16 Pros and Cons of Owning a Laundromat Business

Pros and Cons of Owning a Laundromat Business

 


Owning a laundromat pros and cons

Pros and cons of owning a laundromat is written to help and educate prospective customers in the most simplistic terms. This article might give you a broad overview of the requirements to open laundromats. The laundry business is a very clean business, washing clothes is part of the basic necessity of life, it is part of personal hygiene. Owning a laundromat is one thing and running it successfully is what matters.

It should be noted that customers come into the store to wash their clothes, they pay in advance, and they use their own labor to wash the clothes. Customers come in on a regular basis week in and week out, month in and months out and in essence, the customers are renting the machines, only consuming utilities.

 

Pros of Owning a Laundromat

Cash Business:

In fact a huge advantage of laundromats is that it is a cash business, so there are no checks in the mail, there are no receivables. Customers come in, they use their own labor, they pay in advance, and they pay with cash. The owner also has up to a 30-day grace period to pay on utilities that a customer consumes before they have to pay for those utilities.

• Recession Resistant Business:

Importantly it is a recession resistant, recession-proof business means that when the markets go down, the business usually stays the same, historically no matter what you know, it is essential, people always need to wash clothes, so they are always going to be coming to the laundry store, no matter if the market is excellent or the market is horrible so you can always depend on that no matter what the market is doing. We have certainly seen this, in the last recession period. The laundry business has certainly shown an incredibly stable revenue stream week in and week out, month in and month out. Laundromat revenue is steady and reliable.

• Seasonal Dependency:

This business is non-seasonal; it does not depend on any season. It is necessary and operated in all seasons. It is remarkable how few variations there are to the laundromat revenue stream, there are very few variations when it comes to the weather, and there is also very little variation when it comes to seasonality over that time of year.

• Simple Business Accounting:

It is a simple business accounting, it is really simple there is no advanced accounting needed, no cost of goods sold, people come in, they use the washers, they use the dryers, really simple accounting nothing too complicated. Even if it is unattended.

In short, in this business format, you have no employee paychecks, you know no payroll, keep it really simple especially for your tax time and you know if you are an accountant.

• Business Expansion:

Growing this laundry business is very easy. Once you get the basics done with your laundromat, it is really easy to get another location, basically, multiply your success. Once you know the basics you can just duplicate it.

On the whole, if you have got something that works, it becomes really easy to duplicate. You do not have to worry about it. You know everything is really simple in the laundry business. You can always multiply pretty quickly as long as you have adequate cash flow.

• Low Inventory:

Another huge advantage of laundromats is that there is no inventory required. You may have a couple of cases of soap kicking around and detergents with softeners.

Moreover, it is not like an appliance store, which would have tens of thousands of dollars tied up in inventory, in addition to that there is no spoilage. Restaurants and food establishments have spoilage issues, where they are constantly losing inventory due to spoilage that is not the case in the laundry store.

• Employee Management:

This business operates with a minimum number of employees. Only three minimum employees are required to look after the operation of any laundry business. One for supervising the operation, second to take care of utility, and third to look after the maintenance of machines like washer-extractors and dryers used. This avoids scheduling and managing large teams.

• Flexibility:

Flexibility in working hours is one of the biggest perks of the laundry industry. You can set your own working hours. Once you get the hang of your laundry business, you don't need to be there working 40 hrs a week. Many of the investors are even working full-time and pursuing laundromat businesses as a passive source of income. In this business, it is very important to get responsible and efficient employees, who can look after your business in your absence.

• Simplicity in Operation:

As you do not need more employees to manage the store, so also the clothes are washed and dried by the customers, where employees are not required. There is no need to maintain the payroll records, even the payments from the customers received upfront.

• Expanded Community:

Laundry as being a necessary sector, it has spread all over the nook and corner of society. Just google it and you will find tons of laundry equipment manufacturers, laundry machine repair assistants, and retail laundry near you. So collecting information and getting educated becomes very easy for newcomers in this business.

• Franchisee Free Business:

There are franchisee models in a laundry business, but it is not necessary to take a franchisee of a brand to start a laundromat. Hence, it can be developed and designed as per your requirement. Hence, there is no need to pay any franchise fee to any brand.  

Cons of Owning a Laundromat

• High Initial Cost:

The disadvantages of owning laundromats are primarily high initial investment costs. It costs a tremendous amount of money. It is very capital-intensive; the machines are very expensive plus you need to do expensive construction work for the installation of the laundry equipment.

Laundry business, as it is a really expensive business to get into. It is probably cheaper, your best bet is to buy a zombie laundromat (sick unit, not well maintained) which is basically a laundromat that has been a little rundown over the years. It's dirty, there's garbage everywhere, it doesn't get out of busy, it does not get a lot of business because it's just kind of been, you know, not taken care of. 

So I mean to go in and buy it, renovate it, fix it up, get some new machines, clean it and that is probably the cheapest option. Creating a store from scratch is going to cost you hundreds of thousands of dollars and if not for somebody that does not really know what they are doing. But that is definitely a con. It's not like a bootstrap business. You cannot get in for really cheap. You are going to put up some capital to get into the business itself.

• Utility and Maintenance Cost:

Laundries consume a tremendous amount of utilities, a lot of water, a lot of gas, and a lot of electricity.

Laundromats are also mechanically intensive. So you need somebody to support you. Somebody who has some mechanical skills, a kind of having a person who is a jack-of-all-trades, there is a lot going on in the laundry business. So many things can go wrong on any possible day. So if you are able to fix them, it is going to save you a lot of time, effort, and money. If the dryer goes down, if it is a simple fix by yourself, you can just change it out really quickly.

It is going to be a lot easier if you are a technical person or know basics of it, for you to save money and time and get the equipment fixed and run or else you know you have to hire a lot of professionals out there, who fix your equipment, and they are not cheap, they are not always available right away and sometimes they do not even warranty their work.

Maintenance Cost:

So suppose something else goes wrong and that is a simple fix and if you don't have enough technical knowledge about it, it is going to be hard to fix or almost impossible for you to do it. So always when you have those repair guys come out and make sure you see what they are doing. You know, ask questions and then you learn, to save some money, next time if you can fix it yourself.

Laundromats as a Passive Income

Some people think that laundromats generate passive income. It is not a passive investment. It is not like stocks or bonds invested in. You need to have somebody available to check out the store. Make sure it is operating properly and make sure that it is also maintained properly.

You need to make sure that somebody visits the store every day. It is just like a real business. You just cannot be complacent about it. The store has to have quarters for the change, it has to have hot water to deliver to the customers and the store needs to be clean and ready for business and that is why you need somebody's responsibility to come and check on the store. It has been a very rewarding business.

• Competition:

Disadvantage number three. It is a competitive business, there are lots of laundromats in the town. You need to find the requirement of a laundromat in the area selected for laundry services and if your town does not have one, then that is probably a good time to build one from scratch.

But you know it is a competitive business so make sure you do your research before. Before opening one just walk through all the ones in your town, check out the prices, check out their features just to see what they are all about before you know it. That way you can get a layout of how you want to build your laundromat. You know that your average customer is bringing in $600 a year so you want to make sure that you can get the new customers in and retain them too. You should know how to grow your laundry business.

• Customer Behavior:

It is different from any other kind of business, customers are always crazy. In unattended laundry, basically, customers call to find the opening and closing timings of the laundromats or if they just want to put their two cents in and how to make the laundromat better. I have some crazy stories just like anybody that owns a laundromat. Fix 24/7 CCTV cameras on there so you can always keep an eye on your laundromat.

• Rising operation cost:

The main challenge in this business is the initial start-up cost. Apart from this the utility and rents are also hurdles, you need to monitor regularly, to keep it at the minimum possible level of consumption.

Conclusion:

In conclusion though the laundromat carries a huge initial investment, it is a recession-free business. It has a format of multiplication. If this is managed properly, if the marketing is done properly, timely incentives are floated to retain the customers. So it is good business to go ahead. The return on investment (ROI) is very good. Break-even points can be achieved within 3 to 4 months' time.

A Laundromat is a relationship business and you need to build relations and float timely incentives for the customer, who refers your business to new customers.

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