This article will be restricted to the financial angle when it comes to the cost of starting a laundromat. We will also be touching on related areas that are key to understanding cost as it relates to this business.
Are laundromats still profitable business ideas to consider? Absolutely! The growing need for self-service laundry services in cities across America is a reality.
These consist of services that include self-service dry cleaning, commercial laundry services, dryer as well as washer services among others.
Cost Of Starting A Laundromat
One of the most important decisions you’ll make at the beginning of your journey is to determine how much it will cost to start a laundromat. Although the cost varies, it is generally significant when you plan on doing things the right way. The returns can be huge very rewarding too.
When we talk about cost, we are referring to multiple factors. These include purchasing the right equipment (commercial washers and dryers). You’ll have to also purchase a detergent vending machine, furniture, professional installation, business registration & incorporation, customer suppliers and so on.
To start a laundromat, your start-up costs should be nothing less than $200,000.00. This can go as high as $2,000,000.00 based on scale. However, we’ll need to get to specifics to help you get a clearer understanding of what it entails.
Decide Whether To Build Buy Or Rent
There are two major options available to anyone having an interest in establishing a laundromat business. The first involves building from scratch while the other involves buying an existing laundromat. The option you choose will determine the cost you incur.
To build from scratch, you’ll need to find a space in a suitable location. A 1,800 to 2,000 square foot space should be enough. This should cost anywhere from $150,000.00 to $600,000.00. The cost of buying an existing laundromat business depends on how much the owner wants to sell. When sold, however, you will be buying a business that requires little added expenses to run.
In the case of renting, finding an outlet or office space to rent for your laundromat will cost less than buying an existing laundromat business or building. While this may seem cheaper in the short term, it will cost the business more in the long term unless you find a place. Rent costs are much higher in prime locations than elsewhere.
Prime locations are best for laundry businesses. Different people have different interpretations of what a prime business location.
However, the common denominator for all will be the location with the most market potential. Such locations present enormous profit potentials. So, you should expect to pay higher rent costs depending on the size of the outlet.
Business Entity Fees
Business entity fees are charged according to your preferred business entity. First, you must decide what business entity serves your needs best. You might want to ask for legal advice if there are confusions.
Startup paperwork for your chosen business entity will range from $100 to $1,000.
Machine Cost Estimates
Machines will take up a big chunk of your start-up costs. How much you spend on getting this equipment will depend on how many units you need. The number of units required will also depend on the scale of your laundromat business. There are different types of laundry machines. The major types include the front and top loaders.
The top loaders are less expensive and will cost between $600 to $900 per unit. Getting the front loaders will cost much more and will take up a significant part of your start-up costs. This will range between $3,000 to $20,000 per unit. Cost varies by size and brand. When getting these machines, it’s important to go for commercial laundry machines.
Dryers will cost between $5,000 to $7,000 per unit. So, having listed the price range of this equipment, the next step is to multiply the cost by the number of machines you require. The same applies for dryers. From our estimations, the cost of getting the desired number of machines will range from $100,000.00 to $600,000.00.
Machine or equipment costs for large laundromats will cost much more to purchase. This can be cost two to three times the equipment cost as against what is obtainable for small to medium scale laundromats. This due to one simple reason; More more machines and equipment are required. Translated to figures, the cost of these machines will range between $800,000.00 to $1,500,000.00.
Cost of Water Heaters
Not all laundromats have water heaters. However, if you do want to provide hot water washers in your laundromat, then you’ll be looking at additional expenses. The cost of purchasing and installing a hot water system will range from $10,000.00 to $40,000.00.
Apart from laundry machines and dryers which are the most basic, other basic provisions must be made. You’ll need a security system consisting of a CCTV, a soft vending machine, a WiFi connection, and a cable TV. Providing all of these will cost anywhere from $9,000 to $15,000.
Do You Need A Loan?
A lot of laundromat operators started their business by applying for a loan. But how much loan is required? You should have found answers if you’ve read to this point. Having determined the loan amount required, you are expected to have a down payment set aside. Financial institutions or lenders usually require a sizeable down payment.
Down payment for loans usually require you set aside a sum amounting to 20-30% of the loan sum you wish to lend.
All we’ve been discussing to this point has been startup costs. It is essential to have a thorough understanding of this area before proceeding further. This allows you to know just how much you need. If you’ll be applying for a loan, you need to know just how much loan you’ll be applying for.
Whatever the situation is, your start-up costs must be sufficient. Begin by assessing how much you have and how much can be raised. That way, your laundromat business has a better chance to succeed.