Running a laundromat business seems lucrative on the outside. You set up, go away and money pours in without you lifting a finger, right? This may be partially true, but only if you start right. There's a lot more that goes into running a laundromat, and it all starts with research before purchase.
In the laundromat business, location is crucial. Analyze your intended location in terms of customer base, access, other businesses in the area etc. Also consider the competition around you, remodeling permits and building plans.
Pay attention to the lease agreement. Because of the amount of structural fixtures involved, you may not have the luxury of moving your business at whim. Ensure your lease is favorable and long-term, spanning at least 8 years or more; enough time to recoup your investment.
This is huge. Have the equipment thoroughly examined by a qualified technician. Look out for leaks, corrosion and other signs of deterioration. Verify that electrical connections adhere to set guidelines.
Also look at the maintenance schedule, the model and year of manufacture of the machines. How much life does the equipment have left?
Factor in all projected expenses including salaries, repairs and maintenance, personal and business tax, cleaning materials and security.
Pay particular attention to water use. It may be an indicator of how much business is coming in, but also of leaks.
How much is the laundromat bringing in? Analyze sales receipts, water consumption, bank deposit statements etc.
What is the Store Value Multiplier? This refers to industry set standards for calculating the monthly net income expected from a laundromat. It is based on a number of factors including the condition of the equipment, the local market factors and the state of competition.
Do you have sufficient capital reserves to run the business? Plan for this. Don't base yourself solely on projections by the seller. Factor in the best and worst-case scenarios.
You need to have a realistic working capital of say, three to six months' worth of expenses if you are buying an existing business. If you are buying a new business, a one year cash reserve is realistic.
Setting up a laundromat is expensive so you want to ensure you don't pour your money down the drain. It is safer to get professional support before getting into the business. You could take a laundry online due diligence course or hire a laundromat consulting professional, such as from FLUFF AND FOLD 101, to do it for you.