This article looks at how to start a laundromat business with little to no money. Is that even possible? Well, it depends on several factors.
You don’t have to have all the money needed for the business to start. There are ways you can go about sourcing financing for your laundromat business.
Here are the pros and cons of opening a laundromat.
How to Start a Laundromat Business With No Money
Starting a business is an exciting yet rigorous process that will require a great deal of planning and strategizing.
Everything required for the business needs to be implemented, including sufficient financing. This (funding) is one of the primary requirements for a successful takeoff.
The Franchising Route
You’ll need to consider your options when starting a laundromat business without money.
Franchising and starting from scratch are two options you could take to realize your objective. The franchising model tends to be the easiest as you only need to buy part of a successful laundromat franchise.
So, is it possible to own a laundromat franchise without money? It is!
There are several tips or strategies to go about that. These include franchisor financing, online loans, rollovers as business startups, SBA loans, and home equity loans & HELOCs.
You could also go for other options like partnerships or low-cost franchising opportunities. With any of these strategies, you will likely launch your laundromat franchise business with no money.
Let’s have a further look at the points mentioned, shall we?
i. Franchisor Financing
Through franchisor financing, you’re allowed to own part of a successful laundromat franchise.
Here, franchisees that meet the minimum requirement are offered the much-needed capital to launch their operations. It’s a win-win situation for both the franchisor and the franchisee.
To benefit from franchisor financing, you’ll need to determine the requirements. Each franchisor has its financing program and processes.
However, not all laundromat franchises will offer such opportunities.
ii. Online Loans
Another way to own a laundromat franchise with little to no capital is by seeking online loans.
This can be challenging for a new franchise operation as funding sources with favorable rates can be elusive. Taking out a personal loan is one way to go about this.
Critically details like your credit score, history, and annual income will be considered to obtain a personal loan for your laundromat franchise.
iii. Rollovers as Business Startups
Also known as ROBS, Rollovers for Business Startups offer an alternative strategy to own a laundromat franchise with no money.
Here, funds in your retirement account are deployed early without the risk of penalties. In a nutshell, the ROBS technique gives you access to your retirement funds to start a business.
iv. SBA Loans
If you’re looking for loans with competitive terms and rates, then the Small Business Administration (SBA) loans will be a perfect fit for your laundromat business.
This government organization provides a guarantee on loans issued by banks to businesses such as yours.
v. Home Equity Loans & HELOCs
This business financing opportunity is for property owners. It allows you to use your home’s equity as a collateral startup loan for your laundromat franchise.
For better context, the equity here is the difference between what’s being owed on the property and the property’s value.
You’re likely to get as much as 80% of your home’s value. Such funds can be deployed for different purposes, including buying a laundromat franchise.
Entering into partnerships is another excellent way to start a laundromat business without money.
This financing strategy serves persons unable to cover their franchise financing needs. You become co-owner of the laundromat business by bringing in someone with the money to invest.
vii. Low-Cost Franchising
This approach seeks to only invest in low-cost laundromat franchising opportunities.
Rather than the big laundromat franchising brands whose financial requirements can be significant, low-cost franchises allow people to join without substantial investments.
Usually, these laundromat franchises are relatively new to the business but are thriving. They offer low-cost franchising to grow their brand and business.
Starting a Laundromat Business from Scratch with Little to No Money
Having discussed how to own a laundromat franchise with no money, it’s time to consider the other alternative; starting from scratch.
Like franchising, multiple ways to source funding for your laundromat business exist. These include grants and small business loans.
Other financing options include professional investors, crowdfunding, angel investors, and credit card.
It’s important to note that for any business loan applied, you’ll be responsible for loan payments even when the business fails. This is a drawback of this method.
Grants are a great way to obtain funding for your laundromat business. Luckily, there are tons of grant opportunities for small businesses.
You only need to search with local business administration chapters or government databases. A persuasive application is likely to win you such grants.
ii. Small Business Loans
Government agencies, banks, and online lenders offer all kinds of small business loans to qualified businesses.
You only need to find out what these requirements are. Some types of loans may be more suitable for your laundromat business than others.
iii. Professional Investors
Investors look out for viable business opportunities to commit their funds. Your laundromat business idea can qualify if it’s deemed likely profitable enough.
Here, part of the requirement for investment may include a percentage of your business, its stock, or profits.
A laundromat business can be started by sourcing startup capital via crowdfunding.
As the name suggests, many individuals contribute this pool of funds towards investing in viable business opportunities. You only need to find out what the requirements are.
v. Angel Investors
You can also achieve your goal of starting a laundromat business with no money by turning to angel investors who commit their funds to viable ventures they believe in.
These may be entrepreneurs who may double as mentors or may be members of one’s family.
vii. Credit Card
Your scale of operation will determine whether or not credit card financing can be used to launch your laundromat operation.
Considering this option is advisable only if the funding required is small. It’s important to compare interest rates and terms from multiple lenders before proceeding.
A laundromat business can start without money using the above tips and strategies. You don’t need to raise the funding as long as these options are available.