A laundromat business, if successful, can yield a high ROI compared with other businesses. Laundromat is an evergreen industry in which people from all walks of life can succeed. In the midst of uncertain economic conditions, it is increasingly becoming the choice of most entrepreneurs.
However, to thrive here, you must truly grasp the nature of the laundry industry in your area. It will help you build a solid business plan, which is the foundation of your laundromat venture.
Keep reading as we dive into everything you should know before starting a laundromat business.
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8 Steps to Starting a Laundromat Business
If you’re wondering how to start a laundromat business? Follow these 8 essential steps to ensure your success:
1. Conduct Laundromat Market Analysis
Conducting market research into the laundromat industry in your local area will give you various insights. Most importantly, it will give you information about your target market. You will learn crucial things like how much money your average customer makes, how close they live to your location, the time they spend on laundry services, the type of services they need, and the like.
Besides, you’ll also discover your competitors and their pricing strategies for their services. Analyzing your target local market will help you discover important things about your business. For example, do you fall in the category of high-price or low-price? Do you offer some special services that can be considered your USP? Is your business located in the right place where more people can access it?
2. Assess the Capital Involved in Opening the Business and Running it
As a laundromat business, you must have the right professional equipment. So, you need to consider the expenditure involved. This cost will make up your initial startup expenses and might stretch as far as a million if you are starting a new facility.
Besides, you should also consider other business expenses like paying your employees, rent, etc. Expenses, especially in the initial stage can take up a major portion of your total income. So, it is critical to plan them beforehand. Ideally, you must allot $7,500 every month to these expenses. However, you must consider your specific needs while allotting them.
3. Create a Business Plan
A laundromat business plan acts as your guide, helping you inch closer to success as you start your venture. Here’s what your business plan should definitely include.
- Executive Summary: This includes the purpose of your business plan. For example, it may be to gain financing. The executive summary also includes how your business will provide value to your customers through your services. It will also include your business’s financial projections and mission.
- Business Overview: This includes your business’s locations and hours. Depending on your resources, you can opt for a 24-hour model or specific opening hours. A business overview also contains your company’s legal structure.
- Market and Competitor Analysis: Market analysis will make you aware of your industry’s outlook and predictions. It will help you learn about your target customers. Competitor analysis will help you discover similar businesses and what they are doing to increase their customer base.
- Organization and Management: This includes the structure of your company, employees, and your background details. It can also include vacancies that you need to fill in your company.
- Marketing and Sales Plan: This section includes how you’ll reach your target customers. Your marketing message should reflect your brand positioning, your marketing goals, and your marketing budget.
- Financial Plan: This includes the capital needed to get your business running. You have various options, such as bank loans, lenders who work with your industry, and angel investors.
4. Get the Necessary Laundry Equipment
High-quality equipment is crucial for the success of your laundry business. It helps you enhance operational efficiency and win the trust of your customers. Here are some key equipment that every laundromat company must have.
- Washers and dryers
- Folding tables and carts
- Vending machines
- Maintenance equipment
- Modern payment and POS systems
5. Decide a Location
When deciding on a location, you have two options: build a new laundromat or renovate an existing store. If you choose to buy a new laundromat, you may benefit from its existing customer base and equipment. But if there are no such businesses available in your area, renovating an existing store can be the best choice.
Here are some points to consider when choosing a business location.
- Find a place on a busy street. This ensures that more people will notice your business
- The location should have convenient entry and exit points.
- Put up prominent signs in your facility’s outer part to enable more people to notice it from afar.
- The place should have sufficient free space so more people can visit your store without worrying about securing a parking space.
- Consider putting up the store near the areas your target customers frequently visit. For example, you can set up your business near the supermarket or high school.
6. Secure Financing
There are three primary financing options that laundromats can use. These include the following.
Bank Loans
Bank loans offered by commercial banks cover the cost of initial business investment and operational costs. To secure it, you must apply for the loan, providing your business and personal details. If you have a higher credit score, the likelihood of loan approval will increase.
Small Business Administration (SBA) Loans
This is one of the best ways to secure financing for a young laundromat business. These loans are issued by small banks. They are guaranteed 85% of their value by the SBA. So, lenders can take less risk while they give funds to the borrowers.
SBA loans can be up to $5.5 million and repaid for up to 25 years. They also have a low interest rate. However, to secure them, you must have a credit score of at least 680 or higher.
Microloans
These are small loans that community lenders and non-profit organizations give to help small businesses. If you do not qualify for any of the above loans, microloans can be the right choice. Under the Microloan Program of SBA, smaller-sized loans of up to $50,000 are provided.
7. Do the Necessary Paperwork
Getting your paperwork in order is necessary to legally begin a laundromat business. It mainly includes the following:
- Trademarking your business name and logo.
- Registering your business name.
- Applying for an Employer Identification Number (EIN).
- Obtaining health permits, water pollution control permits, and sales tax permits. To get more specific information about this, contact your Secretary of State.
- Get the necessary insurance coverage. This includes worker’s compensation, general liability insurance, property insurance, and commercial auto insurance.
8. Market Your Business
You can be the best at what you do. But if people don’t know about you, your expertise will go to waste. Here are some effective ways to market your business online and offline to gain more customers.
Online Marketing Tactics
- Find which social media your customers use and set up your business profile in each of them. Then, engage with your target audience, letting them know more about your business.
- Register your business on Google and Apple so you can use their Maps feature. Through it, whenever someone in your area searches for things like ‘laundromat near me, ‘ your business will pop up.
- Create a website and fill it with all the details about your business. Optimize the information with keywords or the words that your target audience uses to look for businesses like yours online.
Host an Event to Celebrate the Start of Your Business
Hosting an event complete with food and drinks will help you gain attention in your community. Everyone loves going to entertaining events, replete with freebies and giveaways. It’s a great way to generate buzz around your business.
Encourage Referrals and Customer Reviews
People trust others more than they trust you. Someone has a high likelihood of trying out your services if they are being referred by another person. You can encourage referrals by giving your existing customers incentives. Also, ask them to leave reviews on your website or any other portal. Customer reviews are a great way of building trust with your target audience. You can encourage reviews by offering rewards or coupons for it.
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Summing Up
The key to a successful laundromat business lies in careful planning. There are several things to do, from researching the target market to securing the right location and more. However, if you are truly committed to succeeding, nothing can stop you. Consider your skillset, budget, and unique requirements to take the right steps. You can also reach out to professionals to give you the proper guidance and understanding to make informed decisions.
