One popular small business found in almost all urban areas are laundromat businesses offering full-service coin-op laundry (washing, drying, and optional folding) services.
A laundromat business is unique in the sense that after the initial capitalization, coin laundry businesses have no inventory or receivables. However, it is not a business that can be started on the cheap. According to the Coin Laundry Association:
Coin laundries can range in market value from $50,000 to more than $1 million, and can generate cash flow between $15,000 and $200,000 per year. Business hours typically run from 6 a.m. to 10 p.m. The stores usually occupy 1,000 to 5,000 square feet of retail space, with the 2002 average being 2,260 square feet.
In the laundromat business,you need to consistently provide high customer satisfaction by ensuring that your machines are functioning properly and reliably. The area should be clean, safe and enjoyable, while providing competitive price and value. Some New York area laundromats are even pushing the definition of “enjoyable atmosphere” by turning their coin-operated laundromats into a party scene at night.
To succeed in the coin laundry or laundromat business, your business needs to have these factors:
1. Great Location: the location of your laundromat business is critical to its success. It has be in a high-traffic area such as along Main Street or a shopping center where lower income to middle income families abound. High income areas will have little need for a laundromat business.
It should also be in an area surrounded by residences, such as apartment buildings. Renters make very good market for a laundromat business. Check where the nearest competitor is located, and try to find a location where your business is the sole laundromat in the area.
Colleges and universities are another excellent market and location for a coin-operated laundry business.
2. Environment = the laundromat should be well-lit (especially at night), with the floors, machines and walls clean. Offer a friendly and professional service to help ensure repeat customers and make it easy for your customers to recommend your laundromat to their friends and families.
3. Safety = some people will prefer to wash their clothes at night. It is important that they feel safe doing it in your laundromat business. Be sure to prepare for the possibility that less than desirable people such as drunks and addicts will walk in at night to harass your customers.
Here are some free articles that can help you get more information about the laundry industry and help you prepare your plan for success:
- Coin Laundry: An Industry Overview http://asbdc.ualr.edu/bizfacts/8005.asp = a good overview of the industry
- IRS Market Segment Specialization Program: The Laundromat Industry = deals with cashflow and books of a laudromat business including water consumption analysis (Read IRS Guide for Laundromat Industry)
- http://www.coinlaundromat.com – California Coin Laundry Association
You can also contact and join this organization:
Coin Laundry Association (CLA)
http://www.coinlaundry.org
1315 Butterfield Rd., Suite 212
Downers Grove, IL 60515
Tel (630) 963-5547
Fax: (630) 963-5864
The Coin Laundry Association offers a number of reports (both paid and free) that covers everything from inspecting an existing laundry to closing the deal, while helping you:
- Decide if the laundry business is for you
- Select the right equipment distributor
- Interpret demographics
- Conduct lease negotiations
Recommended books:
- Start Your Own Coin-Operated Laundry by Mandy Erickson
- How to Start and Manage a Coin-Operated Laundries Business: A Practical Way to Start Your Own Business by Jerre G. Lewis
It is not necessary to pay in full for new equipment. Most manufacturers of coin operated washing and drying machines will offer you flexible payment terms. These machines are assets that maintain their value over many years so you can usually purchase them with only a small deposit and pay back the balance over a period of five or six years.
All equipment should be maintained so that break downs are kept to a minimum. Repairs should be carried out promptly so that problems do not get worse and you don’t let down your customers.
Always keep your store clean as a dirty or untidy store will be a big turn off for customers who may not want to come back. Each time you visit make sure that you tidy up, pick up trash and sweep and mop the floor if necessary. Put yourself in the customers shoes and ask yourself athe question: Does this look like the kind of place that I would like to spend a couple of hours in each week?
One important tips for those who are planning on setting up a coin operated laundry that they can leave unattended is to provide clear instructions for customers. It is important that you provide a positive experience for your customers. As a part of this experience they should have clear instructions as to how to operate each machine and what to do if they encounter a problem.
Excellent points. I’ll just through in one more…
Always consult with your attorney first. There may be some subtle oversights that they can help you zero in on.
Myles M. Mattenson engages in a general civil and trial practice including litigation and transactional services relating to the coin laundry and dry cleaning industries, franchising, business, purchase and sale of real estate, easements, landlord-tenant, partnership, corporate, insurance bad faith, personal injury, and probate legal matters.
In providing services to the coin laundry and dry cleaning industries, Mr. Mattenson has represented equipment distributors, coin laundry and dry cleaning business owners confronted with landlord-tenant issues, lease negotiations, sale documentation including agreements, escrow instructions, and security instruments, as well as fraud or misrepresentation controversies between buyers and sellers of such businesses.
I also write about the coin laundry business and I think this is a great way to start. Personally, I wished somebody had told me about the IRS audit method when I started. I ended up buying a money losing Laundromat and I ended up in court suing.
These are some great tips. Starting coin operated laundry business is like starting any other type of business. You have to have a good amount of capital, ambition and a great location. You pair that with obtaining the proper legal documents and you will have a great jump start on starting your business. Great read!