A Simple Guide to Starting a Laundromat Did you know the average American family washes 8-10 loads of laundry per week? As long as people wear clothes, they will need a place to launder them. Though a home washer and dryer are common household appliances, many people live in apartments or houses without them. These people turn to the trusted local laundromat. Perhaps you’ve seen the machines spinning on a Saturday afternoon and wonder whether it’s a good business. It is! Starting a laundromat is a way for you to make thousands a month in passive income. Do you want to know how to start a laundromat? Check out this guide to learn more. Scout Locations A laundromat is a business like any other, and location is vital to your success. A community that needs a coin-operated laundry but doesn’t have one is a great place to start. Or, you can choose a location where there is competition, but the competition is less than desirable or needs an upgrade. Best Places to Open a Laundromat The best places to open a laundromat are locations where people don’t have access to in home laundry. Urban locations near apartment complexes are a good bet. Though apartment buildings often have a laundry room, residents will often leave property for reliable machines that wash and dry large loads of clothes in one cycle. College towns are also fantastic spots for a successful laundromat. Students who live in dorms that don’t have on-campus laundry rooms or live in off-campus apartments need a place to wash their clothes, especially if they live far away from their parents. You can also make money in a small town, especially if that town has a main street or business district. Though suburban folks are more likely to have home washers and dryers, they often produce large loads that only commercial washers can handle. If you opt for this type of location, make sure there is no competition. Determine Start-Up Costs and Secure Financing If you’re starting a laundromat from scratch, you’re going to incur initial start-up costs. All businesses need capital to launch, and with a laundromat, you’ll have to find the money to buy all the necessary equipment. In many cases, the space for your new laundromat will need remodeling and upgrading. You must make sure your building’s electrical grid can handle the energy usage. You also have to secure the necessary municipal permitting for washer hook-ups and sewage. Needed Laundry Equipment After you’ve found your location, calculated remodeling, and permit costs, you can then purchase your equipment. This is where you buy washers and dryers. To the naked eye, these washers and dryers are the only things you need. The truth is, there’s much more involved in a laundromat than washers and dryers. You’ll need: Laundromat furniture like tables and chairs Scales to weigh loads of laundry Bill and coin changers Racks to hang clothes Detergent dispensers Food and Beverage vending machines Bags and nets These are all purchases you must make after you buy dryers and washers, though they are bare bones. Laundromats are a competitive business, and many entrepreneurs now add a unique twist. There are now laundromat bars, pizza shops, and arcades that offer patrons a fun diversion while they wash. Financing Options Most small business start-up owners don’t have the liquid capital to lease a location and buy all the necessary equipment. You’ll have to find investors and also secure financing. One way to find investors is through your family. A laundromat, unlike a restaurant or bar, makes a fantastic family business because there is little to bicker over. The income is mostly passive, and you can keep all possible disputes at a minimum. Even with family help, the costs will require financing. Aside from SBA loans, some manufacturers offer to finance to business owners. Doing so will help you save money in the short term and allow you to diversify your remaining start-up capital. Buying an Existing Business You also have the option to buy an existing business, and doing so has several advantages. You don’t have to worry about finding a location or buying equipment. If the location is well-maintained, you can have the lease transferred and make any necessary upgrades. Determine Management Responsibilities A laundromat is a fantastic way to make passive income, but that doesn’t mean you won’t have to do work. Keeping your laundromat maintained, clean, and inviting is crucial for winning new customers. Daily and weekly management tasks include mopping the floors, checking the operational status of the equipment, and removing any trash. As the owner, these jobs are your responsibility. You have to determine how and when you’ll handle them. If you’re hoping for your laundromat business to become a passive moneymaker, you’ll have to employ a management team to take control of the day-to-day duties. Engage Other Revenue Streams A clean, welcoming space is vital to your laundromat’s success. You also have to offer reasons for people to come back, especially in a competitive market. Though you may not want to go as far as opening a bar or cafe in your laundromat, amenities like free wi-fi and a dedicated laundry staff will help you stand out. Other coin-operated revenue streams like food and beverage vending, pinball, and arcade games will help boost your income. People want something to do while they wait for their laundry. Rather than pushing your customers to the corner store for necessary provisions, keep their cash in your business.
Tax Benefits for Coin Laundromat Owners March 10, 2021 Operating any small business is an exercise in book balancing and bottom-line values – something about which many laundromats are well too aware. Often, tax season can be quite the hectic time for laundromat operators – a sudsy equivalent of tracking every quarter. Accounting for energy costs, rent, machine depreciation, and so much more can make it difficult to capture every exemption and benefit. Check with your accountant or tax advisor for their expert advice, but the following are some general tax benefits to consider: Making Depreciation Work for You First up, the most obvious but also the most impactful – choosing between Section 179 deductions and Bonus Depreciation, or whether to use both. Utilization is dictated by several factors: Total value of assets, categorical grouping of similar types of assets, and your business’ income vs asset cost – your tax professional can help you decide how to best use these for your business’ specific needs. The important thing to know about Section 179 and Bonus Depreciation is that they have been changed in recent years. Section 179 has been altered to currently allow further flexibility on when you take your deduction on an asset, while Bonus Depreciation has been amended to currently allow 100% of the cost of an asset to be deducted in the same tax year. Section 179 also currently requires that the deduction be no larger than your annual business income, whereas Bonus Depreciation isn’t currently limited in this way. The IRS official fact sheet offers more in-depth information and specifics on utilizing these benefits. Buying new commercial washers and dryers and laundry equipment has never been so enticing! Bracket Strategy Intelligently leveraging your available deductible asset depreciation is the possible key to effectively paying less tax while potentially avoiding issues with the IRS. For example, if you purchased new coin-op machines and wanted to deduct their depreciation value; it may not make sense to claim it all in one year if you might end up in the 30% bracket because of a lack of deductions the following year. Claiming all of your depreciation at once can be enticing, but not necessarily fruitful. TaxAct has a wonderful write up on avoiding tax bracket increases, as well as a thorough explainer on how tax brackets work. Your tax professional can help guide your decision to best maximize your possible deduction options over the lifetime of your business. It’s All in the Prep! Tax season doesn’t have to spell dread! You just need to know where to look for savings! Whether you are seeking to purchase new washers, dryers or other laundry equipment, or are carrying over deductions from years past, don’t let tax season be your enemy! Proper documentation and tax preparation is the key to maximizing your deductions while maintaining proper tax responsibility. WASH Commercial Laundry is your partner in laundry. With the possibility of incredible tax benefits currently afforded to small business, the time has never been better to bring your coin laundry into the 21st century with new, smart machines! Contact one of our representatives today to secure market leading rates on new washers and dryers including the Galaxy600 Series Huebsch front & top load coin machines, as well as a full line of Maytag, Electrolux and Wascomat vended machines! This material has been prepared for informational purposes only, and is not intended, and should not be relied upon, as legal, tax, or accounting advice. WASH Multifamily Laundry Systems and its affiliates do not provide tax, legal or accounting advice. Please consult your own tax, legal and accounting professional(s) before engaging in or proceeding with any transaction.
Investing in a Laundromat March 10, 2021 When looking to grow wealth, many investors conventionally look to the stock market or real estate for steady and reliable gains over time — so why is smart money investing in laundry? Besides the low startup costs, typically first year ROI, and low overhead? There’s never a shortage of customers who need clean clothing. No matter the state of the economy, the laundry business performs – cleanliness may be recession-proof. Owning a vended laundry can be accessible for new or seasoned investors of all backgrounds, offering one of the highest success rates in the small business startup environment/sector. Sound like your kind of investment? Read on to learn more. Low Barrier to Entry A vended laundry can be a very accessible investment to the low-capital investor. Few-to-no employees means low labor costs, selling a service means virtually no inventory to restock, and there are no franchise fees to worry about. Vended laundry offers a proven business model with a demonstrable upside. As such, ROI during the first year is common, and there’s little risk of accruing operational debt (or cash flow problems) with all payment for services rendered made up-front. When you partner with WASH, we can even help recommend laundry-savvy financing partners to help get your new investment up and running even sooner. Every Season is Laundry Season In contrast to some business investments like franchises and startups, there’s very little uncertainty in the success or steadfastness of vended laundry. In fact, over a five-year period, new laundry businesses sport an average 95% success rate. In fact, laundromats earn a collective $5 billion each year – talk about a huge industry! During economic downturns, the increased number of people living in rentals drive laundromat usage up. When the economy is struggling, laundromats still thrive. Investing in a laundry facility also carries the benefit of a flexible amount of involvement. A single employee can handle any issues and oversight required, while modern technological advancements in laundry technology enable you to track usage, profits, and costs remotely – and in real time. Go with the Pros Partnering with WASH for your laundromat investment means you’ll benefit from our generations of experience. Our machine sales consultants will help you pick from our wide catalog of modern, efficient machines. Our technicians can even outfit your machines with your choice of coin-op, card and/or mobile payment technology to optimize profitability by removing friction to payment. We also offer an extensive catalog of ancillary equipment for your laundromat including water heaters, laundry carts, folding tables, vending machines and more! Come clean with WASH and see how rewarding the laundromat business can be.