Does the Economy Really Hurt Coin Laundromats?
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By Brian Brunckhorst
According to The Wall Street Journal article, “Even Laundries Tumble in This Economy”, coin laundromats are closing while others are suffering with a decline in sales. While the article is an interesting read and provides exposure to the coin laundry industry, it does not accurately represent what’s really going on with coin laundromats.
I do not dispute the fact that there are coin laundromats suffering a downturn, there are others that are thriving and growing in this economy. The article does not mention this at all. Instead, it just portrays our industry in one light, leading one to believe the coin laundromat business is not a good business to consider in these times.
Real insiders know there is a reason why some stores succeed in a tough economy and others do not. Do you want to know the reason?
Coin laundromat businesses experience a decline primarily due to a change in the demographics in the surrounding area rather than the fundamentals of the business. In other words, if people leave the area due to a loss of jobs or other reasons, local businesses naturally suffers–not just coin laundromats. However, in major metropolitan areas with a stable population, there have not been a change in the customer base for coin laundromats.
So what can you learn from this?
The key take away point is that location matters especially for coin laundromats. It’s all about location, location, location. This point is so important that it is one of the key criteria I look for when I consider buying a coin laundromat.
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About Brian Brunckhorst
Brian Brunckhorst is one of the nation’s experts on laundromats. He is dedicated to teaching entrepreneurs how to find, evaluate, analyze, and buy a coin laundromat. Brian is also the author of the best-selling eBook, “Secrets of Buying and Owning Laundromats”, and the Laundromat Teleseminar System.
Coin Laundromat Business – 3 Tips to Increase Value
Home > Laundromat Articles > Coin Laundromat Business – 3 Tips to Increase Value
I’m going to let you in on a few insider secrets that determine the value of a coin laundromat business. These few tips can dramatically increase the your wealth and income whether you own an existing coin laundromat or interested in owning one.
Tip #1 – Store Multiplier
A coin laundromat business is valued based on a multiple of the net income. If you can find a way to increase the income and/or reduce expenses, the value of the store goes up. So, what are some ways you can increase the income? Some ancillary income ideas include vending machines or adding a fluff and fold service if one is not offered yet.
If you’re looking at the expense side of the equation, take a close look at the rent you’re paying if the space is leased. Even if you’ve already signed a lease agreement, there is nothing to prevent you from approaching the landlord or property owner to renegotiate the lease or request a reduction.
As you can see, these few ideas will not only add immediate income to your bottom line, they will also increase the value of your coin laundromat if you ever decide to sell your laundromat business.
Tip #2 – Financing
The caveat here is this tip must make sense for your individual situation. In other words, you’ll have to compare the financials yourself to determine if financing will give you a better return on your investment. After all, the store must generate sufficient profits to cover all expenses including the loan and have some extra to add to your bank account.
I can only speak for myself, but financing the purchase of our coin laundromats allowed me to improve my cash on cash return, pay down the note over time, and increase our equity in the business. This strategy also allowed us to eventually expand our laundromat business from one store to multiple stores.
Tip #3 – Buy a Laundromat
It is much cheaper to buy an existing laundromat for sale than building one from scratch. Think about the capital investment required to build a store from scratch. You’ll have the cost of new equipment, construction, permit fees, sewage hook up fees, and operating capital once the business opens.
To this day, I have not built one store from scratch. Instead, I look for underperforming coin laundromats for sale and look for ways I can increase the value. In fact, one of my favorite strategies is to install new laundromat equipment. Why?
- The income generated from the new equipment will far exceed the cost of debt on the equipment. Yes, I don’t purchase new laundromat equipment in full cash either.
- I can usually pay off the loan on the new equipment in seven years. The useful life of the laundromat equipment if maintained will be 15 – 20 years.
- New equipment will help you market your laundromat business. Not only with your existing customers be happy, the new laundromat equipment will attract new customers. Keep in mind the top two things that keep customers coming back to your coin laundromat is a clean, well lit store and newer equipment.
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About Brian Brunckhorst
Brian Brunckhorst is one of the top experts on laundromats. He is dedicated to teaching entrepreneurs how to find, evaluate, analyze, and buy a coin laundromat. Brian is also the author of the best-selling eBook, “Secrets of Buying and Owning Laundromats”, and the Laundromat Teleseminar System.
Coin Laundromats – Their Advantages Over Other Types of Businesses
Home > Laundromat Articles > Coin Laundromat Advantages
Are you tired of working a job? Are you looking to make a career change? Are you looking for a part-time business to supplement your salary? Or, are you looking to invest in a business that makes sense? It doesn’t matter which situation you’re in because the coin laundromat business is the answer for you. Coin laundromats have several advantages over other types of small businesses.
Advantage #1
If managed and operated properly, a coin laundromat should not become a full-time job. With the proper systems and procedures, a coin laundry should not require more than 15 – 20 hours per week. Yes, you heard me correctly. This is a part-time business that works for you instead of the other way around!
Advantage #2
This business is not labor intensive where you will have to manage numerous employees. At most, a fully attended laundromat should only require one employee at all times to oversee operations.
Advantage #3
You do not have to sell anything. A coin laundromat is a self-service business that provides a basic necessity. Customers need this kind of service and are willing to pay for this service. This means you do not have to hire a staff of sales people to promote your service and attract customers.
Advantage #4
This business is recession resistant. During a tough economy, we have not seen a drop off in business. In fact, most coin laundromats are seeing even more business during a challenging economic cycle.
Advantage #5
This is a self-service industry; customers provide their own labor for free. They load the machines themselves. They fold their own clothes after the clothes are dried. That’s good news for business owners like us because we do not have to provide the labor.
Advantage #6
This business is an all cash business. You don’t have to deal with credit card transaction fees, bounced checks, or accounts receivables. Plus, customers pay you upfront. You get paid in full before customers can use the laundromat equipment.
Advantage #7
Coin laundromats are a real, proven business. This is not a start up business or one that is unproven. The risk of owning a laundromat is less than other types of businesses.
Advantage #8
This business is simple and does not require a ton of experience. That said, I encourage you to take the time to educate yourself before jumping in head first. The proper education will save you time and money.
There you have it. I covered at least eight reasons why the coin laundromat business is the perfect business. You are also starting to see why I made the switch to becoming a laundromat business owner rather than spending the rest of my life working in a corporate job.
Here’s to your coin laundry success!
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About Brian Brunckhorst
Brian Brunckhorst is one of the top experts on laundromats. He is dedicated to teaching entrepreneurs how to find, evaluate, analyze, and buy a coin laundromat. Brian is also the author of the best-selling eBook, “Secrets of Buying and Owning Laundromats”, and the Laundromat Teleseminar System.
Coin Laundromat for Sale – How to Find One that Makes Sense
Home > Laundromat Articles > Coin Laundromat for Sale – How to Find One that Makes Sense
I am often asked how to find a coin laundromat worth purchasing. First, it is not difficult to find a laundromat for sale. I’ve seen laundromats for sale through business broker listings, classified ads, and even direct owner inquiries. The real challenge is determining whether or not the laundromat makes sense based on your personal and financial goals.
Target Income and Return on Investment
Before you look at any laundromats, it is important to determine the desired net income from the laundromat. In other words, how much money do you want the laundromat to generate? Most laundromats typically generate $4,000 – 8,000 net income and 15-24% return on investment (ROI). Identifying these targets will help determine the price range of laundromats you should realistically consider.
Driving Distance
How far are you willing to drive to manage or check on your laundromat? As a first-time purchase, I suggest locating a laundromat within a thirty minute driving radius. Imagine having to drive an hour or two each way. If you’re planning to personally manage the store, would you prefer commuting thirty minutes compared to an hour or more?
Make a List
The next step is to make a list of all the laundromats with your thirty minute driving radius. A quick way to compile your list of prospective laundromats is to check your local Yellow page directory or search for this information on the Internet. After you compile the list, simply check the address using an Internet mapping program such as Google maps, Yahoo map, or MapQuest. These programs will help you filter out the ones that are within thirty minutes driving distance and ones that are not.
Figure Out Cash Flow
Now that you have a list of prospective laundromats, the final step is to estimate how much money they are generating. On average, a washing machine in a coin laundromat is used between three and five times a day. Based on this average, here is an easy formula to estimate the total laundromat income:
(# of washers) multiplied by (average price to wash a load) multiplied by (4 cycles per day) multiplied by (30 days in a month) equals (total estimated monthly gross income of washers in laundromat)
30 x $2.50 x 4 x 30 = $9,000 / month.
Now that you’ve estimated the washer income, simply multiple the washer income by fifty (50) percent and you’ll have an estimated income for the drying machines. Using our example above, the dryer income would be approximately $4,500 / month. Adding both figures together, the laundromat should be grossing approximately $13,500 / month. Since the net profit for most laundromats is 35 to 50%, the laundromat example we just described should be generating between $4,725 and $6,750 per month.
I recommend visiting at least twenty different laundromats and run through this exercise. After visiting multiple laundromats and calculating their gross and net income, you should have sufficient preliminary information to help you determine which laundromats are desirable and worth acquiring if possible.
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About Brian Brunckhorst
Brian Brunckhorst is one of the top experts on laundromats. He is dedicated to teaching entrepreneurs how to find, evaluate, analyze, and buy a coin laundromat. Brian is also the author of the best-selling eBook, “Secrets of Buying and Owning Laundromats”, and the Laundromat Teleseminar System.
