How Much Should a Laundromat Owner Make?
Open a laundromat? You have to know THAT beforehand!
Do you want to open a laundromat? Then you are exactly right here! In February 2019 we opened our first laundromat in Kassel, and have since gained a lot of experience. You can find out everything you should know before the opening in this post.
Before we start with the tips for opening a laundromat, you might be asking yourself: Is it even worth opening a laundromat?
Laundromat Profitability - Is It Even Worth It?
The most important formula in business administration is income-expenditure = profit. Of course, this also applies to laundromats. In this article we go into the costs of the construction as well as the possible income.
Important: You will receive exact figures and a sample business plan on request.
Location analysis - the right location for a self-service laundromat
Choosing the right location is one of the biggest factors for your start-up to be successful in the long term. Almost every household in Germany (96%) has its own washing machine. Then who are the customers?
Mainly (business) travelers, residents of small apartments without space for their own washing machine, students or people who lack the financial means for a private machine. Not to be forgotten are the customers who only visit your salon temporarily, for example because they are waiting for repair or replacement after a defect in their own machine or simply want to wash large items (blankets, toppers, etc.).
So that you can reach as many of these customers as possible, your location should have the following properties:
- High proportion of multi-family houses in the area
- Good accessibility by public transport (if you don't have a washing machine, you often don't have a car)
- Parking spaces nearby, ideally free of charge
- Proximity to the university
- Youth hostels, hostels or fitter apartments nearby
In total, the city should have at least 50,000 inhabitants so that the concept is viable. The competitive situation should also not be disregarded: If too many competitors are already active, the location must be examined more closely. As a rule of thumb, one can say that a laundromat can survive economically for every 50,000 inhabitants. The distance to the competition should be as large as possible.
Laundromat costs? The size is what matters!
The amount of costs and possible income depends largely on the size of your planned laundromat. A small salon with 2 washing machines and a dryer incurs different opening costs than a huge shop with 40 self-service washing machines and 20 dryers.
Have you already found a commercial space with the above criteria? You can get an offer for a professional machine park as well as help with planning the arrangement here.
You hardly need any staff for the operation, since the customers serve themselves. You can either do the cleaning yourself or give it to a cleaner. The cleaning of our salon with around 75 m2 of floor space takes an average of 1 hour per day per day (including cleaning the machines).
Costs for premises
The amount of the expenses for the premises (rent or purchase) differ greatly from place to place, which is why a real estate agent or a look at the major real estate portals is appropriate at this point.
Another major cost item is energy costs. In addition to electricity for the operation of the machines and other devices, energy is primarily required to generate heat - in our case through gas central heating. The tumble dryers are also heated with gas in order to dry as efficiently and quickly as possible.
The amount of electricity and gas consumption depends on the occupancy and can be calculated using the sample business plan.
Possible earnings with a laundromat
Before you can calculate the possible earnings, you need to do a little research. In order to determine the possible income, it makes sense to determine the prices of the competitors, because you should orient yourself (especially as a newcomer) on this for the time being.
In the next step, the utilization is estimated. Ideally, you define a core time for this and then estimate the percentage of the machines being used during this period. The industry standard is 30% utilization of the core time, which is 10-12 hours in most cases (for example 8 am-8pm). If you want to approach the calculation more conservatively, you should assume 20-25%.
Financing the project - how much capital do I need?
The capital requirement is between € 30,000 and € 200,000, depending on the commercial space and size of the laundromat. This range is very large, but the sums do not necessarily have to be provided from equity.
Precisely because loans for the self-employed are not very easy to obtain, one should consider another option in addition to traditional banks and KfW loans: Financing through the machine manufacturer - either for purchase, rental or leasing. We would be happy to network you with providers who offer this option.
If further funds are needed in addition to the machine equipment (e.g. for conversion), self-employed people can also receive up to € 50,000 here.
Requirements for opening
As a founder, you do not need any training, certification or the like to open a laundromat. All that is required is a business registration and the chimney sweep must approve the discharge of the exhaust air (if gas-heated dryers are used).
The bookkeeping is rather simple, as the customers usually pay in cash and the till systems now generate automated evaluations. Nevertheless, it makes sense to acquire basic knowledge in the area of accounting, or to hand this area over to a tax advisor.
What services do I offer in my laundromat?
In addition to the self-service services, you should consider which other services make sense for your customers. What would improve the stay and reduce or make work easier? For example, we have one Ironing service added to our self-service concept. A self-service laundromat is often supplemented by a textile cleaning or tailoring shop, as the industries are related.
Interesting and unusual combinations are also possible. For example, some operators rent out chair covers, large tablecloths or other items that need to be washed frequently. The machines that are already available result in cost advantages that other lenders of these articles may not have.
Other operators focus more on making the stay as pleasant as possible and integrate a gastronomic offer into their self-service laundromat. A good coffee or tea shortens the waiting time for the customer and increases your revenue per customer. Some incorporate a coffee or snack vending machine to automate sales as well.
Which building block will it be with you?
Laundromat Franchise - Does It Make Sense Or Not?
The answer to this question depends on your personal skills. Do you have no experience and need a lot of support? Then choosing a franchise program can make sense.
For most entrepreneurial minds, however, after a short time the franchisor's corset will become too tight and frustration will arise. On the one hand, because you cannot implement your own ideas and optimize your own business at your own discretion, and on the other hand, because the franchise fees are quite high in the long run. In addition, the start-up costs are usually higher, since the franchisor also earns money with the machine equipment.
So we said goodbye to laundromat franchise systems and developed our own concept.
Open a laundromat or not? Conclusion!
The opening of a self-service washing center is a business idea from the 1960s, when it was not yet common for every private household to have its own washing machine. Despite a major change in this trend, there are currently around 500-800 laundromats in Germany. The reason for this is clear: there are always people who do not have access to a washing machine - either for cost reasons or because they are not at home at the moment.
We think laundry centers are worth running and investing in the business will pay off over the long term. Nevertheless, one should not underestimate how much effort there is at the beginning until the company can run automatically. At the beginning, we benefited greatly from expert advice from an established manufacturer, and here we offer you the opportunity to access their specialist knowledge.
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