A laundromat is a public business that allows consumers to wash and dry their clothing, sheets, and similar items at their convenience using coon-operating equipment. The typical laundromat offers access to washers and dryers without much personalized professional help. That makes them an interesting business opportunity, since it is possible to run this type of business more as a side hustle. It can also become a full-time job opportunity.
Although most homeowners own laundry equipment, renters do not always have that luxury. People who live in apartments or rental homes without laundry access will use this type of business to take care of their personal items. Even some homeowners use laundromats because they own large bedding items that their home equipment is unable to process.
Staffed laundromats are another option available in some communities. These facilities employ one to three staff to help with basic services, such as providing change, selling detergent, or responding to equipment failures. A growing trend in the industry is to provide food and beverage services for customers as they work on washing, drying, and folding their clothing.
If you’re thinking about this business option as a future opportunity, then here are the pros and cons of owning a laundromat that you’ll want to think about.
List of the Pros of Owning a Laundromat
1. You have minimal inventory to worry about.
Unlike other business options, a laundromat doesn’t carry much physical inventory. That means you’re not spending a lot of time ordering, rotating, or discarding items to keep your shelves fresh. As long as you get your washers and dryers, some laundry soap options, and maybe a few snacks, then you’re ready to be open for business. If you’re operating a drop-and-go style of laundromat, you don’t even need the extras.
2. It is a job where everyone you meet has something in common.
When you work in a laundromat, you’ll find that most people generally behave well while using your facilities. Everyone needs to do some laundry, which means you want to get in and out as quickly and cheaply as possible. For self-serve laundromats, people tend to use machines in groups to make life easier for everyone involved. Customers manage themselves, which allows you extra time to focus on specialty needs or provide service in specific situations.
3. You get to work in a controlled environment.
The laundromat business offers very few variables that you must worry about. Beyond your utility and detergent costs, your budget is fixed. The primary capital investment comes from the equipment required and your property ownership or lease. Once you get beyond those costs, this business opportunity is one that is very easy to manage. The skills required to do laundry are basic, especially if you’re not including dry-cleaning services with your organization. You’re also working inside all the time, so weather is never an issue.
4. It takes a lot of work to keep your profit margins high.
The Coin Laundry Association reports that the laundromat owners who see the highest profits in the industry are those who run their facility well. That means the property must be kept clean at all times. When equipment breaks down, it must be fixed as quickly as possible. Customers also prefer laundromats which use energy-efficient equipment and offer excellent troubleshooting support. If even one of those categories is viewed as being subpar by your community, profits for your business could slide by one-third.
5. There are fewer customer complaints to handle.
When customers are using a self-serve laundromat, they are responsible for how their laundry is processed. The only time there are customer service issues is if the equipment breaks down or damages the clothing of the customer in some way. You’re not forced into a position where returns must be processed because people changed their minds or discovered the item they bought was defective. Once the coins are processed, the transaction is complete.
6. There’s no waiting period to get paid.
When you operate a laundromat, you’re running a business which operates on a cash principle. People must pay in advance to use your services. That means you’re not stuck waiting for batch payments to clear or a third-party to ensure the validity of a check or charge. You get cash, which then goes straight into your company accounts. Although there are some transportation costs to pay if you don’t want to manage the deposits yourself, it is a small hassle to manage compared to some businesses that may need to wait up to 3 weeks for some payments to clear.
7. There are fewer licensing requirements for laundromats in most communities.
For a standard laundromat, you will need a business license or permit and nothing more. Some cities require you to have a laundry license for your facility. Communities might want to inspect your coin operations to ensure you’re not ripping off the customers. For a basic business, however, the barriers to entry are minimal. If you want to serve food or liquor at your laundromat, you might not see this advantage in the same light.
8. You have the potential for multiple locations.
Once you get a laundromat up and running, you’ll begin to learn the rhythm of how your community uses your facilities. That makes it easier to duplicate your efforts into a second location, then a third, and so forth. Unlike other businesses which must adapt to varying neighborhood conditions, a laundromat is a straight-forward opportunity. There’s no need to reinvent the wheel. Just make sure there is demand for the service, find a high-traffic location, then set up shop.
9. There are excellent tax benefits to consider with a laundromat.
Because there are extensive equipment purchases involved with a laundromat, you can take advantage of depreciation right away to support your growing business. There are general business expenses, such as water, power, and gas that might be deducible with this type of company as well. Although there are some capital expenses that may put this opportunity out of reach for some, the comeback at the end of the tax year makes it a bearable expense as you work toward profitability.
10. It is challenging to find another business structured with such simplicity.
With a laundromat, it is your customers who are doing most of the work. You can even charge more for your services if they want you to wash, dry, and fold their clothes to expand your revenue opportunities. There’s no degree that you need to own this type of business. You’re not required to have a specific certification to get into the business with most communities. Even the repair work is usually not that technical. If you like working with your hands, and don’t mind the occasional customer contact, then you can have a successful experience with a laundromat.
11. Once established, you have a reliable revenue stream.
People don’t wear their clothes or use their bedding once and then throw the stuff away. They reuse it after they clean it. Even households who are extremely thrifty will do their laundry on a regular basis That means you have access to a reliable revenue stream when you own a business in this industry. Combined with the fact that you’re not dealing with payments sent through the mail or AR/AP issues, it is a business which lets you feel good about serving the basic needs of your community while you earn a fair return from the initial investment.
12. It is easy to sell a laundromat.
Most people encourage would-be owners to purchase an existing laundromat if they want to get involved with this industry. That makes it possible for you to sell off your business when you’re ready to retire or pursue a new opportunity without much of a loss.
List of the Cons of Owning a Laundromat
1. There is always a risk when you own a business.
You can open a laundromat in the perfect part of town, have access to plenty of customers, and never earn a profit. Every business opportunity involves some level of risk. You must have the foresight to understand what your community requires in a laundromat, then provide those services with your business. If your equipment breaks down or people damage their clothes while using your facilities, it could be a short ownership experience.
2. Extensive capital is required to get a laundromat started.
Entrepreneur estimates the cost of beginning a new laundromat between $150,000 to $300,000. The Coin Laundry Association estimates the annual gross income for a single location can range from $30,000 to $1 million. Expenses are usually between 65% to 115% of the gross income you receive. That means the minimum net is $10,500, with the risk of suffering a $4,500 loss with your business.
3. You can never take a day off when you operate a laundromat.
Although one of the standard benefits of being a business owner is that you can come and go as you please, that is not the case with a laundromat. You must make your business available to your community all day, every day throughout the year. That includes Christmas and Easter, the two days most businesses tend to shut down for the year. You could hire people to cover shifts during this time, but it is an effort that comes with an added cost. Without full availability, customers have less loyalty.
4. Customers can sometimes complain about the strangest things.
You will find unreasonable customers in any line of work, and the laundromat industry is no exception. Once you get your business up and running, you’ll find people complaining about things like not being able to see enough soap in the washing machine – even though they’re the ones who loaded the machine in the first place. Some even complain about the heat or water levels as a way to get a refund from you, essentially getting to do their laundry for free.
5. You might be responsible for clothing left unattended.
Although the chances of legal litigation are reduced when you own a laundromat, they don’t entirely disappear. One common issue that is seen within the industry involves customers who leave their clothing unattended for several hours, if not several days. When those items go missing, they may attempt to hold you responsible for them. You must hang signs inside the laundromat which instruct customers not to leave their items unattended and that you are not responsible for loss if that happens. Even with the signs up, you’ll still get people trying to hold you responsible for their error.
6. You must be mechanically inclined to maximize your profits.
If you don’t know how to fix a washing machine or a dryer, then the laundromat business might not be for you. It’s a lot cheaper for the owner to fix equipment when it breaks down instead of hiring a contractor to do so. There are some markets where you may be required to hire repair professionals as well, cutting into your bottom line. A lot of people get into the laundromat business because they think it will be easy, only to discover that the competition is high, and so are the costs.
7. Self-serve laundromats operate with coins.
Most laundromat businesses offer customers access to coin-based equipment which allows them to run a single load of laundry. That means each consumer must have access to coins to get the chore done. If you don’t have a change machine in your laundromat, then you’re going to lose customers. A general rule of thumb is to have one change machine available for every 300 square feet of space you have. When customers come in without any cash, having an ATM available can help to save some business too.
8. People don’t always treat a laundromat with respect.
If you’re wanting a business opportunity that is glamorous, breaking into the laundromat world is not it. You’ll find that people tend to loiter on your property, especially if it is open all night, because it gets them out of the cold. You might find trash lying around because people didn’t bother to clean up after themselves. If you like things neat and orderly, you’ll be at the business all the time. Depending on the location you choose for the business, there are even safety issues to consider. If you can brush these issues aside, then it can be an excellent opportunity. If not, you might want to move on.
9. You have continued high capital expenses to consider.
For a laundromat to remain relevant, it must continue upgrading its equipment to meet the evolving needs of its customers. Most businesses in this industry must upgrade all their equipment in 15 years or less to stay relevant. You can stay in business without the upgrade, but a lack of investment will eventually cause fewer people to use your facilities.
The pros and cons of owning a laundromat offer a schedule that is reasonably flexible as you become an established business owner in your community. Once you understand the quirks of this opportunity, you’ll have more freedom to take care of pressing needs. Some self-serve laundromats can even operate with zero staffing. There are risks involved too, while there will be times when your business needs all your attention at a time when that isn’t possible, like when you’re sick or on vacation.
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