Opening a laundromat business can be very profitable. Today’s laundromats are bright, cheery places that are well-lit, and clean. There are several considerations to opening a successful laundromat business.
Location of the Laundromat
Laundromats are beneficial for single people and families who cannot afford their own appliances.
The most important decision about opening a laundromat is the location of the business. The laundromat should be located in a high traffic area that is very visible from the street. The location should have convenient parking in a well lit area. Since people will wash clothes at all hours of the day, they will want to feel safe going in and out of the laundromat.
Other than the physical location of the laundromat, the demographics of the area surrounding the facility is very important. A laundromat located in a strip mall near a community with single family houses will probably not draw the same amount of business as a laundromat located near a college campus or an area with lots of apartment complexes. An area that has a younger demographic will probably produce more business than an established community of baby boomers who own their own homes.
A thorough research of the types of people who live in the community where the laundromat will be located is important because the business owner needs to have a clear understanding of about the type of customers that will come to the laundromat.
Financing the Laundromat
Opening a laundromat is can be an expensive start-up business. Once the business is open the equipment will not have to be replaced for several years, but purchasing the equipment in the beginning can be costly. It could cost anywhere from $35,000 to over a million dollars to start a laundromat business, depending on the state where the laundromat will be established. Obtaining financing for the laundromat starts by developing a good business plan.
Once a laundromat business plan hs been researched and developed, many business owners take the plan around to investors and/or venture capitalists for financing. Banks also consider laundromats good business due to the low overhead costs, but banks often want the business owner to finance up to ten percent of the total business start-up costs with their own money. Venture capitalists and investors often will work with the business owner in financing the deal. But remember, anyone putting up money to assist in the business start-up technically becomes part owners of the business.
Laundromat Operations
The size of a laundomat can be anywhere from 1,000 to 5,000 square feet. Coin laundries are considered commercial businesses, and most real estate space leases will be for a 10 to 20 year period. Some laundromats are 24-hour operations, but most hours of operation are from 6:00 in the morning to either 11:00 p.m. or midnight.
Laundromats have low overhead because they do not require many employees. An employee should be at the facility when the laundromat is open to handle any situations that may occur, assist customers with laundromat operations, and restock supplies and coins required for vending machines. A janitor should be hired to clean the facility each day.
Equipment and Supplies
The most expensive equipment purchased in a laundromat will be the washing machines and dryers. Once purchased, the machines have a long life-span.
- Top load washers – 5 to 8 years
- Frontload washers – 10 to 15 years
- Dryers – 15 to 20 years
- Coin changers – 10 to 15 years
It is also good business sense to have several large capacity washers and dryers for heavy-duty laundry loads. The long life of the machinery eliminates the need to constantly replace the inventory, though maintenance costs should be factored into the financial plan.
Other than the basic washers, dryers, and coin change machines, a good laundromat business will also have machines that sell both powdered and liquid laundry detergent, and different types of fabric softener sheets or liquid fabric softener.
Laundromats that understand the value of customer service will also have folding tables, comfortable seating, magazine racks with current reading material, and play areas for children.
Many laundromats also include laundry drop-off and wash, dry, and fold service for busy customers. This means that the customer drops the laundry off, and the laundromat employee does the laundry and has it ready for pick-up at an agreed-upon time.
Buy or New Business
After a thorough study of what it takes to operate a successful laundromat, the decision then becomes to either start a new laundromat business or buy an existing business. Both decisions take careful consideration, study, and the performance of due diligence before making the final determination.
Buying existing business – The first step is to determine why the current owner is selling the business. Ask to see past financial statements, query other business owners in the area to determine the flow of traffic to the laundromat, and talk to the current owner’s bankers, if you can get the information. If the seller does not want to divulge this information, that should be a red flag about the success of the business.
Just because one business owner failed to make the laundromat successful, don’t automatically assume that it cannot be a profitable business. A new owner can infuse energy and marketing expertise in the business to make it successful.
Starting a New Business – Perform the demographic research to determine customer base, then crunch the numbers to see if the business can be profitable. Also research to see how many laundromats are in the area, and if possible talk to the owners of the competing businesses. Research the purchase of equipment and supplies carefully to determine the best pricing structures. Write the business plan and start to take it around to potential funders. Don’t be afraid of rejection.
Starting the Laundromat
Make sure that all city, county, and state laws are followed and all pertinent licenses obtained. Develop a sound marketing strategy for attracting customers into the laundromat. Join local business groups and clubs, Chambers of Commerce, and business networking groups to help with the support and promotion of the laudromat.
