Giant coin washers and coin dryers, 75-100 lbs. capacities and larger, are showing up in new stores and some retools every day. Many laundry owners are scratching their heads trying to figure out why. Since a 80# washer extractor costs upwards of $17,000, how in the world do the ever make money?
There are a couple of tricks that large equipment operators know: First, large equipment uses smaller amounts of utilities, so the marginal cost per load – or the cost of each additional load to the owner – is very small compared to a small washer. So you save quite a bit of money on utilities per pound of clothes over the life of the machine. A 75# dryer, for example, will save more than the cost of the machine in 3 years of operation, when compared to utilities used per pound of a 30# machine. Second, they take advantage of financing.
I know financing seems like a dirty word: DEBT. BUT, when running a small business, especially a cash based business, CASH is king. The smart operator knows that any way to preserve cash — especially by using OPM (Other People’s Money) — is worth it’s weight in gold.
Be careful, though…all finance programs are not the same. For example, a manufacturer offers 3% financing on new equipment. Well, that is nice, isn’t it? NOT WHEN YOU READ INTO THE TERMS OF THE LOAN. This particular loan has a big asterisk (I like to call it aster-exasperation). They only finance the equipment itself at that price, but for installation, ancillaries, etc, they charge a whopping 12% variable rate! So you never know…just ask questions. Your distributor will be upfront with you and explain it to you until you understand. If not, find another distributor!
Most financing options for equipment will be a variable rate, tied to the prime rate somehow. Just remember that when you sign the documents and watch it closely. It is not likely that the Fed will raise the prime rate to a great extent in the next 5 years, so now is a good time to finance. Prime will go up, but not incredibly — because our recovering economy still needs a shot in the arm to keep moving forward.
If you have any questions, call us at National Laundry Equipment. We are happy to help.