How to Start a Laundromat Business
The laundromat business has proven time and time again to be an ideal venture to start. Even during the pandemic, this business seemed not to be affected that much mainly since everyone turned to them as the cost of repairing the appliances went up. Like any other business, starting it can be a pain. But this does not have to be the case. Here we have listed 16 tips that will guide you to become a successful business owner.
Select the Business Type
There are several ways to run a laundromat. They can be managed, unmanaged as well as slightly managed.
Managed laundromats will offer more services which bring more profit to the business. These services include tailoring and alterations, commercial work, wash-dry-fold, as-well-as residential collection, and drop-off.
Study the location you intend on starting the business to know what hours it will operate. Either regular hours or a 24-hour system.
Another way to go is by considering franchising. How does this work? First and foremost, a franchise is an agreement between a franchisor and a franchisee where the franchisor agrees to sell to the franchisee the right to use its name, goods, and services.
This model will bring returns through sales, marketing, and operational support.
Come up With a Business Proposal
For this business to remain a success even after it is operational, come up with a well-coordinated plan. This will assist in identifying the challenges and also aid in expanding the business.
Below is a list of things to consider:
- Write the abstract: It should include an outline of the company and how you plan on making it a success.
- The company’s information: The plan should have the company’s description and also explain the benefits of using it and not any other company.
- The organization and its management: Should feature how the business is structured and run. Most companies we know of have partners. So, choose if yours will have partners, S-Corporation or LLC.
- Analysis of the market: What are some of the challenges? Who are the competitors? Who are you trying to target? These are the questions you should try and solve before getting started.
- Financial plan: Describe the financial plan. Where will the funding come from? Is your financial statement promising? These questions will give a guide on the next step.
- Marketing plan: The proposal should include what to consider in choosing the right marketing strategy.
Cost: How Much Do You Need To Start This Business
Having a business idea is one thing and executing the idea is another concept. Understanding the start-up cost will get you a step closer to knowing if you have what it takes to make this idea a reality.
Starting a laundromat business means buying commercial-grade washers and dryers, and utility installation, including furniture and fittings. That said, it is costly to start a laundromat establishment.
For a resale business, 200,000 dollars will get you started but if you want to start the business from scratch, be ready to part with 1 million dollars.
The location also matters when buying these types of equipment. Some places are more expensive than others. Compare the prices of different locations and buy from a fair dealer.
The good thing is, there is a way out. To reduce the start-up cost, purchase second-hand equipment.
Study and Understand The Expenditure
The Laundromat business is lucrative when managed well. It can provide years of gaining profits and also assist in starting other small businesses.
Its estimated market value ranges from $ 50,000 to 1 million dollars according to Coin Laundry Association.
Come up With a Charge Sheet
Before printing the costs on flyers and social media, find out how much other laundromat owners are charging, then put a figure that considers the operating cost.
For instance, the cost per head will depend on several factors like the quantity of water used and its cost, how much money it will cost to heat water as well as the electricity consumed. Most appliances if not all provide some information like energy and water consumption.
Select a Suitable Business Model
There are many ways to conduct this business. Through corporation, partnership, or LLC. However, it is vital to know that any choice you make will reflect positively or negatively on the business.
Choose a plan that will consider the risks, taxes, and daily operations one that adheres to the legal protections and benefits. Here are the most popular:
- Sole proprietorship: This is a business model where there is a single owner.
- General partnership: When two or more people come together to form a business it is called a general partnership. This model does not require any filing.
- Limited liability company (LLC): It is the most popular form of business enterprise. The main advantage of this model is that it protects your assets from being subjected to debt and taxes incurred by the business.
- A Corporation: This business model is owned by shareholders. The best part of being part of a corporation is that the owner is protected from personal liabilities such as debt and obligations.
Select the Name of the Business
Picking a name does not just mean selecting any name and sticking it at the entrance of the premise. A lot has to be considered. The idea is to pick one that is catchy and will attract customers.
Choose one that is short, describes the business, is capable of drawing attention, and not to mention easy to remember.
In most cases, the business needs approval from the government before the operation commences.
Registration of the business
You have to get a go-ahead from the state or government for the business depending on the location. If it is a corporation, LLC, or general partnership, apply for the registration online or by writing an email addressing it to the secretary of state.
However, if the name of the business does not match your name, there is a process to follow.
The business will be registered with the government by filing a form this method is known as the ‘doing business as (DBA)
Be at Per With the Federal and State in Regards to Tax
Getting federal and state tax IDS will ensure you avoid being on the wrong side of the law. Register with IRS to get an employee identification number (EIN)
EIN works like the social security number. The only difference is that the latter is for businesses.
For a sole proprietor with no employees, EIN is not necessary. Use your social security number to file the taxes.
Additionally, when creating a business bank account, EIN separates business accounts from personal accounts.
The laws vary in every state. So depending on your location, apply for a state tax IDS if it is needed. Get a lawyer to ensure the process is smooth.
Create a Business Account Get a Credit Card
Separating a business from your account can be beneficial this way, if you are operating a corporation and the business is sued, your finances and assets will be protected from legal action.
Two, before vendors and suppliers get into any business, they countercheck the finances of a business.
Therefore, before starting to make any profits or incur expenses, open a business account.
Permits and Licenses
Business licenses and permits will vary depending on factors such as type, location, and regulations. Since small businesses will require some form of permit, laundromats also fall among the businesses that will require this permit.
Apart from permits, below is a list of documents that you may require for the business to be fully operational:
- Sign Permit
- Environmental permit
- Fire department permit
- General business permit
Depending on the state, other governments charge various fees like:
- Impact fee
- Sewer connection
- Public improvement
- Sewer/ Wastewater
In case you have some trouble with which permit to get, visit the state website. Finally, ensure the permits are renewed as per the stipulated time.
Get Insurance For The Business
Every business needs insurance. A laundromat owner will need insurance to protect the business from accidents reported at the establishment.
Considering that the policies cover depends on the insurance company. It is good to get yourself help from a professional.
Besides insurance covering accidents, it also ensures that employees are compensated for unemployment.
Location: Select a Suitable Location
For a laundromat business to flourish, it has to be set up in an ideal location. Other aspects to check out include the population, accessibility as well as the income of the residents.
Conduct a survey to get more information about those aspects. Apart from that, ask yourself. Is the business competitive in that location? And if it is, how do you plan on attracting customers to your laundromat?
Study the budget carefully to understand if getting a lease is a good idea. With a little effort and good planning, this can be your biggest source of income.
Since we have established that starting this venture can be costly, you might be forced to seek alternative means to get the money.
Get a business loan from the bank or use an SBA-backed loan. Use the funds to buy the equipment that you need as well as pay for licenses and permits. Also, this money can be used to settle repair bills that occur frequently.
Ensure that you are disciplined enough to withdraw the money only when it is needed. And still in the case of getting the funds, use the well-planned proposal to assist in getting the funds from the bank and investors.
Check that the proposal covers the profits and losses expected and that the budget includes financial projections.
When it comes to marketing, consider performing the strengths, weaknesses, opportunities, and threat analysis. With this in mind, now you can be able to conduct the best marketing that will ensure the right target audience is reached.
Many small businesses become successful mainly because of referrals. People tend to trust other customers more than you the business owner.
Have a social media platform where customers can leave their reviews and feedback. Google, Yelp, and Bing are good ways to get started.
With all the competitors that exist in the laundromat business, marketing, and successfully attracting customers to your establishment is not an easy task. That’s why you will need all the help you can get.
Seek help from business mentors who have experience in starting their businesses from the ground up. They can help with a thing or two.
If your dream has always been to start a laundromat business, this article has provided important insights that will guarantee your dreams come true. All that is needed right now is a plan and the best strategy to execute it. So, what more convincing do you need? Get yourself then a plan, funds, and be the next successful laundromat owner!