeah…
0:15:28.6 Cathy Neilley: Yeah we use moisture sensing dryers so that they don’t continue to run, even when the clothes are dry. We have light sensors and we don’t use paper in the bathrooms. We’re all handicapped accessible. We have picnic seating so that families could sit together and they can enjoy all of the nice restaurants that we have in the strip mall or across the street, coffee, donuts, things like that. And they could sit with their family and because I’m not keen on a lot of cross noise, I have plenty of signs that ask people to just keep their conversations to themselves, wear nice fancy headsets like here and talk amongst themselves. And the area is really bright. The lighting is awesome and people come in there and they forget they’re doing something they don’t like.
0:16:26.3 Kurt Baker: Well, I’ve got different visions. As you were saying, there’s one, when you talk about the kids in the play area, I’m thinking about when McDonald’s first came out with the play area, then the kids, you couldn’t get the kids to leave. So now when they have lunch there, they probably had dinner too, because the kids were playing all day.
0:16:38.4 Cathy Neilley: Oh, yes.
0:16:38.5 Kurt Baker: So they keep getting stuff. So I can see how this would definitely appeal to families because sometimes people forget that parents with young children have to do laundry, a lot of times they have to bring the kids with them.
0:16:51.3 Cathy Neilley: Yes.
0:16:51.9 Kurt Baker: They can’t really just leave them at home. They’re too young or there’s nobody else to leave them with. So they’re toting the whole family with them wherever they’re going. And it would be nice to have a place that they’re going that the kids wouldn’t mind other than say, oh, I wanna go to laundromats right now. You get, oh, we’re gonna go to the laundromats…
0:17:05.8 Cathy Neilley: Yes…
0:17:06.1 Kurt Baker: So now it’s like, now it’s a lot of fun. So you’ve got an appeal to them. Then I had another vision where they talk about like on the train, people are commuters, like just you can talk, but don’t be too loud.
0:17:18.6 Cathy Neilley: Yes…
0:17:18.7 Kurt Baker: So be considerate of your neighbors, so to speak, so everybody’s…
0:17:21.3 Cathy Neilley: That is true. And it’s in two languages too. So you can’t say you didn’t hear me.
[laughter]
0:17:25.1 Kurt Baker: Oh, it’s in two languages. There you go. So you’re trying to cover it.
0:17:30.8 Cathy Neilley: Yeah, I’m try to cover it.
0:17:31.6 Kurt Baker: Try to cover all the languages. So yeah, that sounds awesome. Once you came up with the concept, now let’s talk about when you opened your first location. So how did that go? So you have your initial concept, you open up the location. Did anything change or did you find out any… Learn anything while you’re opening up that first one? ‘Cause a lot of times people go, oh, here’s my great concept, and then you go into actually execute, sometimes you have to tweak it a little bit. You have to kind of play around a little bit. Maybe you made a space different size, or maybe you did a little more of this or a little less of this. So what did you find out when you actually started having people come in or when you were starting to build out or whatever you were doing? Can you walk us through that process of concept actually implementing the first location?
0:18:09.9 Cathy Neilley: Yes. I must say that the Electrolux people were very helpful in evaluating the space. I think many manufacturers will do that and they’ll come in and they’ll say, well, I know you would really like to have a… What’s called wet system so you can do some dry cleaning, but you don’t have enough space for that. And that was something that I wanted to do in case I didn’t have a dry cleaner partner to do some of the jackets and shirts and things like that, that people might have. So that was one change. I think I wanted to do a little more vending than I do right now. I have snacks and I have drinks and things like that. But I wanted to put another one with either healthy snacks or some more toys or something that the kids could play with. And there wasn’t enough room for that ’cause I have this humongous boiler…
0:19:05.5 Kurt Baker: Okay. A big… Well, you have to make hot water, I’m assuming. I think that is…
0:19:08.4 Cathy Neilley: Back there… Yeah. The other change that I made, I wasn’t really thinking of doing too much retail other than from the vending machine. And I visited a few of them and the Electrolux people came and he said, you know, you might… You’re gonna have a booth anyway to do the processing of the wash, dry and fold. So you got a little space here. Maybe you can sell larger sizes of laundry. So now I sell lint rollers and other little tools that people like, they also come and they see us folding things and using dryer balls and they go, “I like… The folding is so beautiful. I like some of that too. How do I get some?” Right up in the front…
0:19:54.9 Kurt Baker: There you go.
0:19:55.5 Cathy Neilley: There you see. And so that was thing… The workstation as more people were working, doing service IT type work, and they had a computer. They didn’t necessarily wanna sit at the table where people were eating. And so I had this little game that I purchased on eBay that you can like Pokemon kind of stuff. And I just removed it after a while and just gave the desk to people who had to do homework and then stuff, and just moved that out. And ’cause I had… I came to the realization that a lot of people were getting smartphones about that time, this is 2012, and they were doing the games on the… Candy land stuff on their phone and weren’t really using that anymore anyway. And then it’s become very popular, just a little space off in the corner with the magazines and they can just do whatever work they have to do.
0:21:02.6 Kurt Baker: Well, that’s awesome. So now you have your first location open and you kind of tested it. So they say what test? Test small roll out bigger.
0:21:08.9 Cathy Neilley: Yes.
0:21:10.2 Kurt Baker: Or big in your case. So you got the first one going and that was started what? 2012, right?
0:21:13.1 Cathy Neilley: That’s correct.
0:21:14.8 Kurt Baker: Okay. So you started 2012. Where was that one located and then what did you do next?
0:21:18.6 Cathy Neilley: That is in Hamilton Township and it’s in a strip mall called Kuser Plaza. That’s spelled K-U-S-E-R and White Horse. It’s across the street from where the Kmart used to be and now there’s Planet Fitness. People have grown up around this.
0:21:36.3 Kurt Baker: So you got nice, hot sweaty people that come over do their laundry.
0:21:38.2 Cathy Neilley: Yes.
0:21:39.2 Kurt Baker: I like that pairing. That’s a nice pairing.
0:21:41.6 Cathy Neilley: And that is true. I have two trainers from the other walk across the street and it’s…
0:21:45.6 Kurt Baker: There you go.
0:21:46.2 Cathy Neilley: Yeah. You have to wear a mask, but it’s… [laughter]
0:21:50.1 Kurt Baker: Okay. So that’s great. So you started off in Hamilton and once you had that one going, then what made you decide to maybe I’m gonna do another one of these. It looks like it was starting to have some success. How long did that take you from getting that rolled into… Or did you always think you could open a bunch of them? Did you… What was your…
0:22:05.4 Cathy Neilley: I was thinking that, yes, I wanted to roll out a couple of them. I must say that my husband’s been extremely supportive of this. He wasn’t initially. He was…
0:22:15.3 Kurt Baker: That’s also a critical for an entrepreneur to have a spouse that’s empathetic and supportive.
0:22:18.7 Cathy Neilley: Yes. I do admit that when he… When I invited him over during construction, that I never seen him quite that color. [laughter]
0:22:32.2 Kurt Baker: Oh, okay.
0:22:33.9 Cathy Neilley: It was, “What are you doing?”
0:22:36.3 Kurt Baker: Oh, yeah. That that’s not uncommon in the entrepreneur world, let me just say.
0:22:40.4 Cathy Neilley: Yes. The family needs to be involved If you wanna be an entrepreneur, for sure.
0:22:45.7 Kurt Baker: Yeah. They have to know what’s going on. That doesn’t have to be in the middle of the trenches, but they have to at least understand.
0:22:51.3 Cathy Neilley: But they have to understand what was going on. So that was visual. And so yes, I did plan on expanding through ownership, corporate ownership, but my husband who’s still in a corporate role, he took a position in Arlington, Virginia.
0:23:13.8 Kurt Baker: Okay. Oh. That’s not near Hamilton?
0:23:16.3 Cathy Neilley: No, it’s not.
[laughter]
0:23:17.3 Cathy Neilley: So we actually had to… We sold the house. And I moved into an apartment so I could be near the store and we… I was going back and forth on Amtrak, just keep things together. So the idea of now opening up another second or a third was now pretty much out of the question, but everything in the flagship store is trademarked and branded, the slogan, everything else. And people come into the store and they go, “This is a franchise, right? This is a franchise. Isn’t it?” So I said, well maybe it will be.”
0:23:54.0 Kurt Baker: Maybe it will be.
0:23:54.3 Cathy Neilley: Yes.
0:23:54.7 Kurt Baker: So people were actually asking. They liked the concept.
0:23:56.9 Cathy Neilley: Yes.
0:23:57.9 Kurt Baker: Yes. They come in, they like it. This is great.
0:24:00.8 Cathy Neilley: And, “Here’s my name, if you ever do that, I’d love to… ” That kind of thing.
0:24:02.4 Kurt Baker: Wow. That’s awesome.
0:24:03.6 Cathy Neilley: And I said, this is a sign from God right here. And so I spoke to hubby about it and he said, “I’m not quitting my day job. But I can… I’ll help you out because I know… I see. That’s a passion for you. The customers love it, you’re making money. I see it. So I I’ll help you out.” So I deputized him as my VP of operations. And he coordinates all of the phone calls that we get. We’ve done a number of expos in Atlanta, Virginia, Secaucus. And he’s coordinating all of the phone calls and we’ve got lots of people in the funnel right now, so…
0:24:48.1 Kurt Baker: That is awesome.
0:24:49.2 Cathy Neilley: It’s way. Awesome.
0:24:50.3 Kurt Baker: Yeah. So we’re gonna take another quick break. You’re listening to Master Your Finances. We’ll be right back.
0:24:54.9 Announcer: This is Master Your Finances with Kurt Baker, Certified Financial Planner Professional. Learn about tax efficiency, liability, owning, managing, and saving your money and more from Kurt and his experienced panel of guests. Master Your Finances is underwritten in part by Certified Wealth Management and Investment and Rider University. Rider University offers flexible education for adult learners. For more information, it’s rider.edu/nextstep.
0:25:25.6 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m here with Cathy Neilley and we’re talking about her first flagship store she set up. It was so successful that she had customers coming in, looking at the concept, thought it was fantastic, assumed it was a franchise, so it looked professional. I have a feeling it has a little bit to do with your corporate background and what you understood from how to brand and how to… And you trademarked, you’re registered. That’s also important. People don’t realize how important that is. Once you have a great concept, protect it. And then the last but not least, now you have your husband involved, your spouse. That’s fantastic. If they’re on board.
0:26:00.6 Cathy Neilley: Yes, it builds intimacy.
0:26:03.5 Kurt Baker: Absolutely. Well, yeah, hopefully it’s good intimacy.
[laughter]
0:26:07.8 Kurt Baker: It depends on the day, right?
0:26:07.9 Cathy Neilley: Yes.
[laughter]
0:26:08.7 Kurt Baker: So it’s all coming together. So he had a job down in Arlington and you’re in… Still up here in your apartment now, basically living next to the laundromat. [laughter] You had to use the services yourself, I guess, ’cause you’re right there. So then what happened next? You had people come, inquiries, you have these list of names of people when you’re interested and one day you said, “Hmm, maybe we’re gonna do that.”
0:26:31.6 Cathy Neilley: Yes.
0:26:31.7 Kurt Baker: So what happened next when you finally said, “I think we’re gonna go ahead with this?”
0:26:35.1 Cathy Neilley: And so we started doing some research on companies that can help you pull together the legal documents necessary and the registrations necessary for you to move forward with that. And we narrowed it down to maybe three companies that can do it. The prices is not inexpensive. They could run anywhere from $5,000 up to a $100,000 or something. Because they want to add a sales arm to it and consultation for the first year or two. But they’re pulling together a 100 or more paged document that says what you can and cannot do to sell this in various states in the United States.
0:27:22.1 Cathy Neilley: And so they go over it with you, there was a three or six month process of my doing a brain dump on the equipment and what we could do in terms of training new investors and that type of thing. And then I, once it was done, it was filed with the government and then the pandemic hit.
0:27:48.3 Kurt Baker: Oh.
0:27:48.4 Cathy Neilley: Yes.
0:27:48.4 Kurt Baker: Yeah. That’s a… [chuckle] That little pandemic.
0:27:50.6 Cathy Neilley: That little pandemic thing. Yeah.
0:27:52.1 Kurt Baker: Little bump on everybody’s life.
0:27:53.4 Cathy Neilley: That pandemic hit. But there were a number of franchise shows that were done virtually during that time. So I kind of got my feet wet a little bit with questions that potential investors were asking about the business and just listening in on other calls, try to figure out what works and what doesn’t, and the company that we ultimately chose to pull the legal document together, they have ongoing consultation.
0:28:21.5 Cathy Neilley: So we would go over what the pitch was, where they thought we would get the most bang for our buck in terms of getting leads for it. And then we went with our own booth at some shows and also joined some franchise broker organizations, like France Serve, IFPG. They have whole stables of brokers that want to hear about new products that they could put in their portfolio and sell to potential clients.
0:28:56.4 Cathy Neilley: Not all of them do equipment, some of them just stay in the food industry or what have you. But if you have the opportunity to do your pitch in front of enough of them or put information up on their website, then they’ll call you and say, “Listen, I think I have a client who might be interested in working with you. And that’s pretty much the stage we are with a number of people.
0:29:24.4 Kurt Baker: So once you’re at this stage, talked to other franchise and it’s… This is like a little bit of a dance and a marriage kind of thing.
0:29:32.5 Cathy Neilley: Mm-hmm.
0:29:32.5 Kurt Baker: Because people don’t… A lot of people that like don’t have franchise don’t realize that you don’t just call up McDonald’s and say, “I wanna buy a franchise,” and I’m in.
0:29:39.6 Cathy Neilley: That’s right.
0:29:40.2 Kurt Baker: McDonald’s is like, “Hey we’re not sure we necessarily want you, I don’t care what… How much money you have, because we want you to protect our brand because you’re selling a brand and you’re selling a service.” So whoever comes in as the franchisee has to really understand where you’re coming from and have the same passion…
0:29:58.0 Cathy Neilley: Yes.
0:29:58.0 Kurt Baker: For the type of service, especially in a high end service business. So kind of walk us through a little bit about how that goes. Let’s say we have somebody out there that’s like, “I might be interested in this,” ’cause I mean before we had this conversation, that’s not where I’d go with high end luxury X.
0:30:11.9 Cathy Neilley: That’s true.
0:30:12.9 Kurt Baker: Laundromat didn’t… Wasn’t the X word that came out of my brain [chuckle] necessarily, but now it does. So now that I kind of have that connected and somebody says, “Yeah, maybe that’s something I might be interested in because I’ve had experiences like that.” And I think, “Yeah, it could be done a little better and maybe it’s time.”
0:30:30.9 Cathy Neilley: Yeah. Maybe it’s time.
0:30:31.7 Kurt Baker: With the mobile US and everything. We’re getting back to it, right? We’re moving around a little bit more.
0:30:36.2 Cathy Neilley: We are getting around to it. Now, the sales broker will do a little bit of the grooming and the screening and filtering of their own clients. And what we provide to them as a franchisor are some of the basics of what we’re looking for as an ideal customer. And they would have to have a certain amount of money liquid to pay the contractor, to pay the franchise fee and amount of money and assets. Also, have a good credit rating and then from a personality standpoint, someone that is willing to do the work, has some basic business acumen, is also committed to working with us. That’s also important. And so they’ll kind of groom the customer. And if they feel that the client is not set for this business, they’ll let us know. And if they say, “Hey, I want you to talk to this individual.” Then we set up…
0:31:46.3 Cathy Neilley: At least, our process is that we will then set the client up for one hour webinar. And we will go over the history of the little laundromat industry and what people think about the laundromat industry right now and how it’s evolving and how the customer today wants technologically advanced business. They want something that’s clean. They want something that’s secure. They want community involvement. They think that’s important. And they also want a business that is going to do high quality work. And so how does the Spin Doctor fit that desire of today’s customer? And then here’s how on all these levels. And we go through that, we show them pictures of the interior, we show them how the technology has advanced to the point that the machines can text customers. There’s text to customer.
0:32:58.4 Kurt Baker: My laundry’s gonna text me now?
0:33:00.9 Cathy Neilley: Yeah. The washer’s gonna text when the washer’s…
0:33:02.1 Kurt Baker: So my shirt says, “Hey, I’m ready. Come get me.” [chuckle] I don’t want my laundry talking to me. I don’t know. That’s a little scary.
0:33:10.7 Cathy Neilley: You’re right.
0:33:10.8 Cathy Neilley: And that we’re coin-less. And we work on cards. And so there’s a safety element involved in it, that from a managerial standpoint, you can run reports on your… The tasks that have been done for the day, the revenues, the credit card reports, tasks, everything, machines that are running, not running. I was… Got a trip to… Where did we go? Puerto Rico. And I was sitting on a lawn chair and the attendant said, “I have a customer here. She started the wrong dryer and she wants a refund.” And I said, “What’s the number?” And so she read the number off of the back of the card.
0:33:56.4 Kurt Baker: Oh, wow. There you go.
0:33:57.2 Cathy Neilley: And I just plugged it into my phone and I said, “Is she happy? I gave her her money back for the dryer.” And so she said, “Oh, she’s ecstatic.”
0:34:06.2 Kurt Baker: Oh, sure. That’s yeah.
0:34:10.3 Cathy Neilley: And yes…
0:34:10.3 Kurt Baker: Yeah no, I know that… ‘Cause normally it’s a process to get a refund like that. Call this number and wait four to six weeks…
0:34:17.7 Cathy Neilley: four to six weeks, somebody will call you back. So it’s instantaneous. If I want to change the price of the machine… And this is what people want nowadays, especially if they’re not ready to leave their day job, that they can actually operate this side hustle that may become a full-time job for them or not from the safety of their home and quiet of their home and still live their life.
0:34:43.4 Kurt Baker: Okay. That’s awesome. So now you have the structure set up, you have a… Somebody helps you screen it, so you don’t have as much of a lift, so to speak, from a screening ’cause that’s… A lot of these business, we have a lot of clients that may come in with interest and the vast majority really are just kind of sniffing around a little bit. You only got a relatively small segment that are really interested. So once you get those, then you can screen them. Have any of these started now? Have some of these open now, their franchises now?
0:35:09.1 Cathy Neilley: Yeah. We do have… We literally got out of the gate in February of this year. We have three now potential investors. They’ve signed contract agreements with us and we’re in the process of now hooking them up, so to speak, with the local Electrolux dealer. I’m a brand ambassador for them, so I could pass on quite a bit of information to them that helps them. And then we’ll go visit some of the sites so they can get built up and running now, but it’s…
0:35:46.5 Kurt Baker: That’s awesome.
0:35:47.2 Cathy Neilley: I’m like, yeah. Wow.
0:35:48.1 Kurt Baker: Absolutely. Well, that’s fantastic. You’re listening to Master Your Finances and we’re gonna take another quick break.
0:35:53.9 Announcer: This is Master Your Finances with Kurt Baker, Certified Financial Planner Professional. Learn about tax efficiency, liability, owning, managing, and saving your money and more from Kurt and his experienced panel of guests. Master Your Finances is underwritten in part by Certified Wealth Management snd Investment and Rider University. Rider University offers flexible education for adult learners. For more information, it’s rider.edu/nextstep.
0:36:23.3 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m here with Cathy Neilley and we’re talking about the laundromat business. So you’ve got your successful flagship store running. You’ve set up your process. You went through screening all these companies, narrowed it down to three, came up with the one that actually is gonna help you. It sounds like they’re pretty involved as an ongoing monitoring process. They’ll also help you with the pre-screening of potential franchisees, which takes a lot of the load off of you, and also adds more expertise, which I think is kind of a win-win for both yourself, as well as the people coming in, so they know that they’re all set. And so I think one of the people that… Many people don’t understand, is that especially with franchises, they tend to have a much lower failure rate than just somebody that goes out and decides to start a laundromat.
0:37:08.7 Kurt Baker: And I think a couple of reasons, my understanding is one is the franchise stores have a system in place that they’ve already proven to be successful. They have a brand in place they’ve proven to be successful. They have a business model that they know works. And when they bring people in, they tend to be very careful about who comes in and make sure they can sustain the startup process, which people that are not entrepreneurs don’t really understand that there is a curve where you’re spending money for a while before you actually start to recover and start to get that income coming. Yes, it’s great once you get it rolling and once it’s up and running, but it’s expensive to get most of these things started. So you wanna walk us through like what happens with these franchisees that are coming in and how that process went as far as how they put the money end of it together.
0:37:57.6 Cathy Neilley: Fantastic. One of the characteristics that we spoke about earlier about an entrepreneur is that they are more on the risk taking side. Doing a franchise reduces that risk. And that’s really what you’re paying for because you know, we get the question, well, I could just open up a laundromat myself. Yes, you could, but there is that curve you… For the first six months or a year, there could be a cash crunch. You have rent to pay, you have supplies that have to go in. The machines, if they’re not leased, they have to be bought outright and you need to go to a bank, a financial institution, to get a loan.
0:38:40.8 Cathy Neilley: And so this could be for the first six months or a year a potential strain on… Not only yourself financially, but your family if you’ve left your full-time job and now there’s less money coming into the household and more going out. It could be pretty scary. And so anyone going into a business on their own or with a franchise needs to be fully capitalized. You hear the story about how if someone loses their job, they need three month’s… You might wanna think about nine or more months worth of savings to get you through those periods.
0:39:25.7 Cathy Neilley: Fortunately, the good thing about the laundromat industry is, it is recession proof. You could say that about a number of other different industries, but it’s really true because particularly during this pandemic, we did not close. I had shorter hours and people were still flooding in there. Many of them were working from home. And so they could adjust their hours to come in and work. And so it worked out for me that way. But if you are starting out a business, you have to be prepared for the adoption and the moving away from maybe some of the competitors for the word to get out. And word of mouth is what really accelerates your growth. The amount of money you’re gonna spend on marketing in that first year is a larger percentage of what you’re bringing in. But you could lower that certainly in year two and three, but you gotta get through that first year. I mean, 20% of businesses fail in the first year, 45%, I think, by year five.
0:40:36.6 Kurt Baker: Yeah. It’s a pretty high failure rate among businesses.
0:40:38.8 Cathy Neilley: Yes.
0:40:38.8 Kurt Baker: They think it’s all like, “Oh, you gonna go own your own business.” I go, it’s not really as easy as a many things people think from the outside. There’s a lot that goes on behind the scenes. And it looks great when you walk into a nice business, but that person in the back office is working pretty hard to make that look that way.
0:40:57.2 Cathy Neilley: They really are.
0:40:58.6 Kurt Baker: Sometimes, they forget about that part.
0:41:00.3 Cathy Neilley: They do. And we have a number of relationships with three or four different financial institutions. All of them specialize in franchising. And they go around the country at many of these franchise expos and explain what’s needed to purchase a laundromat or. And what the financials are, what you need and so that part, we go over at a high level, but these experts that we get them in contact with can really go over their financials and tell them what’s lacking, what isn’t and whether or not they’re qualified to move forward. And we provide that at… They don’t even have to sign up. We want them to be qualified and prepared to do this business. So we just give them the context so they can talk to all these people.
0:41:53.6 Kurt Baker: Right. So you have your… The person that screens them, right?
0:41:58.0 Cathy Neilley: Mm-hmm.
0:41:58.0 Kurt Baker: That bring them in.
0:41:58.7 Cathy Neilley: Your sales broker.
0:42:00.6 Kurt Baker: Your sales broker brings them in. So they’re doing some pre-screening on the financials as well, right?
0:42:04.4 Cathy Neilley: Yes.
0:42:04.7 Kurt Baker: And then we have…
0:42:04.9 Cathy Neilley: But I hate to say, but people lie.
0:42:07.8 Kurt Baker: Oh, yes. I know. I’ve watch the house.
0:42:09.8 Cathy Neilley: Yes.
0:42:10.2 Kurt Baker: Everybody lies.
0:42:10.9 Cathy Neilley: Everybody lies. Yes. And you don’t wanna say… You don’t wanna tell anyone you do.
0:42:16.3 Kurt Baker: Oh, many people hold things very close to the vest and like, oh yeah, I have that amount of money. And they turn out it’s their third cousin twice removed might give them money if they’re lucky. [laughter] Kind of.
0:42:25.1 Cathy Neilley: That’s a good one. That’s a really good one.
0:42:27.7 Kurt Baker: So, I mean, they’re thinking where their money’s coming from and they don’t necessarily have it in their bank at the moment. They’re thinking, “Well, how am I gonna raise this money?” And I’m sure there’s a lot of entrepreneurs to think that way. They’re like, “Okay.” And that’s not nothing wrong with that, getting the family involved, but you have to really vet this out and make sure everybody’s on board with what’s actually happening and who’s gonna be on the hook, so to speak.
0:42:46.3 Cathy Neilley: So true.
0:42:46.8 Kurt Baker: So then you get the actual financial institution. And that’s another thing you brought up that’s very important, is that many people don’t understand, there’s different types of lenders for different types of specialties. And they understand the business and a lending partner really is a partner because they’re really looking out for your best interest because they don’t want you to default on a loan either.
0:43:04.0 Cathy Neilley: That’s correct.
0:43:04.5 Kurt Baker: Or the lease. So when they’re telling you things you may not want to hear, that’s because they have experience in this area and understand what you need to do to be able to repay either the lease or the loan. So don’t take that as them being mean to you or whatever, I mean, whatever you wanna say, they’re really just trying to make sure that you’ve got everything lined up the way you need to for a very, very high success rate. ‘Cause they don’t want a default rate.
0:43:31.1 Cathy Neilley: No.
0:43:31.2 Kurt Baker: They would like it to be zero, but they’d like to keep it in that 1, 2, 3% range. They’re realistic, too. Things happen to people, but they don’t want to be any higher that, so once they set that up, so then what happens next? Now they’ve got the vetting, right? You’ve gone to the bank. You’ve got the franchise thing done and now they’re gonna start the process, right?
0:43:48.9 Cathy Neilley: They would start the process.
0:43:49.9 Kurt Baker: Let’s say you have the financing in place.
0:43:52.3 Cathy Neilley: Yes.
0:43:52.6 Kurt Baker: You’re now ready. What’s gonna happen now?
0:43:55.3 Cathy Neilley: Now, they’re going to get a full disclosure document, the legal document that they can go over with their own lawyer and we do a follow up call. So if they have any questions for us or their personal lawyer has posed any questions for us, and then we have what’s called a discovery day when they can physically come to the flagship store and walk around the… I’ll show them how the machine works, how the operations set up and show them a sample of the operating manual, which we provide to them.
0:44:37.9 Cathy Neilley: They will also get a sample of the marketing templates because that’s included as well. All the marketing campaigns that have been done over and posted for the past 10 years, they’ll have a catalog and they can pick campaigns that they think might work for them. And then we have a little lunch, a little breakfast and everything, and we talk about timelines for finding the right spot for them if they haven’t found the right spot. And our advice is to find something that’s 45 minutes or an hour from where they live or work, that way, certainly during the build out process and the installation, they really should be there or have someone…
0:45:26.5 Kurt Baker: And that’s something I wanted to ask about. So the location itself, so do they help with that? Is Electrolux… Who helps? Because I know it depends on, you wanna put it in the right place, right?
0:45:35.6 Cathy Neilley: Yes. Yes.
0:45:36.0 Kurt Baker: Because I know you can put it on the wrong corner if you can’t get in and out. There’s all these little things that people that have never done commercial before, especially retail…
0:45:43.5 Cathy Neilley: That’s correct.
0:45:43.8 Kurt Baker: I mean, one corner is not the same as the other corner…
0:45:45.8 Cathy Neilley: Yes.
0:45:46.6 Kurt Baker: As far as things go. People don’t realize that.
0:45:48.4 Cathy Neilley: Well said.
0:45:48.6 Kurt Baker: Until they’re trying to get in and out of a location. Like, I don’t really like that place. I don’t wanna go there anymore. So you have to make it really easy and you have to put it in a place where you’re gonna have maybe apartment buildings or your gym or whatever the case might be. So do you help with that process too?
0:46:03.0 Cathy Neilley: Yes.
0:46:03.0 Kurt Baker: Or does Electrolux help with that?
0:46:04.4 Cathy Neilley: Yes.
0:46:04.5 Kurt Baker: As far as…
0:46:04.7 Cathy Neilley: Yes. We’re all involved in it. So initially, the client, potential client will take the first step of drawing that circle, providing three to five zip codes to me.
0:46:16.3 Kurt Baker: Okay.
0:46:16.7 Cathy Neilley: I will actually screen them for population density, number of schools, apartments to home ownership.
0:46:25.0 Kurt Baker: Okay.
0:46:25.4 Cathy Neilley: Per capita income. I know I’m forgetting some other things. So I can throw that all in the mix. I look at some data online or through different systems. And then we have… We talk to them on that follow up call about, well, this area’s looking pretty good. This pretty looking good, are you working with a commercial real estate person? And they’ll say yes or no. And then we’ll say, “Well, look, what I’m going to do is I’m going to find a few in that area, I’d like you to work with them, you need something that’s at least 2,500 square feet because the machines take up a little bit too much room,” and work with them. And they’ll find a few slots that might be good. Then step two is now we call the regional Electrolux dealer.
0:47:10.6 Kurt Baker: Okay. Okay.
0:47:10.8 Cathy Neilley: ‘Cause they know the area pretty well and the competition as well, and they will go out and then actually look at the space and they can advise you, “Hey, you know like $30 a square foot is maybe a little too high.”
0:47:24.0 Kurt Baker: So make sure the numbers work.
0:47:25.4 Cathy Neilley: Right. And the venting is okay, there’s no load bearing walls that’s gonna prevent us from getting in there or doing the floors, yada, yada, yada. And then we’ll pop in again if there’s lease negotiation, something like that and work with them to see if we can find a contractor if they don’t have one to do some of the work.
0:47:45.4 Kurt Baker: And then get it built out. They’re ready to go.
0:47:46.9 Cathy Neilley: Yes.
0:47:47.3 Kurt Baker: So you must have a website, I’m assuming. So what’s… Where’s your website. Just make sure people can reach out if they want to reach out.
0:47:54.8 Cathy Neilley: It’s www.spindoctorfranchise.com, or you can Google us and you look under small business and we have lots of nice information there.
0:48:04.5 Kurt Baker: That’s awesome. Cathy, once again, thank you for coming on and talking luxury laundromats, which I never would’ve put them together, but that is really awesome. Making it a much better experience for everybody. You’re listening to Master Your Finances. Have a great day.
0:48:19.0 Announcer: That’s all for today’s episode of Master Your Finances. Missed Kurt Baker’s biggest money managing tip or even a full episode, hit on over to masteryourfinances.us or 1077thebronc.com/masteryourfinances. Look for Master Your Finances on Anchor, Spotify, or anywhere you get your podcasts. We’ll see you next time, only on 107.7 The Bronc.
