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.

Finding a Laundromat for Sale

The Coin Operated Laundry Business

A laundromat is like any other small business, it has a location, staff, expenses, employees, etc. What makes them a good business to get into is that they have been around for a fairly long time, 50 to 60 years or more in some areas. Coin Operated Laundry services have always been good businesses to get into back then and even today.

Everyone, including yourself, have dirty clothes... that's millions and millions of potential customers. Your not going to get them all, but you will get some of them. The base operating of a laundromat is self service for the customer, so they are actually doing the work, you are simply supplying a location and equipment. You may already decided this and are looking for ways to find that business, either locally or in another area.

Finding a laundromat for sale

To find a commercial business, you'll need to be looking in the right place. Browsing your local newspapers will usually not provide much, you might get lucky and actually find a great local laundromat to buy, but the odds are low. What you will need to do is find a commercial Realtor or commercial business listing. Some that you can look at online include www.business.com and/or www.loopnet.com . Both have great listings on available businesses for sale.

Buying a Laundromat

As I have said before, there is a lot that you need to consider when buying a laundromat. Everything from the location, equipment, laundry supplies, commercial laundry machine servicing, the building itself, leasing options, legal issues, customer demographics, earning potential and especially the reasons as to why an existing laundromat is for sale in the first place.

If you are looking at buying an existing coin operated laundromat business, you need to know why it is for sale. If the current owner is retiring, illness, or something that would prevent them from continuing in the business, then it would be a good location to consider. However, if you cannot determine the exact reason, then it is likely that the owner is not earning enough, or is loosing money. This could be because of the location, equipment failures, pour service or something that is keeping the potential customers away.

Not only should you look at existing laundromats for sale, but you should look at some that are not for sale. See if you can get in touch with other owners, preferably on the other side of town. If you related to another business owner and you show that you don't have any competition with them, they will be more likely to help you out. Most small business owners that thrive are proud of their achievement and I have found that they often like to talk about it. Be straight with them, tell them you want to get into the business and that you are curious as to why they have done so well. Complements do work wonders, even if the place is a dive.

How to buy a Laundromat for Beginners

If you are looking for a business to buy or build, as a beginner into the business world you need to consider a few things. If you are considering a laundromat as your first business, you will want to know a bit about buying or building a laundromat before you get right into it. There are a lot of details that often get overlooked by people who are doing exactly what you are doing, looking for a business to buy or build. In their research, or lack thereof, people often miss subtle items that come back to bite them later. When buying a laundromat business you need to look at all the aspects of that business and the laundry industry as a whole. Without adequate knowledge, you could be left in the dust by your competition.

Lets talk about buying an existing laundromat business. I will go into how to build a laundromat service from the ground up later. For now, you will need to focus on the existing business. In your hunt for the perfect laundromat, you will need to start off with your basic items. This will include the location, the size of the business, proximity to your home and your commute, options if you plan to move, your budget and pre-arranged lawyer, inspectors and industry expert. I guess before you even arrange any of those items, you first need to decide if buying a laundromat business is right for you. These pages may help you decide if a laundromat business is right for you. I recommend that you not only check out my site, but others as well. You need a broad range of sources and input to evaluate your business goals and career intentions. A Laundromat is simply one option, there are many other business opportunities out there you can review and research.

Purchasing a laundromat is like any other business that is for sale, you need to find it first. There are laundromat specific listings online, as well as general business and franchise listings online or in your local papers where you can find existing businesses for sale. That should be your first starting point. Once you find a suitable business, you will need to check it out. Investigate all aspects of that business, and use the services, get a feel for the neighborhood and customers, get a sense of the atmosphere and if it is a place you would like to work and invest your time and money into. Once you have found that perfect locations, you will need to discuss your offer or intent with the seller, at that point you can look into the actual business further, such as the paperwork, income and books, costs and more detailed stuff. Use your lawyer and industry experts and building inspectors to evaluate the business from their point of view. You should also evaluate it against similar laundromat or laundry service businesses, such as dry cleaners, etc. With a letter of intent, you can secure the offer and restrict the seller from discussing the sale of the business with any other prospective buyers. This puts a hold on it if you will. You will need to negotiate a holding time where you must decide if you are to continue with the purchase or decline.

The time that you have as negotiated by your letter of intent and agreement with the seller, you need to now spend your time to inspect and evaluate the business. Determine if you are getting your money's worth and if the price is a fair value. Examine all aspects of the property, equipment, etc. Having an industry expert available to help you with the evaluation will make your life a lot easier too. Get to know all the employees and customers too if you can. List and itemize all equipment, age, service records, utility costs and what is to be transferred as part of the sale of the laundromat. You need to determine all the building information, inspections, building codes, any faults, any repairs required, leasing information, taxes, etc.

Then you will need to determine your rate of return, or the profit you will or can make with the business. Determine if you will be making money right away or if you will be running at a loss until something is corrected or you have to invest some money into it. Review your competition and how long each other laundromat has been in business, who has the biggest or most loyal customer base. Determine how your prospective business compares and how it is viewed by the community. You may find some easy wins for this business to make it more profitable and attract more customers by knowing your competition up front.

Upon deciding if this laundromat business is right for you and within your budget, you will need to have your lawyer draw up the terms and conditions of the sale / purchase of the laundromat business. Make sure your lawyer is proficient in small business sales and preferable familiar or experienced with the laundromat industry. Use your lawyer to complete all the legal and financial stuff to acquire your business. In no time, you will be running your very own, profitable laundromat business.

Buying a Laundromat Business Tips to Remember

You have to consider who is going to use your laundromat service. People who have clothes are already washing them somewhere, and will wash them again, probably at the same place they did last week. So the question becomes, how do you get them to come to your place of business of the laundromat they already go to?

There are a few things you need to consider if you are buying a Laundromat or building one. The first obstacle you have is going to be how to get those customers who already use another laundromat to come to yours. If you can, be more convenient for them to get to, or use. Having newer and better equipment, a nicer atmosphere and environment as well as a very clean store will be the best ways to attract your customers. If you are considering buying an existing laundromat business, you should look at it as if you were going to build it yourself and if it has all the amenities you would put into it. A well equipped laundromat will do more to bring in new customers then having the best advertising or locations.

Time is limited and for most people they want to get in and get out. So, one of the biggest draws will be larger capacity machines that complete the wash and dry cycles in faster times. Larger and higher capacity machines usually mean a bigger investment up front if you are having to buy equipment for your laundromat, but the rate of return will be higher. This will allow you to serve more customers in less time, bringing in more revenue.

If you don't know this by now, then you should not be looking at this article. You need the right location to make your business successful. Location, location, location. This is true to some respects, but in today's economy and market, you do not need to be on the corner of the local street to attract business from that neighborhood. Almost everyone uses a car to get where they want to go. People drive to their Starbucks, big market stores, etc, so why not drive to the laundromat, and they do. People will travel further to their favorite store or laundromat because they like, not always because it is the most convenient or closest to them. Developing your business atmosphere will help to keep and attract those customers. So, the location is not always as important as having a convenient location. When I talk about a convenient locations, I mean a convenient location by car. So if your laundromat is easy to get to from major roads and not a hidden strip mall, you will have a better chance at keeping customers.

Research your location for your laundromat, of if you are buying an existing business, you must check out the surrounding areas. Visit the laundry rooms of any local apartment buildings, see what they are like. Most apartments I have visited usually have inadequate machines, old, and often out of order. If you find many apartment buildings in this kind of shape, you are in a prime location to receive lots of local business. There are many other factors you will need to consider about finding the right location to buy your Laundromat, or build your own Laundromat. Spend most of your time finding the right location for a new business and carefully study the area of any laundromat you are considering to purchase.

Where do you start? Buying a Laundromat

How to buy a Laundromat

I decided to share with everyone the information you need to buy your own Laundromat business. Why? why not. Mostly because I don't feel that giving away the information will affect me and my business at all, and having other people with the right information in the Laundromat business will only make it better. There are a lot of lessons to learn with a coin laundry service, but they also apply to any small business venture. The coin operated laundry business is fairly simple and if well managed can produce a very good income for anyone.

This industry is a self-serve industry, also known as a coin-operated laundry service. The great thing about laundry is that it never stops... it's not weather dependent, it has no high or low season, it does not rely on tourists either. Ok, a bit of a lie, it is somewhat weather affected... meaning, the worse the weather and the dirtier it is outside, the more clothes people have to wash. They have to wash them somewhere. Once setup, you will find that you spend most of your time collecting and counting all those coins.

Finding a location and a willing seller is probably the hardest part. This business is such a profitable and easy business to manage, that many people don't give up the easy income. There are still many cases where some people have either not managed it properly or have run into other circumstances that require them to sell their Laundromat business.

Once you have found a location and seller there are many things that need to be done. First and most obvious is a purchase price for the business. Complete and LOI, which is a Letter Of Intent. This letter documents your desire to purchase and the sellers desire to sell. Remember that this letter is not a legally binding document to sell, rather like a promise, if you want to call it that. You need to also clearly list all the assets and other stuff that will transfer with the sale of the Laundromat business. Once of the key features of the LOI is that is prohibits the seller from discussing or pursuing other potential buyers. Do not rush this process, make sure that you establish the sellers intentions and document a standard 90 day evaluation period in the LOI. This period will allow you to determine if the selling price and other clauses in your negotiation are a fair to you. You can also use this time to understand every facet of the sale, especially if this is your venture into owning your own business. You must also spend the time to determine the actual value of the business.

Get yourself a good lawyer to review your contract. Either to review or draw up the contract and terms of the sale. An experienced and skilled contract lawyer will save you time, money and prevent you from getting into a deal that is not beneficial to you. Ensure that both the seller and buyer have their own lawyers, this will prevent any conflicts or bias any one lawyer could have.

Determining the value of the Laundromat is similar to evaluating any business really. Review the last year of the books and determine the cash flow, expenses, debts, taxes, etc. Find the property value and property taxes. Equipment, leased or owned by the business? does any need replacing? if so, negotiate that into the purchase price or conditions. What is your competition? What are the employees like and how long have they been with the business? What is the community feel with the business? You should also check any local business associations like the better business bureau for complaints or other filled paperwork regarding the Laundromat in question.

There are some points you need to consider before you buy a Laundromat. The business itself , as well as many others, has it's share of dis-honest people. You need to take all precautions to prevent being taken to the cleaners ( if you know what I mean ). Coin operated Laundromats are very appealing to investors, such as yourself because they are profitable and fairly easy to manage. They are not always transparent in the operating costs, you need to take the following steps to ensure you are evaluating the business as it is represented. Have an analysis done by verifying the gross sales with the water and fuel usage. By doing a detailed analysis of the water and fuel usage you should be able to see if the claims by the seller are accurate or exaggerated.

If you are not fully comfortable with doing the evaluation and analysis on your own, hire an expert. Look for someone experienced in the coin laundry business, they will be able to identify all the pros and cons with the Laundromat you have selected or intended to buy. Remember that the seller or broker will almost never tell you about any problems the Laundromat is facing and in most cases will try to hide or re-direct you from them. A contract lawyer is not going to do this, at best they can evaluate the business in general, but will not be able to give you an accurate evaluation of the coin operated Laundromat business.

Ok, now that you have determined all the legal and financial stuff, there is still more you need to consider. Maintenance and service can be a large cost, if you are able to maintain and service the equipment yourself, you will save a large amount of money. Many of the newer equipment and machines require very little maintenance and are designed to be heavy duty, long lasting items. However, with any coin-operated laundry machine, something can always happen.

Building instead of Buying a Laundromat Business.

Building a Laundromat in a new location still requires the same, if not more commitment and research. There are many laundry equipment distributors that have experience with building and setting up a new Laundromat. Inquire with a distributor in your area first, they will often offer a full service and build everything for you. Acquire a proposal from the distributors in your area, as well as a review of the demographics, locations and competition, then consult your coin laundry expert.

All the other research applies , but without buying an existing business you will have to determine your startup and running costs with an expert in the coin laundry business. If you don't you might be getting in over your head and have to sell. This is the type of business you actually want to buy, from someone who did get in over their head and must sell the business at a loss, don't be that guy.

This article was posted as a supplement to your research and is not intended to be a guide. This information should not be regarded as comprehensive.

I wish you well in your search for buying a Laundromat and may you find exactly what you are looking for.