Laundromat Business Plan

Laundromat Business Plan

A Laundromat is usually a full-service coin-op laundry (washing, drying, and optional folding) service dedicated to consistently providing high customer satisfaction by rendering reliable machines and furnishing a clean, enjoyable atmosphere at a competitive price.

Most Laundromats offer self-service washing and drying facilities. It is also advisable to provide a service wash, where items are dropped off by the customer then washed, dried and folded by staff for later collection.

Laundromats are mostly geared towards the immediate community and may offer services for particular groups of customers (such as a collection and delivery service for the elderly) and local small businesses, e.g. hairdressers, cafes.

The first washateria was opened in 1936 in Fort Worth, Texas by Noah Brannen. Most laundromats are fully automated and coin operated and generally unmanned operating 24 hours a day.

A self-service laundry is a facility where clothes are washed and dried. They are known in the United Kingdom as launderettes or laundrettes, and in the United States, Canada, and Australia as laundromats (from the trademark of the Westinghouse Electric Corporation) or washaterias. George Edward Pendray created the word "laundromat" for Westinghouse.

A laundromat offers a self-service washing and drying facility. Many also provide a service wash, where items are dropped off by the customer then washed, dried and folded by staff for later collection. Some may also offer a self-service dry cleaning facility. Laundromats are mostly geared towards the immediate community and may offer services for particular groups of customers (such as a collection and delivery service for the elderly) and local small businesses, e.g. hairdressers, cafes.

Some laundries employ staff to provide service for the customers. Minimal service centers may simply provide an attendant behind a counter to provide change, sell washing powder, and watch unattended machines for potential theft of clothing. Others allow customers to drop off clothing to be washed, dried, and folded. This is often referred to as Fluff & Fold, Wash-n-Fold, bachelor bundles, a service wash or full-service wash. Some staffed laundry facilities also provide dry cleaning pick-up and drop-off.

Laundromats can have a bad public image and are usually seen as run down. However, increasing numbers of new and refurbished shops have opened, targeting the less price sensitive customer and promoting themselves on cleanliness, efficiency and safety.

Many now offer additional services in an attempt to establish a wider customer base, for example, providing an ironing or clothes repair service. Some laundromats also offer specialist cleaning of bulky items, such as duvets, which are too large for domestic machines.

A computerized system is gradually replacing the traditional coin-operated method of use, with a central electronic pay point being used in conjunction with cards or tokens, which can record helpful details of usage and also discourage theft. The price of a service wash will vary considerably depending on the area and the size of the load. Prices rarely increase significantly, as the majority of customers belong to the lower socio-economic groups.

The market has been affected by an increase in legislation covering things such as pollution control and the use of chemical solvents.

Laundromats 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 current average being 2,260 square feet. New Laundromats are valued based on actual construction and equipment costs, while existing laundromats are valued based primarily on revenues. Laundromats are perfect examples of passive income generators and are also referred to as coin-op laundries or coin-operated laundries.

Laundromats are one part of the self-service laundry business; the industry is actually comprised of two distinct segments. The first is coin-op laundromats, and the second is represented by coin-operated machines located in apartment housing. This apartment segment of the business is referred to as the multi-housing laundry business or the coin route business. These two segments frequently overlap; in more mature markets, the self-service laundry business is estimated to be evenly split between the two. The self-service laundry market consists of an estimated primary customer base of 86 million people living in rental housing. The secondary customer base consists of the nonrental population, which use laundromats only occasionally.

The origins of the Laundromat business date back over fifty years. The first wringer washer was developed around 1907, but the public laundry concept was first seen in the late '20s and early '30s. Initially, all of the "take-in" laundry was done by an attendant and returned to the customer. Later, early washers were made available on a per-hour or per-day basis. This continued with the first "automatic washers" in the late '30s and early '40s. The Laundromat concept really took off in the '50s with coin meters being added to the machines, establishing a true self-service, coin-operated business.

The first Laundromats were small, narrow stores that offered a few washers on one wall, and a few dryers on the other. Many of these Laundromat were open 24 hours a day, many did not even have locks on the doors!

In the early years, demand for this type of service was tremendous, almost guaranteeing success for Laundromat pioneers. Many of the early investors were absentee owners, who were not knowledgeable of Laundromat operation, nor were they "hands on" enough to correct problems. As a result, a high percentage of their Laundromats fell into disarray...machines weren't maintained...stores weren't kept clean...and many stores were left open to vandals and thieves. The result of the deterioration of the early stores was a very poor public image of Laundromats, and a poor reputation for Laundromats in the local business community.

Eventually, a "new breed" of investors jumped in to the Laundromat industry with a professional, "hands on" approach to the business. In the '60s, the industry entered a high-growth period as owners built larger stores; employed attendants; and offered additional services such as drycleaning and tailoring. New owners spent time in their stores; keeping the stores clean; and keeping the machines in top condition. Profits soared because service had been improved, while rents and utilities remained very low.

Manufacturers and distributors of Laundromat equipment also profited during this time, as some local distributors built as many as 20 to 40 new coin-ops per year. As the early '70s rolled around, the oil embargo hit, and the energy crisis put a damper on profits and new store construction. Interest rates were also on the rise, making resources scarce for new investors. The demand for coin-ops continued through the '70s, but it wasn't until around 1980 that Laundromat construction made a comeback.

The stores being built during this time were bigger and better than ever. New investors were more sophisticated, and the larger stores required substantial investments. By this time, equipment had become more energy efficient, more reliable, and offered more options to the customer.

The industry is in the midst of another upswing today. Many areas are facing matured markets and tough competition, but the demand for quality Laundromats remains in much of the country. We are seeing a trend toward larger stores, and stores that provide additional services such as wash-dry-fold, drycleaning, tailoring, shoe repair, and other laundry-related services. New Laundromats are expanding services even further by offering a variety of "extras" such as tanning beds, videotape rental, mailbox rental, concessions, restaurants, convenience stores, exercise equipment, children's play areas, TV lounges, shipping services, faxing, photocopying, and dozens more ancillary services.

Today's profit margins do not compare with the pre-oil embargo period; however, they are still high enough in most cases to provide a very favorable return on investment. The Laundromat industry is stronger than ever, and industry leaders are optimistic for future growth.

Clean clothes, like food and shelter, are considered a necessity of life and coin laundries provide a basic health service for millions of people across the globe. While Laundromat are found in virtually all neighborhoods across the country, stores seem to perform exceptionally well in predominately renter-occupied, densely populated areas. These areas are increasing in number with each year throughout countries. The intense population growth, coupled with the expansion of rental housing, has increased the customer base for Laundromats.

Industry growth is based on the demographics of population density, population mix and population income. The more concentrated the population, the greater the need for quality Laundromats. National and regional demographics indicate renters, the primary users of Laundromats, are the fastest-growing segment in most nations. The end result has been a mature, stabilized industry with predictable rates of turnover and values of existing Laundromats, development of new turn-key facilities, and equipment expansion and replacement.

The most important aspect of owning a Laundromat is your location. Ideal locations are small shopping centers for the poor to lower-middle class. Basing your Laundromat around apartments, colleges and universities is also a good idea as they have a high turnover of single people who don't have the space to put an appliance, or feel it uneconomical to purchase if they aren't going to be staying there for a very long time.

Many people think that the only reason to develop a Laundromat Business Plan is to convince potential lenders or investors to provide financial backing. This view is a little short-sighted, however. A well-developed Laundromat Business Plan can serve as one of your most important management tools. A good Laundromat Business Plan will provide a blueprint and step-by-step instructions on how to translate your idea into a profitably marketed service.

Remember that no two Laundromat Business Plans will look alike. There are a number of key considerations that will play an important role in shaping the content. These considerations include whether you're writing the first Laundromat Business Plan for a new business or business opportunity, or a Laundromat Business Plan that updates or supersedes an already existing Laundromat Business Plan. Obviously, your Laundromats position in the life cycle will have a significant impact on the type of planning that's needed. An ongoing Laundromat might require a Laundromat Business Plan that relates primarily to a new market that it wants to enter, or a new service that it wants to introduce.

Planning models and theories that approach faddish status usually prove to fall short of achieving business success. They don’t present a complete process, resembling more bits and pieces of processes rather than a unified, logical pathway to the future. They deflect from the true needs of Laundromat Business Planners to tell a story in business terms. For example, hundreds of millions of dollars have been spent on reengineering efforts, Total Quality Management (TQM), and the balanced scorecard, all with minimum overall return. These activities may be good as specific tools, but they cannot substitute for a completely integrated Laundromat Business Planning model. Unfortunately, Laundromats attempt shortcuts with these overpromised tools and get fragmented success. Only by using a complete Laundromat Business Planning cycle and applying appropriate tools at appropriate times can you ever achieve the full force of the Laundromat Business Plan.

The Laundromat Business Planning process puts energy and emotion back into the Laundromat. It energizes the workforce by tapping into employees’ purpose and passion. The model encourages the use of intellectual capital and promotes the empowerment of people to take responsibility for accomplishing agreed-on, realistic goals. The Laundromat Business Planning process forces examination of how work is done with the idea of eliminating unnecessary and wasted efforts that translate to lost profits.

Writing A Laundromat Business Plan

Writing A Laundromat Business Plan

Writing A Laundromat Business Plan

The key areas of Laundromat Marketing that all Laundromat Business Plans should look at are the following:

Pricing Strategy

What part of the Laundromat market are your prices aimed at? Are you attempting to gain lots of profit from each sale; sell lots of items at a low price, or aim for somewhere in between?

You need to look at whether your current pricing is effective, and whether you believe your strategy needs to be changed. Perhaps just making your image appear more upmarket could increase high profit sales without lowering the price.

By setting an objective on your price strategy you can help plan for unexpected sales growth or reduction.

Example Objective: “Maintain our high profit strategy by promoting our superior service. However, if our competition drops their prices, we should be prepared to do the same to maintain sales.”

Pricing Against Competition

In the vast majority of markets, the way customers view your prices is based not only on the direct cost to them, but also the cost compared to similar products (i.e. your competition).

Your prices may be cheap, but if the competition is offering a near identical service for 20% less then you still risk losing a lot of customers.

You need to look at how your price compares to the rest of the Laundromat market. If you are more expensive, do you need to emphasize the quality of your service, or if you are cheaper do you need to assure people that quality is not compromised? Would altering prices make you more competitive?

Example Objective: “Remind customers that although we are cheaper, our quality is comparable with models over 30% more expensive.”

Finding Your Service

It may seem like a simple point, but can your potential customers find your service? Making your service available in the right locations is a key part of marketing your Laundromat.

Do you want any products to be sold only through your business (E.g. If you deal with specialist requirements), do you want it to be sold through selected approved retailers, or through every possible outlet?

You need to look at where your products / services are currently sold, and whether you need to make it available in more / less locations.

Part of this process involves looking at how your services are sold. You should look at how effective your current setup is, and look at ways of maximising sales and availability.

Unique Selling Points

Most products have a unique selling point; this is a feature, branding, price, or other attribute that is the most attractive to consumers.

You need to look and try to work out what the USP’s of your services are. You can then look at how to maximise the benefit of the USP to your business.

By knowing the key selling points of your product in detail, it will help to make all of your marketing more focused and effective.

Example Objective: “Customers feel our value for money is our USP, we should try to keep providing good value for money at all times over the coming year.”

You should look at when sales are lower, and whether there are ways to increase sales, or whether there are alternative products you can market instead.

Example Objective: “Introduce a new or altered service to the market during the months where our current service has lower demand, with the aim of gaining a 30% increase in sales each non-peak month.”

How will you carry out your marketing? Once you have a clear marketing strategy, you need to be clear about how you are going to make it happen. A detailed Laundromat Marketing Plan should explain how you will go about achieving each of your marketing targets and objectives (as defined in your marketing strategy above) either by particular target segment, by type of marketing activity, or both.

Such a business plan will include some or all of the following:

  • The marketing methods you will use for each segment of your target market.
  • The specific action you are going to take to reach each segment.
  • A timescale or timetable for each marketing activity.
  • The people or organisations that are going to carry it out.
  • The estimated costs to undertake particular marketing activities (your marketing budget).
  • How you will monitor and review progress.
  • How you will handle the response to your marketing.
  • If it helps, think about the four 'P's, of product, price, promotion and place.

It will also be important to identify how you will manage the overall Laundromat Marketing Plan, including aspects such as ensuring that the entire budget is not spent too early, monitoring results, adjusting the plan and introducing new tactics as you go along.

Laundromat Business Plan

Laundromat Business Plan

Laundromat Business Plan

It would take an exceptional genius to maintain detailed control of a Laundromat above a certain level. It may be that you will not reach that level, even with the planned expansion. Perhaps the employment of a competent manager the installation of a good management accounting system and the right help when needed. There is no need to over-elaborate a management system. But there are situations where, perhaps through the temperament of the owner, proper management controls are essential.

However, experience does show that when a substantial amount of new money is needed for expansion, the Laundromat will also need a change of management style and an infusion of supplementary management skills. Some venture capital firms even insist on introducing some of their own management skills, almost always financial control, into the Laundromat in which they are investing. The management system is very important, and it is worth spending time and effort to convince the readers of your Laundromat Business Plan that you recognize the problem and have a management strategy which is balanced and will work.

The areas that will require special attention when money is sought for expansion.

  • innovation;
  • cheaper prices;
  • better service;
  • better quality of goods.

Great Laundromats do not happen by accident.

They are planned that way!

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