How to control the costs of a laundry?

Controlling income and expenses is of vital importance for companies, and is a challenge for any type of business.

You know what we're talking about: voucher and ticket submission, invoice review, validations, reimbursements, vendor payments, etc.

However, controlling your laundry expenses can be complex and costly, especially if you are just starting out in this industry.

 The first step is to learn how to identify and organize them.

Types of expenses in your laundry business

A company's expenses are all outflows of money, whether in cash or by other means of payment (transfers, checks, etc.).

These expenses can be:

• Variables or fixed. The former depend on the type of activity and are directly proportional to production (materials, raw materials, energy consumption, etc.).  The latter doesn't change, even if your sales increase or decrease (rent, employee payroll, taxes, etc.).
• Direct or indirect.  The former are related to the product or service, while the latter are present in any production process, regardless of the activity.
• Flow-through or not Flow-through expenses involve a disbursement by your company. Regarding non-flow expenses, they are difficult to account for because although there is no payment as such, they directly impact your profits.

From Jeff we propose a classification of expenses of your laundry more adjusted to the characteristics of this business model:

Initial expenses

The start-up costs of a laundry are essential to get your business up and running. 

They include the purchase of machinery, furniture, stock of supplies and packaging, uniforms, marketing products and cleaning supplies. To this we also add any possible renovation that may be necessary to make the premises suitable for this activity.

Recurring expenses

As the name suggests, these are expenses that you will have to pay every month. Recurring expenses can be fixed and varied.

Some of the fixed costs of a Jeff laundry are:

•   rental of the premises
•   insurance
•   accounting costs
•   royalties
•   Internet and phone

In the second group, there would be:

• the cost of laundry electricity (as well as other utilities, such as water and gas)
•   chemical products (soaps and cleaning products for daily use),
•   gasoline
•   Packaging 
•   investment in marketing/promotion of the business
•   maintenance expenses

Another recurring expense of a laundry is the workers' salaries (payroll, social security, associated insurances, etc.).

Extraordinary expenses

These are one-time, specific expenses and usually have a high cost.

In the case of a laundry, extraordinary expenses can be breakdowns or repairs, but also investments linked to the development of the activity and the growth of your business, such as the acquisition of new machinery.

Advantages of controlling your laundry expenses

Controlling your expenses will help your laundry to be profitable, and is a strategy to make the day-to-day running of your business smoother and more efficient.

Accounting for your laundry expenses will also help you:

1. 1. Detect superfluous or unnecessary expenses.
   2. Analyze your monthly income and expenses.
   3. To propose improvements and establish short-term budgets.
   4. Negotiate with your suppliers based on the real interests and needs of your business.
   5. Avoid long-term problems. Or, to put it another way, to improve your laundry management and invest your money better for the future.

Tips to control your expenses

Some of the keys to controlling your laundry costs are:

Know what you're spending each month

That is, how much money you invest and in what. You should review all your bills and receipts to analyze, among other things, how much you spend on electricity or laundry products.

On the other hand, you should pay attention to income fluctuations to check in which months you get more or less profit, and try to identify the cause.

Identify possible expenses to be eliminated

Knowing what your company's activity costs is an important step to eliminate unnecessary expenses, minimize superfluous expenses and make decisions that will help you clean up your accounts based on objective data.

The aim is to verify expenses that can be replaced by other less costly ones. For example, minimize warehousing costs, and even negotiate with suppliers. 

You will also be able to compare and look for more cost-effective alternatives.

Optimize essential expenses

Some of your laundry expenses are essential to your business. But being clear about what your most profitable products or services are will help you focus your efforts on them.

Likewise, understanding how each expense affects your business is the first step to optimizing your resources and improving their management.

Knowing how to control your company's expenses is vital for the development of any business. That's why, in our Mr Jeff Laundry franchises, we help entrepreneurs in this task.

Todos nuestros franquiciados tienen dentro de Jeff Suite, su software de gestión, un apartado donde pueden contabilizar, con todo detalle, sus gastos fijos y variables.

All our franchisees have a section within Jeff Suite containing their management software in which they can record, in detail, their fixed and variable expenses. 

Each month, the program performs an automatic review of them based on:

• Parameters established in a generic manner for each country.
• Number of sales.
• Sales typology.

This allows us to know, in an objective way, what is the threshold of profitability that your laundry should have.

If there is a deviation in this data, your Partner Success Manager (a professional from Jeff's team who accompanies each partner to check that everything is going according to plan) will carry out a study and offer you an action plan so that you can correct errors, adapt your strategy and achieve the results you expect in the shortest possible time.

Some of your laundry expenses are essential to your business. If you are thinking of opening your own Mr Jeff center, contact us and we will give you all the information you need to do so.