1/3/2024 0 Comments Rough bumpy road![]() ![]() Pushing down your costs means you can give the seller what they want and still make money in the long term. It’s an economy of scale: You already have the infrastructure (warehouses, factories, industrial dry-cleaning facilities, etc.) in place to do all behind-the-scenes work, often at a cheaper price point than that of the person you're buying the business from. When you’re constantly growing, if you’re doing it correctly, you're also pushing down your operating, production and delivery costs. To that end: Whenever I come across a valuable asset that I think can be improved upon, I look at what we can bring in and how we can push the cost down. Was the seller willing to take their money a little bit differently-say, less up front? Were they willing to have an incentive program? Were they willing to take a percentage of something? Were they willing to take a longer buyout? If the seller had flexibility on structure, then there was almost always a deal to be made. The key was to find out exactly what was important to the seller, and then figure out the best structure to accomplish that. I had to become very good at leveraging whatever assets we had. Usually, even when working with partners, I was the one who structured the deals. Over these intervening years, I made a lot of deals to buy different kinds of dry-cleaning businesses. It was a lesson in realizing that (a) we had to better calibrate our understanding of the market, and (b) we needed to find clients who could afford-and in fact, would demand-the quality and services that we provided. Unfortunately, when we raised the price, it turned out these particular corporate clients could legitimately not afford our services. We noted that this business was not charging a lot, and we saw an opportunity to raise the pricing while improving the range and quality of its services. Know what the market can bear-and find the right market.Įventually, I got into corporate dry cleaning: My partners and I bought a business that worked with a bunch of offices on Long Island. Rather than wasting more time and money on a system that no longer worked, we sold the business.Ĥ. The business model ultimately became unsuccessful. Also, the doorman building culture changed as doormen took on bigger and better-paying jobs for individual tenants (such as regular dog-walking gigs), which made the small dry cleaning commission far less appealing. But ultimately, other dry cleaning companies caught on to this method and started doing the same thing. For a while, this worked very well the doormen of these luxury buildings referred customers, and they’d receive a small commission. At one point I was running a dry cleaning service that did pick-up and drop-off at doorman buildings in Manhattan. ![]()
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