The Laundry BizThe Laundry Biz
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Laundry Business Right For You

by The Laundry Biz

Industries go through up and down periods of popularity among investors. The laundry business is no different. Laundromats have long been an attractive business model for investors who were looking for their first business purchase, or perhaps a venture where they could keep their day job. Because of that popularity, the competition to buy existing laundromats has been on the increase. More than ever, people in a laundry business need to do their homework and get their questions answered.

Is A Laundry Business Really A Passive Model?

We have heard MANY times from potential laundry business investors about how they dream of owning a laundromat because there is little work involved other than collecting the cash. It is true that a successful and well-run laundromat can mean more freedom for the owner, and we have seen many owners who spend less than 10 hours per week in their store. As far as brick & mortar businesses go, laundromats are a good bet.

Most times, however, that owner has put in a lot of work to get to that point. You need a great store, a great system, and great employees. In the early stages of ownership, there will be many late nights or weekends with your arm in a clogged drain or trying to figure out why dryer #13 won’t heat up. Having someone to help who has experience can make things go more smoothly.

Can You Keep Your Day Job?

The easy answer is ABSOLUTELY. More than half the owners we have worked with kept their regular jobs through the first year of laundromat ownership. For this to work you need well-trained employees and an emergency plan for things like AC failures or plumbing disasters. You will get a call or a message that something has gone wrong, usually at inconvenient times. You will have to take an occasional personal day or sick day to take care of an issue. It is just a matter of managing the mini-crises and overcoming the big ones.

Freedom with a laundry business

Will A Laundry Business Really Buy You Freedom?

It certainly can, and that is the goal for the majority of clients that we help. When your operation is running smoothly, you will be making money every hour it is open. When you are at home, at a concert, at the beach… there will be customers in the store dropping off their laundry or putting money into a machine. You will need trustworthy and reliable employees for this to work, but it is certainly achievable and probably the most appealing aspect of owning a laundry business.

Does It Cost A Fortune?

Laundromats aren’t necessarily cheap. A new location has a huge initial capital investment cost and can easily get past $500,000. Existing locations are almost always the best bet for new investors. The used equipment is discounted and the customer base already established.

A general rule of thumb is that businesses without real-estate tend to sell for 2-3 times their annual net income. A business netting $100,000 per year might sell for $200-$300k. A laundry business however will sometimes fetch as much as 3-5 times the net, and we’ve seen them go as high as 7x! This means a laundromat making $100k per year might sell between $300-$500k.

What does this mean for you? If you are an all-cash buyer who has a lot of capital to invest, it means you can get into a relatively simple business to run with a good return. If not, you will need financing.

You can expect a bank to require 20-30% down for a business loan. There are always alternative options to lessen the initial impact, such as SBA loan programs or seller-financing. We have seen just about every combination of loans, financing, and creative solutions for clients getting into the laundry business.

Is A Laundry Business Risky?

EVERY business is risky anytime you have customers, employees, a building, equipment, etc. People slip and fall, employees get injured, and any combinations of plumbing, electrical, and gas can have occasional mishaps. We have seen or heard just about every crazy story from laundromat owners, but that is the reality with any physical business. Having the right insurance coverage for your laundry business is critical to lowering risk and giving you piece of mind. But that is true of any business.

On the flip side, laundromats are some of the least risky businesses from a financial standpoint. The laundry business is a fairly steady industry, one that usually INCREASES during a recession. People always need to clean their clothes, and they can’t do it online (at least not yet!). Drop-off laundry services are increasing as more young professionals look for ways to make their lives a little less hectic. Income and expenses are typically pretty regular throughout the year with some slight seasonal ups and downs. There really are no market corrections, crashes, or drop-offs that affect the laundry business.

 

Are You Ready For A Laundry Business?Are You Ready For A Laundry Business

You probably already know the answer to this question if you’ve made it this far! As with any venture, it is important to learn as much as you can about what you are getting into. Read through the articles, do research, ask questions. Check out the online courses, packed with hours of important information and details about getting into the business and also running a successful operation. We offer lots of solutions to help newcomers and current store owners alike.

 

If you haven’t already done so, subscribe to our email list to receive our laundry business articles and also a free sample Laundromat Business Plan Template.

The Laundry Biz
About The Laundry Biz
We help people interested in learning more about the laundromat business and can answer all questions big and small about getting into the business and running a successful operation.

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Laundry Business Right For You
The Laundry Business: Is It Right For You?