Have you ever sat down in a laundromat while waiting for your wash cycle to end and thought about what it’s like to run a laundromat business?
You might be surprised to know that there’s a lot of money in it. In fact, user @laundromatmoney on TikTok bought a simple laundromat in 2021 for $65,000, and turned it into a profitable business that is raking in a mind-blowing $20,000 a month. Here’s how he did it, and some tips you can follow to make your laundromat business a success.
How to Start a Laundromat Business
There are two ways you can get into the laundromat business; the first one is by building a laundromat from scratch, but that can get really expensive and would require dealing with your local government, which can be tiresome and lengthy. Therefore, it’s best to focus on the second way, and that is buying an existing laundromat business. You can use websites like BizBen.com, BizBuySell.com, and Loopnet.com to browse multiple laundromat businesses and see how much money they bring in and how much money they’re sold for. In general, a laundromat starts from around $70,000 and could go up to a couple hundred thousand, depending on its size and condition. You can even go to your local laundromats and ask if they’d be willing to sell, and you might find some of them wanting to.
The entrepreneur mentioned above, user @laundromatmoney on TikTok, recommends that you should never buy a laundromat that’s priced over six times its yearly profit, and a fair valuation for them should be between three and five times their yearly profit. He bought his off Craigslist for just $65,000, but he had to put in an extra $25,000 to fix broken washing machines and do a full remodel of the floors, walls, and install some storage closets.
How to Pick a Location
A laundromat needs to be in an area with good foot traffic, maybe near full apartment buildings that have people that can use it. But, another good tip is to find a laundromat in a location where your customers wouldn’t need to stay inside the laundromat if they don’t want to. If you frequently do your laundry in a laundromat, then you probably already know how boring sitting still and doing nothing for 30 minutes. Which is why you should buy a laundromat that’s close to a grocery store or a pharmacy, so people can just load up their washing machine and be able to leave and run another errand within close distance.
Before you agree to a purchase, it’s important to do your own due diligence. Don’t just believe everything the seller says, ask them to provide their business’ bank statements, tax returns, an income statement, and some copies of their utility bills. If they can’t give you that information, then you should avoid that business altogether, but if it’s a deal that’s really good, you can use their lack of information to your advantage and ask for a hefty discount, you might just get it.
Getting an LLC
It’s extremely important to set up a limited liability company or LLC when you’re starting a business. The cost of an LLC is around $500 or more, depending on your state, so it’s important to research your state’s regulations and requirements. You need an LLC because it’s basically a business structure that protects its owners from personal responsibility for the LLC’s debts or liabilities. For example, if something goes wrong in your business for any reason and you get sued by a customer, your personal assets, like your car or your house, get legal protection. Of course, there are limitations to this protection, so you might want to talk to an attorney first.
LLCs also have other benefits, aside from the legal protection. For example, if you connect your laundromat business to an LLC business account, you could actually get tax benefits, since the IRS allows small business owners to deduct some costs of running their businesses. If you need some extra help with setting up your LLC, or anything else for your small business like setting up a business bank account or bookkeeping, you can use the services of Tailor Brands, a platform that helps small businesses grow by helping them do everything that’s necessary for starting a business, including making a website and getting insurance.
Getting Financing
After getting your LLC, you’re now ready to go to the seller and sign a contract to buy their laundromat. Keep in mind that you need to have your finances ready, as most sellers will require a down payment of 20% to 30% of the total cost of the business. If you don’t have the money, you can go to your bank to get a loan, or ask the seller to do owner financing, which is basically the seller financing the purchase directly with you, either in whole or in part.
This adds a lot of risk to the seller, but many sellers are actually happy to do that because it eliminates the costs of a bank intermediary, and they like the extra income in the form of interest. In addition to that, owner financing can help them close the transaction much quicker. If you can’t do owner financing, then it might be a good idea to get a business partner to go 50-50 with, and this would be great for you overall since a partner would help you with ideas to grow the business and reduce your risks.
How Do Laundromats Make Money?
It’s important to understand that there are two main sources of income for most laundromats, and they’re the self-serve side of the business, where customers use the machines themselves, or the wash-and-fold service, where the laundromat does all the work and all the customer has to do is send their clothes to get washed then pick them up when they’re finished. By watching @laundromatmoney’s TikToks, you’d see that most of his revenue comes from the self-serve side, which brought him around $27,000 in January, while the wash-and-fold side brought in around $16,000.
He also makes more than $1,000 via vending, and it’s a great way to increase your profits in a laundromat business. This resulted in a total revenue of around $44,000, before deducting the expenses. The amount of money a laundromat makes depends on how many washing machines and dryers it has. For example, you could get a laundromat that has 15 double load machines, and charge around $4 per use. If all your 15 machines get used per day, that’s $60 per day, and $1,800 per month. Some laundromats have triple and quadruple load machines in addition to the smaller double load, and you can charge $5 and $6.50 per use for them, respectively.
Laundromats also include dryers that can dry up to 30 pounds of clothes, which charge around 25 cents for five minutes. If you buy an existing laundromat business, then it’ll probably come with all of the machines, but if you want to buy more machines, you can shop for them online. You can also set up your own vending machine in the laundromat to earn extra money selling snacks and drinks, but, another type of vending machine that’s great to have in a laundromat is a soap vending machine.
You can buy one online for $600 to $950, and fill it up with small soap boxes from brands like Tide and Real-Tuff, but try to include other brands that cater to people with sensitive skin and eczema too, like All Free Clear, for 50 to 60 cents, and sell them for $1.25 each in the vending machine. You can sell things like detergent, stain remover, and laundry bags in the vending machine. User @laundromatmoney’s soap vending machine sometimes makes him around $330 in just two weeks.
What are the Costs of Running a Laundromat Business?
When you buy the place, especially if it’s for a low price, you might find that some washing machines are down, so you’d need to spend more money to fix them. Maintenance for the washing machines can be anything from $100 to $500 a month, and a good tip is to learn how to do the repairs of your washing machines yourself. Not only will this save you a lot of money if you’re planning to run a laundromat business, but it’s also not that hard to learn as most fixes take 15 to 20 minutes, and is a very useful skill to have.
There are also the water and sewer bills, which are extremely important for a laundromat business. These bills can differ from one state to another, but user @laundromatmoney spends around $680 on water each month, and $630 on the sewer bill. He also spends around $1,400 each month on gas bills, and that can even be higher in winter. Gas is also extremely necessary for a laundromat, since water heaters and dryers require it. There are also the electricity costs, which also depend on where you’re living, but he spends $865 per month on it, and that increases in the summer because of any fans or ACs in the business that are turned on.
You might need to account for extra costs like an internet bill, so your customers can use the internet if they’re waiting around in the laundromat, and the average cost for that is $65 per month. You’d also need to pay for a phone bill as you might need to take calls from customers and answer their questions, and this could cost you around $80. An often overlooked cost when discussing laundromats is costs for pest control, which can be from $50 to $250 on average for DIY treatments or between $70 to $5,000 for professional services. You also need to account for the cost of supplies, including things like detergent, fabric softeners, and bleach. On average, you can spend around $500 to $1,500 every month, depending on how many washing machines you have in your laundromat.
Another cost is the insurance for your business, and the average laundromat in the U.S. spends between $350 to $750 per year for $1 million in general liability coverage. You should also consider paying costs for advertising. You can advertise in Facebook Ads (NASDAQ: META) or Google Ads (NASDAQ: GOOG), or print papers that can be sent to people in the mail, and you can do that by contacting the mailers in your area, they’d cost you anywhere from $0.30 to more than $10 per person. If this is too much money, you can still do the advertising for free by posting about your laundromat in Facebook groups of your area or neighborhood.
If your laundromat has a wash-and-fold service that requires you to pick up and deliver laundry from your customer’s doorstep, then you’d need a vehicle to do that and you’ll have to pay costs on that vehicle. These costs include the payments on your vehicle if it’s not completely paid off, insurance, which averages $2,150 per year and gas. You should also consider investing in a laundromat software like Curbside Laundries, which streamlines pick-up and delivery orders, as well as payments, and this will cost you around $370.
You should also keep in mind the costs of employees’ salaries, which can be up to $10,000 a month, depending on how many people you hire. Of course, you can choose to run the laundromat by yourself to save money, but if you want to transform this business into a passive one in the long-run, then you should get some people to help and even managers to manage the employees, so you won’t even need to be there most of the time. Overall, running a laundromat could cost you $20,000 to $25,000 per month, so it’s important to make sure you have enough money when you start the business.
How to Keep Customers
The most important thing when running a laundromat is to make sure your customers have the best experience so they can keep coming back to your business and not leave you for a competitor. Most laundromats take payments in quarters, but you should include other payment methods that people can use, like Apple Pay (NASDAQ: AAPL), Google Pay, cash, and debit and credit cards. This way, people won’t turn away from your business because they don’t have coins or cash, and you’ll increase the revenue coming in.
Additionally, it’ll be easier for you to know how much money you earn each month, as you won’t have to count hundreds of coins. You can also give them discounts, or develop a website and offer them benefits if they use it.
Is it a Passive Business?
A laundromat business can become a very passive business. Take user @laundromatmoney for example, he says that his work can be from four to fifteen hours per week, on average. And his work hours depend on what he has to do. For instance, if he has to fix a machine that broke down, he’d work for longer, but other than that, you don’t need to be in your laundromat the entire time as you could get your employees to handle day-to-day operations.
Of course, this is only later on, and you’ll need to exert some serious effort in the beginning to make your laundromat a passive business, but after that, you won’t even need an office in the laundromat, and your only job would be ordering supplies, fixing the machines, and performing quality control inspections on the wash-and-fold service.
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