ALSIP, Ill. — His presentation title was brief and attention-grabbing: “How to Make Money in the Laundromat Business.”
Flanked by boxed washers and dryers on either side in his company’s warehouse, Matt Miller, president of laundry equipment distributor Coin-O-Matic, shared what he described as key factors to successfully develop a laundromat when starting from zero.
His suggestions—crafted from decades of industry experience—were aimed at investors and entrepreneurs attending his company’s Laundry Business Excellence Expo on Tuesday. Here they are:
1. Know Your Limitations
Know them both in terms of time and of finances. Where time is concerned, geography (especially the mileage between your store and your home) makes a huge difference in the amount spent, as does your decision to have an unattended store or an attended store (will you work there, or will it be someone else?).
If it’s the owner’s first time in business, they should have a credit score greater than 670 and the ability to finance an amount less than or equal to two times their net worth. Expected equity is 20-40% of project cost plus having three times their monthly operating expenses available in a checking account.
2. Establish Your Rolodex
In no certain order, build these contacts and relationships: mentor, chief financial officer, banker, legal counsel, accountant, laundry equipment distributor, branding agency and advertising agency. For each, it’s important for there to be mutual respect and for both parties to enjoy the other’s company, Miller says.
3. Recognize Your Laundromat’s Revenue Streams
They can include self-service income; chemistry sales (detergents, color-safe bleaches and softeners); food, pop and more; and full-service income from drop-off and pickup and delivery wash/dry/fold service.
4. Establish Your Brand
Your brand conveys your vision and establishes your presence and culture, Miller says. Enlist the aid of a professional branding agency to help you establish your business name, mission statement and a comprehensive theme (including colorways and fonts, interior design, and signage).
5. Find a Banker
Develop a relationship with a banker who you like and trust, because it will be important to your long-term success.
6. Time to Get Legal
Purchase your domain name and trademark it. Establish the legal entity (limited liability company or type of corporation) and document a succession plan with your partners and/or family. About the latter, Miller says, “Get it out in the open and it’s done.”
7A. Finding the Best Location for You
Locate a site within your desired geography and with the right demographics for a laundromat. Given your budget, choose the best available size, accessibility, parking, visibility and infrastructure that helps keep costs down. A well-run new or rehabilitated laundromat will win over most customers within a given market, Miller believes.
7B. If the Location will be Rented...
Find a landlord who’s likable and trustworthy and get to know them before you sign on, Miller advises. Look for a long-term lease, because this laundromat is for future owners, too, and the longer the lease, the higher the business is valued.
8. Equipment, Amenities & Payment System
Seek equipment features that customers want and are unique to your market. Equipment mix and layout must match the location’s demographics, Miller points out. You want efficiencies to keep variable costs down and to “give customers their day back.” Also, look for an accessible, easy-to-use payment system and a proper accounting system that keeps you in control of your business.
A well-built laundromat can save you a fortune, whereas problems equal headaches plus surprise expenses. Only use contractors experienced in laundromat projects, because these projects are highly utility-dependent and “a lot more complicated” than they look, Miller says. At the end of the day, a laundromat is a reseller of utilities, so quality and efficiency are king.
Your brand drives everything—website, digital ads, social media, print media, direct mail and email—so find a partner to help develop and execute your advertising. After all, today’s marketing rules are advancing by the hour.
In closing, he was asked which one or two points from the 10 he might emphasize.
“Be honest with yourself about time, because it’s not just a new baby. This is only the start,” Miller says. “And pay attention to your finances so that you’re not going to be strung out.”
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].