If you’re looking to invest in a business, there’s a good chance a laundromat has never crossed your mind. But why not? Laundromats are recession-proof – people need to do their laundry. Couple those needs, with a convenient location and affordable solutions, and the result will be steady demand and, in turn, steady income.
The Coin Laundry Association reports there are currently “about 29,500 coin laundries in the United States, generating nearly $5 billion in gross revenue annually.” One of the biggest benefits of investing in a laundromat is flexibility. You’ll have the freedom to be as hands-on (or hands-off) as you wish, choosing to be involved in daily operations or hiring staff to manage.
Purchasing an existing laundromat (vs. building new) has the added benefits of proven financial data and existing customer base. While this may sound like the perfect opportunity, some due diligence before investing is highly recommended. A laundromat is a business and you need to be prepared to think about expenses, human resources, maintenance, marketing, and cash flow management. A well thought out business plan with financials is a great place to start.
What should you look for if you decide to purchase an existing laundromat?
- Are you near apartment complexes or in a college town?
- What is the surrounding demographic?
- Check out the crime report for the area.
- How close is the nearest competitor?
- If any are within two miles, do they have a loyal customer base?
- What are their hours and do they offer ancillary services, such as dry and fold or dry cleaning?
- Hire an inspector to check out the property to ensure the electrical and other systems are up to code.
- Thoroughly test the existing equipment to ensure machines are clean and functioning properly.
- Review sales and expense history so you have a better financial picture. As for bank statement, tax returns, profit and loss statements.
- Anticipate expenses for at least the first year and ensure you have enough capital to cover.
- This will include payroll, workers’ compensation, taxes, repairs and maintenance to facility and equipment, cleaning supplies, security system, and marketing.
- Ask the owner for past repair receipts and records; owner’s manuals for equipment; and other paperwork to legitimize the potential expenses.
The basic model of the self-service laundry industry remained the same over the years; however, technology has created some competition for the most positive experience. Free Wi-Fi, televisions, high-efficiency machines, vending machines (food and laundry products), card systems with loyalty incentives, 24/7 convenience … the list goes on. If you take the time to research the industry, the specific property, and the opportunities, you’ll have a better handle on whether a laundromat is the right investment for you.