The majority of existing Laundromats for sale will have an existing lease on the premises the buyer will have to assume. Many established laundries have leases with rents currently "below market" for new shopping center space, and although the leases may be shorter, the lower rate can make some exceptionally attractive. You may also attempt to negotiate a new lease or a lease extension on any existing lease. Rent, along with utilities, constitutes the largest monthly expenses an operator faces and sometimes a note payment if a loan was made to finance the purchase. Viewed in this light, some locations for new laundries may be more affordable, however, rental costs should not be considered apart from the contributions the landlord may make toward tenant improvements. The square foot costs of rent per month will vary. Some locations may rent for as little as $1.00 per square foot or as much as $3.00. Rehabilitated locations in established areas may be less costly, while shopping centers in rapidly developing or exclusive areas are often more expensive. The lease is the most important document for the majority of owners who do not own the property housing their business. Depending on a number of factors, including the location, the lease can be a complex, lengthy document. The simplest leases run four or five pages. However, the bigger the shopping center, the larger the lease is likely to be in number of pages. In developing areas where rents can escalate rapidly, operators prefer longer-term leases, fifteen to twenty years or more. But whatever the lease duration, a clause should be requested which permits the tenant to assign if a decision is made to sell. Because the lease establishes the terms of tenancy and sets rent for a fixed period it is important that the lease be negotiated with the assistance of an experienced person in Laundromat ownership or development.
Q. WHAT IS AN ACCEPTABLE POPULATION DENSITY?
The typical Laundromat user is in the middle-to low-income bracket. Densely populated areas with apartment buildings, college campuses, resorts or mobile home parks can be considered advantageous locations. Laundromats also have successfully located in the suburbs and multiple-housing areas where they serve the needs of families with children. For up-to-date information, research services are available which provide demographic studies at reasonable rates of up to $100.00 per survey, or Laundromat123.com will provide them for free upon a request and meeting.
Q. HOW IMPORTANT ARE OTHER LAUNDROMATS IN THE AREA?
The number of Laundromats that can operate successfully in one area depends upon the size of the market. If demand is adequate, a one mile radius might support five or more stores. One owner with four stores located within one-quarter of a mile apart in a low-income, urban area reports: "Business is fine in all of them."
Q. IS PARKING IMPORTANT?
In Southern California, parking should be plentiful, close, and well advertised. Ample off-street parking is eminently desirable, Laundromats which share their parking lots with adjacent stores ("reciprocal" parking regulated by the lease) will require more parking if located near establishments (like cocktail lounges) whose patrons stay for longer periods of time and tie up parking spaces.
Q. IS VISIBILITY NECESSARY?
Laundromats should be located where potential customers can easily see them. Good exterior signs can help a poor location by attracting the attention of individuals traveling by car. The standard: an unobstructed, lighted sign, visible for three hundred feet or more.
Q. WHAT IS THE INDUSTRY OUTLOOK?
The market for Laundromats will see expansion in the next few years as housing costs soar, forcing more young adults to select apartment dwellings for longer periods of time, and as the population of California continues to grow at a substantial pace. The successful future of the independent store will depend on its owner's willingness and ability to develop good management practices, adjust to changing economic and environmental conditions, and investment back into the business. Energy-efficient equipment will play an increasing role in effective store management overall. Laundromats have weathered many of the storms brought on by shortages and increased regulations. Industry leaders are therefore optimistic that the well-equipped, well maintained, and well-managed store will continue to prosper, attracting and keeping customers by offering quality service at a competitive price.
Q. ARE VANDALISM AND THEFT MAJOR PROBLEMS FOR LAUNDROMATS?
While not a large problem, money theft and store vandalism are two common threats to Laundromat security. Many safeguards can be implemented to deter money theft and vandalism. It is always a good idea to outfit machines with the most sophisticated locks available and some operators have installed different locks on each ten machines for security reasons. Physical protection of the Laundromat is accomplished in various ways. Both silent and sound alarms are commonly used for store entrances during non-business hours. Operators who do not employ full time attendants may use automatic time locks to open and close the establishment or install cameras. Inside the store, alarms are also used on bill changers.
Q. DO YOU HAVE A SUMMARY STATEMENT?
Laundromat123.com and Larry Larsen, Realtor® are ready to provide you with the help you need to develop a new or buy a used Laundromat. We employ a low-key approach that features education in an attempt to help you buy on your terms and in manner that fits your personality. We believe that repeat customers are the strength of any company. This website is designed to instruct and assist the potential Laundromat store buyer in making an informed purchase. If it stimulates additional questions, Larry Larsen is available to supply additional answers to your complete satisfaction. Larry Larsen is also available as a consultant to analyze any Laundromat prior to making an offer to purchase or build.
If you've been waiting for things to get better before you buy some equipment, it's time to put your tool belt away and step up to plate. You're going to need to improve your Laundromat before competition steps in and takes away your customers. A lot of you are spending more on repairs than you would on a monthly payment for new washers. If you haven't placed enough front load washers in your store, now is the time. You can only make your store grow by putting a little money back in. Replace the old equipment and raise the prices. You can't continue to patch up some of your ancient equipment forever and expect people not to notice. Unreliable equipment hurts your business. How long has it been since you've spent any money on your Laundromat? More than three years and you're in need, especially if most of your equipment is over ten years old. At a minimum, you should replace a row or two of top load washers and buy a half dozen new laundry carts. Just my suggestion.
Q. WHAT SIZE OF EQUIPMENT SHOULD I BUY?
A Laundromat is a service business. Therefore, the equipment you provide is one of the most important factors in the success of your store. Customers must be satisfied with the quality of the wash and should be provided with a range of machines to handle all of their washables (including irregular-sized items like bedspreads, rugs, etc.). You should purchase reliable, dependable and easy-to-maintain equipment of various sizes for all your customer’s needs.
Q. MOST WASHERS LOOK ALIKE. WHICH BRAND SHOULD I BUY?
Reputation and efficiency should be your guides in choosing washers for your Laundromat. It's best to look for equipment that combines the latest energy efficiency with an attractive appearance. You should consider the new Super High Spin washers sold as a complete line only by ADC, ContiG and Wascomat. Speed Queen and Huebsch are popular names in Southern California (both built by Alliance Laundry) but do not have a complete line of Super High Spin washers. Here is a ranking in order of quality features for maximum profit and energy savings: ADC, ContiG, Wascomat, Maytag, Speed Queen-Huebsch, Dexter, Ipso, Milnor, General Electric and Whirlpool.
Q. WHAT KIND OF DRYERS SHOULD I BUY?
Some Laundromats lack drying capacity; there are not enough dryers resulting customer delays at the dryers. The stack dryer (one tumbler stacked on another) allows you to double your drying capacity in the space occupied by a single dryer. Energy efficiency, history of repairs, and parts availability in Southern California should be considered. ContiG, Speed Queen, Huebsch and Ipso are all the same dryer manufactured by Alliance Laundry. American, Milnor and Maytag are manufactured by ADC. Wascomat imports a dryer and Dexter makes its own (also made both Maytag and Continental in the past.) Reversing dryers with moisture awareness are the latest addition to the energy saving designs of experienced professionals.
Q. WHAT ABOUT THE WARRANTY ON THE EQUIPMENT?
New Laundromats will have manufacturer’s warranties ranging from one to five years on various components of their equipment. Manufacturers do not provide any payments to the distributor for warranty labor. The guarantees and warranties of the manufacturers relate to parts only. Any service technician help provided by your distributor comes directly out of his pocket and his profit.
Q. WHAT AFTER SALE HELP SHOULD I EXPECT FROM A DISTRIBUTOR?
Initially you should look for your distributor for advice and guidance. You should look to your distributor for training on how to repair, maintain your equipment and teach you how to manage your Laundromat for maximum success.
Q. WHAT OTHER EQUIPMENT IS NECESSARY TO OPERATE A LAUNDROMAT?
Laundry carts, folding tables, soap dispensers and change machines are necessary to provide a full-service Laundromat. Other additional equipment, such as video game machines, soda and candy machines, will largely depend on space availability and how you decide to operate your Laundromat. Be sure and plan for an energy efficient water heater as well, since water heaters typically consume 50% of the natural gas purchased for your Laundromat. The tank-less water heating system provides the greatest utility savings to Laundromat owners, although "liming up" problems can happen and may require installation of pre-filters.
The best locations in Southern California are found in high-density, low-to-medium income areas with a good concentration of multi-family apartment buildings. The Laundromat should be located in sites with adequate parking. Laundromats may also do well in middle-to-high income areas with abundant single-family homes, since many two-income families now share the washing and drying experience.
Q. HOW IS THE TERM "TIMES MONTHLY" NET AND GROSS USED?
Laundromats are often marketed at prices that reflect a multiple of monthly net and gross income figures. In the past, the rule of thumb for calculating the value of Laundromat was to multiply the monthly gross times twenty or twenty-five. Because of the current variations in rent, CAM charges, utility expenses and repair costs, the brokers of Laundromats now use the net income, with allowances for hired cleaning and repair labor (but not any note payments)times a multiple that ranges from a low of forty to a high of seventy based on remaining lease term, age and condition of equipment.
Q. WHERE DO I GET FINANCING?
Financing is available from a variety of sources. Financing is seldom quick and easy, but working with a variety of financing specialists it is usually obtainable. If you have a good credit history, approval is normally within thirty days. Sometimes it is necessary to secure your first Laundromat investment with real estate as partial security. SBA loans are also available on existing locations with a verifiable history of profits. Banks look at credit history, down payment, previous profits, alternate means of repayment and experience of the buyer in the business.
Q. SHOULD I BUY A NEW OR USED LAUNDROMAT?
Without question you should buy a new store if you have the financial capability and a location is available near your home or business. A new store allows you to learn without the strain of keeping up with repairs, which is higher on the used stores. It also should contains the latest in energy saving equipment. Utility savings can be considerable in new stores compared to older existing Laundromat locations. Consider using the new Super High Speed washers for energy savings.
Q. HOW DO I GO ABOUT BUYING A NEW LAUNDROMAT?
There are several companies in Southern California with an ongoing program to develop new Laundromat sites. You also have the option of finding your own Laundromat location and finding a distributor of laundry equipment to supply you with equipment, evaluation of your location, frank advice on whether you should pursue it as a location and assistance in negotiating of a lease with industry specific terms. Larry Larsen, Realtor® and Laundromat123 are available for consultation, development issues and a review of potential purchases of all potential new Laundromat locations.
Q. WHAT IS THE PROCESS OF BUILDING A NEW LAUNDROMAT?
A Laundromat professional is normally used to survey your location, recommend a mix of equipment, and design your Laundromat. After your approval of the basic design, an architect will create a complete set of Laundromat plans for submission to the appropriate building department. Construction will then start with the delivery of necessary gas, water, sewer and electrical service to the site followed by installation of the equipment and other tenant improvements. Approximately six months after your decision to purchase a new Laundromat has been made, you'll be ready for your Grand Opening.
Q. HOW CAN I GET LAUNDROMAT CONSTRUCTION DONE RIGHT?
Don’t try to do it on your own. Mistakes have to be lived with for the life of the investment. Select someone who has a history of construction of Laundromats that can be with you every step of the way. It is easy to leave out necessary items, use poor layouts and select inappropriate materials. Experience is required if you want a quality Laundromat built for the lowest possible investment.
Q. WHERE SHOULD A LAUNDROMAT BE LOCATED?
A steady flow of customer traffic is essential to a good location. Prime sites, a recent industry study reported, are found in and around large shopping centers, neighborhood business districts with freestanding stores, and strip centers (a row of stores with off-street parking spaces). Sites near food markets, car washes, mini-markets and fast-food restaurants are also considered good locations.
"I can't seem to make any money!" my friend and fellow coin laundry owner said to me recently while I visited him at his Laundromat. "I do the work and the only one who benefits is the landlord, the utility companies, the parts houses, the mechanics, the janitors, and the rubbish haulers" he continued. "I wake up early, drive to my Laundromat, clean the floors, clean the washers, and do all the repairs on the washers and the dryers. Then I'm off to buy parts and vending products, and then back to the store to stock the vending machines, handle customer complaints and counsel my attendant about his pay and problems" he went on. "Some days I wait for hours for the rooter company to come and clear the sewer lines, for a mechanic to fix bearings on a front loader that's out of service or I collect quarters and stock the change machine. At home, I spend a few hours writing checks for the bills and refunds." "We all know there's a lot of work in owning a Laundromat," I responded, "but it costs a lot to wash a load, and you listen to every sales agent and scare tactic that tells you to lower prices to compete! You lowered your wash prices to 75¢ when that new store opened" I went on. "You didn't drive your competitors out of business and now you can't afford to fix your old washers, let alone buy new ones!" "You should be fed up" I continued. You're entitled to make a living, but you can't make any money giving away your product. If you were working for a boss that didn't pay, you'd quit! Why do you work in your own business for free?" I said. "You can't make any money at the prices you charge, raise your wash prices for a top loader, and lower the minutes of dry time or get out of the business!" "Close your laundry or sell it to me" I finished. On the drive home from my friend's Laundromat I thought about what I had said. "Raise prices or get out of the business!" Tough decision, what are you going to do?
WHAT SHOULD I DO IF I HAVE SOAP BACKING UP THROUGH DRAINS AND TOILETS?
It is likely that the "backing up" of the drains is actually a result of too much soap that bubbles put in the washers by your customers and the results foam out onto the floor and later turn to water as the foam dissolves. This would explain why the problem doesn't happen every time. It is unlikely the size of the drain would be able to control an over-soap situation, since too much soap would overwhelm any drain installed; the triggering level from a larger drain might be slightly less but the result would be the same if someone significantly over-soaped.
Over-soaping problems are more common in the modern "green" Laundromat as machines use less water for energy savings and the same volume of chemicals are introduced (soap) resulting in a froth of soap being produced. More mechanical action (speed of agitation) from front load washers, the same chemicals (soap) and decreased diluting of the water results in the creation of more froth. It's very difficult to explain to customers that the new generation of washers needs less soap to do its job. It is an educational process, but in the meantime here is my suggested solution:
1. If the problem is occasional water behind the washers that causes water to migrate to your neighboring businesses, the first solution attempted should not be an expensive choice, such as increasing the drain size.
2. The first step is to control the occasional problem by waterproofing the wall between the units using a product like Henry's water seal that will stop the water from spreading into to the neighbors suite.
3. Spread the black goop with a putty knife or thick-bristled brush in a two or three inch wide strip of sealant on a clean, dry floor and up the wall the same two or three inches all along the wall behind the washers. This is the cheapest way to control the problem.
4. If the over-soaping is really extreme, you can control the spread of the backup froth by creating a "holding pen" behind your washers made out of bricks that encircles an area around the back of the washers one brick high. Seal and mount to the floor. This will hold a sufficient volume of water to control the occasional overflow and allow the overflow to evaporate in a holding pond or be directed by the design of the bricks to a floor drain.
5. The floor drains alone will not control the problem since the drop in the floor will not be severe and it is likely that the froth will not flow easily to a floor drain.
6. When soap starts to show up into the toilet of the store next door you have someone who has seriously over-soaped. Increasing the size of the drain will have limited benefit. Increasing the size of the vent will also have limited benefit. The vents are necessary to create air pressure for proper draining. I believe these over-soaping problems are a result of a lack of educational effort on the part of the Laundromat owner.
7. This is the recommended solution: first, goop the wall, at a cost of about $25.00 for materials and second make a brick "holding pen" at a cost of about $100.00 only if the first solution does not solve the problem.
8. You can get a large bottle of liquid Downey since it quickly breaks down soap suds and pour some into each washer to break down the soap that remains inside a washer after a use. The residue from the previous over-soaping is often combined with the soap of a new over-soaping customer and really adds to the problem. Downey added to a washer during the suds episode will quickly control the situation.
Q. WHAT KIND OF LEGAL STRUCTURE SHOULD I HAVE FOR MY LAUNDROMAT?
Determining the operation's legal structure is one of the first tasks an owner faces. The options are to form a sole proprietorship, a partnership, or a corporation. Given that each form has specific advantages and disadvantages. The choice must be made in accordance with the prospective owner circumstances, needs, and goals. In acting alone, the operator is likely to engage in the most widespread form of small business organization—the sole proprietorship. Addition of a partner with capital and/or talents of use to the business will typically lead to a partnership. In either case, income is taxed to the owner, not the business. Forming an LLC or some type of corporation, such as Subchapter S, is another possibility. An attorney can help clarify the many technical aspects of selecting the legal form of business organization.
Q. DO I NEED SPECIAL INSURANCE FOR A LAUNDROMAT?
Laundromat insurance policies generally address two main areas of concern: damage to the property and public liability. A basic insurance package might include the following: Fire insurance covers damage to the premises, equipment and inventory caused by fire, explosion, wind, riot, or smoke. Coverage for vandalism and malicious mischief is also desirable. Business interruption insurance compensates for revenue lost during a temporary halt in business caused by fire, theft, or illness. Public liability insurance covers accidents on store premises, sidewalk, and parking lot; damage to property of others; and expenses of defending the owner in a lawsuit. Additional types of coverage, such as the following, are desirable to protect the owner and employees,if any. "Key person" insurance compensates the business when any partners or persons essential to managing the operation become disabled or die. Workers' compensation insurance, mandatory in California, covers employees for injuries and loss of pay related to accidents on the job. If changes, such as retrofitting, are made to washers and dryers, the operator should review the insurance policy to make sure the equipment is still covered.
Q. WHAT ARE THE STORE HOURS FOR MOST LAUNDROMATS?
Stores usually are opened for business between 6 A.M. and 7 A.M., and closed between 9 P.M. and Midnight. A few stores are open for 24 hours. Those Laundromats equipped with automated opening systems have the doors unlock and the lights come on at a preset time each morning. The cleaning contractor or your employee upon leaving each night locks the entry doors.
Q. SHOULD I DO ANY ADVERTISING?
Yes. "Advertising directly increases the volume of our store," one successful operator claims. Increased competition among Laundromats underscores the importance of advertising and promotion not only to inform potential customers of the store’s professional facilities and services but also reinforce current customer's reasons for returning. An owner who steadily boosted his advertising allocation to almost 5% of gross currently reports sales volume increases of 20% in a year. Handbills are a widely favored advertising medium because they are relatively cheap and generally have a good return when distributed in the Laundromat's area. For example, when a new store is opened or you want to promote the installation of new equipment, you should distribute between 5,000 to 20,000 flyers in a one-mile radius of the store. Some operators circulate handbills at street fairs, parking lots or organizational meetings near the new store, and report a good return on this advertising investment. Community newspapers and advertising circulars or "shoppers" in urban areas enable the operator to advertise in specific sections of the city. The most cost-effective ads are generally those that appear regularly, since the cost typically declines with the frequency of the ad. Signs inside the store and the exterior store sign help build store image at the point of sale and provide continuous advertising for store services.
Q. WHAT ABOUT DROP-OFF OR "FLUFF AND FOLD" LAUNDRY SERVICES?
If the store hires a full-time attendant, one avenue of diversification might be drop-off-laundry service. "Fluff and Fold," as it is also termed, meets the needs of busy customers willing to pay for the store's labor. Price per pound charge averages 75¢ to $1.00, but ranges from 50¢ to $1.50. The attendant uses store funds to operate the machine and is then responsible for folding and wrapping the customer's laundry, typically offering one-day service.
Q. HOW MANY HOURS WILL I HAVE TO SPEND IN MY LAUNDROMAT?
At first, you will spend many hours learning the business and getting familiar with the various pieces of equipment installed. In time you will be able to manage the Laundromat with between three and six hours of work per Laundromat location per week.
Q. HOW OFTEN WILL I HAVE TO COLLECT THE MONEY?
Once a week. Sometimes twice if you are extremely successful and to prevent the coin boxes from becoming overly full and interfering with the operation of the machines. Usually it is best to collect the money in the early morning hours or when the store is filled with customers. Some owners believe in collecting while there are patrons in the store. However, if machines are emptied during store hours, it's a good idea to vary the time of collection.
Q. HOW MUCH SHOULD I EXPECT TO PAY FOR UTILITIES?
Your machines should be energy-efficient and of industrial quality. In general, total utilities cost will average 18% to 25% of monthly gross income on Laundromats designed and constructed in the era of the energy efficient commercial washer and dryer. New Super High Spin washers can provide even lower utility bills. Some of the older laundry equipment can push utility bills beyond 30% of monthly gross.
Q. SHOULD I BE CONCERNED ABOUT UTILITY SHORTAGES?
Certainly anything that can affect the supply of an essential element of your business should be of concern to a potential buyer. In the past, the washing of clothes, a health related necessity of life, has been be one of the least affected of businesses in southern California in times of water shortages and other utilities. Increased water and utility costs to the Laundromat owner have been more than offset by price increases in the vended wash price, with minimal or no loss of the customer base.
Q. IS THERE REALISTIC POTENTIAL TO IMPROVE INCOME?
The potential to improve a Laundromat is often observed simply upon entering the front door of the premises. Anything you observe that could discourage customers from patronizing the laundry may be seen as a potential for increasing the business. Outdated, old style, or ill appearing equipment may cause customers to seek better-equipped Laundromats, even if it causes them to travel a greater distance. Laundries that are not well maintained may cause some to seek alternatives. An inadequate number of a particular type of equipment, such as dryers or large capacity washers, may also reduce business. High Speed Spin washers will tend to increase income.
Q. WITH ALL THE EQUIPMENT, IS MAINTENANCE DIFFICULT FOR THE OWNER?
No store, no matter how large, should have more than a few inoperative machines at any one time. A machine not working is not generating income, but is projecting to the customer the image of a poorly run store. One operator who repairs his own machines maintains: "No equipment in my store is out-of-order for more than 24 to 48 hours." Although parts warranties are usually over one year (with extended warranties on certain components) top load washers will typically last seven to ten years or more, while large capacity washers and dryers are expected to last at least twenty years to thirty years. Operators sometimes choose to keep costs down by performing machine repair and preventive maintenance themselves. Free repair classes are available to help operators do their own troubleshooting and repair work. Operators attending these sessions also use the classes as an opportunity to pick up needed machine parts, sometimes at discount, and to meet fellow storeowners as well as equipment manufacturers representatives.
Q. WHAT ABOUT CITY AND COUNTY BUSINESS PERMITS, TAXES AND REGULATIONS?
A municipal or county business license, or both, must be obtained from city hall or the county courthouse. And if the store name does not include the owner's surname or implies the existence of additional owners, the fictitious name must be registered with the city or county clerk and must be published as a legal advertisement in a general circulation newspaper in that city or county. Personal property tax registration is accomplished at the city or county assessor's office, which annually collects taxes on a store's inventory and equipment. Each spring the owner is required to file a report listing owned property, original cost, and date of purchase. Store equipment and water usage will be affected by various local agencies. County sanitation districts may require new stores to pay a sewer hookup charge per washing machine. Municipal utility districts regulate sewer treatment charges. The charge can vary widely. The laundry owner who rents or owns the premises and who intends to remodel will usually need a building permit from the Public Works Department. If the building is an older one, this may involve bringing plumbing and electrical services up to code. Local building codes may limit the size and amount or facilities relative to power loads, plumbing, and venting. Parking regulations may affect access to the business site. Some communities require off street parking in proportion to the building size. City sign ordinances may define minimum or maximum heights, ban certain types of signs, or approve only bonded installers. Fire regulations typically mandate well-marked exits, specific types of fire extinguishers, and other fire precautions. Inspections by local or state fire, safety and health officials are required in some areas: the owner may be billed for some of these. The city or county clerk's office or local planning agency can be helpful in describing the above requirements.
Q. HOW SHOULD I PLAN FOR MY GRAND OPENING?
You can erect signs and deliver direct mail to the neighborhood. We suggest you hire a local church, Boys-Girls Club or Boy-Girl Scout troop to pass out flyers announcing the opening date of your new Laundromat. Professional companies are also available for this service. Flyers should be passed out each weekend in the surrounding area for the first six months of operation. Advertisements in local shopping guides can also be considered or a joint advertising efforts with neighboring merchants. A brightly colored "Grand Opening" sign indicated your promotional pricing is also very effective. Check with local zoning regulators about the lawful display of signs and the distribution of flyers.
Q. SHOULD I HAVE A GRAND OPENING PROMOTION BASED ON PRICE?
Yes. We recommend that you open your new Laundromat with a discounted price on your wash prices. We suggest that you maintain this price for six weeks, then raise the price to a second level of discounted pricing for a second six weeks. Then raise the prices to your full retail pricing structure.
Q. SHOULD I KEEP A WEEKLY INCOME REPORT?
The weekly income report records seven-day revenue from all income-producing equipment and services in the store. Income categories might include dryers, washers, double load washers, drop-off laundry, or water machines, for example. A comprehensive picture of store business can be derived from this information in three ways: by assigning percentage values to each type of income, by figuring income in terms of the number of washers or number of loads washed per day per washer ("turns")or by figuring the cost of utilities as a percentage of gross dollar volume. The expense ledger, or cash disbursement journal, tallies rent, utilities, vendor supplies, payroll and any other store expenses. Daily work sheets are used in attended stores that offer drop-off services. After writing in the shift, date, and cash on hand at the beginning of the shift, the attendant can keep track of work performed by order number and work picked up. Work tickets identify the customer and the work to be performed. Employee records may include employment applications, timecards or sheets, and daily checklists for janitors and attendants. The general ledger details all business transactions for the month and summarizes the information from all other ledgers. The income statement, balance sheet, and cash statement are all derived from the general ledger.
Q. WHAT KIND OF FINANCIAL STATEMENTS DO I NEED TO KEEP?
Three other records keep track of the flow of money through the business: the income statement, the balance sheet, and the cash flow statement. The income statement, also known as the statement of earnings or the profit and loss statement, lists:
1. Monthly income sheets;
2. Financial statements;
3. Records from other applicants owned Laundromats, if any;
4. Applicant's savings account books and verification authorizations;
5. Copy of applicant's federal income tax return for previous 2 years;
6. Summary of applicant's past management experience.
Q. IS MAINTAINING BUSINESS RECORDS IMPORTANT?
No single factor, including location, equipment or management makes or breaks a Laundromat business. Industry leaders concede that while careful management is a factor in success, many storeowners are poor managers when it comes to maintaining records. Knowing they have few or the inventory or receivables problems or other small businesses, many operators fail to realize their all-cash trade actually mandates a good income control system. The farsighted owner looks beyond the coin boxes and closely monitors the store's cash position and credit standing. Record-keeping systems need not be complex to be efficient. You, or your accountant, can design one that is simple, efficient, and tailored to your exact needs.
Q. WHY SHOULD I KEEP RECORDS?
The balance sheet records assets, liabilities, and the capital of the business for the reporting period. The cash flow statement is the most current of these three statements and shows sources and uses of cash. Accurate, consistent records do more than satisfy the tax collector, they also enable the operator to:
-Compare fixed operating costs to income;
-Determine which equipment generates the most income;
-Detect income fluctuation and take preventive measures;
-Reveal seasonal fluctuations in business, so you can step up promotions;
-Evaluate the success of new services;
-Analyze income and expenses for the current period vs. Previous periods;
-Show the net profit or loss of the business.
Q. WILL I HAVE EMPLOYEES?
Part of a store's standing results from its cleanliness. Therefore, the Laundromat should receive at least two cleanings per day: one during the day and a more thorough cleaning, including mopping the floors at night. Nationally, about 50% of Laundromats hire employees. The majority of stores in California operate with no employees, or very limited employee hours. Most Laundromats choose to use the services of a part time cleaning person. The cleaning person and the employees work may appear to be the same, but the cleaning person sets their own hours and can hire a family member or friend to provide cleaning services. The cleaning work is contracted to an individual or firm who provides the needed cleaning services. Using a cleaning person under contract may eliminate the need for any employees. If you elect to hire employees, the owner should formulate a policy describing duties, job descriptions, hours, wages, benefits, training, vacation time and rest/lunch breaks. Owners may advertise for employee in local newspapers, advertising circulars or post "help wanted" signs in the store itself. At a minimum, the cleaning contractor wipes machines and folding-table tops, mops the floor, cleans machines, cleans lint traps and disposes of trash. If you elect to hire employees, they can be used for filling vendors, refunding change for machine malfunctions, handle customer complaints, refund money, keep currency in bill changers, stock vendors and teach customers about the benefits of using the Laundromat. Employees should be trained to recognize and help customers with their laundry needs and be able to teach customers how to best operate and use the Laundromat equipment. As stores expand their services into areas such as drop-off laundering ("fluff and fold" services) it may become necessary to hire employees.
Q. HOW DO I SET MY PRICING FOR WASHERS AND DRYERS?
Store owners set prices for many reasons: to maintain a competitive price position, to generate more profit, or to adjust to increasing operating costs. In developing a pricing philosophy, the more sophisticated owner must look increasingly at higher costs. Machine pricing varies greatly from area to area, city-to-city, neighborhoods to neighborhoods. A frequent survey of local competition will provide information. Operators should always note the date of price increases in the store's records, for later use in interpreting gross volume figures and cost percentages.
Q. IS THERE A RIGHT SIZE OR DESIGN FOR A LAUNDROMAT?
Store size varies greatly among Laundromats. The size should be tailored to the specific business or residential environment. For instance, one area might support a forty-washer establishment, while other areas might support eighty washers or more. While smaller stores are less than 1,600 square feet, 60% of all Laundromats are between 1,500 and 2,500 square feet. Proponents of the large-store, or "supermarket" concept, are building Laundromats up to 5,000 square feet in size. Exterior design is of limited importance to a Laundromat, provided the store contains sufficient windows and appears well illuminated. More and more owners are concentrating on making the interior attractive and comfortable for patrons. In fact, stores now feature schemes: coordinating paint, wallpaper, canopies, flooring, equipment color and accessories. In addition, the following are some common standards for Laundromat design:
1. Soundproofing.
2. Acoustical tile is the most widely utilized ceiling material.
3. Lighting. Good lighting is imperative for making the customer feel secure.
4. Light Levels. Light intensity of about 50 foot candles provided by fluorescent
lights.
5. Combination. Artificial lighting and natural lighting will complement each
other.
6. Time clocks. Better coordinates natural and artificial lighting and save
utilities.
7. Flooring. Vinyl or tile floors are economical, durable, resistant to water and
stains.
8. Entrances. Multiple entrances provide customer convenience.
9. Visibility. No hidden areas or dark corners inside the store.
Q. WHY SHOULD I INVEST IN THE LAUNDROMAT BUSINESS?
The Laundromat business is a sound investment opportunity. It's an all-cash, low labor and recession-resistant business. With one attendant, you can run a professional laundry service. Laundromats have been a growth business in the past and should continue to be so in the future. CBS Evening News, the N.Y. Times and The Wall Street Journal have saluted Laundromats as an exciting and growing business. Now with over 65% of American women of working age employed, less time is available for traditional household chores and more families are turning to the Laundromat alternative as a way to save time and achieve professional washing results.
Q. CAN YOU SAY IN ONE SENTENCE WHY A LAUNDROMAT IS A GOOD INVESTMENT?
Yes. Because it is an all cash business with the potential for successful operation on an absentee basis with fast cash down-payment return requiring minimum amounts of your unscheduled time but still provides excellent depreciation tax benefits, has a potential to build increased volume, needs no direct customer contact or prior knowledge of the business, little or no labor costs, no monthly franchise fees, no accounts receivables to collect, no inventory to manage, no bad checks, no skilled staff required, no professional license required, no competition from mass merchandisers, minimal administrative needs and it can make you a lot of money.
Q. WHO SHOULD BUY A LAUNDROMAT?
People from all walks of life and ethnic origins are investing in Laundromats. It is a common sense business, requiring minimal supervision. It can be run on an absentee basis, which helps you avoid giving up your current profession or other source of income. Unlike many small businesses, the self-service nature of Laundromats allows owners a great amount of freedom and flexibility. Operators don't spend their working day behind a counter or in the stockroom. In fact, their full-time presence is seldom required at the business site. The lure of absentee ownership has generated many types of entrepreneurs. Some are semi-retired individuals setting their own pace, enjoying their one-store ownership. Others are multiple-store owners, whose daily itinerary takes them to their various locations. In recent years, many individuals with capital to invest have turned to Laundromat ownership, including engineers, accountants, and pilots. People looking forward to the challenge of operating a small business without tying themselves to it eight hours a day or giving up their career occupation. However, some owners decide to manage their stores as a full-time business venture in its own right. Since even the best machines break down occasionally and many owners who have brought mechanical experience from other jobs choose to keep costs down by doing their own machine maintenance. Alternatively, outside maintenance (either hourly or on a monthly contract) is readily available and relatively inexpensive. The average owner will be able to meet the challenges of satisfying customers and keeping the lid on operating costs without the need for specialized knowledge or training.
Q. WHAT IS THE BACKGROUND OF THE LAUNDROMAT INDUSTRY?
The nation's 40,000 or so Laundromats have passed the $4 billion sales mark. For a small business founded on nickels, dimes and quarters this is an impressive performance. Laundromats evolved from conventional drop-off laundries in the late 1940s. After World War II wages were high, and the American middle class was in bloom. Like cars and refrigerators, new washing machines were coveted goods in short supply. Laundry operators soon recognized the growing market for a fast, low-cost, do-it-yourself service. Since those early days, Laundromats have persisted as one of the most recession-proof businesses because clean clothes, like health,food and shelter, are considered a necessity of life. Laundromats currently serve over 40 million residences. They appeal particularly to the vast majority or middle and low-income households whose laundry facilities may be limited. Laundromats have also followed Americans into the suburbs to offer more and larger machines in direct competition with the single home washer. Laundromat owners during the 1980's became much more sophisticated, augmenting good business practices with an awareness of outside influences on their business such as taxation, environmental regulations and license fees that can affect the industry's long term success. The criteria for success in the Laundromat industry are the same as for most other small businesses; adequate capital and knowledge are particularly essential for the profitable operation.
Q. WHERE DID THE NAME LAUNDROMAT COME FROM?
The word "Laundromat" was registered as a trademark by Westinghouse Electric, a subsidiary of White Consolidated Industries on Oct. 1, 1947. Westinghouse says it first started using the name "Laundromat" on Oct. 26, 1940. It still owns the name and renewed the trademark in 1988. Unlikely that you'll have anyone knocking on your door to prevent you from using the name, since Westinghouse is not a current player in the coin laundry marketplace. In the southern part of the United States two popular names for Laundromats are "Washeries" and "Washaterias." The use of these names are older than the use of "Laundromat" by a few years, probably around 1937, and remain in use today. In fact, the southern regions of the telephone company started using the yellow pages heading "Washateria" in 1947, but switched three years later to "Laundries-Self Service," which they continue to use up to today. Why 1937? Because in 1937 the Bendix Appliance company first began selling the automatic clothes washer that sparked the development of Laundromats across post World War II America. Within fifteen years there were over 4,000 Laundromats in the country. The growth has continued to the present with an estimated 40,000 or more Laundromats in existence today. In southern California you can find a variety of names in use for Laundromats.
Generic names are Wash & Dry, Coin Laundry, Laundrette, Laundreeze and Self-service Coin Laundry. Launderland is the name that the local Speed Queen distributor put on the stores it developed. Laundryland, Laundroland and other variations attempted to benefit from the popular concept. Thrifty Wash stores were developed by Ardmor. California Coin Laundries by Jerry Hood. Express Laundromat is supported by Continental Girbau. Buzz, E-Z Wash, Sudsy, Sudzy, Suds Your Duds, Suds, Suds N Duds, Clothes R Clean, The Clean Scene, Kwik-Wash, Lucy's, Spin Cycle, Clean 'N Lean (a combination coin laundry and gym) are some of the other names used by one entity or another and you get the idea that the need for specific identification will not threaten the widespread use of the "Laundromat" name.
Everyone seems to be able to develop a cute name for his or her Laundromat. Some of the most creative ideas that Laundromat owners have is in the naming of their business. Although the name may not make it to a sign, it seems to always make it to the checkbook. One of my personal favorites is the "Rub a Dub Dub in the Tub" Coin Laundry. While "Snow White Coin Laundry" has an innocent flair to it, the name Sudsy brings to mind frothing bubbles of overflowing soap. I suspect many Laundromat owners spend more time pondering the name for their Laundromat then they do on picking a name for their children or pets. The cute names may never add anything to the bottom line, but they do seem to bring joy and unbridled pride to the owners.
Q. HOW MUCH DOES A LAUNDROMAT COST?
The price of a Laundromat depends on its location, size, the type and mix of equipment, and the amount of construction that is needed. In general, the cost of a new Laundromat can run from $200.00 to $300.00 per square foot for a typical size and location. Highly profitable established laundries, with long leases and modern equipment are in great demand and will command the highest prices; yet many excellent opportunities exist in smaller, lower volume, and less expensive locations. The cost of sewer fees (impact fees) range from a few dollars per machine up to $4,000.00 per washer in various cities of Southern California. Providing adequate water, electric service, sewer and gas lines to the site can range from $20,000.00 to over $120,000.00.
Q. HOW
MUCH CASH WILL I NEED TO GET INTO THE LAUNDROMAT BUSINESS?
You will need approximately thirty percent of the purchase price to buy your own new Laundromat, assuming you have a financial statement able to finance the balance. Frequently lenders will require first time buyers to secure their loans with second trust deeds on real estate. The cash down payment on used stores depends on the cost of the store and the willingness of the current owner to provide financing.
Q. HOW MUCH INCOME CAN I EXPECT WITH A LAUNDROMAT?
Much of the income your Laundromat will generate depends on various factors. Some of the important factors in the success of a modern Laundromat are location, length of lease, variety of equipment, competition, and advertising. Laundromats most often gross in the range of $1,500 to $8,500.00 per week.
Q. DO I HAVE TO PAY "IMPACT FEES" IF I BUY AN EXISTING LAUNDROMAT?
No. If you purchase a Laundromat that is already in business, it will not be necessary for you to pay these fees. In fact, you can purchase some existing Laundromats for less money than it would cost to pay for the plans, sewer fees, building fees, adequate gas, water, electric and sewer lines to the location.
Q. WILL I NEED ANY OTHER CASH TO GET STARTED?
Yes. In addition to the down payment, you will have to pay insurance, escrow charges, and deposits on utilities. You should set aside a cash reserve equal to two months of operation of the business. These amounts will total approximately $6,000.00 to $25,000.00 depending on the age and volume of the Laundromat.
FREQUENTLY ASKED QUESTIONS & ANSWERS
