Would-be entrepreneurs love coming up with excuses to postpone starting the businesses of their dreams. Money – or a lack thereof – is usually the culprit: they fear that unless they can secure a big bank loan or generous investment, the success they seek will never materialize.
Dreamers like these should talk to Intersect Fund clients Mike Ivers and Casey Ruff. The two founded BTM laundry – a New Brunswick-based company that picks up customers’ dirty laundry, has it washed or dry-cleaned, and returns it the next day – on a shoestring budget in 2007. After expanding BTM’s customer base to include thousands of students and families in the region, Ivers and Ruff bought a Laundromat – in cash – last August.
No, Ivers and Ruff are not laid-off investment bankers. In-fact, they were juniors at Rutgers University when they each put up $500 of their savings to start BTM. Their concept was to serve Rutgers students who craved the comfort of home. (BTM stands for “Better than Mom’s.”)
Ivers’ advice to budding entrepreneurs reflects the duo’s circumspect attitude toward growing a venture: “Live within your means, start making money, and hold on to it so you can grow,” he said.
As Ivers and Ruff built BTM, they supported themselves through an activity similarly rooted in college culture: they managed the popular New Brunswick restaurant Hansel n’ Griddle, helping its owners open a new location on Church Street. Ivers said working for the restaurant ensured he and Ruff could keep BTM’s profits in the business, where they grew into a fund ready to support a future expansion.
By 2011, Ivers and Ruff were looking for laundromats. Ivers said the two sent letters to approximately 30 laundromat owners indicating their desire to buy one. This campaign proved fruitless, but a high school friend of Ruff’s who happened to visit Hansel n’ Griddle earlier this year had a possible solution: an acquaintance of his owned Laundromat Express in North Brunswick was looking to sell it.
Buying a business can be tricky. The owner will usually base her asking price on a multiple of the business’s revenue, and it’s up to the potential buyer to determine whether the revenue figure the owner cites is accurate. The buyer also must figure out whether the business’s overall health is as good as the owner will likely claim.
Ivers said the self-service laundry industry is an especially difficult one in which to deal: owners rarely manage their businesses day-to-day, and they are somewhat less than eager to enter hundreds of cash (and coin) transactions into a bookkeeping system that produces tidy financial statements.
Faced with an accounting enigma, Ivers and Ruff devised a creative form of due diligence: they got a hold of Laundromat Express’s utility bills from the past two years and focused on water usage. Knowing roughly what water costs and how much water a load of laundry requires, the two were able to determine the business’s reported sales were likely accurate.
Since Ivers and Ruff bought the business in August, it has earned almost twice the revenue they thought it would. And because the two eschewed debt or investors, they get to keep the profit it makes.
In the time BTM Laundry grew into a thriving venture, countless would-be entrepreneurs have deferred their own business dreams in favor of waiting for an elusive bank loan. If they aren’t kicking themselves for waiting, the story of BTM shows they should be.
Check out BTM Laundry online here.