How to Operate a Laundromat
Home > Laundromat Articles > How to Operate a Laundromat
Even though the laundromat business is self-service, it doesn’t run by itself. There are several things a laundromat owner will need to take into consideration in order to ensure the business is operating efficiently and effectively. Below are a few factors as it pertains to operating a laundromat business.
Employees
Consider whether or not the laundromat will be attended or not attended. Some laundromats do not have an attendant present. Others have someone on-site to clean the store, assist the customer if she or he has a problem, or manage a fluff and fold service. If the laundromat will have an attendant, then you’ll want to consider whether or not the business operations can support an employee (part-time or full-time). After all, the goal of owning a business is not to buy yourself another job.
This is one of the most important areas for a laundromat owner. Why? Marketing is one of the most important activities that can not only bring in new customers, it can also increase existing laundromat customer loyalty. Typical marketing activities could include special coupons to residents in the area, promotional contests in the store for prizes, incentives for customer referrals, co-operative advertising with other nearby retail businesses, and just about anything else you can imagine.
Security and Surveillance
The safety of your business and your customers is of paramount importance. It is for this reason, I equip all my laundromats with a surveillance equipment. I want to make sure I record whatever happens inside my stores. A surveillance system will help you monitor any potential criminal activities such as someone who is looking to steal the money out of your change machine. In addition, you want to make sure your customers feel safe and comfortable in your store. A surveillance system is one way to provide the customer with peace of mind.
Laundromat Equipment
A critical part of business operations is making sure your laundromat equipment is operating at peak performance. The commercial washing machines and dryers need to work. On this note, here’s a tip. Most people new to the laundromat business think they need to service the machines themselves. Sure, you could learn how to do this and save some money. However, I like to ask myself, “How much is my time worth?” Once I go through this exercise, I know it is actually cheaper for me to hire a professional to service the laundromat equipment because they can complete the work order in less time than it would take me (and cost less when factoring how much my time is worth).
Bookkeeping
This is another area where most laundromat owners fall short. They fail to keep an accurate set of financial records since this business is an all cash business. As a business owner, you must keep good records so you know if your business is profitable or not. If you’re not comfortable maintaining this kind of information, get help from a professional bookkeeper. This will also help you when it comes time to prepare your business tax returns too!
Amenities
This is one area where you can differentiate yourself from other laundromats in the area. Personally, I like to offer my customers free wireless Internet service. Other amenities include ATM service, a fluff and fold service, and vending machines, which also offer ancillary income for a laundromat business.
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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 Business Plan: How Marketing Can Increase Profits
Home > Laundromat Articles > Coin Laundromat Business Plan: How Marketing Can Increase Profits
Marketing works! If you as a coin laundromat owner market your business and most of your competitors do not – you’re going to be miles ahead of them.
Like any business, you don’t want to forget about promotional marketing. I think that’s a common mistake between most people that own laundromats where they don’t budget much of their allotted income towards marketing expenses.
For most laundromat owners primary marketing is by word-of-mouth and that’s it. Sometimes they’ll do something like give away a free box of soap or leave soap out on the counter and let people just have free soap or something like that. It’s pretty rare that in laundromats they have real marketing campaigns. I think that’s a mistake.
I would recommend, probably, having somewhere between 3 and 5% but probably no more than 10% of the gross income to go to the marketing expense. The amount that you use would really depend upon what kind of net income you have and whether or not it makes sense to spend more than your allotted budget for it. With laundromats, you can do some relatively inexpensive marketing.
One thing to do is you can print up flyers on neon paper just talking about the laundromat and distribute them. Another popular form of advertising is postcards – direct mail.
From time to time we send emails to customers. I love emails because it doesn’t cost you anything for the marketing as opposed to a postcard. The savings you get by using emails allows you to pass some of that savings on to the customers by giving them coupons even if they are existing customers.
The other thing I like to get customers to do is refer other customers. I normally only do this with online marketing where I will send out an email and I’ll say, “Refer 5 people and you win a prize.”
The other type of marketing, which also really works well, is there are some online services that review different companies. Customers come in, they will wash with you then they will go online and they will rate your business from 1 to 5 stars. They get to write it up and it’s in their own opinion. Basically, it’s a testimonial of your business.
It is important to track everything otherwise you don’t know what is effective and what is not. Every marketing promotion that we do has a different give away or a different promotion. We advertise in one of those “Penny Saver” magazines and on that we have a different ad with a different coupon. We even advertised on shopping carts in supermarkets and that worked pretty well.
Advertising is one of those things that is always evolving. If you find one that works, keep doing that. If you find stuff that doesn’t work, stop doing that and go on and try a different type of advertising.
The experts say in marketing for ads to be effective, you want to touch your customer at least 6 times with some sort of marketing plan. It could be 6 different types of marketing, such as postcards, flyers, and the name of the business as they are driving down the street. Whatever that happens to be. I think it’s important to have some sort of consistent regular marketing approach.
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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 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.
Laundromat Equipment – Interview with Brian Brunckhorst
The Coin Laundry Association just released their August issue of “The Journal”. If you look carefully, the cover photograph is a picture of my coin laundromat in Hayward, California.
Also on the cover, the association features an article is called, “It’s a Remote Possibility”. The article discusses how laundromat owners with multiple stores use high-tech laundromat equipment to manage store operations remotely (also referred to as absentee ownership).
I was one of the contributors to this article. In the article, I discuss different aspects of remote management such as:
- Working on my laundromat part-time from my home office.
- Connecting coin laundromats to high-tech remote video surveillance camera systems.
- Using attendants so you don’t have to manage the store full-time.
Read the rest of the article to get the full details. I bet it will change the way you think about the traditional laundromat business.
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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.
Need to Finance Your Coin Laundromat?
Home > Laundromat Articles > Need to Finance Your Coin Laundromat?
What is the best way to finance a coin laundromat? Should I pay all cash for the store or should you finance it? These are the questions I hear frequently.
The answer depends on:
- The financing terms
- How much cash you have to invest
- How much cash flow you expect to pocket from your business each month
In most cases, it makes a lot of sense to finance the business though. So, if you’re looking at your financing options, here are a few choices available.
Seller Financing
I would argue that the best method for financing a coin laundry is to get the seller to hold a note for a portion of the purchase price (or the entire purchase altogether). This is a win-win situation for both the seller and buyer. Why?
From the seller’s perspective, the sale could throw him/her into a higher tax bracket and a good portion of the money received from the sale of the Laundromat would be eaten up by taxes. In addition, the owner receives a steady stream of income, but now without the “headaches” of having to run a business.
For you, as the buyer, you don’t have to deal with a mortgage company and worry about loan qualification. In addition, this gives you more piece of mind because the seller now has a vested interest in your business success.
Home Equity Line of Credit (HELOC)
In some cases, using a home equity line of credit to purchase a business that generates monthly cash flow is a really smart idea. I like the HELOC method because the interest rates are usually lower than those of traditional business loans and the loans are easier to qualify for, especially if the property is your principle residence. In fact, if you choose the option of paying interest only on your HELOC, you can maximize your net cash flow thus increasing your overall return on investment. I used this option to purchase our very first store.
Small Business Association Loans
This is probably the most common loan for a business of any kind. This is a full documentation loan which generally requires 2 to 3 years of your personal income tax returns and may require you to use your primary residence as additional collateral. They may also want to see at least 2 years financial records on the business (Profit & Loss Statements and Balance Sheets), plus the tax returns of the seller. If the store has had declining revenue over that period, there is a good chance that they will decline to loan, or require a greater amount for the down payment. A word of caution, SBA loans can take anywhere from 45 up to 60 days to close, so make sure your escrow period is long enough to account for the lengthy funding process.
Private Investor Financing
Sometimes you can obtain financing from private investors to help you with your purchase. This can come in several forms, but here are a few of the more common ones.
Hard Money Loan (HML) – These are loans made many times by private investors in the secondary loan market to those who may have a hard time qualifying for a traditional SBA loan. These loans typically have higher interest rates ranging from 2 to 5% above the prime rate and have shorter term lengths (24 months or less). The primary advantage to borrowers is that these loans can fund in as little as 3 days.
Promissory Note (Prom Note) – This is a loan where the lender holds a note for say 5 years, at maybe 10 to 15% interest. In most cases, you need only make the interest payments either monthly or quarterly, with a balloon payment at the end of the term of the loan. Prom note investors are looking for a higher return on their investment and essentially offer the borrower a no or low documentation loan.
Direct Investment – In this example, you give up a piece of the business and profits to get the project funded. Why would anyone do this? Well, fifty percent of $4K a month is better than 100% of nothing! Besides, there are ways to structure it so the partner becomes a silent partner and gives you money up front.
In conclusion, I’ve shown you various options when it comes to financing your store. Wait… Why didn’t mention paying full cash? You end up negating leverage, but that’s another topic for another day.
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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.
