How to Open a Laundromat with No Money: The Ultimate Guide
The idea of owning a laundromat can be alluring. The steady stream of customers, the semi-passive nature of the business, and the straightforward operational procedures make it an attractive venture.
But what if you’re strapped for cash? “How to open a laundromat with no money?”
In this comprehensive guide, we’ll unpack the answer, along with:
- How to Conduct Market Analysis
- How to Create Your Business Plan
- Understanding the Operational Side of a Laundrette Business
- Checking The Permits Needed to Open a Laundromat
- How to Open your Laundromat Store with no Money
- Are there any Grants to Start a Laundromat?
- Operational Tips to Success
- Final Conclusions
How to Conduct Market Analysis
I always think that before starting a business, there is a critical phase that involves thinking and planning.
B2B International has proven that businesses that conduct market analysis regularly have a 28% chance of increasing their year-on-year growth and if your idea is to open a laundromat business this is where you should start.
I have explained all the benefits of conducting Market Research in my post and it’s good that you have these concepts in mind.
The analysis involves 6 different steps as per the infographic below:
Let’s now try to break down each single step for your case.
Step1: Define Your Objective
If you are planning to open a Laundromat, your ultimate goal should be running the business in a sustainable and profitable manner.
This involves balancing your workload and automating the ops as much as you can whilst keeping your expenses under control.
Step 2: Market Segmentation
In this phase, you will categorize your client base. As the business runs on a fixed premise, the main aspect for you to consider is the customers’ geography.
Once you have chosen the location, you can focus on estimating the area you can serve. Be objective, there’s only a certain optimal radius that can defined to consider your area of influence.
Your geographic reach will also be different if you plan to open in a big city (and subsequently in which area of the city you are) or in a more rural place.
A simpler consideration can be made for other aspects like age and occupation. Generally, Laundromat serves a wide audience, and it’s seen as a service accessible to everyone.
Step 3: Market Size
In this step, you would want to estimate the size of the market. I would probably approach this subject by considering the population in the geographical reach as well as considering how many competitors are serving the same area.
Here 3 Examples to give you an idea:
Locations 1: Urban Apartment Complex in a big City:
- Target Market: Apartment dwellers in a densely populated city, aged 20-35, who don’t have in-home laundry facilities.
- Geographic Reach: Within a 1-mile radius.
- Population Data: 10,000 people fit the target demographics within this radius.
- Market Share: 5 other laundromats exist within this area. You aim to capture 20% of the market share in the first year.
- Frequency: Assume each person does laundry once a week.
- Estimated Market Size: 10,000×0.20 x 52 (weeks) = 104,000 potential transactions a year.
- Target Market: Families and homeowners aged 30-60.
- Geographic Reach: Within a 3-mile radius.
- Population Data: 5,000 people fit the target demographics within this radius.
- Market Share: Only 1 other laundromat exists in this area. You aim to capture 50% of the market share.
- Frequency: Assume each family does laundry twice a week.
- Estimated Market Size: 5,000× x 2 (times per week) x 52 = 260,000 potential transactions a year.
- Target Market: College students aged 18-25.
- Geographic Reach: Within a 0.5-mile radius of the campus.
- Population Data: 15,000 students without in-campus laundry facilities.
- Market Share: There are 3 other laundromats near the campus. You aim to capture 25% of the market share.
- Frequency: Assume each student does laundry once every two weeks.
- Estimated Market Size: 15,000×0.25×0.25×2(twice a Week) x 52 = 97,500 potential transactions a year.
Step 4: Consider Market Trend
With this step, you want to capture trends, probably at a local scale. Ask yourself questions like
What’s the urbanistic plan for your area of interest, specifically in the geographic reach you are considering?
Any new real estate development coming up soon?
Step 5: Evaluate your Competitors
The next step will be identifying your competitors and what makes you different from the others.
For a Laundrette Business, there are many ways you can evaluate competition and frankly, most of them are quite straightforward. Depending on your capabilities, you can try many of the following at the same time for better results.
- Check the competitors in your area: For this, you can use Google Search and Check Local Directories.
- Website and Online Presence Analysis: Most clients will find you online make sure your Google My Business profile and your Google Map Citations are up-to-date.
- Check Customer Reviews and Feedback: Platforms like Yelp, Google My Business, and Trustpilot can give insights into customer sentiments about competitors. Look for common praises or complaints and aim for spot-on customer service.
- Plan for a Physical Visit: Nothing gives you a better comparison than a quick visit. Understand the standards, the layout of the store, check the machines used, and pricing/promotion structure.
- Test their Services: It definitely worth a shot. Trying and checking the results will give you some good points to consider. For example, if you are satisfied with the wash, you might dig deeper into the machine used and eventually get in touch with the seller.
- Leverage Public Records and Financials: Depending on the country or region, certain business aspects and financial data may be publicly accessible. This can include business registrations, permits, or even health inspection reports for businesses of this type.
- SWOT Analysis: Objectively create a SWOT Analysis to highlight Strengths, Weaknesses, Opportunities, and Threats of your competitors. Finally, compare it with yours. Anything good you want to replicate or something you should stay away from?
Step 6: Understand your Customer Persona
By this point, you would have defined your Customer Personas. Those are nothing but clustered groups of people that can be targeted with paid advertising and organic traffic who are more likely to use your services.
Make sure you are directing your advertising efforts and resources to those people with the right strategy and through the right platforms. Use Google My Business, Your website, and social to make sure you are recognized amongst the others.
How to Create Your Business Plan
Once you have conducted a market analysis for your laundrette business, your next task will be moving to the planning, financial, and operational side of things.
Especially if you want to open a laundromat with no money upfront, you will need to have a solid business plan.
In the plan, you will need to consider several aspects like the company structure as well as all the finance, operations, and marketing stuff. I highly suggest you to read my guide on how to create a business plan if you have time but if you are in a rush, you can watch this video summary.
The Basics of a Laundromat Business
Type of Laundrettes
We have now two big green checkmarks on Market Analysis and Business Plan and it is now time to move to the operations.
As far as I’m aware, there are three different operational types for a laundrette:
The choice of which one is the most viable for you will depend on factors like the layout of the store, the cost of the machines, the demographic of your potential customers, and potential upfront costs
- Coin-Operated: These are traditional models where customers pay using coins to operate washing machines and dryers. They’re straightforward and have been in use for decades.
The pros include ease of use and not needing a connected system. The cons might involve dealing with a lot of coins and potential mechanical issues with coin slots.
- Card-Based: Modern laundromats might use card systems where customers load money onto proprietary cards (similar to gift cards or metro cards) or debit/credit cards. These cards are then used to operate machines or, in the case of debit/credit cards, to play for the service.
The advantage is the elimination of coins and the ability to track transactions and usage patterns better. The downside could be the initial setup cost and having a wi-fi connection up and running to operate.
- Hybrids: Hybrid models combine both coin and card operations. They offer flexibility to the customers and can be an excellent way to transition from coin to card in areas where customers might be resistant to change.
Permits Needed to Open a Laundromat
I will start by saying this there are different requirements depending on factors like location and local regulations and it is important for you to seek advice from subject experts. However, if we want to answer the question; “What permits do I need to open a laundromat?”, here are some guidelines:
Get Your Business Licence
If you want to operate a business you need to register your venture officially on government sites where you operate.
If you are in the US, Most cities or counties require a business license or permit for any commercial operation. Check the local city or county website where you plan to open your laundromat. The U.S. Small Business Administration (SBA) can be a good starting point.
If you are based in the UK: In the UK, while there isn’t a specific “business license,” you do need to register your business with HM Revenue & Customs (HMRC). Visit the UK Government’s business registration page for guidance.
If you are based somewhere else, just type “Business Licence Laundromat” and something will pop-up.
Health Department Permit
A Self-Service Laundry must meet some specific Health & Safety criteria as well. Whilst these will not be as strict as the ones to operate a restaurant, you will still be asked to comply with the current regulation.
Same for the point above, here you can find some guidance:
US: Health department regulations vary by state and county. It’s essential to check the specific requirements for laundromats in your local jurisdiction. Usually, the state or county health department’s website will provide this information.
UK: While laundromats in the UK aren’t typically subject to the same level of health inspection as food businesses, it’s good to check with the local council for any specific requirements or inspections. You can find the appropriate local council via the UK Government’s official site.
Due to the significant water usage and potential chemical discharge from detergents and bleaches, laundromats might be subject to environmental regulations. These can relate to water treatment, recycling, and chemical disposal.
If you intend to hang a sign outside, once you have opened your laundromat, many local authorities will require a permit, to ensure that your signage meets local aesthetics and safety guidelines.
- UK: Consult with your local council to understand regulations about business signage in your area.
- US: Check with your local municipality or city hall. The regulations for signage often fall under city or county zoning departments.
Finally, I will include two more things that might/might not be relevant to your case, but still valuable for you to consider:
- Fire Department Permit: Depending on your location, you might need a clearance from the local fire department, to ensure that your premises adhere to fire safety standards.
- Building Permits: If you’re planning any construction, modifications, or major renovations to your premises, you might need a building permit.
How to Open a Laundromat with No Money
Funding your dream with little to no money can be a hard challenge but here are 4 different options that can help you to achieve your dream.
1. Create a Partnership for your Self-Service Laundry
A Partnership solution is always a good choice for this type of business. I am sure that you can find someone next to you who has the capital to spend but no time to dedicate to this activity.
Reach out to your network and show your business plan. Many potential investors might be interested and will proceed with funding your venture, at least at the beginning.
If that’s the case, you will have to sit at a table and negotiate the terms, make sure to be prepared by reading my article on how you can become a better negotiator and get a win-win deal.
2. The Seller Financing Option
Whilst researching for the right spot, you might come across some existing Wash and Dry activities that are on sale. If you are comfortable enough you can always reach out to the estate agency and ask for a meeting with the current business owner.
You can eventually propose the Seller Financing Option meaning that you’ll pay them over time, instead of you having to secure a traditional bank loan. This will allow you to open a Laundromat with no upfront costs.
3. Lease-to-Own Equipment
Sometimes, machine producers are happy to lease the equipment instead of selling it to you.
If you have already found a location but have no money available, instead of buying machines outright, look for suppliers who offer lease-to-own options.
It minimizes upfront costs and allows you to make payments over time.
4. Get A Quick Business Loan
Do you know that you can get a quick business loan without having available cash?
It is possible to access loans independently from your current financial situation as long as you are able to demonstrate that you will be able to pay back the lender.
This is not an easy task but if you have a good credit score and a solid business plan, lenders will be happy to invest in your venture.
Make sure to read the two articles!
Are there any Grants to Start a Laundromat?
The answer is Yes! Same as other ventures, laundromats and laundrettes are subjected to grants in the same way other businesses do.
Grants can come from various sources, including government entities, private foundations, and corporations, Here you can find an ideal breakdown of the steps you need to go through to obtain the financing.
7 Steps to Find and Secure a Grant for a Laundromat
Step 1: Determine Your Eligibility
Before diving into research, identify the nature of your business and its needs. Some grants may be specific to certain demographics (e.g., women, veterans), areas of business, or locations.
Tip: Always read the eligibility criteria carefully before applying to avoid wasting time on grants you can’t qualify for.
Step 2: Check Government Websites
Governments often provide grants to support local businesses, especially those that can create jobs or revitalize certain areas.
- GOV.UK – This government site offers a searchable database of various financial support options, including grants.
- Grants.gov – The US government’s central repository for federal grants. While many grants here are not business-centric, it’s still worth a look.
- U.S. Small Business Administration (SBA) – Although the SBA doesn’t provide grants directly to small businesses, they can direct you to local resources that do.
Step 3: Check Local Government and Organizations
Local councils, municipalities, or chambers of commerce sometimes offer grants to stimulate local economies.
Tip: Engage with local business support organizations and attend town hall meetings or local business networking events.
Step 4: Look into Private Foundations and Corporations
Certain foundations or large corporations have grant programs aimed at supporting entrepreneurship and community development.
Tip: Websites like Foundation Center (US-based) can be valuable resources for identifying potential foundation grants.
Step 5: Prepare your solid application
Once you’ve identified potential grants, the application process is crucial. Most grant providers require detailed business plans, forecasts, and explanations of how the funds will be used.
Tip: Some grants can be highly competitive. Your application should be thorough, well-researched, and professional. Highlight the community benefits of your laundromat, job creation, and any environmental or social initiatives you plan to undertake.
Step 6: Consider Hiring a Grant Writer
Grant writing is a skill. If you’re not confident in your ability to craft a compelling application, consider hiring a professional grant writer to enhance your chances.
Tip: Ensure the writer is familiar with the laundromat industry or small business grants. They can tailor the application to maximize its impact.
Step 7: Stay Updated
New grant opportunities can arise at any time. Spending time building up your network and making yourself known can improve your chances of getting the latest on the subject.
Tip: Subscribe to newsletters or feeds from grant databases or industry associations to stay informed about upcoming grant opportunities.
Operational Tips to Success
At this point, let’s give some space to operational tips that will help you succeed with your Laundrette Business. After all, running smooth operations is what makes your life and the lives of your customers easier.
When opening a Laundromat, planning from the beginning for streamlined processes will ensure an optimal launch and consistent revenue.
Also, running a successful laundrette goes beyond just providing washing and drying facilities. By enhancing the customer experience, diversifying services, and actively engaging with the community, you can build a loyal customer base and a sustainable business.
Offer Additional Services
I want to start straight away from a selling point of view. Why don’t maximize the upselling side of your business whilst your customers are on site?
As many other self-service laundry stores do offering additional services will work just fine. These are some ideas you might want to consider:
- Dry Cleaning and Pressing: Not everyone has the time or facilities for these tasks. By offering them, you cater to a broader market.
- Pick-up and Delivery: Especially in urban areas, convenience can be a significant draw. Provide a service where you pick up dirty laundry and return it cleaned and folded.
- Tailoring and Repairs: Partner with a local tailor or offer basic sewing services for minor repairs.
- Childcare or Play Area: Families might be more inclined to use your facility if there’s a safe area for kids to play while waiting.
- Vending Machines: Offering snacks, drinks, or even laundry supplies (like detergent or fabric softener) can provide additional revenue.
Implement a Loyalty Program
Loyalty is a crucial aspect that every business owner needs to master. Overall, your client base is what brings new cash into the cog and your target is to keep the existing customers happy and loyal to your brand and services.
But don’t just stop there, go above and beyond to get new ones with promotions and programs that will increase their retention. For that, you can consider many of the following:
- Point-Based Systems: Customers earn points for every visit or every pound of laundry, redeemable for free services after reaching a certain threshold.
- Discount Days: Offer discounts on specific days or hours to boost footfall during slower periods.
- Referral Program: Reward customers for bringing in new clientele.
- Membership Models: Offer monthly memberships that provide unlimited washing or other perks for a set fee.
Plan Your Maintenance
For a business of this type, maintenance is an important aspect to both keep you and your clients happy.
On your side, you have to be smart enough to plan regular maintenance in low periods or with a rota that doesn’t endanger the cash flow.
On the other side, you always want to have availability and make the sale for each and every client that pops in. Make sure that at least one of each type of machine is available for the service to be offered.
Here are three important points to consider:
- Preventative Checks: Instead of waiting for machines to break down, schedule regular check-ups. This can save money in the long run and ensures continuous service for your clients.
- Training: Ensure your staff knows the basics of machine troubleshooting and can guide customers on proper machine usage.
- Quick Response Time: Collaborate with a reliable repair service that can fix issues promptly. Having machines out of order for extended periods can hurt revenue and reputation.
Many people don’t realize but tech is here to help. And helps a lot.
Whenever possible, try to automate things with all the tools available online. There are many aspects that can be automated, from your booking and machine availability system to your coin distributors.
I always think that automation frees up time that can be re-invested in making our business better and better. Some of the aspects you might want to think about are:
- Digital Payments: Apart from coins and cash, offer payment methods like credit cards, mobile payments, or even app-based solutions.
- Booking Systems: Allow customers to reserve machines during peak times.
- Energy-Efficient Machines: They might be pricier initially but can save on utility bills and are better for the environment.
Enhance you Customer Experience
Get rid of the idea of people just transiting through your Laundromat. For the nature of the business itself, they might be required to stay.
And why don’t you try to make their permanence a better experience? Here are some common “nice to haves” that will make your clients’ “Laundry Experience” better.
- Wi-Fi and Charging Stations: Providing free Wi-Fi and charging stations can make the wait more enjoyable.
- Spot on Cleanliness: Beyond the machines, ensure the facility – especially restrooms – is always clean.
- Comfortable Seating Area: Invest in comfortable chairs or even couches, and consider adding a TV or reading materials.
Is important that you see your Laundry Shop as a community aggregator.
People will gather there regularly and will eventually spend some time talking to each other.
I bet that the community you are in will help you out if possible, especially if you are proofing the value of your services.
- Local Partnerships: Partner with local businesses for cross-promotions. For instance, collaborate with a nearby restaurant for mutual discounts.
- Support Local Causes: Sponsor local events or sports teams, or collaborate with charities for fundraising events.
Constantly Monitor and Adapt
“If you don’t measure, you don’t know”. I was told this many years ago in my first job. Nothing is more true than that.
How would you know if you are doing good? And how would you know if you could do better?
Getting into the mindset of Monitoring and Adapting (without missing out on all the financials) will help you to get better and grow faster. Focusing on the 2 following points will help you go a long way.
In this Ambitious post, we went through all the steps on how you can open a laundromat with no money.
The idea of starting a new Laundrette Business with no financial backup might sound scary but we’ve managed to find some possible solutions to get some financing to start right away.
Now it’s your turn to share with me your ideas and your doubts. What do you think is the better way of starting a new Laundromat Business with no money, going through the route of getting a new loan, or creating a partnership with investors?
Make sure to reply in the comment.