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.

Building a Laundromat Business instead of Buying one

You may have already been looking to buy an existing Laundromat, but you may also want to consider building one from the ground up. This is a great business to build, a laundromat is a good opportunity for anyone who wants to earn a great living. As with any new business, especially building one from scratch, you will want to know the aspect of that business up front. Building a laundromat is no different from any other new business, you will need to have a knowledge of the commercial construction process, or have someone you can use who is. Let me start by telling you that your initial costs for building a new building and business will be a lot higher up front, so your budget will need to be larger accordingly. some of the benefits of building a new building and business is that you can incorporate the most efficient services and building aspects, where you can't necessarily do that if you were to buy an existing laundromat business. The great thing about the laundromat service industry is that it can be very profitable is run correctly, so setting up an optimal business from the ground up may net you more profit in the long run that you could ever achieve with buying an existing one.

In your research you will want to evaluate the location of your new business more then anything. The right location will make or break you, so don't cut any corners here. As with finding an existing laundromat to buy, you will be making the same evaluations as to proximity to your home and your commute time, the location and neighborhood you wish to build, available commercial lots, parking, access by major roads and visibility.

You can partner with an existing laundry machine supplier who can help with the setup of a new business. By helping you and arranging lots of the little "hidden" items that may come up in this industry, they benefit by your using their equipment. You will need to have coin-operated and/or card reading technology washers and dryers. Most new machines today have both options. The card-reading machines allow the customers to fill up an electronic credit card to use in the machines. This ads to the convenience for your customers and saves them from carrying pocket fulls of coins. If you are looking to start the new business on a smaller budget, you can still go with the standard coin-operated equipment. They are usually cheaper and will have less features, but they will fit the bill in a pinch. It is my recommendation that you opt for the dual coin/card reader machines as well as machines that are medium to high end quality and durability. Having more efficient and longer lasting machines will save you in operating costs in the future. This is where the higher up front costs will apply too. Spend more money up front to save more in the future and increase your profit margin.

Once you have determined you machine and dealer you will use to help setup your business, you will still have to evaluate the final location for you business. Part of this evaluation will require you to investigate your customer base. You can use existing demographic services for any major city to find out what your customer base is. Use the industry experts to show you what demographic has the highest usage rate of laundromat services. You can use the pre-existing information available to you to help make your decision on the location. You can cater to nearly any market, but knowing the market ahead of time will make it easier to build for that market too. You should spend some serious time investigating your customers and the market you intend to setup in.

Once you have determined your market, location, equipment and amenities you plan to build into your laundromat business you need to start the process. Once you begin, the laundromat business will start to pay for itself in no time, and with proper management and maintenance you can make a great living for many years. Beginning the building process requires some expertise in the commercial building area, you should hire an experienced contractor or service that can do this for you. First time buyers or builders will usually fail without the proper knowledge or help. Use the manufacturers services and expertise in the industry to help you in the right direction. You can also find several equipment manufacturers that will actually arrange the commercial building process and setup for you. You just give them the money, they build and research everything for you and you just show up to pick up your keys when they are done to start running it.