If you are someone who is responsible for washing clothes in your house, chances are you have used laundromat services at some point in your life. For people not in the know, laundromats are self-service laundries that allow you to wash and dry your clothes without any professional intervention. Machines available in laundromats are mostly coin operated. Laundromats are also known as launderettes in some countries like United Kingdom while people belonging to some southern states of the USA also use the term washateria. Despite washing and drying machines being available in majority of homes, laundromats services are in popular demand especially among people who live in apartments. Some people use laundromat services for larger objects like bedding items which cannot be properly washed or dried using residential washing machines. Some laundromats are also available in places like hostels at universities, hospitals, apartment buildings etc.
Because of their popular demand, it makes sense that opening a laundry service would seem like a very attractive idea for any businessman or entrepreneur. A huge advantage of opening a laundromat is that it has a very stable market. Clean clothes are a necessity and people wash clothes either on a daily or weekly basis. This means that people will be always using your services regardless of day, year, season etc. This makes sure that you are always generating a steady amount of revenue from your business setup. There are around 11,000 laundromats working in the United States and they have been known to bring in almost 3.4 billion dollars each year. An individual laundromat can bring in anywhere from 20,000 to 300,000 dollars on an annual basis. So if you are keen on the idea on opening a laundromat, you should first go over the expenses required to do so. When it comes to establishing a business, long term planning is always involves regardless of the business’ nature. First you will need the financials to setup your laundromat and then you will need to manage expenses to keep it running smoothly day after day. This article will give you an idea regarding expenses involved in opening a laundromat, the costs of running it any other payments like loans, insurance etc.
How much does it cost to open a laundromat?
Setting up a laundromat business can cost you around 200,000 to 500,000 dollars even if it’s an average sized one. The amount of money you have to spend depends upon the type of business setup you are aiming to go for. As is the case with any business, you can either decide to buy an existing laundromat from its owner or you can take the longer route of starting your own brand from scratch. The option that will cost you the most is obviously the one where you will have to create everything from scratch. Setting up a new business isn’t an easy task as you would have to arrange everything as in buying or renting property, purchasing equipment and machines, hire staff if needed and building your customer base. On the other hand, you can try purchasing an already existing laundromat. This comes with a couple of advantages. An existing laundromat would have an already established consumer base and would allow you to skip the entire process of building a business entirely.
A third option you can pursue is buying into an existing laundromat franchise. If you decide to go down this route, your expenses will range from 75,000 dollars to 300,000 dollars depending upon the worth of the franchise. The best benefit will be the customer’s trust in the brand’s name that is showcased on your store front. This will also allow you to rely on the franchisor for any guidance you may require.
Property for your laundromat
If you are going to establish your laundromat or any business for that matter you are going to need to sort out two things first: a space and a location. If you are the owner of a property which you think would make for a good business location, then go for it. In most cases, you would either have to purchase or rent a property. The price of land is going to depend upon variety of factors. If your target is a big metropolitan city, then you would have to pay more. The size of an average laundromat is around 2,170 square feet, so make sure to do your research on property prices before making your decision. Expect a cost of somewhere from 200,000 dollars to a million depending upon the market price in that region.
The second thing you need to watch out for is the location of your laundromat. Location plays a big role in the success of your business venture. Make sure to set up shop in a place where there is a demand for a laundromat. Any area rich in apartment buildings is your best option as people living in apartments usually don’t have washing or drying machines. Also make sure your laundromat is easily accessible and near to your customer base.
Obviously, the first piece of equipment you have to purchase is washers followed by dryers as they make up the base of your business. Once again, the cost of these machines vary depending upon model, brand, type etc. A typical washer or dryer is going to cost you from 800 dollars to 2,600 dollars. A typical washer or dryer lasts for 10-12 years so you won’t have to invest in new machines any time soon. The number of machines you purchase is going to depend upon the scale of the laundromat you are going for. The number of machines in a laundromat can range from 40-100, so you are looking at a bill of 32,000 to 260,000 dollars. Also keep in mind that you may need to repair any machines that go out of order. A typical repair or maintenance can set you back up to 500 dollars, so keep this in mind while planning your budget.
You should also consider installing a card reader system so that the customers can pay via cards. This will make paying convenient for a number of customers that don’t like to carry their money around. This can usually cost you around 40-80,000 dollars. Other equipment you may need include laundry carts, fabric softener and soap, furniture, office equipment etc.
Going by the nature of your business, this is probably going to be your biggest expense when you start running your shop. In most scenarios, you will have machines running non-stop all day long and with it will come water and electricity costs. In other words, you are looking at a cost of 4-8,500 dollars per month. Also make sure that your selected property has good built in plumbing infrastructure as a poor water line system could set you back a lot. Depending upon the number of washers in your laundromat, your sewer connection could also end up being costly. You should also keep some money separate in case of any event that results in some unexpected costs.
Business structure and insurance
Establishing and owning a laundromat means that you will also have to decide what your business structure is going to be. The structures you can adopt include sole proprietorship, Limited Liability Company or LLC, limited liability partnership or LLP and corporation. In case you file for sole proprietorship of your business, keep in mind that there is no difference between you and your business. In case of any mishaps like failed loan payments, your personal belongings may also be at risk with your business setup if sued.
The second thing you need to do is to secure insurance for your business. A business insurance helps small business owners in protecting their business setups. Owning a laundromat means exposing yourself to some degree of risks. Your machines may take some damage due to some reason or a customer can trip and fall in your laundromat resulting in a serious injury. Your recovery from any of these mishaps is going to depend upon your insurance policy. You have to file for commercial property insurance that will cover any damages relating to fire, vandalism, theft and weather related property damage. This could cost you up to 2,000 dollars annually. In case if you have any employees, you may have to pay for unemployment and compensation insurance.
If you are establishing a new business, then marketing can play an important role in the success of your business. Marketing can bring new eyes on your laundromat and help you gain more customers. When it comes to marketing, make sure that your advertising campaign is well designed to target your key demographic. Also you can sue social media to advertise your business. With people spending a lot of time on social media, it has become a necessary place to market your products and services. It also guarantees more eyes on your business which is never a bad thing. If you are offering a unique service that isn’t available at any other laundromats in your area, make it a key point of your marketing. Also providing a good quality service would ensure customer loyalty and free marketing with people recommending your shop to other people. You could try to overlook marketing especially if you are already on a tighter budget, but the benefit it brings is undeniable. So make sure to allocate 7-8% of your budget for marketing purposes.
Just like any other business, you have to spend a good amount of money to set up a laundromat service. But being in laundromat business means being part of a stable industry. The absolute need for clean clothes would mean a constant or steady amount of customers regardless of month or season. If you keep your place clean, make sure the machines are in good order and offer excellent services then you can easily make a name for yourself in the laundry services marketplace.