Thursday, May 3, 2012

Is a Laundromat Business right for you?

It is mandatory that you do your research first.  Getting into any small business is always a risk.  Before you do decide on your course of action, you need all the information you can get.  This is what you need to know before you buy into an existing laundromat business, or build your own business or franchise.

The recession and economical crisis is over, but not out of the woods yet.  Many people are still unsure about the future of our economy.  Unless you have been under a rock for the last couple years then you should know that employment rate is dropping, spending is turning around and our economy is going again in the right direction.  This is a great thing, because this is not only a good time, it is one of the best times to start into your own business.

Starting a Laundromat business is a fantastic way to become your own boss and business owner.  Many years ago I made the choice to be my own boss through buying a franchise laundromat service.  I spent a lot of time researching and looking at other options and for me at the time this was the best choice for me.  I was a little unsure about myself at the beginning, but I was given all the tools and training I needed to succeed.

What I did learn was that there was not a lot of public information about how to run and manage a seemingly simple business as a laundromat.  If you are like me, you are probably wondering the same thing and you might be thinking that it is fairly simple.  This can be true to some point, depending on your point of view.

There are a few misconceptions about laundromats that I do hear from customers and other people who do not know the business.

Operation of a Laundromat is cheap

Starting and Operating a laundromat are two different costs and people often confuse them.  When I am talking about operation of a laundromat, I am talking about the day to day costs.  Like any other business, you need to figure out your cash flow, expenses, salaries, etc.  Then from there you can determine your net profit.  Operating costs are like any other small business and include advertising, insurance, equipment leasing, equipment maintenance, Utilities, Rent or building lease, Supplies, Taxes, Wages and other expenses you may think of.  This is definitely not a cheap business to operate, but it is a very stable and profitable one.

A Laundromat is a hands-off business

This is probably one of the biggest misconceptions out there about laundromats and ownership.  What most consumers don't realize is that the owner of the local laundromat business is the one behind the counter and doing the work.  Operating a laundromat is definitely a hands-on business in my experience.   Don't expect to get into this type of small business and sit around all day and watch the customers and money roll in.  This is a full time commitment and you need to be clear on that.

This is a business for a dedicated, hard working person.  If this is not you, then don't bother, go get a 9-5 job.

If you are still eager to know more about laundry service businesses, then there are other things you need to think about before making your decision.

I have mentioned this before: Location.  Location of your business is the key to success.  I can't stress this enough and you must put a lot of time into finding the right location for your service.  That goes for both buying an existing business for sale, or building your own service from the ground up.  Almost any small business, especially customer dependent businesses such as laundromat services, will either sink or soar by its location alone.  Picking the right demographic and location is critical in laundromats because of the traditional users of the service.  I have seen the most success in low income areas.  This is not a bad thing. 

You should be looking for locations with existing client base in high tower apartments, college dorms or high concentrations of condominiums.  The best locations are actually within close proximity to dorms.  This is because most dorms don't have adequate laundry services and having a convenient, close location to them is ideal.  Your business must be visible too, end-cap locations may cost more in rent, but will bring in 50% more clients compared to a lower rent, inner location of a strip mall.  This is true for almost all businesses.

Your Competition

The competition to your business within the "ideal location" is also vital to research.  Scope it all out, even visit each location and get a feel for the service, fees and clientele.  If you can, even talking to the customers as well and note how busy the places are and at what time of the day.  When it is busy, actually bring a load of laundry to do and talk to the other customers.  I have done this before... as you are sitting around, say this " It sure is busy today, is it always like this? "  You usually get someone commenting about it.  Follow up the conversation and get an idea of how the like the service or if there are other options around.

You will need to combine both location and customer base into usable information.  You can do this yourself or hire out a market research analyst to do the work for you.  Then again, I find a little foot work of your own gives you a far better idea in specific areas.

Asking questions

It is important that you ask the questions too.  If you never ask, you will never find out.  Even asking other business owners how their business is doing might give you insight into the area as well.  Most business owners I know love to talk about themselves. Take advantage of this and determine the feasibility of operating your own business in that market.

Laundromat businesses are well established and long term businesses.  You can be very successful in this industry if you do you homework first before you jump in.