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Workers today want careers that fit their values, are enjoyable, and contribute to society. Here’s what business leaders can do to deliver on this idea of “good work.” For further insights, read “Good Work.”
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Good Work
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In the last few years, business leaders have turned their search for creative, innovative talent into something of an arms race. They understand the competitive advantage of being a highly rated place to work, and they are striving to show just how much they value their employees. The recreation rooms and wellness centers springing up at many companies have helped in recruiting, but they can also be seen as superficial. To attract the best and brightest people, young and old, companies must take a stand on profound questions being raised today about the value of human activity in the workplace. These questions concern not just Instagrammable workplaces and perks; they concern the context and the content of organizational activity. People want to do “good work,” in two ways: They want intrinsically rewarding experiences, and they also want to make a contribution that fits with their values.
Part of this new focus on the nature of work has to do with technology. Robots and artificial intelligence (AI) are threatening to replace some human tasks, and it isn’t yet clear what jobs will be left or how jobs will be reconfigured. But what humans will most likely focus on are the more participative, collaborative, and transparent aspects of business. As companies seek their employees’ commitment, not just their clocked-in time, people will naturally think less transactionally and more strategically about their jobs; the emphasis will be on the roles people play in how tasks get done, or the input, and the value of that work, or the output.
Typically, institutions lag behind when technological revolutions occur. It took almost a century to relieve the appalling working conditions that were initiated during the Industrial Revolution. Laws designed to regulate work in the age of AI are not yet in place. We believe companies can and should act now to find their own 21st-century definition of good work and develop strategies to deliver it, not only for the sake of employees but because it will keep them competitive (pdf).
What is good work (pdf) in today’s world? We believe it should, at the very least, involve a decent workplace context: fair pay, tolerable levels of change, autonomy and control over one’s work, and a chance for fulfillment. Employees who give customers what they want because they are inspired by their job will create a powerful feedback loop that increases business. For some, good work might include a satisfying work–life balance and opportunities to travel. Good work also encompasses the nature of the organization: Is it inclusive, diverse, and respectful? Do people’s values align with those of the organization? Do employees approve of the goals of the enterprise and see how their efforts contribute? There is typically an element of meaningful purpose: Is the organization, in the view of employees, helping to improve the world around it and make life better?
Not every company can save the world. Many areas of work, such as consumer goods and services, can present ethical challenges for people for a variety of reasons. But how employees experience their day-to-day job, in any industry, is something their bosses can and do influence.
How employees experience their day-to-day job, in any industry, is something their bosses can influence.
If you assume, as we do, that providing a good work experience is truly a significant source of competitive advantage (pdf) for business and government because it leads to better performance and better outcomes — maybe the best source of advantage in a world of complex human–machine interaction — then it is clear that most enterprises need to put considerably more effort into it.
Dissatisfied Rank and File
Large numbers of people are not satisfied with the amount they are working — they feel it’s either too little or too much — and the effect their workload has on their life. PwC’s study “Preparing for Tomorrow’s Workforce, Today” shows that two-thirds of companies are failing to make workloads manageable, and 80 percent don’t prioritize programs to help workers’ well-being or mental health, even though they realize these issues are important. The World Health Organization describes stress as the “health epidemic of the 21st century.”
Myriad factors contribute to employee dissatisfaction. The development of AI makes certain changes inevitable. When jobs are broken down into tasks and some of those tasks become automated, companies need to restructure and revalue people’s contributions. In more and more countries, a job is no longer expected to last a lifetime or lead to a livable pension. People starting employment today will likely retire much later than their parents and work on a much less secure basis, changing jobs often over their working life. Benefits packages and pay policies, however, are still mired in the old “work nine to five, retire at 65” world. The gig economy, the threat of robots, and the overload of 24/7 connectivity are all taking a toll.
Our most recent research explores the factors that can make a difference in creating good work. Our global survey of more than 1,200 business and human resources (HR) leaders in 10 industry sectors in 79 countries clearly shows just how important the human side of work is to people. Working with Lynda Gratton, professor of management practice at the London Business School, we identified 45 organizational capabilities — defined as the ability and the capacity to perform specific tasks that benefit organizations — that are important in today’s working world. We then asked survey respondents which of these capabilities were most vital for the future of their organization. The five selected most often were all related to improving the nature of work: building trust, valuing human skills, supporting mental and physical well-being, managing workloads, and having work spaces that encourage collaboration and creativity.
The survey also asked respondents if their business was taking action to develop these capabilities and others they cited as important. By analyzing these two sets of answers, we identified areas that respondents ranked as highly important for the future but in which relatively low levels of implementation had taken place. This result suggested that it’s a struggle for companies to develop capabilities that engender a good work experience. The results also identified one of the reasons: Organizations are not using technology to help them deliver better on-the-job experiences. Five of these 10 underdeveloped capabilities that put companies at risk — that is, important things that companies are not doing — involve the use of data analytics to make jobs better (see “Making ‘Good Work’ Work Better”).
Making “Good Work” Work Better
The top 10 organizational capabilities companies should be developing but aren’t.
1. Using big data and advanced analytics in workforce decision making
2. Using data to monitor the skills gap in the workforce
3. Using data analytics to eliminate bias from hiring and rewards
4. Ensuring HR professionals are trained to use analytics for workforce decision making, predicting and monitoring the skills gap, and eliminating bias from hiring and rewards (capabilities 1–3)
5. Developing policies and practices to encourage flexible working
6. Managing workloads to ensure employees don’t burn out and do take vacations
7. Using predictive analytics for all of the above
8. Developing career path models that mirror how people work today, not simply up-or-out paths
9. Creating work paths that nurture adaptability and agility by promoting rotations and skills development
10. Designing work spaces that promote well-being and accommodate a variety of working styles
It’s as if the threat of what technology can do to the workforce is scaring people from using it, even in positive ways. Risk number four in “Making ‘Good Work’ Work Better” highlights the deficit of analytical skills in HR. Organizations understand that workloads are onerous, but they are not using analytics to plan schedules, create better work environments, or prepare for job skills gaps. Career paths are unclear, but training and development are not mapped against what future jobs might look like. There are concerns that bias is limiting diversity in the working world, but companies are not using technology to help here, either.
The remaining at-risk actions on the list involve the work experience itself. Providing flexibility is not yet a reality, even though research shows (pdf) how much it is valued and also shows how much different segments of the population, including older workers and parents, would value a chance to reenter the workplace on their own terms. And although wellness is a buzzword, companies say they are slow to reimagine workplaces in ways that foster well-being.
The Human Factors
At the heart of all the coming changes in the workplace are the people who will make them happen. People’s working life is their life story: They spend more hours working than doing almost anything else. And working lives are getting longer (pdf): Those who live to 60 years of age have around 93,600 productive hours; those who live to 100 have 218,400. The businesses that succeed will be the ones that create the kinds of narratives that people buy into and then their leaders support with action. These businesses will have to be flexible and adaptable. There is no one-size-fits-all approach; the employee journeys of a 25-year-old recent college graduate, a sales assistant, and a midcareer manager are not the same.
Analyzing the gaps between what business leaders know is important and where they are actually taking action, we have identified five specific areas in which organizations can do something now to lessen the stress and anxiety their employees are experiencing. They need to tackle burnout and boost vitality, build social resilience, encourage agility and adaptability, support “intrapreneurship,” and provide autonomy. We’ll take each in turn and describe practical steps to address these issues, with examples of what some companies are already doing. Our message here is to leadership: Unless senior managers actively embrace this agenda and empower HR to take these actions (see “A Crucial Role for Human Resources”), it will not happen. And unless this agenda’s implementation is measured and linked to management rewards, employees won’t believe it really matters to their boss.
1. Tackle burnout. If people are to thrive and maintain their well-being over longer working lives, then organizations must ensure that their working practices and processes don’t wear employees out. Careers today are marathons, not sprints. But long working hours and being available 24/7 are still seen as proxies for success. Further, it could be that people enjoy their work but simply don’t know how to slow down or are not encouraged to do so. Research has found that 20 percent of employees with the highest engagement levels also report burnout. These “engaged–exhausted” employees have mixed feelings about work: They report high levels of passion and stress concurrently. Companies that don’t recognize the symptoms may lose some of their most driven and hardworking people when they burn out.
Proactively managing workloads and encouraging recovery time — even short breaks — during the day is a good start to boost vitality, but this is easier said than done. The engaged–exhausted are hard to shut down. In 2014, crowdfunding platform Kickstarter started offering unlimited vacation time, but retracted the policy the following year because people simply weren’t using it. The social media management platform Buffer took a different route in 2015: It introduced financial incentives to encourage employees to take more leave. When that didn’t work, it implemented a mandatory vacation policy in 2016. Current data estimates that 56 percent of Buffer employees will have taken 15 days of vacation (or more) by the end of 2018, up from 43 percent. It’s too early to know whether the Buffer employees who took the time off will be more productive, but research indicates that the company could expect an uptick. Rested employees perform better.
Having role models also helps. In 2015, Barclays began to offer a range of flexible initiatives to support people at various stages of their lives, such as those pursuing further studies, parenting, or caring for other family members. The possibilities for workers include working from home, changing or condensing working hours, taking career breaks, and sharing jobs. By telling the stories of people who took up these options, Barclays encouraged more than 3,000 middle and senior managers to become “dynamic worker” champions. In 2017, 57 percent of employees identified themselves as dynamic workers, and their engagement scores, as measured by Barclays, outpaced those of others, with 5 percent higher scores in what the company termed “sustainable engagement.”
People naturally function in what are known as ultradian cycles, periods of high-frequency brain activity (about 90 minutes) followed by lower-frequency brain activity (about 20 minutes). Taking a recharging break every 90 minutes is especially important for workers using computer screens, as they make the brain overly active. There is some initial research that shows that trying to push through the rest phase of the ultradian rhythm triggers the body’s fight-or-flight response. That’s bad news, because it can cause the parts of the brain that handle logic to become less active.
Technology can help here: Some apps and software programs remind and encourage people to take physical and mental breaks regularly throughout the day. PwC Netherlands has made one such tool available to its staff for years. And work spaces can also be designed to reflect the natural rhythm of collaboration. Rows of cubicles are being replaced by communal tables and comfy corners so people can come together as a group and then break apart. Those table tennis and foosball tables, even if they’re not used regularly, at least signal that employers believe downtime is important. The key is to accommodate your employees with a working environment they want, while also recognizing that forcing spaces on people may not always work. A bad workday in an open-plan office isn’t for everyone.
2. Build social resilience. People may think of loneliness and its effect on their productivity as something that happens outside work, within their own personal networks, but that’s not the case. Despite this being the age of social platforms, rates of loneliness in the U.S. have doubled since the 1980s, and businesses are suffering from absenteeism due to depression. A long-running Harvard University study has found that close social relationships are more important than money in promoting happiness. It’s these close ties that protect people from life’s setbacks and help delay mental and physical decline. Social ties are better predictors of long and happy lives than are social class, IQ, or even genes. But the 24/7 work culture means that fewer people are finding friendships outside the workplace, loosening these important bonds. The number of people who report having a close confidant in their lives has been declining over the past few decades.
Organizations can help prevent this isolation by ensuring that their employees can not only disconnect from work more easily but also have the opportunity to create connections on the job. Managers play an integral part as role models by showing their commitment to avoiding excessive workloads and minimizing unpredictable hours. They can also promote more nurturing work networks. The tools they can use to help build networks are already present in common company software, such as Yammer and Slack. Of course, employees may need encouragement and a reason to use these systems. Tata Consultancy Services has developed its own social network called Knome — a slang term related to the interpretation of DNA — that connects 380,000 workers around the world in one online forum similar to Facebook, and is employed by close to 80 percent of the staff. They use it to exchange both private and work-related information, upload blog posts, and create communities with colleagues who share interests. Employees have created more than 9,500 of these online communities where they exchange ideas and collaborate.
3. Encourage adaptability and agility. In the future, when people regularly live to 100, retraining will become the norm as jobs and skills change. The traditional, just-in-case learning models companies use now will not be enough to keep up with rapid technological change. And the stages when training is needed will be different for a recent graduate, for example, than for a machine tool operator whose job is outsourced to a robot. Companies will need to plan for this type of up-skilling. In Singapore, the government is leading the way by giving grants to workers to help them retrain throughout their working lives, not simply to help them gain new skills but also to help them adjust their expectations of what a working life means.
Data analytics can help predict what skills companies will need, but getting employees to take up training will be a challenge. The Australian retail bank Westpac recently created a social learning platform called Learning Bank for its 40,000 employees that tags content to employees’ profiles; workers select what they want to learn. It’s an informal approach that empowers employees to learn what they choose, when and where they want to learn it. In 2017, Westpac added TechU to encourage people to acquire skills in future technology, according to Dave Curran, bank CIO at the time of the launch. “In my mind, nirvana is where people are self-educating to where their interest is, somewhat guided by the organization and people like me, towards where the demand will be,” he said.
Personalization of experiences helps improve adaptability. At Heineken, which employs more than 80,000 people worldwide, the company’s career track tool helps people move laterally within the organization by listing what kinds of opportunities are available that fit with their personal aspirations. Employees can choose to receive information about the experience and capabilities required for the job they want and how to prepare: In effect, it lets them tailor their development plan to the work they want to do. Fastweb, an Italian telecommunications company, recently launched a rotational development program to increase internal mobility as part of its talent attraction and retention strategy.
4. Support “intrapreneurship.” More young people today want to run their own company than ever before, and older people are also switching to entrepreneurialism. Organizations that fail to create opportunities for “intrapreneurship,” that is, encouraging employees to develop new enterprises and commercially viable ideas within the company, risk losing their own workers’ innovative ideas. The key is to create the kind of environment within a company where innovation is encouraged and people can take risks safely. These psychologically safe settings produce fewer errors in day-to-day work even as they create space for experimentation. For intrapreneurship to work in practice, people need time; creativity is often a function of the quantity of ideas produced. A 2015 study found that the first 20 ideas people generate are often significantly less original than their next 15.
There are different ways to build a supportive, intrapreneurial environment. Rite-Solutions, a software developer, created the Mutual Fun platform five years ago, which works as a virtual stock market for ideas by combining social networking and gamification strategies. An employee interacts with the market by first creating a personalized profile, which allows him or her to find others with similar interests or complementary strengths to work with on innovative projects. They can then invest their intellectual capital (in the form of virtual US$10,000) into the “idea stocks” of the colleagues they would support. A decision algorithm derives each idea’s stock values based on the activity and investments in it, while also calculating a leaderboard of players. Successful Mutual Fun initiatives lead to the formation of volunteer teams that could receive real investment.
Not all entrepreneurial ideas work out, so rewarding failures plays a role in encouraging risk taking. In 2006, Tata Group started its Innovista Awards to recognize innovation, even if the attempts failed, with the goal of fostering what it called “appropriate risk taking.” The uptake wasn’t great at first, but participation grew. In 2018, the company recognized 23 innovators. Normalizing, even celebrating failure can help individuals and organizations learn more about the products they are creating and the markets they serve.
Some organizations hold periodic hackathons in which employees present ideas and compete to tackle specific challenges aligned with the company’s broader strategy. Participants can earn prizes and recognition. Unilever has a startup hub to keep bright ideas generated by its employees in-house. It’s an insurance policy, aimed at validating intrapreneurship. Companies want to replicate the success of lightbulb moments such as 3M’s Post-it Note, but they should not forget that it took a decade for Post-its to become commercially successful. (The project failed three times before finally taking off.)
5. Provide autonomy. Faced with a transforming working environment, employees value choices. People regularly tell survey takers that they would give up income for greater control over how they work and for a more meaningful job. Research on powerlessness by neuroscientists shows how it can result in a lack of well-being, thwart motivation, and even damage cognition. A move toward a more autonomous and empowered work culture can help employees feel more satisfied and lead to stronger job performance and greater commitment to the organization. To paraphrase Dan Cable’s thesis in Alive at Work, employers have to proactively find ways to help people release their inner explorer.
Spotify, for example, groups its more than 2,000 employees into agile teams, called squads, that are self-organizing, cross-functional, and colocated. There is no single appointed leader of a squad. The mantra is that “alignment enables autonomy — the greater the alignment, the more autonomy you can grant.” A leader’s job is to figure out the right problem and communicate it, so squads can collaborate to find the best solution.
Gaming software company Valve, famous for its flat organizational structure in which no one has a boss, gives employees desks on wheels and encourages them to push the desks around the building to join projects that seem interesting. Valve holds them accountable for the results. Employees are given clear expectations when they join a new project team, and they must complete 360-degree evaluations when projects end to measure individual contributions. In an industry in which innovation is the lifeblood, Valve is thriving, with 360 employees and a 22-year record.
What Should Business Leaders Do?
Headlines that focus on the war for talent are elevating to the boardroom concerns that have traditionally been the domain of HR, such as skills and productivity. In PwC’s 21st CEO Survey, a 2018 look at chief executives around the world, the lack of availability of key skills was number five on the list of top threats to economic success. In 2019’s survey, it has risen to number three. HR professionals will be the guardians of good work experiences on a day-to-day basis, but it will be top leadership that must guide the overall strategy.
A high-quality workplace experience for employees is critical to developing a learning culture — and thus critical to the continuous improvement of the organization’s skills and capabilities. People don’t unleash their productivity if they’re having a bad time at work. Effective business leaders must demonstrate that they recognize the value of the people experience in their company and must work to improve it. They need to craft a narrative about what the future of work means for their organization and what actions they are taking now to deliver on that future. Leaders who understand this will have a competitive advantage. As the examples here show, some companies are already taking the initiative, rather than simply reacting.
Leaders can be the catalyst for change if they make it a priority. They can bring together communities of innovators within their enterprises; they can empower people to deliver in the ways that best suit them by making wellness and flexible working a differentiating source of energy, engagement, and loyalty. And they can find ways to help employees see into the future of their longer working lives. Data analytics are tools that can offer insight into what work will look like, not ends in themselves. They can help judge what skills people will need and determine how to develop the capabilities that sustain employability.
Good work should not be hard to find or hard to describe. To keep their workers’ attention and harness their potential, companies will have to encourage and develop the attributes and skills that make them innately human. If they fail to do that, their greatest resource, people, will simply walk away.
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How to Start a Coin-Operated Laundry
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Like things neat and clean? Starting a coin-operated laundry might be your ticket to entrepreneurial success.
15+ min read
Opinions expressed by Entrepreneur contributors are their own.
Editor’s note: This article was originally published on February 1, 2008, and has been updated. It was excerpted from our Coin-Operated Laundry start-up guide, available from Entrepreneur Bookstore.
The coin-operated laundry industry has undergone a revolution. No longer dingy, unsafe, boring places that customers must endure on a weekly basis, laundromats are becoming fun and attractive multiservice centers that customers may even enjoy visiting. “The industry is now getting a facelift,” said Brian Wallace, president and CEO of the Coin Laundry Association, a national association for self-service laundry owners. “There’s a trend toward coin laundries being more comfortable for the customer.”
Newer laundries have snack bars, a place to leave off and pick up dry cleaning and video games. Some of them don’t even use coins. Instead, customers use swipe cards that subtract the cost of the wash or dry, much like a phone card or debit card. Many laundry owners also employ attendants to keep an eye on the store and help customers use the equipment.
Laundromat Renaissance
The coin-operated laundry industry has changed in response to several trends. The first is that, for most of us, meeting the demands of work and our personal lives leads to a time crunch — there just aren’t enough hours in the day to accomplish everything we would like to. Laundry owners are capitalizing on this reality by offering their customers time-saving convenience in the form of wash-and-fold (drop-off service) and dry-cleaning service. Some are even picking up laundry from customers’ homes and delivering it back to them clean and folded.
In addition, owners have realized that they can maximize their profits by providing customers with access to multiple services. Since they’re paying a set amount of rent on their commercial space, they might as well use that space to its fullest potential. Many owners around the country are serving food, renting mailboxes and offering free internet access. Because newer laundries are bigger than in the past — often 3,000 or 4,000 square feet — overhead is higher, and owners are looking for ways to cover the cost. These additional services demand little increase in overhead because the rent is already paid for. Customers benefit by being able to use several services all in one convenient location.
Cindy Patel, owner of Mountain Wash Laundry in Shelby, North Carolina, at time of interviewing, said that she planned opening a snack bar and a minimart in her laundry. “I have a big space, 6,000 square feet,” she said, “and this will help pay for it.”
Paul Partyka, who edited American Coin-Op, a magazine devoted to self-service laundries, said Patel’s approach is the norm. “Trying to generate additional revenue per square foot has always been an issue,” he said. “But it’s even more so now with tighter competition and utility bills growing. Everybody wants to squeeze as much money as possible out of their space. Looking for an extra service that will work is always on their mind.”
Another trend laundry owners have recognized is that customers prefer to visit laundromats with a more pleasant atmosphere. Many laundry owners are building kids’ centers, holding music concerts, giving away coffee and hiring attendants who are friendly and helpful. “I don’t think we’ll ever cross that threshold into making laundry fun,” Wallace said, “but we’re making it more comfortable.”
Tom Leavitt, owner of Darcies Laundry in the Seattle area at time of interviewing, opened three new stores, all of them near older, smaller laundries, most of which have since closed. Darcies offers customers a better deal: bigger stores with play areas for children and attendants on duty at all times. “Our stores are very convenient,” Leavitt said. “They’re clean, they have a friendly environment, and they have a lot of machines, so you can get in and out of there as fast as possible.”
The Good News
As the population of the United States grows, the number of renters — your main market — is likely to grow, too. Other social phenomena, like the prevalence of two-income families, suggest that convenient services such as wash-and-fold will continue to grow in popularity as working parents have less time to attend to household chores like laundry.
According to a survey from the Coin Laundry Association, more than half of coin laundries offer wash-and-fold. “It’s by far the number-one extra service for laundries,” said Partyka. “It’s doing well.” Partyka also notes that even people with washers and dryers at home are using self-service laundries for the sake of convenience. With the regular capacity machines used in homes, it can take quite a lot of time to do load after load — and that’s where laundromats come in. “They just run over to the coin laundry, use a couple of the large machines and knock it off,” he said. In other words, although the majority of laundromat customers are low- to middle-income renters, some laundries are tapping into higher-income markets by offering convenience: wash-and-fold service and large machines.
In addition, office dress codes are growing increasingly less formal. And as more people wear casual clothing (which doesn’t require dry cleaning) to work and leave the nicer duds for special occasions, you may find that consumers will be making more trips to the laundromat.
The Bad News
While the trends we’ve mentioned are favorable for entrepreneurs entering the laundry business, they don’t suggest that business is booming. The industry is what experts describe as a “mature market.” Save for areas that are seeing high population growth, pretty much every neighborhood that needs a laundry has one — or two or three — that are competing vigorously. In some areas of the country, there are too many laundromats already.
However, there is room for new laundry owners. Many get into the business by purchasing an existing laundry and renovating it. Some also find that they can build a new laundry in an area with competing laundries and thrive by offering a bigger store, more services and better customer relations. Another way to get into the business is to locate your store where there is the best potential need for a new laundry: in an area that’s experiencing population growth.
As you consider getting into the laundry business, keep the words “mature market” in mind. Don’t buy a store just because it’s for sale or build a store just because you have a great idea for a new gimmick. You’ll need to be very careful to make sure there’s enough of a customer base to make your business thrive. You may be able to draw a little extra business from people who like using your store better because of its cleanliness or from people who use your wash-and-fold service, but the core of your business will be people who just want to get their laundry done quickly and conveniently. If there are already enough laundromats in the neighborhood to serve their needs, they’re not as likely to patronize your store.
Finally, you also need to consider that getting into the laundry business requires a large initial investment. The average-size laundromat could cost you in the neighborhood of $200,000 to $500,000 — whether you choose to purchase an existing laundry or build one in a retail space.
The Laundromat Life
If you’re planning on operating just one or two stores, you’ll be in good company. Three-quarters of laundry owners own only one store, and very few have more than two. While there are no national laundry chains, a few local chains are starting to grow in various parts of the country. These chains are still quite localized, though, and only a few consist of more than a few dozen.
For a little more than half of laundry owners, operating the store(s) is their full-time job. Others take the moonlighting approach-they manage other businesses or work a day job. But more laundry owners are starting to own larger stores and more than one store. These people are able to survive on the income larger stores or multiple stores generate.
The amount of money you can make from a laundry varies tremendously. According to the Coin Laundry Association’s Brian Wallace, the annual gross income from one store can range from $30,000 to $1 million. The expenses incurred while running a store range between 65 and 115 percent of the gross income. That means that for a store grossing $30,000 per year, at best it nets $10,500 and at worst it loses $4,500. For a store grossing $1 million per year, the profit could be as high as $350,000, or there could be a loss of up to $150,000, depending on expenses.
Wallace says these profit margins have less to do with the size of the store than with its owner. An owner who runs his or her store well-who keeps it clean, repairs its equipment quickly, uses energy-efficient systems and offers good customer service-will see profit margins of about 35 percent.
The steady income that a laundry generates is a plus for many people. If you’re looking for a business that will keep the cash flowing no matter what the rest of the economy is doing, you’ve found it in laundries. Clean clothes are a necessity, not a luxury, so people are going to use laundromats no matter how the stock market is performing. The business is also fairly steady month in, month out. So unless you draw on vacationers’ dollars in a place with seasonal tourism, you’ll find that you can count on a fairly steady income throughout the year.
No Experience Necessary
None of the entrepreneurs interviewed for the Coin-Operated Laundry start-up guide had experience in the laundry business when they first started out. One had a resume that included milking cows, another was a contractor, yet another ran a rental equipment business. Most just decided that starting a laundry was a good business opportunity. However, they all recommend that new entrepreneurs research the business by talking to laundry owners, joining associations and reading the trade literature.
Tom Leavitt put some time into planning the three laundries he opened in Seattle. “We traveled around the country, looked at a lot of other operations, and designed our prototype,” he says. “We took care to figure out what would work the best.” He and his partner also attended a Coin Laundry Association convention in Chicago and took a tour of laundries in the area.
Collette Clarkson knew nothing about the business before she started a laundromat in Evans, Colorado, with Kim Clarkson, her business partner. But the two got to work when Collette’s uncle, who was building a strip mall, asked if she’d be interested in operating a laundromat. “We did a lot of research,” Collette says. They spoke to a number of laundry owners about the business and read as many issues of trade magazines as they could find.
While no particular experience is necessary, a business background is always important. In addition, a background in machine repair or a knack for fixing machines helps. Owners who have experience with laundry equipment are able to cut down on the cost of repairs. But others have found that they can learn about the machines and make some repairs themselves, or hire a repairperson and avoid the headache altogether. The self-service laundry business is an open club. With enough enthusiasm, interest and business-savvy, you can join the club and succeed in the industry.
The Laundromat Personality
You may think that the laundry business is about clothes, but what it’s really about is people. It’s a service business, and like any service business, you need to treat your customers well if you want them to return to your store.
If you’re friendly, your customers will want to use your store. By taking the time to talk to them, you will also be able to learn about their laundry needs and their preferences for services. Ultimately, this kind of information will help you improve the quality of your business so that you can attract even more customers.
Even if you decide to hire employees and leave the customer relations to them, you still need good people skills to hire and supervise employees. The more closely you work with them and the better they know and like you, the better job they’ll do.
If you have an unattended laundry that you visit twice a day to clean and collect quarters, you still need to greet your customers with a smile on your face and an attitude that’s ready to help. So if small talk with strangers leaves you cold, and you can’t stand the thought of answering customers’ questions (often the same ones over and over), the laundry business may not be the one for you.
However, if you think you’ll like meeting new people, helping them work the machines, and listening to them talk while they wait for the dryers to finish, you’ll find this business rewarding. “Interacting with customers-that’s the best part,” says Collette Clarkson. “I can’t even imagine how many regulars we have who we know by name.”
The Daily Routine
So what’s it really like to own a laundry business? Whether you do all the work yourself or hire an attendant or a janitor, there are tasks you will need to take care of on a daily basis. You will need to open and close your store promptly each day, clean it, collect money, and fill vending and change machines. You will also need to keep track of which machines are being used and how often.
Those laundry owners who have employees will have other duties, too. They’ll be hiring and supervising those employees and overseeing additional services such as wash-and-fold.
The Hours You Shall Keep
Laundries are generally open between 6 a.m. and 10 p.m. seven days per week. Because weekends are usually the busiest days for laundries, you should definitely keep your doors open on Saturdays and Sundays. In some instances, you may want to adopt alternate hours, especially if the market you serve or the location of your store lends itself to having open doors at other times of the day.
Brian De Coster, who owns several unattended laundries in and around Iowa City, Iowa, keeps his stores open 24 hours per day. Three of his four laundromats are in a college town, and students are notorious for keeping odd hours. “You’ve got the machines; you’ve already paid the money for the machines and the rent and everything else,” he reasons. Because his laundry is unattended, he doesn’t have to pay employees to stay up all night with his store.
Tim O’Connell, who owns 24 Colonial Laundromat stores in the Syracuse, New York, area, keeps most of his stores open 24 hours as well. “The biggest problem we had was turning customers away,” he says. “Customers would come in late and employees would want to be leaving, so it was easier just to stay open.”
Other laundry owners we interviewed base their hours on surrounding businesses. Dave and Kris Anderson, who own an unattended laundry in New Glarus, Wisconsin, keep their store open daily from 5:30 a.m. to 10:30 p.m. They chose those hours because they’re the same hours the nearby gas station is open. “We feel it’s working out perfectly,” Dave says. “If we had kept it open later, we might have had more vandalism.”
Your first duty of the day is to open your store, and you must be on time because your customers may plan their day around getting their laundry done at a certain time. You can avoid having to be at your store early in the morning and late at night by installing an automatic lock system on a timer. A typical system like this will cost you between $1,000 and $1,500.
At night, of course, you must close down and lock up. If you want all the customers to be gone by 10 p.m., you should consider locking the door at 8:30 p.m., leaving enough time for the last loads of laundry to be finished. You can either let customers out yourself or install a lock system that allows them to leave but prevents others from coming inside.
Scrub-a-Dub-Dub
The first order of business for you or an employee you hire is to clean your store thoroughly, at least once a day. This will take about two to three hours. You or your employee will need to do the following:
- Mop the floors
- Wipe down the machines
- Clean the soap dispensers in your front-load washers
- Wash off the folding tables
- Clean the bathroom
- Empty the trash
- Wash the windows
- Clean the vending machines, change machines and video game screens
The best time to clean is after customers have gone-that way you or your employees can clean more efficiently. You’ll also avoid the risk of customers slipping on wet floors or tripping over cleaning equipment. If you have a large or busy store, however, you may find that it requires cleaning twice a day. You can wipe down the machines and folding tables easily while customers are in the store, but save the floor for after they’ve left or for a slow period of the day.
Collecting Coins
One chore you’re not likely to delegate to an employee is collecting money from the machines. If you have a card system, your job is much easier. All you’ll have to do is empty the card machine of the bills, count them and deposit them in the bank.
But if you have a coin laundry, you’ll need to empty each machine, preferably daily. You’ll want to pull (take out the coins) from one type of machine at a time so you can determine how often your customers are using each type of machine. Put a bag in one of your laundry baskets and roll it from machine to machine, starting with the top-loaders. Count these coins and record how much money you made on this type of machine, then follow the same procedure with the front-loaders and the dryers.
For recording purposes, you should draw up a chart with seven rows, one for each day of the week, and columns for each type and size of equipment: top-loaders, front-loaders, dryers and vending machines. Then record in your chart how much money you withdraw every day.
You should refill the change machine in your store on a daily basis, too. When it’s empty, your customers can’t do their laundry, and they’ll go elsewhere. If it’s empty more than a few times, they may never return. No one wants to lug several loads of laundry to a laundromat, only to find they can’t get change. De Coster says if his change machine runs out, “that’s like shooting myself in the foot. I check the change machine at least once a day.”
Let Us Vend
The last bit of daily business in your store is restocking the vending machines. If you own your own soda and snack machines, you will need to make sure they’re full every day. If you contract with a vending company, they’ll worry about filling them.
The most important vending machine in your store will likely be the soap vending machine, and since these machines are relatively inexpensive and rarely break, you should buy your own. Make sure it is properly stocked every day. Many customers will bring their own soap, but those who don’t will expect to find soap available. An empty soap machine is almost as bad as an empty change machine-it will cause you to lose business.
Keeping Track
When you’re done with the daily in-store duties, you’ll need to take care of some additional office work. Many laundry owners do this at home, though some may find it easier to work in a rented office or at the laundromat if they have space. Owners with other businesses, such as De Coster who has both laundries and an equipment rental business, can take care of everything in one office.
At your office, you’ll need to take care of your accounting and track equipment usage by customers in your store. It’s important to record how often each type of machine is used so that you can determine if you’ve got the right mix of equipment. For example, if you find that your front-loaders are getting six turns per day (the number of times a machine is used each day) and your top-loaders only two, you may need to add front-loaders and remove some top-loaders. Your customers are likely waiting for the front-loaders and possibly going elsewhere, so you could be losing money.
Startup Costs
You can expect to encounter a number of basic startup costs to get into the laundry business. Depending on whether you build a new laundry in a leased space or buy an existing one, your costs may include:
Market research (literature/subscriptions/association fees)
The cost of an existing laundry business
- Construction or remodeling (if you are building a new laundromat)
- Washer hook-up fees (sewer connection)
- Licenses/permits
- Equipment
Keep in mind that if you buy a laundry, you don’t pay for licenses or sewer connection fees (unless you decide to have additional washers installed). But you will have to pay for renovation and any new equipment you decide to install if you want to update the laundry.
In addition to these basic startup costs, you may also have a number of ongoing expenses. These include:
- Lease/rental costs
- Utilities (gas, sewer, water and electric)
- Insurance (fire, theft and liability)
- Employee payroll/benefits
- Miscellaneous supplies (cleaning supplies, soap, invoices for wash-and-fold, bathroom supplies, etc.)
Research and Development
Once you’ve completed your initial research on the laundry business, you will need to figure out how much it will cost to build your store-to remodel a space and fill it with laundry equipment-or to buy an existing laundry. Whether you decide to buy or build, you can expect to pay between $200,000 and $500,000 for an average-size laundromat (about 2,000 square feet).
If you’re buying an existing laundry, figuring out your major startup costs is simple-just determine the value of the business. If you plan to renovate the existing store by painting the interior or putting in new flooring, be sure to add these costs to your startup expenses.
Figuring out your startup costs involves a little more work if you decide to build. Since you’ll be leasing a space that was something other than a laundry in a previous life, the cost of the construction is going to depend on how much remodeling you have to do. If the space you’ve chosen was formerly a beauty salon, for example, you’re going to have to add enough water, sewer and gas pipes for the conversion to a laundry. You’ll also have to provide enough electrical outlets, possibly move a few walls, and completely redecorate before it will look like a laundromat. You should hire a contractor to help you do all this remodeling.
In general, you can expect to pay about $200,000 for the construction costs to remodel an average-size space (2,000 square feet). This includes the cost of installing your equipment and putting in folding tables and seating. The remainder of your major startup costs will be buying the equipment itself.
Licenses and Hidden Fees
The licenses and permits you will need depend entirely on your location. Check with your municipality regarding:
- Business license
- Health department license (if you are serving food)
- Fire department permit
- Air and water pollution control permit
- Sign permit
- Public improvement fees
- Impact fees
You should also be aware of a few lesser-known fees that will affect you as a laundry owner. In many areas around the country, municipal water districts charge sewer connection fees. These can cost you anywhere from $200 to $8,000 per washer. If the fees are $8,000 per washer, the owner of a laundry with 30 washers must pay $240,000 in hook-up fees-almost what he’ll pay for construction! Brian Wallace of the Coin Laundry Association tells us that high hook-up fees are one of the biggest problems facing the coin laundry industry today. “Before you get too far down the road, make sure you understand what if any impact fees, tap-on fees, wastewater fees-they call them lots of things-there are,” says Wallace. These fees are a major challenge to laundry developers. And in areas where operators are forced to pay these fees, the price of laundromats has also risen dramatically. If the fees are high in your chosen area, you may need to reconsider your entire plan.
In addition to sewer connection fees, you may find that you have to pay sewer and waste water fees, too-check with the local municipality. Don’t neglect to check on these charges when you’re researching a laundry business. After all, you will be using these utilities heavily, so you’ll want to know if the monthly charges will be manageable from the get-go.
The Goods
If you decide to buy a laundry, you will already have a full complement of equipment-unless you want to replace a few of the older machines or add a few more machines to meet customer demand. However, if you decide to build a laundry, buying equipment will eat up virtually all the rest of your startup costs. You can expect to pay between $150,000 and $300,000 to fill an average-size laundromat with washers and dryers.
Top-load washers cost between $500 and $700 each, and front-load washers cost between $3,500 and $20,000 each, depending on their size. One stacked dryer (which means two dryers arranged one on top of the other in a joined cabinet casing) costs between $5,000 and $6,000.
If you want to add a card system, it will cost you in the neighborhood of $40,000 to $80,000, including readers on the machines, a card dispenser and cards, and the software to compute equipment usage and let you change prices. It’s pricey, but take heart: With a card system, you don’t have to buy a change machine, which runs in the ballpark of $1,000 to $3,000.
A water heating system will run you between $15,000 and $40,000, and a soap vending machine will cost between $500 and $1,500. Those laundry carts that let customers transport their clothes from washer to dryer cost $50 to $75 each. Supplies such as soap, cleaning equipment, signs, clocks, and trash cans should run another $750 to $1,000.
Setting Yourself Apart
Consider giving your store a theme or a gimmick. For example, one store in San Francisco plays classic black-and-white movies on their TV, and the walls are covered with photographs of movie stars from the 1920s and 1930s. Another store in Texas displays the owner’s collection of antique laundry equipment. Iowa City, Iowa, laundry owner Brian De Coster chose humor: He plays comedy channels on his TVs and places signs with clever puns, such as “We have a dryer sense of humor” and “We never clothes.” (His store is open 24 hours.)
A theme gives your store more personality; customers will remember it, and they’ll find your laundry a more interesting place to come to. A clever gimmick may also get you some free publicity from the local press. If you want to create a gimmick for your laundromat, think about who your customers are and what sort of theme they will appreciate. One owner in Southern California, with customers from all over Latin America, hung his laundry with flags from several of his customers’ native homelands and started serving traditional Latin American food.
For the Little Kids
Many laundry owners are realizing that they can increase business by providing a play area for children. Often, customers need to bring their children to the laundromat, so giving little ones something to do makes the laundry chore much easier on parents. Having an area set aside for children can also help keep them from running around and possibly getting hurt or damaging equipment.
Collette Clarkson and her partner have a play area for children. They have a TV with a VCR, children’s videos and toys. “We wind up picking up a lot of toys,” she says, “but they love it.”
If you want to put in an area specifically for children, check with your insurance agent and your city or county officials regarding liability issues. These professionals should be able to tell you how to design the area to maximize safety and make sure you won’t be responsible in case a child gets hurt. In fact, you may need to place signs saying you’re not responsible for children’s safety.
For the Big Kids
Even adults will get bored at a laundromat. After all, mostly what they are doing is waiting around for clothes to wash and dry. Many laundries these days have one or more TVs mounted to the wall. Some laundries keep the TVs tuned to one channel, some play videos, and others let customers change the channels themselves.
If your laundry is unattended and you want to let customers change the channel, mount the TV low enough on the wall so they can reach the channel and volume buttons. Customers are likely to walk off with a remote control, even if it’s tacked to a table.
Many laundry owners also have pinball and video games for their customers. Clarkson says a video game vendor approached her about having a videogame console in her store. He put a machine in at no cost to her, and they split the profits 50-50. “We’ve seen as much as $300 a month off the video game,” Clarkson says. They change the game every so often to keep customers from getting bored.
Snack Time
It’s likely that your customers will get hungry and thirsty while they’re waiting for their laundry to finish. Even if your store is near a shopping area, many customers wisely don’t want to leave their clothes. So vending machines with sodas, chips and candy fit the bill. You can buy a vending machine, fill it yourself and take all the profits. Or you can contract with a vendor who will provide the machine and snacks and split the profits with you. Ask your distributor about vending companies in your area.
Clarkson and her partner decided to put in a snack counter rather than vending machines. They offer their customers-and anyone else who comes in-a soda in a glass with ice, along with candy bars and chips. The partners chose to go that route after talking with other laundry owners. “In interviewing other people, we found that [they] didn’t like cans, they liked a fountain drink,” Clarkson says.
They sell the snacks at a low cost because their store is next to a mini-mart. “If we had the same prices or higher, everyone would just go next door,” Clarkson says. Still, their snack business is brisk enough that it brings in $30 to $60 a day. “Our Pepsi distributor says we do more [business] than some of his restaurants.” Having the snack counter also improves customer relations, she says. “Our customers really appreciate the cheap prices.”
Coin-Operated Laundry Resources
Associations
Coin Laundry Association
International Fabricare Institute
Magazines and Newsletters
- American Coin-Op
- The Journal
- Coin Laundry News
Manuals
- California Coin Laundry Association Owner’s Manual
- California Coin Laundry Association Reference Manual
Websites
- Coin Laundry Association bulletin board
- Coinwash.com (a bulletin board for laundry owners and marketplace of laundries for sale)
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The Entrepreneur Behind Popchips Hopes to Have Another Hit With Rice Made From Vegetables
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Keith Belling’s RightRice, made of lentils, chickpeas and peas, will be available today nationwide on Amazon and at Whole Foods stores.
2 min read
Innovations that are seemingly simple usually have a lot of power. For Keith Belling, his first big hit came after he asked why chips couldn’t come in a healthier, popped form. The result of that question, Popchips, became a hit snack under his leadership that is sold in more than 30,000 stores and has generated more than $100 million in revenue.
Today, Belling will launch his next product, RightRice, which also stemmed from a simple question: How do you make rice healthier?
“Most of the ideas that I’ve pursued in my career have come from solving a personal problem,” Belling told Entrepreneur. “RightRice evolved from consuming too many carbs and empty calories, and eating less and less rice, one of my favorite foods. Both [Popchips and RightRice] inspired me to think deeply about the opportunity that existed and what was missing in the market.”
Image Credit: Courtesy of RightRice
RightRice is available nationwide exclusively at Whole Foods stores as well as on Amazon in seven-ounce pouches at a suggested price of $3.99. Along with rice, the product is made from lentils, chickpeas and peas. Its four flavors are Original, Lemon Pepper, Spanish and Garlic Herb. Each serving contains 10 grams of protein and five grams of fiber and 40 percent fewer carbs than a bowl of white rice. The company says it cooks and absorbs flavors just like regular rice.
Related: Amazon Is so Powerful That Big Companies Are Producing Exclusive Brands Just for the Site
Rice is a popular staple food in many cuisines, and RightRice’s premise of packing vegetable protein into the traditional carby food offers a good alternative to rice or substitutes such as cauliflower or quinoa and other grains. Several staffers of Entrepreneur tried out the Original and Lemon Pepper varieties of RightRice and came away impressed with the texture and flavor.
“As someone who’s had a long love affair with carbs, I thought RightRice was a legitimately delicious substitute,” said special projects director Patrick Carone.
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You Can Thank Us Later – 8 Small Business Tax Deductions You MUST Consider
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The best way to ensure that you don’t get a bigger bill than necessary come income tax time is to double check you are getting every deduction possible. There are multiple small business tax deductions available to sole-proprietorships and other small business organizations, such as LLCs.
Different Tax Deductions You Can Apply to Your Business
Keep in mind that while the list below contains some common deductions that may apply to your business, there may be some on this list that don’t work for your specific circumstances. Always check with your accountant before claiming a deduction on your taxes.
1. Home Office
This is one of the most common deductions that small business owners are able to use. In order for you to qualify for the home office deduction, your space needs to pass the needed requirements. You must use the area exclusively for your business. Working from your bed won’t get you the deduction. You should also regularly conduct most of your business from this location.
Beginning in 2013, the IRS introduced a simplified option for you to claim your home office deduction. This allows for you to claim up to 300 square feet at a rate of $5 per square foot. This didn’t change who can claim the deduction. But, it just made it easier to claim the deductions. You are also able to claim your deduction using the standard method. However, this does have a few differences:
- It allows you to claim a percentage of the home used instead of using a 300-square foot cap.
- Depreciation deduction for a portion of the home used is allowed as well as recapture of depreciation upon the sale of the home.
- Actual expenses are used to determine deduction instead of the standard $5/square foot.
Which option you choose when claiming will depend upon your entire tax situation as a whole. Spend some time going over your tax situation in its entirety to figure out what exactly will work better for you.
2. Car Business Use
Just like your home office, using your car for business purposes may allow for you to get a nice deduction on your taxes. This deduction is a bit harder to keep track of if you use your vehicle for both personal and business use.
If you are purchasing a vehicle that will be used at least 50% of the time for business during the year, you are able to deduct this from your taxes. SUVs can yield a deduction of up to $25,000. Smaller passenger vehicles can get you a deduction of up to $11,060.
If you plan on deducting your business mileage, keep in mind that you need to have proper and thorough documentation of exactly how your mileage relates to your business. You also need to keep this documentation on hand for up to seven years after you take the deduction. You are able to deduct either the actual cost of the mileage or take the standard deduction.
Legally, you are able to take the standard deduction even if the actual cost of your mileage is less. However, if you do take the standard deduction, you will not be able to deduct the operating costs of the vehicle. These costs include gasoline, maintenance, or insurance.
3. Advertising and Promotional Materials
Advertising can be one of the biggest, but also the most necessary, expense a small business owner can incur. All of your advertising and promotional materials can be deducted at 100%. Therefore, this expense can also quickly become your biggest deduction as well.
These deductions include not only your paid online and offline advertising, such as billboards or Google ads. It also includes business cards and pamphlets you hand out at networking events. If you paid for SEO services or pay a monthly fee for email marketing software, you are able to deduct those expenses as well.
One advertising expense that is a bit tricky to deduct is vehicle advertising. It’s very common for local small business owners to have their vehicle decorated with their company name, logo, and contact information. The actual cost of adding the promotional materials to your vehicle is deductible. However, the cost of driving around so people can see your vehicle is not deductible.
There are also advertising versus selling costs that need to be kept in mind. If the sole purpose of your business website is advertising, then the monthly maintenance costs and fees are deductible. However, if you also take payments on your website and sell your products there, this is considered a selling fee and no longer deductible under advertising purposes. This also applies to signage. If you post a temporary sign to get attention for your business, you can deduct it. Permanent signs, such as those lasting a year or more, are not deductible.
4. Child and Dependent Care
If you have anyone who is dependent upon you for care, such as your children or a spouse/family member incapable of self-care, you can deduct the expenses you incur while paying for care for them during your working hours.
If you own your business and have employees, offering to pay for your employees’ childcare expenses can also provide you with a fairly lucrative deduction on your taxes. This can add up to $150,000 a year by claiming 10-25% of this expense.
5. Education
It’s always a good idea to further your knowledge and skills in your chosen area of expertise. By attending workshops, taking classes, and purchasing books that are directly tied to furthering the skills you need to properly run your business, you can accrue quite a deduction.
The IRS will definitely take a look at these expenses and determine if they qualify for the deduction. Yet, every single education-related expense that you incur while furthering your education will be deducted at 100%. Any education-related expenses not directly related to your business or that will not help with a new career will not qualify.
6. Retirement Contributions
While you may love what you do, eventually, you will want to retire. Contributing to your retirement fund will give you a great nest egg for the future. It will also give you a great deduction on your income now. You will need to work closely with your tax advisor or accountant to make sure that you set up a qualified plan. Only certain plans qualify, and each plan qualifies only up to a certain amount.
7. Travel
Much like your vehicle expenses, traveling for the sole purpose of work is also deductible. If you are going to be away from your home for longer than one business day, you are able to deduct all expenses accrued during that time as long as you thoroughly document who you are meeting, the purpose of travel, and days of return/departure. Some of the included deductible expenses are:
- Travel expenses, such as plane or train tickets
- Meals, including any tips for service
- Lodging
- Shipping of any baggage and materials necessary for the business trip
Like vehicle expenses, keep very detailed records of your business travel to submit with your taxes. Hold on to those records for a few years after.
8. Legal and Professional Fees
Deductions also include paying for any sort of professional to work with you. These professionals include accountants, business specialists, and attorneys.
Every business owner needs to pay an attorney even if it is just to help get all of their business paperwork in order or draw up partnership papers. These business-related fees deductible. You can also deduct fees for legal matters like creating your will as long as you only deduct the portion that relates to your business inside of the will.
An accountant or another tax professional is crucial to any small business owner. Doing your taxes incorrectly can not only cost you some hard-earned deductions now, but it can also cost you thousands in audit expenses later by not filing everything properly.
Keep in mind that if you pay any of these professionals more than $600 during the year for their fees, you may need to file a 1099-MISC. This will definitely be something you need to consult a professional because it can be very complicated determining who needs to file the 1099-MISC and for what expenses.
Don’t Pay More Than You Need To
While owning your business can be one of the most rewarding experiences you can have, it can also be quite costly, especially when it comes to income tax time. Knowing what you can — and can’t — deduct from your taxes ensures you don’t pay more than you absolutely need.
Republished by permission. Original here
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This article, “You Can Thank Us Later – 8 Small Business Tax Deductions You MUST Consider” was first published on Small Business Trends
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3 Rules to Help Your Retail Business Provide the New Products Customers Demand
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Blame it on Amazon, on the constant stream of social media feeds, or on sheer boredom, but shoppers today increasingly crave new merchandise from retailers. According to Shopper-First Retailing, a new study from Publicis.Sapient and Salesforce based on data from half a billion shoppers worldwide, 69% of shoppers expect to see new products every time they enter a store .
Here’s what the study uncovered and how your retail store or ecommerce website can keep up with shoppers’ insatiable thirst for the new.
Offering New Products is One Key to Retail Success
“Make it fresh” is the new mandate from shoppers, according to the study, which lays out three key rules to follow for success.
Rule 1: Constantly Renew
Shoppers reward freshness with their wallets: Among the top 5% of products that the retailers surveyed sold each month, 59% are new. Keeping your product mix fresh is essential to generating customer loyalty and keeping shoppers coming back for more. Retailers that fail to accomplish these goals will continue losing ground to marketplaces like Amazon, the study contends.
To keep a steady stream of new merchandise in your store or on your website, here are some ideas:
- Visit trade shows to seek out new products to add to your offerings.
- Look for startup manufacturers or distributors who may be interested in selling to you.
- Ask your customers which products or brands they’d like to see you carry.
Of course, you don’t have to turn over all your inventory every week to give shoppers a sense of the new. Providing a new feeling, look or experience every time shoppers visit can help create that renewal they seek. For example:
- Rotate displays to bring different merchandise to the front of your store or the home page of your website each week.
- Spotlight a particular brand or type of product each week.
- Change out your window displays and your store home page each week.
- Invite a brand you sell to do a pop-up shop in your store (check out these 25 examples of eye-popping pop-up shops for ideas).
Rule 2: Act with Urgency
Customers who have purchased from you recently are most likely to buy from you again. According to the study, half of repeat buyers make a second purchase within 16 days of their first purchase.
But while 50% of shoppers make their first purchase of a product through a retailer, 47% go to marketplaces like Amazon when they want to buy it again. If you want to avoid losing customers to competitors, you’ve got to act quickly to re-engage the first-time buyer.
This can include:
- Loyalty offers
- Upselling (try sending an email suggesting a related product)
- Retargeted ads
Personalization can also help get first-time shoppers back. An e-commerce site can provide personalized “you might also like” recommendations; a store salesperson can review studying a shopper’s past purchases before suggesting new items to try on in the store.
Rule 3: Create Unique Products
No small retailer can hope to compete with Amazon’s vast catalog of products. But small retailers can compete when it comes to offering unique products that no one else has. Consider these survey findings:
- 59% of customers are more likely to buy from a retailer that offers customization
- 49% are more likely to buy from a retailer that offers limited editions
- 36% are more likely to buy from a retailer that offers collaborations
Thirty-one out of 70 retailers that were “mystery shopped” in the study offered customized products or product collaborations, and four out of five top-performing stores offered some type of customization.
Customization can range from the minimal (monogramming or engraving a product) to the maximal (creating a product from scratch to the customer’s specifications). American Girl and Build-a-Bear are prime examples of customization, but this is also within reach for small retailers. For example, one store in the study offered made-from-scratch jewelry handcrafted in the store. Retailers that enable shoppers to truly create products from scratch stand to benefit greatly.
Follow these rules, and it’s not so hard to provide shoppers with the constant new products they crave.
Image: Depositphotos.com
This article, “3 Rules to Help Your Retail Business Provide the New Products Customers Demand” was first published on Small Business Trends
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The Best Ways to Educate Yourself
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Photo by Aditya Vyas on Unsplash
Stock market investing can be a prudent financial decision. However, you must educate yourself first. Also, you’ll need to manage your funds wisely.
Moreover, like an old English proverb says, “A fool and his money are soon parted.”
Unfortunately, too many people are tempted to throw caution to the winds. They think they can get rich overnight in the stock market, but this is seldom the case.
RELATED ARTICLE: 4 REASONS WHY BITCOIN INVESTING IS A LONG-TERM GAME
Experts generally recommend that you consult either a broker or an investment adviser. However, it is possible to work out an effective investment strategy on your own. Do this by conducting the appropriate research.
Image Credit: Wikimedia Commons
Take Some Advice from the SEC
For instance, the US Securities and Exchange Commission (SEC) has detailed some important steps. Follow their advice, as it can help you to define and meet your financial goals. Here’s the gist of their Roadmap to Saving and Investing:
Define
Your Goals
Determine an acceptable time frame for meeting specific goals. Do this by calculating what you’ll need to save each year.
Evaluate
Your Finances
Create a personal net worth statement. That is, look at what you own alongside what you owe. Next, determine whether you have a positive or negative net worth. In other words, subtract your liabilities from your assets.
Start
Tracking Your Income and Expenses
Tracking your income and expenses will tell you how much of your income you have available to invest.
Take Advantage of Compound Interest
Leveraging even small amounts of money in savings can lead to big returns because of compound interest. In short, avoiding impulse purchases could be your key to financial success.
Eliminate
High-Interest Debt
Experts encourage consumers to pay off credit cards before doing any stock market investing.
Put
Money in Savings
Even though your money will earn a low interest rate, it’s typically safer to put it in savings accounts, checking accounts, and certificates of deposit. That way, your money will be insured.
Assess
the Risks
You always assume some degree of risk with stock market investing. It’s true that returns on successful investments can be greater than many other options. However, in some cases, it’s possible to lose the entire amount that you’ve invested.
Understand
Your Risk Tolerance
If you want your money to grow faster, you might have to consider riskier investment products.
Know Your Investment Options
There is a variety of products for consumers to consider for stock market investing. For example, you could invest in stocks or mutual funds. There are also corporate and municipal bonds, annuities, exchange-traded funds (ETFs), money market funds, and U.S. Treasury securities.
Know the Types of Stocks and Their Costs
According to Nasdaq, there are two different types of stocks when it comes to stock market investing. That is, there are full-service stocks and discount stocks.
Investors with a higher net worth typically partner with full-service brokers. These brokers provide them with stock recommendations, guidance, and so on.
However, if you want to stay in charge of all of your investment decisions, then seek out a discount broker. That’s because discount brokers charge significantly lower fees than full-service brokers do.
What Fees Can You Expect?
There are two main fees that investors incur in with stock market investing. The first comes in the form of commissions every time you purchase and trade stocks. These fees can range from $10 to $30 per transaction through discount brokers.
Additionally, there are mutual fund fees. These are the fees that you’ll incur when you invest in mutual funds.
Remember, the best way to manage risk is by investing in a range of assets. This is also known as diversification. For example, a well-diversified portfolio will often incorporate mutual funds that include a large number of stocks and other investments.
Should You Invest in Products or in Stocks?
A concept that some people struggle with is whether they will earn more from investing in a stock or in a product.
To answer this question, a group of consumers conducted in-depth research on 35 different companies. They sought to determine how much they would have made if they had invested in a company’s stock instead of buying that company’s product or service.
Apart from a few exceptions, these investors concluded that an investor would make a profit if they invested in a company instead of purchasing that company’s product. The key takeaway was that the changes in a company’s stock value can dramatically alter an initial investment.
Educate Yourself Before You Begin Stock Market Investing
Finally, it pays to do your homework and educate yourself before you begin investing in the stock market. Follow the suggestions here and you’ll be sure to have greater success with your own stock market investing.
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Business Plan – Step-by-Step Planning Templates
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This guide to writing a business plan will outline the most important parts and what should be included in an effective plan.
Opinions expressed by Entrepreneur contributors are their own.
A business plan is a written description of your business’s future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you’ve written a plan, or at least the germ of one.
Business plans are inherently strategic. You start here, today, with certain resources and abilities. And you want to get to there, a point in the future (usually three to five years out), at which time your business will have a different set of resources and abilities as well as greater profitability and increased assets. Your plan shows how you will get from here to there.
Related: 7 Steps to a Perfectly Written Business Plan
You can visit our small business encyclopedia to learn more about business plans or our FormNet area to get the necessary forms to get started.
Before writing your plan
Writing your business plan
Business Plan Tools
Business Planning Videos
Video: What Investors Really Think About Your Business Plan. At our Entrepreneur magazine Roundtable, financial pros offer tough talk about the business plans of first-time entrepreneurs:
Related: What Investors Really Think About Your Business Plan
Video: How Can I Hire Someone to Help Write My Business Plan? In the video below, Tim Berry, founder and president of Palo Alto Software Inc., responds to a reader seeking advice on finding a low-cost writer to help with a business plan:
Related: 25 Business Plan Tips From Professionals
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Amazon Is so Powerful That Big Companies Are Producing Exclusive Brands Just for the Site
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Amazon Accelerator allows the ecommerce company to offer exclusive products to customers, while outsourcing all the costs.
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Search for “sugar” on Amazon and the top results will show cane sugar from 365, the in-house brand of the Amazon-owned Whole Foods, followed by a zero-calorie sweetener from Sugarly Sweet. Both are tagged “Our Brand,” but the latter is the product of Equal.
This new product is part of a push called Amazon Accelerator to have more brands that are sold exclusively on the ecommerce site.
“Amazon Accelerator creates new opportunities for suppliers and offers a way for them to launch brands directly to (and exclusively for) Amazon customers,” according to a statement from Amazon. “Participating suppliers develop and produce brands and products of their choice, and Amazon then makes those brands and products available to customers.”
Related: Amazon Will Let Entrepreneurs Start Their Own Delivery Business and Earn Up to $300,000 a Year
The advantages of partnering with Amazon are clear: top billing on the biggest store on the internet, as well as enhanced insights about the products. Meanwhile, Amazon outsources the costs of developing and manufacturing the products as well as shipping them, while holding exclusivity to sell them.
Amazon said that dozens of brands, ranging from health and personal care items to furniture to apparel, have created products for Accelerator. An Amazon spokesperson pointed to the Basic Care brand, as well as mattress brand Nod, from Tuft & Needle, as holding customer ratings above four stars.
For Merisant, makers of Equal, launching Sugarly Sweet was a way to expand its business.
“[Ecommerce is] an area that is ripe for significant growth and opportunity over time,” said Brian Huff, president of Merisant in North America. “For us, it was more of, what are the opportunities for us to be able to expand our portfolio and product line.”
Related: What Do the Major Changes at Whole Foods Mean for Food Entrepreneurs?
The new product line allowed Equal to expand into sweeteners made with sucralose, saccharin and stevia. Instead of taking up more pricey retail shelf space, the products occupy a digital space where companies have more room to explain the products’ benefits to customers, as opposed to fitting information on the back of a box that a customer never picks up.
“Online you have a lot better venue to be able to educate consumers than you do in brick and mortar,” Huff said. “People are looking for more customized and personalized offerings. Exclusive and unique offerings by retailers at least in the short term will continue to increase.”
An Amazon spokesperson would not say whether these exclusive brands will eventually be sold in Whole Foods.
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House Small Business Committee Outlines Goals for 2019
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The House Small Business Committee recently announced five Committee Democratic Members who will serve as Subcommittee Chairs for the 116th Congress. With the Democrats in charge of the House now, Small Business Trends got in touch with House Small Business Committee Chairwoman Rep. Nydia M. Velázquez (D-NY) to get an idea of the committee’s goals for 2019.
2019 House Small Business Committee Goals
Issues
Velázquez stressed a hands-on approach to tackling the issues small businesses face.
“I am looking to hold a wide range of hearings that will probe the diverse challenges facing America’s entrepreneurs. I am proud that we have an exciting group of new Members who will be serving as Subcommittee Chairs for the 116th Congress,” she wrote in an email.
Top Priorities
“Through hearings at both the full and subcommittee levels, we will dive into the most pressing issues facing small firms such as access to capital, workforce development, exporting abroad, and expanding access to the federal procurement marketplace.”
The National Small Business Association recently placed the trained worker’s skills gap as the third priority issue for the 116th Congress. The association bookmarked several of the other points the committee flagged.
Velázquez also pointed to a focus on rural areas. She underlined a few of the digital issues facing small business there and acknowledged the impact of international trade disputes.
SBA Programs
“As a Committee, we will look at how we can expand investments in SBA programs for rural areas, as well as address the most pressing issues facing rural entrepreneurs such as a lack of broadband, the opioid crisis, and the impact of tariffs on our small agricultural and manufacturing firms.”
Small Business Concerns
There were other long standing small business concerns like lack of access to traditional capital for loans that Velázquez said would be another one of the committee’s focuses. She said that when it comes to start-ups particularly, there were several other sources of funding like the SBA’s Small Business Investment Company (SBIC) program.
“The program was created as a source of financing to fill the gap between bank loans and more traditional equity capital. On the Committee, we constantly hear from entrepreneurs who need more flexible forms of capital investment, such as the SBIC program. The Committee will conduct work in this area to ensure that the SBA’s capital offerings keep pace with the needs of entrepreneurs.”
Flexibility
She pledged the Committee will work to make sure that any capital offerings from the SBA will be geared towards the flexible forms of capital investment start-ups need. There was at least one area where the incoming Chairwoman felt there was a special need for a bipartisan push from both sides of the aisle — infrastructure.
Infrastructure
She noted how deteriorating infrastructure has a negative effect on the nation’s economy because transportation delays up expenses for small businesses. She also mentioned how any needed reform would benefit three small business sectors specifically.
“For small firms operating in sectors such as construction, manufacturing, and agriculture, a robust infrastructure package has the potential to fuel new jobs and innovation,” she wrote.
Expanding small business access to the federal procurement marketplace was another touchpoint. While Velázquez pointed to the ongoing work that’s been done in the area, she acknowledged much more needs to be accomplished.
Disparities
“Despite recent advancements, disparities remain for small contractors and especially for traditionally underserved entrepreneurs when it comes to accessing the $500 billion a-year federal marketplace,” she writes. “Ensuring that small contractors are paid in a timely manner, expanding mentorship resources to underserved entrepreneurs, and ensuring proper oversight of existing initiatives are all steps the Committee must take towards leveling the playing field for small contractors and subcontractors.”
Velázquez offered a perspective on the Republican tax law that was at least partially geared toward small businesses.
“The Republican tax law is projected to add nearly two trillion dollars to our deficit and as we have heard on the Committee, provides little relief to small businesses. At the end of the day, we ought to be focused on tax reform that will increase compliance assistance for small firms and update the tax code to meet the needs of a 21st century workforce.”
The Small Business Committee’s Subcommittee Chairs for the 116th Congress are: Rep. Abby Finkenauer (D-IA) will Chair the Subcommittee on Rural Development, Agriculture, Trade, and Entrepreneurship. Rep. Andy Kim (D-NJ) will Chair the Subcommittee on Economic Growth, Tax, and Capital Access. Rep. Jared Golden (D-ME) will Chair the Subcommittee on Contracting and Infrastructure. Rep. Jason Crow (D-CO) will Chair the Subcommittee on Innovation and Workforce Development. Rep. Judy Chu (D-CA) will Chair the Subcommittee on Investigations, Oversight and Regulations.
Image: smallbusiness.house.gov
This article, “House Small Business Committee Outlines Goals for 2019” was first published on Small Business Trends
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