Everything you should know about a profitable laundromat business is mentioned in this article. Check out to get acquainted with the details.
One of the most profitable business ideas is a laundromat business. A laundromat, also known as a launderette is a complete self-service facility that let users wash and dry their clothes by using commercial washing machines that can handle heavy loads and constant use.
Though the first laundromat was started in Texas, nowadays it is very common in almost every corner of the globe. If you are thinking of starting your own laundromat business, then you should stick around and continue reading.
This article will give you all the necessary information such as what equipment you need to buy, how much capital you will need at first, how to identify the pros and cons of this business idea, etc. So without wasting any more time, here are the details about how to start a laundromat business.
Things To Consider Before Setting Up A Laundromat Business
Starting a laundromat business needs proper research and you need to follow a proper process to do it. Hence we have compiled a list that will walk you through the process of how to start a laundromat business.
1. Do proper research.
2. Create a strong business plan.
3. The business entity is also important.
4. Buy or Build- the choice is yours.
5. Running time of business.
Here are the detailed facts about these points.
1. Do proper research
Starting a new business is always quite daunting but it needs extensive research work to get a rewarding result as well. The main benefit of conducting proper research is that it will help you understand if the laundromat business is right for you or not. Also, you can get insights into the business details, local market, competitors, cost details, start-up equipment, etc. Here are some of the things you have to keep in mind while researching.
Research on competitors
To start a laundromat business, you must research your competitors thoroughly. Researching your competitors can give you a perspective of the market for your business idea. This part needs a lot of time but when the research will come to an end, you will understand your direct and indirect competition. No doubt, this will help you to plan accordingly to compete with your existing competitors.
You can search for your competitors on Google. Apart from this, you can also walk into various laundromat businesses across the city to get a proper idea about them. You can make detailed notes. It will help you to make a comparison between them. When you will do this, you will get two types of competitors, namely, primary competitors and secondary competitors.
Primary competitors mean they are exactly at the same doorway as your laundromat business. There will be a higher chance to attract your clients to them. Whereas secondary competitors are those who are offering the same service but not exactly at the same place. It may be the different end of the city. Still, they can be your competitors because they are offering the same service to a wider population.
When you are researching your competitors make sure to keep an eye on other facts like the convenience of service, market positioning of them, features provided by competitors, type of customer service, employee types, etc. By finding out these factors, you will be able to find out the process of making a strong position in the market.
A sound location
It is always important to find a favourable location if you want to start a laundromat business. You should find a locality that is easily accessible and can be viewed from the roadside. Choosing a top-notch location can make your business flourish quickly and more easily. When you will start searching for the location of your business, you should ask yourself if the location is the right choice to start the business, if the locality has a stable community to use a laundromat, or if the locality is already equipped with a laundromat business. When you can answer these questions, you will automatically get a proper idea of the location of your business.
Also, the location should have a proper parking lot where customers can easily come and go. Taking footnote to the main area of the laundromat, maintaining CCTV connection for the safety of customers, etc should be kept in mind. Along with this, make sure you have crosschecked all the permits, fees, documents, etc to start the laundromat business in the particular location. Some of the few permits or licenses required are health department licenses, fire department, pollution control board licenses, etc.
Proper market research also includes checking expenses beforehand. Expenses will include construction expenses, machine costs, license fees, location costs, employee payroll, and other miscellaneous expenses. This business idea needs huge money as a starting capital because of the huge machinery cost. Utility cost is another expense to be considered.
When you are done with all kinds of research work, make sure you have an organized note that can help you to make a bold decision from every angle possible.
2. Create a strong business plan
A business plan is mandatory for any kind of business. A business plan means you are gathering all the exact steps that have to be taken. Apart from this, you will also get an idea of resources, the long-term and short-term goals of the business, etc. Do not try to skip this part. A business plan for a laundromat will give you a holistic idea of profitability. In the business plan, you need to include an executive summary, company description, management system (details of employees), market analysis, financing plan, and marketing strategy.
3. The business entity is also important
Though time-taking but the important step is making a business an entity. In this step, you need to think of a proper name to start a laundromat business. You need to get paperwork from the government to create your business agency. When you are done considering the name of your business, you need to follow a state’s business filing website. Everywhere the rules are different so make sure you have a detailed idea of this.
Before doing all these, you need to decide on the business structures like “Sole proprietorship”, “General partnership”, “Limited liability company (LLC)”, and “Corporation”. Documents can vary from one another. If you want to register as LLCs, corporations, and general partnerships, then you need to register with the Secretary of State or a business agency.
When you are done with the detailed structure of the business, you need to obtain an employee identification number (EIN). EIN is a social security number for your laundromat business entity that is required for state and federal tax filings. Only if you are going for a sole proprietorship without any workers under you, then you can skip this part.
Open a business bank account so that you can make all the business-related expenses from one account. Through this, you can keep a track of all expenses. To create a business-related bank account, you may need the employee identification number because it will help you to ensure the separation of the business account and personal account.
4. Buy or Build – the choice is yours
Well, now you are ready with the business entity. Now it’s time to buy or build your business. You can purchase an existing laundromat. Otherwise, you can make one from scratch. Whatever the way you will choose, you will need all kinds of permits, licenses, charges, etc.
Buying an existing laundromat means you have already a running cash flow. It is of course less risky than making one. Besides, when the business is already stable, you may get investors easily. Investors love a proven business model where they can invest. So this is a great option to buy an existing laundromat business. Also, you will get previous employees to run the business. The only thing you need to check is the facilities and construction. These two things should be renovated as per your choice.
You can also start a laundromat business but this means you will have no customers at first. You need to hire employees as well as you will not have a strong cash flow. Only if you can enjoy a daunting journey, then you will love this tough journey.
5. Running time of business
When you are all set with your new laundromat business, now you need to fix a few schedules, where you can do some extra things related to the business. Being a laundromat owner means you have to keep eye on daily tasks. Here are some of those factors for your business.
Total work hours in a day
Usually, laundry should open in the early morning and close at the end of the day. Also, owning a laundromat means you have to open your business even at the weekend because these days will be the busiest day ever. Only if you open a 24*7 coin-based laundromat, then you can open it whenever to check the ongoing works inside the business area. You have to be very punctual if you need to open the door of the business area. Remember, your customer will come to use your service only if your service is comfortable and satisfying to them.
Clean place to start
Make sure you have a clean and hygienic place so that people are comfortable using the area. You can clean the place on your own or else just hire someone. Make sure to clean the whole place at least once a day. If before and after closing the shop is possible, then it will be the best.
If you have a coin-based laundromat business, then you need to collect the coins at the end of the day. You can also make use of a card system so that customers do not need to carry cash with them. They will just swipe the card and your bank account will be credited with the money amount directly from the customer.
Well, these are the most basic factors to consider before starting your own laundromat business. Apart from all these factors, you also have to take care of some other things as well. Don’t worry at all because we are going to help you with those so that you can make a proper decision of starting a laundromat business.
How Much Does It Cost To Start A Laundromat Business?
Already we mentioned you can start a laundromat business by buying one existing business or building a new one. Well, in both cases, it can go from $200,000 to $500,000 if it is an average-sized laundromat.
A huge portion of the initial cost is dependent on equipment costs. To run your business properly, you must go for the best machines. Top-load and front-load are two types of laundry machines. Top-loads can go up to $1000, whereas front-load can be between $700 to $1000. Dryers can also cost nearly $1000 to $1500. Here is the list of equipment you need to purchase.
● Washing machines
● Water heaters
● Laundry detergent
● Fabric softener
● Laundry carts
● Office essentials like computers, notepads, stationery items, etc.
If you want to enable a card system in your business for the convenience of your customers, then it may take up to $40000.
Your business insurance can also go up to usually $1,000 to $2,000 annually which will include all kinds of issues. Though, you can choose insurance as per your capability. Insurance is available at various costs with various offers and can assist you to start a laundromat business.
How much should you charge your laundromat customers?
This part can be changed person by person. First, you need to check what other laundromats in your locality charge for their services. Now, define your pricing by calculating all kinds of operating costs of your laundromat.
You should keep in mind costs per load will change because it will be dependent on various factors. Some of those are the cost of water, sewerage per gallon, how much water is used, electric usage, cost of liquid soap, count of washing loads, etc. Before charging your customer, make sure you have enough idea about the water and electric consumption of the laundry machines.
Pros And Cons Of Owning A Laundromat Business
Business ideas come with rewards as well as risks. The same applies to a laundromat business too. There are lots of pros and cons you may face while running this business. If you want to start a laundromat business, you should consider its pros and cons.
Pros of a laundromat business
Let’s see what benefits you can avail if you start a laundromat business-
● Work-life balance
Owning a laundromat business can be a part-time business. It is because you have the opportunity to use an automatic laundromat system, that can be operated by the customer. So, you can easily balance your work and professional life, if you start a laundromat business.
● Easy management system
Coinless payment systems, automatic filling machines, card-enabled systems, etc, made this business easier like never before. So an on-site management system is not mandatory always rather you can just sit back at your home and manage the business remotely.
● High success rate
Usually, this laundromat business has a return rate of 20% to 30% on investment. Besides, you do not need to spend on any inventory. So, you can get a good profit from this business idea.
● Extra source of income
Some people sit in the laundry area for two to three hours. You can offer them beverages, snacks, magazines, etc which will lead you to get a side income along with your business.
● Family business
When you start a laundromat business on your own, your next generation will gain detailed knowledge on how to run a business, how to manage various business skills, etc. Easily, you can transfer the business to your child and so on.
Cons of a laundromat business
This is the time to check what disadvantages you may face if you start s laundromat business.
A laundromat business can lead you to huge competition depending upon the location, services, etc. You need to be always upgraded and active with your services.
● Unpredictable demand
It may happen that the vacation is not your cup of tea because vacation means everyone will do all kinds of laundry stuff together. That means you may face a huge demand during vacation time which will dissolve your holidays easily.
● Huge initial cost
To start a laundromat business, a high investment is needed. Commercial-grade equipment, permits, licenses, location costs, insurance, etc may cost a big amount. You may need to take a loan or you need to get investors ready by your side.
So, here we have provided you with all the possible details for starting a laundromat business. Hope this article was helpful to you. Keep in touch with us to get more information like this.
Frequently Asked Questions (FAQs)
1. Is the laundromat business profitable?
Nowadays people are quite busy or sometimes they don’t have a laundry machine at their home which can take a huge load. In this scenario, people are hunting for a commercial one where they can wash and dry bulk clothes, fabrics, etc. So, the demand is growing day by day. It is noticed that laundromat businesses generate approximately $5 billion in nationwide gross annual revenue. With a coin-based laundromat business, you can expect a cash flow from $15,000 and $300,000 annually.
2. How can I be successful with my new laundromat business?
Well, new-age entrepreneurs are quite interested in the laundromat business because there is a steady demand for this service. If you are one of them, then you have to maintain a few things to be a successful laundromat business owner.
● High-grade commercial machines are a piece of must-have equipment.
● Don’t forget to provide liquid soap and other necessities separately so that people can buy them for their homes just from you.
● A good amount of start-up capital is also necessary to arrange everything to organize the business. $250,000 is the average start-up cost.
● Don’t skip advertising if the shop is completely new. If you are buying an existing laundromat business, then you can skip this part.
● Location is the single factor that can make or break the business. Make sure that the location is easily accessible for your customers, your employers, and your suppliers.
● A strong team is also a key factor that can keep you running always with lots of services. So, you need to hire people accordingly.
3. What are the items or equipment you need to start a laundromat business?
The laundromat business includes a lot of equipment and items. Here is the list:
● Commercial grade laundry machine
● Water heater
● Fabric softener
● Coin machines or card machine
● Detergent vending machine
● Laundry carts
● Door hangers
4. Is customer relationship essential in a laundromat business idea?
Undoubtedly, it is one of the most important parts of the laundromat business also. From a financial standpoint, if you provide your customers with the best service in the town, then it will help you in retaining customers. Your cost per service will also play well and people will remember which company offers what. So make sure to provide the best customer service to make your brand the strongest one.
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