www.americanlaundrynews.com
December 2023 • Volume 49, Number 12
The Newspaper of Record for Laundry & Linen Management
When it’s time to say ‘no’ to new business Two business advisor/consultant experts answer questions about times for laundries to turn away customers
(Photo: © billiondigital/Depositphotos)
BY MATT POE, EDITOR
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n the surface, a laundry and linen service turning down new business might not make sense. After all, doesn’t growth mean adding new business, especially after the past few years? Not necessarily. Dig a little deeper, and there are times when an operator can and should turn away a new client. American Laundry News heard from two experts in the field of business growth and productivity and resource optimiza-
tion (PRO) on this subject. Jason Pourakis is a partner at Mazars USA LLP, an international audit, tax and advisory firm committed to helping clients confidently build and grow their businesses. Doug Story is a laundry industry veteran who recently opened MorgenBrooke LLC., a North Carolina-based group consultancy that provides PRO evaluation and decision-making that applies to any size laundry or institutional operation. Let’s start big picture: Why would a laundry turn down new business? POURAKIS: Three major reasons: Pricing constraints do not make the customer profitable, the delivery stop size is too small, or the plant is at capacity and needs to be more selective of the customers they onboard. These are simply the economic metrics a company should start with. Of course, there are many other reasons such as industries/products a laundry does not currently service and also specific customer/ethical decisions will help decide if a new customer is the “right fit.” STORY: In the context of growing your business, you shouldn’t. However, in this context, many companies have fallen into the death spiral of growing their business but not being able to pay their bills. One of the most, if not the most, expensive thing a business can do is install new business. So, with every new installation, one must consider the expense of the installation versus the ability to recover the capital spent in a timely matter. What should laundries be looking for when seeking new business? POURAKIS: Become more niche specific. The more “similar type” customers you can service, the better you will get at
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servicing all of these customers. In addition, similar products and similar workflow and processes through the plant lead to more efficiencies and, therefore, increased profitability. STORY: A set of baseline considerations must be developed by management to include type of account, credit history, supplier history, delivery schedules, route density, and volumes that are part of the goals and objectives of your operation. Type of account: A hospital wants to do business; you are a linen supply plant. Is this part of your goals and objectives? The answer is probably no. Credit History: Are they calling you because they have exhausted the credit of other suppliers? They have not paid their bills, so they want to change. A sudden call for your company to supply service to them “out of the blue” should always trigger a credit check. Supplier History: Do they change suppliers on a regular or maybe even sporadic basis? Changing every time, they receive a price discount, or they demand so much the supplier cannot satisfy the customer. Delivery Schedules and Route Density: Is the account within your baseline delivery perimeter or the areas as defined by your goals and objectives? Is it an easy fit to your current system or does it stretch the ability to service the account reliably and efficiently? Volumes: Is the account too small or too large based on your goals and abjectives? Too small in that it would cost you more to set up the account, crank the truck and supply services to the account than it would ever yield in terms of revenue and profits.
See Say No on Page 6
LATE NEWS Alliance Laundry Systems acquires Statewide Machinery RIPON, Wis. — Alliance Laundry Systems, a manufacturer of commercial laundry equipment, reports it has acquired the distribution assets of Batavia, New York-based Statewide Machinery Inc. “As a family-owned company, Statewide Machinery has built a reputation for providing customers with value that extends well beyond the premier equipment brands they sell, and into excellent care well after the sale,” says Craig Dakauskas, senior vice president, Americas Commercial, Alliance Laundry Systems. “That shows in the volume of their loyal repeat customers.” Statewide will become part of the Alliance Laundry Systems Distribution East Region while maintaining its Batavia office. Since its founding in 1954, Statewide Machinery has been a leader in providing solutions for on-premises laundries, laundromats and multi-housing applications in Northern Pennsylvania and Hudson Valley, New York, including, Buffalo, Syracuse, Rochester and Albany. “The entire Statewide organization has a passion for serving our customers and now, as a part of Alliance Laundry Systems, we will take it next level,” says Jen Houseknecht, president of Statewide.
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