Neglecting or mismanaging your business Bad management is the top reason why many laundromats eventually fail. All too often, a person will purchase a laundromat with the idea that as long as they collect their earnings every week or two, the business will continue running.
In densely populated areas with rising property prices, such as San Francisco or Boston or New York (what Richard Florida calls superstar cities), coin operated laundromats simply can't generate enough revenues. They are being replaced by either upscale housing or retail businesses with high per-square foot sales.
Understanding laundromat value
U.S. Laundromats post impressive numbers with a 95% average success rate and 20 - 35% profit margins. But whether or not your laundromat can meet (or exceed) these industry standards depends on some important factors.
Irregular hours: As much as your schedule can be flexible to suit your needs, you also have to be flexible for your business. When emergencies and issues come up, your business and customers won't care if you're on vacation, sick, etc. You'll likely be tackling problems at all hours.
By now, you know that the average laundromat makes $300K annually with 20% to 30% profit margins. We also explained how much owners make, the expenses that go into running a laundromat, and how to start a laundromat.
A coin-operated laundromat can be a profitable business, but there's also a high risk of it attracting thieves. You'll also need to keep cash on hand to provide customers with change for the washers and dryers.
Neglecting or mismanaging your business
Bad management is the top reason why many laundromats eventually fail. All too often, a person will purchase a laundromat with the idea that as long as they collect their earnings every week or two, the business will continue running.
Laundry Services: Offering customers additional laundry services is a common method for laundromats to gain additional revenue. Wash and fold, delivery, ironing, and dry cleaning are a few examples of laundry services that can help attract new customers and increase engagement among existing customers.
We talked to the Laundromat Millionaire, Dave Menz, who owns four laundromats and makes nearly $2 million annually. He even helps other business owners navigate the industry to get more customers, become a full-service laundromat, and outshine absentee owners.
Most laundromats have a lot of clothing left behind. As a courtesy, the lost clothing will usually be kept for one month. At the end of the month, the clothing is donated. It's estimated that laundromats in the USA donate upwards of 10,000 pounds of lost clothing per month.
The laundromat industry is highly stable, does not fluctuate with seasons or recessions, and enjoys quick payment turnarounds. If you keep the laundromat clean, the machines in good order, and offer good customer service, chances are you'll see between 20-35% ROI (return on investment).
Many laundromats offer a wash and fold laundry service, which means you can spend less time on laundry and more time focusing on your busy to-do list, spending time with your family, or just enjoying some hard-earned relaxation.
Location – Many laundromats suffer from “inferior location complex”. Laundromats located in a defunct plaza can suffer when the plaza has gone south, lack of upkeep to the plaza, poor parking, limited visibility, bad neighbors (neighboring businesses that attract the wrong crowd, fail to attract business, etc.)
While most homes have their own washers and dryers, self-service laundries are used by many who do not have their own machines. Even those who have their own machines sometimes use them for large bedding and other items that cannot fit into residential washers and dryers.
In conclusion, while owning a laundromat may seem like a promising hands-off business, it is a venture that requires dedication, active involvement, and sound management skills. If you're willing to put in the work, it can provide a rewarding income stream and the opportunity for substantial business growth.
For most laundromat owners (and most entrepreneurs in general), an LLC is the best choice. That's because you'll have fewer regulatory requirements than S Corps or C Corps, but you'll be able to keep your personal assets separate from your business assets — something you couldn't do with a sole proprietorship.
Finance, law, real estate, health care, and software development are among the most profitable industries in the US. If you're looking to make as much money as possible, consider starting a legal services business, a brokerage, a health care company, or a software-based venture like a virtual assistant business.
On average, smaller laundromats might earn between $1,500 to $5,000 in profit per month, while larger, well-established ones in prime locations might see profits of $10,000 to $30,000 or more per month.
Quicker spin speeds mean greater water extraction, for a shorter cycle time and faster drying time in the commercial tumble dryer.
The average lifespan of commercial laundry machines is 8-15 years.
1. High Success Rates. A recent Gallup poll found that 66% of potential entrepreneurs are held back by the fear of business failure. However, one study found that laundromats have an extremely high rate of success – approximately 95% of laundromats succeed over a five-year period.
Self-service laundromats have developed a reputation for being unhygienic over the years. In reality, they're often much cleaner than your home washer. Ask yourself, when was the last time you cleaned the inside of your washing machine? Here at Liquid Laundromats, we clean ours routinely.