Rent or Buy Towels? The Small Business Equation

As a commercial laundry company owner, one of the most common questions I hear from small businesses is: "Should I buy my own towels or sign up for a towel rental program?" It's a valid concern, and thankfully, there's a way to figure out the best approach for your business. While not a perfect science, this equation can guide you toward the most cost-effective solution.

The Startup Phase: Bootstrapping vs. Funding

The first crucial factor is your business's stage. Are you just starting out? If you're a spa, hair salon, gym, yoga studio, restaurant, or bar, you'll likely experience a ramp-up period. This could take weeks or months, and during this time, you might want to avoid adding to your fixed costs.

Why Fixed Costs Matter

Towel rental programs typically charge a weekly fee, regardless of how many towels you use. This is a fixed cost, meaning it remains constant every week for the duration of your agreement.

• Bootstrapping: If you're bootstrapping, you want to conserve cash and only pay for what you use. Buying your own towels and having them laundered by a pickup and delivery service allows you to shift from a fixed cost to a variable cost. You pay only for the laundry service based on the volume of towels you send.

• Funded Business: If you have outside funding and are focused on rapid growth, a towel rental program might be suitable. You can delegate the towel management and focus on marketing and expansion.

Finding the Right Laundry Partner

Not all laundry companies are created equal. Some only offer rental programs, while others, like us, offer both rental and customer-owned goods (COG) services. When choosing a laundry partner for your COG program, consider these factors:

• Stain Separation and Treatment: Ensure they provide stain separation and treatment at no extra charge. This is essential for maintaining the quality and appearance of your towels.

• Stain Removal Success Rate: Ask about their success rate in removing stains. The benchmark is 95% (5% remaining stained), but ideally, they should aim for under 3% to minimize costs.

The Transition: From Variable to Fixed

Once your business has ramped up and you have a consistent customer volume, transitioning to a towel rental program becomes more feasible. At this point:

• It becomes the most cost-effective option.

• It frees you from the burden of managing towel inventory, purchasing, and laundry.

• It allows you to focus on growing your business while the laundry company handles the towel service.

Key Questions to Ask Your Laundry Service:

• "Do you offer stain separation and treatment at no extra charge?"

• "What is your success rate in removing stains?"

• "Do you offer customer owned goods laundry programs?"

In Conclusion

Whether you choose to rent or buy towels depends on your business's stage and financial situation. During the startup phase, a customer-owned goods program can be more cost-effective. As your business grows and stabilizes, a towel rental program can provide convenience and efficiency.

By carefully considering your needs and asking the right questions, you can make an informed decision that saves you money and allows you to focus on what matters most: growing your business.