CHICAGO — As economic conditions and market forces change, business owners must re-examine their business plan and structure to make sure their company stays on track. Sometimes, this requires the company to either grow or shrink.
In Part 1 of this series, we examined some cleaners’ strategies of slimming down their businesses during the pandemic and altering their business models. In Part 2, we looked at reactions to changing economic times. Today, we’ll conclude this series by exploring the role of risk when it comes to setting a company’s size and more.
The Decision to Hold Steady
French Cleaners in West Hartford, Connecticut, is a fifth-generation family business that has been serving its customers since 1911. Since its beginning, it has only had one store, and that’s something that Manager Mark Hatch doesn’t see changing any time soon.
“I think we’re really lucky,” he says. “We have the one location, so I have my management team in one location. My route drivers all report to that location. Our customer service staff is here. My production staff is here, so we interact with a lot of customers.”
Hatch believes that having one storefront, rather than have the business spread throughout the community, makes this customer interaction and feedback more concentrated and effective.
“Every day, we have multiple regular customers who we’ll see every time they come through, so we get their direct feedback constantly,” he says. “We really have a good bead on what customers are asking for. Whenever we make some small change, like in our packaging, we’ll hear about it right away. We have a lot of customers who are really candid with us, but they do it in a nice way. If they think something’s not right, or if they think maybe inspection is slipping, they’ll let us know. We take our complaints seriously. If there’s a mistake, such as a missing button, we’re able to drill down and try to figure out what the root cause was.”
While it has only one location, French Cleaners has offered pickup and delivery services for decades.
“Routes got added very early,” Hatch says. “We actually have some pictures of vans and route delivery trucks from the 1940s, so we always have been in that game. We had radio-dispatched vans before cellphones. It was never really a huge portion of our business until the late 1980s and early ’90s, when routes starting to get really big. We had two route vans for a long time, and then it just picked up ever since the pandemic. We’ve probably doubled our route volume in the last few years.” About 40% of French Cleaners’ business now comes from its route services.
While he’s not opposed to growing or opening new locations, Hatch says the fit has to be right for him and his business.
“I think our business is a perfect size,” he says. “I’ve been to industry meetings and met amazing entrepreneurs who are buying up stores, acquiring other customers, picking up routes, doing wash and fold, and other things. So, I think, ‘Well, why can’t we do all this stuff? We could get really complex and have multiple locations.’ We’ve had opportunities pop up here and there. One of them specifically was fire restoration. We seriously considered it, and we did a lot of groundwork.”
Ultimately, Hatch and his team decided against the expansion.
“We took a few months to consider it and ultimately decided against it because we didn’t want it to take focus away from our current customer base,” he says. “If I shift my time, a certain percentage of my management staff would be shifted to that new venture. It definitely can be done in a good way, but it’s important to consider those things and decide if you should expand.”
The Role of Risk
When it comes to deciding whether to change your business or stay the same, risk must be weighed against any possible benefit the choice may bring. And while nothing is guaranteed in business, there are steps an owner can take to reduce risk.
“In the context of expansion or retraction of retail locations, minimize your worry by doing homework and knowing your marketplace,” says Craig Bamberg, who co-owns Platinum Dry Cleaners in Naples, Florida with his brother, Chris. “We do not feel you can open a location only based on a commercial real estate agent providing numbers of estimated cars passing by a strip plaza. What is your core product or service? Does it ‘fit’ in your proposed geographic location? What about the surrounding residents? Do they purchase your core product of service?”
After these issues are addressed, he believes there’s one question that has to be answered: “Does the location financially work in your overall plan? The rent may be just too expensive. It may take too long to cultivate the market in this location at that monthly rate. Or, you might conclude that it will work. For us, it’s all about the education.”
“We are also very cognizant of the fact that if we need to pivot, we need to have a Plan B,” Chris Bamberg says.
While the risks of opening a new storefront or buying a competitor’s business are more obvious, there are also risks to closing stores. Again, this can be minimized with some research and communication.
“When we close a location, we try to plot the customers and put them on a map,” says Arthur C. Anton Jr., CEO of Anton’s Cleaners of Tewksbury, Massachusetts. “We see where they’re coming from, and how close they are to our location. Then, we see if we can move these customers to another location, or if we have a route in that location. You’re trying to minimize the loss by strategic planning.
“Sometimes, we have given them an incentive to continue to come to us for a year, so that they don’t forget about us. The customers may be disappointed that their store has closed, but it’s like if your coffee shop closes and you have to go across the street. You’re going to be annoyed, but eventually you get used to it.”
Change is the Only Constant
Business plans must evolve as time goes on if the owners want to stay relevant to their customers’ needs, believes Gary Maloney, owner and president of Nu-Yale Cleaners in Southern Indiana,.
“It’s going to change, whether you like it or not,” he says. “You just have to ask yourself which one of these things can I live with, and which one doesn’t fit my business model? I’ve been in plants that have no automation, but they’re very efficient at their manual operation. I just have a bigger problem with labor in my market. You look where your pain points are and then see how you can get around them.”
Maloney believes that part of navigating the turns of running a business is having a network of peers.
“You have to listen to the customer,” he says, “but more than that is being active in associations in the industry. You’ve got 15,000 to 20,000 experiments out there — everybody puts their two cents together and comes up with a plan. You listen to it, and if it sounds good, you do it, and if it doesn’t quite fit you, you can pass on that. This industry is really good about sharing.”
Hatch echoes Maloney’s thoughts on this matter: “There are tons of dry cleaners who have done all this different stuff. People will say that they’ve had had success while these other people haven’t. If you’re curious about offering a new service or buying a piece of equipment, you can get about 10 or 12 opinions on something. There’s so much information out there. It’s really a disservice to your employees and your customers to not do the research on these things.”
For Part 1 of this series, click HERE. For Part 2, click HERE.
Have a question or comment? E-mail our editor Dave Davis at [email protected].