If you are looking for Advice for How to Start or Buy a Laundromat, read this guide!
These days with the recession in full swing, a lot of people are looking for some recession-proof investments. One of the best recession-proof businesses is the commercial laundry business. The typical ROI is 20%-30% and has been classified as of the safest investment! A laundromat business can also be a part-time job, since the owner does not have to baby sit the business. Even better, you don’t have to have pervious experience so it makes one of those small businesses easy to get into without lots of background knowledge. Commercial laundromats can still be profitable, even in low income neighborhoods.
Things You Need to Consider Before Starting a Laundromat
Like any business, you need to start with a good, solid business plan. The next step should be to determine the type of business entity you new business will be and estimate the operational and startup costs. You can use this plan to formulate loan proposal. Banks and loan companies will carefully examine the document and check your personal credit history to see if they can trust investing money with you. They will also want to see you have the assets to cover a portion of the loan. It’s easier to get a secured loan with low interest rates than an unsecured loan with high interest rates.
For most people, it will be necessary to get a loan since laundromat equipment costs will be high. Your loan payments should not be a problem for you – you can expect a solid cash flow between 13k to 250k a year with your ROC being between 20%-30%. In a few years your business should have paid itself off!
You need to make sure to select the equipment that is best suited for your operation – all the equipment should have provisions for coin operations as well. There are choices of card reading technology instead of coins and there are benefits and drawbacks to these (less work for you, but more prone to hacking). You need to do a careful cost analysis here and see what’s suitable for your budget and needs.
It’s also crucial that you get the necessary permits and licenses so you can operate legally and without fear of being shut down. You wouldn’t believe how many people try to operate illegal laundromats and dry cleaning services!
You should determine if you need any staff and decided on their wages etc. Though you may not have “employees:, you will need to occasionally hire people to fix and maintain the machines – so keep this in your budget.
You need to find a place to put your business. Laundromat businesses typically require between 1000 to 5000 square feet of pure retail space; the lease durations are usually between 10 to 20 years with possible option periods, depending on the case. The location is, of course, crucial to the success or failure of your business. You should spend the most amount of your time making sure the location is perfect. For laundromats to be profitable, you should try to select a shopping complex (large influx of people) or areas with large tenant or student populations. Students and tenants will be the likely customers. In general, you want areas that are in the lower to mid income bracket level, an area that has more apartments then houses. People with houses will often have their own washing machine and dryers. Before you get a lease, you absolutely should consult with a lawyer. Make sure you can afford the lease and have enough money in the bank for the first six months to a year. Fortunately, coin laundries are fairly profitable from the get go, so you should start to see a ROI right from the start.
You need to take advertizing into account in your budget; you can use websites such as craigslist, advertise in the local paper, radio, etc. There are many ways to do this.
You need to thing about some ways to retain your customers, especially if there is competition in the area. Some suggestions for this could be video arcade machines, snack machines, toys for children, etc.
You should find out what hours of operation you wish your laundromat business to follow. A good many laundromats are open all day or use some sort of special timer system which open/close doors automatically.
Determine the hours of operation; some Laundromats are open all day or use a timer system to open and close the door as per a preset timing schedule.
The above information are some useful tips to follow when considering how to start a laundry business. In general, commercial laundromats are an established profitable business model that almost anyone can start. There is a high ROI and low operational costs. But like any business, don’t just assume it’s a breeze to start and run – you need to do some heavy groundwork first.
