Do you want to start a coin laundry business? If YES, here is a complete guide to starting a coin laundry business with NO money and no experience plus a sample coin laundry business plan template.
The coin laundry business is one that attracts various entrepreneurs especially as the business seemingly runs by itself as customers attend to their needs, thereby making it an easy and lucrative business to start up. However, as easy as this business might seem, neighborhoods with a high number of renters usually have several coin laundries within a short distance of each other, thereby making the business a very competitive one.
This however does not mean that you cannot open yours and become quite successful especially if you have taken your time to understand the market.
In order to stand out from other coin laundries that you are going to meet, it is essential that you offer additional services to attract and retain a high number of your customers. Some of the additional services that you can add are dry cleaning services, wash and fold services, video games, free coffee, televisions that customers can watch while waiting for their laundry, free Wi-Fi, children play areas and food café.
One thing you will need to take into cognizance when starting your coin laundry business is where you intend to locate the business as location is one of the critical factors that will allow your business succeed. Your coin laundry business has to be in a location that has a high amount of traffic and where there is a large number of low or middle income families or renters.
It is important that your coin laundry business is well lit especially at night time and that your floors, walls and machines are very clean. Also, because there are customers that have time only at night to wash their clothes, it is important that you provide security so that your customers can feel safe at all times.
Just like with any other business, having a business plan in place is very important as it enables you conduct a thorough research into the business to know if the business will be worth your time and resources.
Steps to Starting a Coin Laundry Business
1. Understand the Industry
The coin laundry market is referred to as commercial grade equipment that allows self-service operations. Most coin laundries usually lease retail space for long periods of time, the least being 10 years and the highest being 25 years. The market is regarded as unique because it usually has no receivables or inventory. The market value for coin laundries range between $50,000 and $1 million.
There are close to 29,500 coin laundries in operation in the united states and they generate revenue of nearly billion per annum. Even though the industry is nearly 70 years old, there are no major operators or for that matter franchises.
According to research, renters are the primary users of coin laundry services and a 2010 United States Census found that about 35 percent of the 116 million households in the country were occupied by renters. This has led to the growing number of coin laundry businesses in existence for the past 70 years.
The way the industry has grown has led to its stabilization and maturity with industry analysts predicting the rate of turnovers as well as the value of the coin laundry businesses that are in existence.
According to IBISWorld, the increasing competition in the industry is disastrous especially as the rental market is declining which will cause the coin laundry industry’s growth to decline or slow down massively, especially as those living in rented houses are the primary targets.
Also, rising utility costs being experienced in the industry, coupled with the competitive environment will lead to lower profit margins for operators. IBISWorld projects that between the periods of 2012 and 2017, the coin laundries will grow by 1.1 percent. While there are more than 22,700 coin laundry businesses in existence, it has employed close to 52,000 people.
The coin laundry business and the self-service laundries that operate in apartments, dormitories and other such locations are under the Laundromat industry. The increased competition that is experienced in the industry from household laundry machines as well as pickup laundry services can be attributed to increased disposable income from consumers.
It is expected that between the periods of 2017 and 2022, the revenue of the industry will continue to decline because more consumers will have bought their own personal laundry appliances, thereby abandoning coin laundries and other sort of commercial laundry services.
According to analysis, coin laundry operators are distributed based on the level of population, which therefore means that the region with the highest level of population generated more revenue than those with the lowest. Also, coin laundry services are usually located in areas where there are large urban centers than places where the population is more of rural or suburban.
This is because urban cities are likely to have more individuals living in rented apartments or houses. According to reports, the Mid-Atlantic has more than 32 percent of coin laundries, with New York having the largest number of Laundromats.
The coin laundry business industry is projected to be in the mature phase of its life cycle and this is due to the fact that coin laundries are no longer experiencing high revenue growth. This doesn’t mean that coin laundries located in areas that have large population and increasing population density aren’t generating revenue that are substantial in nature.
Also, regardless of the fact that the industry is experiencing a decline in income, it is still performing well as the recent economic downturn saw an increase in demand for coin laundry services.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those that require the services of a coin laundry facility are those who are primarily renters in apartment buildings. Others are those who either cannot afford to get a new washer and dryer or repair the ones that they have.
This therefore means that in trying to figure out the demographics for your coin laundry business, you should try to make it as encompassing as possible as they would include young adults, middle aged and senior citizens who can afford these services.
3. Decide Which Niche to Concentrate On
Offering niche services is one way of ensuring that your coin laundry business stands out from others. However, before deciding on what niche to go into, ensure that you have conducted a thorough research on it so that you do not end up wasting time and money on a niche that is not profitable.
Some of the niche ideas that you might need to specialize in are;
- Self-service dry cleaning
- Professional or commercial laundry services
- Washer services
- Dryer Services
The Level of Competition in the Industry
The level of competition in this industry is a bit intense as coin laundries have to compete against owners of laundry machines in their homes as well as commercial grade machines that have been installed in apartment buildings and in dormitories.
When it comes to running a successful coin laundry business, distance can be said to be a barrier, which is why in order for you to be able to compete successfully against your competitors, you must be located in a place that is not only visible but can be easily accessed by your target market.
If you are therefore looking to start a coin laundry business in the United States, you should be aware that there are several coin laundry businesses in existence especially if the area you intend going into has a high number of renters. However, meeting stiffer competition doesn’t mean that you still cannot stand out and get noticed by your target market.
4. Know Your Major Competitors in the Industry
Popularity in an industry that is not only location dependent but is also filled with small and independent operators might be a bit difficult. However, some brands have stood out in their various areas due to their services, customer relationship and a host of other factors.
Below are some of the well-known coin laundries in the industry;
- MAC-Gray Corp.
- Maytag Commercial Laundry
- Tide Spin
- Pert Cleaners
- One Price Cleaners
This self-service laundry industry is one that is comprised of two segments; the coin laundry business and the route laundry business also referred to coin operated machines that are located in apartment buildings. The coin laundry business is one that has existed for more than 7 decades and has no major players except individual owners or operators.
Coin laundries are found in almost all parts of the country and are most popular in areas that are densely populated. According to economic analysis, areas that are densely populated are increasing year by year which has led to an increase in the customer base of coin laundries.
The coin laundry business is recession proof because during times of recession, the self-service laundry market expands because people do not have the money to get new washers and dryers or repair the ones they have and so they resort to coin laundry services. Also, during recession, people move to apartment houses that have inadequate laundry facilities and so the few self-service laundries gain more customers especially as people will always need to wash their clothes.
The growth of the industry is largely based on how dense the population is, the mix of the population as well as the average income earned. If the population is more concentrated, there will be a greater need for the coin facilities in existence to be of a better quality. Also, it is important to note that those who are the primary users of coin laundries are renters, who are regarded as the fastest growing segment in the United States.
5. Decide Whether to Buy a Franchise or Start from Scratch
When starting your coin laundry business in the United States, one of the decisions that you will have to make is whether to start the business from the scratch or to buy a franchise. Whatever decision you take is one that can make or mar your business and therefore it is important that you conduct thorough research so that you can make an informed decision about which option is best for your business.
The coin laundry business has been in existence for nearly 70 years and is considered to be in its mature phase of life cycle. However, regardless of how long it has existed, there are no major operators that will allow for the growth of the franchise sector.
Therefore, if you are looking to buy a franchise for your coin laundry business, you aren’t likely to find any, which therefore leaves you with the option of starting from the scratch. While starting from the scratch might be overwhelming for an entrepreneur especially one that is faced with existing and successful competitors, having a business plan as advised will help sort out most of the hurdles.
6. Know the Possible Threats and Challenges You Will Face
When starting any business as an entrepreneur, it is best that you understand that there are several threats and challenges that you are likely going to face and therefore have strategies in place to combat them whenever they crop up. Not being prepared for threats and challenges mean that you are not serious about your business. Although some threats can be easily controlled, not all will be and so you must learn to ride challenges that cannot be easily controlled while hoping for the best.
Some of the threats and challenges that you are therefore likely to face when starting your coin laundry business are; growth and stability of the economy which will lead to more people buying their own laundry machines and not using coin operated laundry machines, increasing competition, declining renters and the entry of new operators into the industry.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
There are five kinds of legal entities that are in existence in the United States of America for entrepreneurs and they are sole proprietorship, Partnership, S Corporation, C Corporation and Limited Liability Company (LLC). However, choosing any of these legal entities is highly dependent on the kind of business the entrepreneur is in.
The coin laundry business might look like one that is so simple but the fact is that it is a unique business and while operators are single and independent, choosing a sole proprietorship for instance will not be to the benefit of the business as under a sole proprietorship, you cannot source for loans.
Even though the legal entities are different in nature, what you can use to easily determine what will work for you are factors such as the flexibility of the legal entity, what liability options exist for you especially if you might get sued by a customer or client, the ease at which you can set up and control the legal entity and also how flexible the legal structure is. Alternatively, you can engage the services of a lawyer who thoroughly understands your kind of business to help in choosing the best legal entity for your business.
The S Corporation, C Corporation and LLC are all similar in that the business is regarded as a separate entity from the owners. The owners cannot be personally held liable for anything that goes wrong during the course of running the business. The corporation form of legal structure involves more paperwork than the LLC. The LLC has an advantage in its taxation structure over the corporation as tax is paid on the personal income returns of the owners as against a corporation that faces double taxation.
8. Choose a Catchy Business Name
Having a catchy name for your business is very necessary in order to ensure that your business not only has an identity but stands out from others in the same industry. When choosing a name for your business, it is best to pick something that is not only easily pronounceable but is also memorable as well.
Below are catchy names for you to consider for your coin laundry business;
- Coiners Laundromat
- Coins and Cards Laundromat
- Sweet Spinners
- In-and-out Laundromat
- Quick Tumble Laundry Services
9. Discuss with an Agent to Know the Best Insurance Policies for You
Having insurance for your coin laundry business is very important. If something happens to your machines, having insurance will save you from spending your own money to either repair or replace the machines. Asides from the machines breaking down or needing to be replaced, customers or employees may have an incident on your property that will require you to use your insurance to pay.
Purchasing the basic insurance policies are very important and if you do not know what insurance policies will best suit your coin laundry business, it is best you engage the services of an insurance agent or broker to help you out. Below are some of the basic insurance policies that you will need to purchase when starting your coin laundry business in the United States;
- General Insurance
- Liability Insurance
- Equipment/Machine Insurance
- Property Insurance
- Workers’ Compensation Insurance
- Health Insurance
- Overhead Expense Disability Insurance
- Payment Protection Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The coin laundry business even though it is one that is largely dependent on machines and equipment is regarded as a business under the self service industry, and as such an entrepreneur starting this business does not need to worry about acquiring intellectual property protection before starting the business because the machines and equipment used are basic and of commercial grade standard.
11. Get the Necessary Professional Certification
If you are looking to start a coin laundry business in the United States and are worried if you will require some sort of professional certification either before starting the business or during the course of running the business, the answer is no.
As long as your machines are operational and people can get to your location easily enough, that is all you need to be able to run your business and attain the success you seek.
12. Get the Necessary Legal Documents You Need to Operate
When starting any business in the United States, part of what you need to run the business successfully are legal documents. The authorities do not take it kindly with businesses that do not have complete documents, so it is best you check with an attorney to find out what you will need for your business.
Some of the legal documents you will require in order to run your coin laundry business are;
- Certificate of Incorporation
- Operating Agreements
- Business License
- Business Plan
- Insurance Policy
- Employer Identification Number (EIN)
- Federal Tax Identification Number (TIN)
13. Raise the Needed Startup Capital
Finance is a very important component when it comes to starting and running a business successfully. If you are looking to start a business but you do not have the necessary finance needed to start the business successfully, then it is best you shelve the business idea till you have gotten all the funds you need.
Sourcing for finance is not an easy task for an entrepreneur, especially from those that might require you to pay back within 10 to 25 years, but it is something that you cannot escape, which is why having a business plan helps make the finance sourcing easier. Below are some of the financing options that are available to you when looking to start your coin laundry business.
- Use your personal savings and revenue from sale of stock and properties as part of your start-up capital
- Apply for equipment financing loan
- Apply for loan from the commercial bank
- Approach private investors or business partners for financing
14. Choose a Suitable Location for your Business
One thing that can affect the growth and success of your coin laundry business is where you are located. The coin laundry business is one that is dependent on a high population of renters and so the closer you are located to this sort of people, the better chances your business has to grow.
However you should note that you will be competing with laundries that are located in apartment buildings and dormitories, and professional dry cleaning services as these kinds of laundries are going to be in existence in areas with high population.
The coin laundry business no matter what little scale you intend to start the business isn’t one that can be operated from home as this is a self-service business where customers are expected to use coins to help them achieve the services they want.
The location of your business is important to the growth and success of your business, which is why you are expected to locate your facility in an area that is very visible and where your target market is located. If your coin laundry business is however located in an area that is not too visible, then you should be prepared to contend with having little or no customers.
However, for your coin laundry business to be located in a good location, you need enough funds as good locations do not come cheap. Ensure that you have allocated enough funds that will enable you lease a facility in a good area as your lease will be for a long period of time.
If choosing a suitable location might be overwhelming for you, then it is best you engage the services of a real estate agent who has full grasp of the area you intend to start your business in.
15. Hire Employees for your Technical and Manpower Needs
The coin laundry service consists of four areas and they are; janitorial, collections, maintenance and employee management. The coin laundry business usually thrives in periods that are both good and bad – growth and recession and this is because people will always need to wear clean clothes. In periods where there is growth, more people get to rent apartments and in times of recession, the market still booms due to the fact that those whose machines have broken down will use coin laundry services instead.
The lease term for coin laundry businesses are always long, between 10 to 25 years as this allows the owners to generate revenue that will allow them recoup on their investment. The market value for a coin laundry is between $50,000 and $1 million with a store usually occupying between 1,000 to 5,000 square feet of space. Coin laundries that are however new in nature are valued based on how much was used in the construction and the cost of the equipment.
The coin laundry business is an equipment-based kind of business and so it is necessary that you purchase your equipment as brand new or as fairly used from a trusted dealer. If you are purchasing as fairly used due to a strained start-up budget, then it is important that the machines are in excellent condition so that you do not waste time and resources to keep repairing them, thereby losing your customers to your competitors.
Some of the equipment that you are expected to have include; topload washers, frontload washers, dryers, heating systems, computers, phones, printers, software and basic office supplies. If you intend to own a fairly large coin laundry business, then you are expected to build a solid business structure that will enable you recruit proficient people that understand the business and your corporate values of your business.
Those you should be looking towards hiring include; Chief Executive Officer (Owner), admin and human resource manager, marketing and business development executive, accounting executive, maintenance department, front desk officer, security officer and cleaner. From the above breakdown, you will be required to hire at least 9 people in order to run an effective and successful coin laundry business.
The Service Delivery Process of the Business
In ensuring that you run a coin laundry that will be successful, you need to not only ensure that the laundry is clean, but you will also have to ensure that the machines are maintained properly.
In carrying out maintenance on your washers and driers, it is important that you know the maintenance requirements depending on the type of machine you are using. Washer-extractors need to have their doors left open at the end of the day so that moisture can evaporate, while top load and front washers will require that their lids be opened after each use in order to prevent odour.
It is necessary that machines that are operated by coins be emptied daily, while those that use cards need to have the smart card processing machines emptied daily too.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing is a very important aspect of a business and so if you are starting a business and have not yet carefully planned out your marketing strategies, then it is safe to say that you are setting your business up for failure. Marketing achieves a dual purpose for every business as it not only ensures that your business achieves the intended revenue to help grow and sustain the business, it also ensures that awareness is created for the business through the various marketing campaigns, which is why it is important that only the right and effective marketing strategies are used in order to get the right results.
With marketing, you not only know your target market, you can also penetrate your intended target market and get a fair share for yourself. You also get to compete against your competitors in ways that will allow you to stand out and get noticed by them. However, before all this can be achieved, it is important that you conduct a thorough market research as this is the only way you can understand and achieve your intended marketing and revenue generation goals.
The coin laundry business is dependent on location for a large part of its success and so while it is necessary that you have great marketing strategies in place, a large part of the effectiveness of your strategy will be dependent on where your business is located as such businesses thrive in areas that have a high number of people.
Below are some of the marketing ideas and strategies that you will require for your coin laundry business;
- Ensure that you not only create attractive themes but that you provide attractive add-ons such as video games and televisions in order to create awareness about your business
- Place adverts in local newspapers and magazines as well as on radio and television stations
- Ensure that your coin laundry is listed not only in yellow pages but in online directories as well
- Distribute handbills and fliers in various strategic locations in order to create awareness about your coin laundry business
- Allow your marketing executives to physically market your coin laundry business in order to attract customers
- Make use of your social media platforms such as Facebook, Twitter, Instagram and Snapchat to promote your coin laundry business
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
One way businesses can stand out against their competitors is to ensure that they boost the awareness of their brand whilst also positively creating a corporate identity that will allow them achieve revenue generation. Every entrepreneur starting a business knows that creating the right publicity for their business is one sure way to move the business forward.
However, because creating strategies that will not only create awareness but also generate revenue is something that must be carefully thought out, it is important that a thorough market research is conducted so that not only will the market that you are going into be understood thoroughly but you will also understand what kind of target market you have and what awareness strategies will be more effective on them.
As with every business decision that you are going to make when starting your business, you will need to decide just how much money is enough for you to push the publicity of your business, this is because while some publicity strategies might cost so much, others might cost next to nothing and still be effective. The internet for instance has opened up a lot of cheaper and yet effective ways for entrepreneurs to create awareness for their business.
However, if you are just starting out your business and are running against already established and successful coin laundry businesses, then it might be necessary for you to engage the services of an experienced publicity consultant who understands the industry you are in to help craft publicity strategies that will boost awareness for your business whilst also creating a corporate identity that is positive and will allow the business grow and sustain itself.
Below are some of the strategies that you can use to boost the awareness of your coin laundry business and also create a corporate identity for the business as well;
- Make use of classified ad forums and websites such as craigslist to promote your coin laundry business
- Ensure that you place adverts for your coin laundry business in local newspapers and magazines as well as on radio and television stations
- Distribute handbills, business cards and fliers in strategic locations where your target market are likely to gather
- Install flexi banners and billboards in strategic locations around the area where you intend to operate your business from
- Use your social media platforms such as Facebook, Twitter, Instagram and Snapchat to promote your coin laundry business
- Ask your loyal and satisfied clients to help refer your coin laundry business to others