Have you ever walked down the street or passed by a particular store and thought to yourself “how or why is this guy in business”? There are literally no customers in sight and the business itself services what conventional wisdom would think to be a non-existent market. How are they paying the bills? Unfortunately, I ask myself this almost everyday as I walk through the streets of Grantville, a little-known part of San Diego tucked away on the edges of Mission Valley that seems to have been left for dead when the 80’s rolled around. It’s always an adventure walking through Grantville, you never know what you might find.

Yup, that’s right. You’re looking at a real life sewing and vacuum cleaner repair shop that appears to be left over from the 80s. While this might have once been a hot business idea for an ambitious young entrepreneur, the fact of the matter is that our buddies over in China have perfected the manufacturing process (and eliminated child labor laws) which allows them to produce and sell sewing machines and vacuum cleaners for a lot less then we can. As a matter of fact, I paid $40 for my vacuum cleaner 6 years ago. When it breaks, I won’t be getting it fixed; I’ll be throwing it away and getting another one for $40. Let’s examine one of these Grantville businesses a little bit closer to see how exactly they survive.

Overview

Here we have a prime example of a Grantville business; a rug washing company. It’s a fairly simple business model where customers can bring in their throw rugs and have them professionally cleaned. Their slogan is “lug your rug and save”. The slogan insinuates that customers can save a little money by bringing the rug into the plant themselves versus having someone come to the house and clean it or pick it up. These guys have been in business since 1946 and the spinning sign above is a testament to that as I believe those went out of style in the 60s.

Don’t get me wrong, I understand the value of this business. Some people have expensive rugs and once in awhile they need to be cleaned. My argument against this service is that anyone that would be willing to roll up a rug and drive it all the way to Grantville most likely wouldn’t spend a lot of money on a rug and would probably throw it away when it became dirty. However, we’ll give them the benefit of the doubt. Let’s see if we can figure out approximately how much money this company might make.

The Numbers

If you believe Manta then it looks like they make about $76,000/year in gross sales and have approximately 3 employees. A little quick math and those numbers don’t seem to work out very well for the business owner or the employees so they’re most likely incorrect. I gave them a call this morning and asked how much it would cost to get an average 6′x9′ rug washed. The receptionist then proceeded to ask me if it contained any human protein such as vomit or urine as they charge $10 extra for that. Luckily my rugs are all vomit and urine free.

The pricing breakdown is as follows for the 6×9 rug.

• Synthetic Rug - $44 - $54
• Wool Rug - $95 - $121

The synthetic rug pricing was fairly straightforward at $44 with a $10 vomit surcharge but a wool rug costs quite a bit more to clean. Like anything else that’s wool, it requires dry cleaning. On top of that, according to the friendly receptionist, many fine Persian rugs which are truely authentic are made using special exotic dyes which will require an acid wash before cleaning to lock in the colors and prevent them from bleeding. This is why the price varies so much for the wool rug cleaning.
During a visit to the rug washing plant I counted 12 average sized rugs sitting outside drying. I walk by this plant fairly often and I would say that on average there are 10 to 12 rugs outside drying at any given time. I assume these are all synthetic rugs as the wool rugs are all dry cleaned. There were also 5 or 6 small doormat type rugs drying but we’ll ignore those for this analysis as they only charge $20 to clean those. As far as the wool rugs go I’m going to assume they only clean 3 to 4 of those a day.

Conservative Monthly Gross Sales Estimate
synthetic rugs - ~$8800 (10/day @ $44)
wool rugs - ~$5700 (3/day @ $95)

Aggressive Monthly Gross Sales Estimate
synthetic rugs - ~$12000 (12/day @ $50)
wool rugs - ~$8400 (4/day @ $105)

Total Monthly Gross Sales Estimate - $14,500 - $20,400

With an estimated average annual gross sales of about $210k the owner should be able to pay 3 employees 40k/year and have around 90k left over to pay the bills. This still doesn’t sound like enough money to cover operating expenses AND make decent money for yourself so I did a little digging. The key to this particular business is the rent. There is none. According to city records the property belongs to a James Schwerma who, in case I didn’t mention it earlier, is the owner of the rug washing plant.

Conclusion

I have to admit, I’m actually kind of surprised at the revenue these guys might potentially be pulling in and I’m sure my aggressive estimates are probably still on the low side. While the rug washing business may not make you an overnight millionaire it is a viable business. Owning the property you do business on is a huge advantage as that eliminates one of the largest fixed operating expenses (outside of salaries) for most small businesses. Furthermore, being in business for over 50 years gives you some credibility and lots of recurring business. While I wouldn’t recommend opening up a new rug washing plant I think it’s safe to say that these guys will be around for years to come