Do You Want to Start Laundromat business?
Are you planning how to start laundromat business? This is an excellent business idea considering hygiene is a key component of every individual and society. As a matter of fact, everyone has to regularly wash their clothes and other household items to maintain good standards of hygiene. However, due to the pressures of modern life, people don’t have time to do their own laundry. With this realization, laundry business is now a lucrative venture as it promises good profits if the right strategies are put in place. You can either choose to start big or small depending on availability of funds and your target market.
2.1 The Business
The laundromat business will be registered under the name Cleanspot and will be situated in Newport, New Jersey. The laundromat will be owned by Samantha Clever who is a Laundry Specialist by profession.
2.2 Management Team
Samantha Clever who’s the owner of the laundromat is an experienced Laundry Specialist with extensive industry in the laundry business. Prior to starting laundromat business, Samantha had a successful career that spanned over two decades working for numerous top brands across the U.S.
2.3 Customer Focus
Cleanspot business plan for laundromat plans to set up base in a strategic and busy location a high population in need of professional laundry cleaning services. Customers are expected to come from various social, cultural and religious backgrounds.
2.4 Business Target
Cleanspot intends to provide different types of laundry services to residents of Newport and the wider Jersey City.
3.1 Company Owner
Samantha Clever is an experienced laundry specialist who has enjoyed a successful career. She is credited and respected for playing a major role in helping to streamline activities and enhance better service delivery.
3.2 Aim of Starting the Business
After major successes in her career, Samantha realized how people are busy and don’t have time to do their laundry. With the demand for professional laundry services increasing, she considered opening a laundromat business to meet a demand that was increasingly growing by the day.
3.3 How the Business will be Started
Considering her vast industry experience, Samantha Clever is well versed with the technical and operational procedures associated with a laundromat business. She however has engaged business development experts to help her come up with a comprehensive financial analysis for the business. Below is the financial analysis for Cleanspot.
|Research and Development||$10,000|
|TOTAL START-UP EXPENSES||$52,500|
|Other Current Assets||$15,000|
|Start-up Expenses to Fund||$30,000|
|Start-up Assets to Fund||$20,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$12,000|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$42,000|
|Cash Balance on Starting Date||$18,000|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$95,000|
|Loss at Start-up (Start-up Expenses)||$42,000|
|TOTAL CAPITAL AND LIABILITIES||$30,000|
Services for Customers
Cleanspot is keen on offering a wide variety of laundry services for various types of customers; both residential and commercial. In line with the vision of starting a laundromat business that effectively meets customer expectations, the laundromat business intends to provide the following services.
- Self-service washing services for customers
- Dry cleaning services to cater for various items
- Ironing and folding of clothes and various fabrics
- Snack and coffee bar to provide refreshments for customers
Marketing Analysis of Laundromat Business
For the laundromat to effectively penetrate the market and provide good services, a detailed market analysis was carried out. The aim of the analysis is to find out how to best implement this laundromat business plan in order to effectively reach out to potential customers. In this section, the business has carefully studied the market, identified the opportunities and formulated a marketing strategy for driving success. More and more people are turning to professional laundry providers for key services creating lucrative business opportunities.
5.1 Market Segmentation
Everybody is in need of laundry services and for this reason, Cleanspot intends to serve a wide range of customers. Newport is a vibrant city with a huge population which offers a ready market for the business. Since the business is located in a busy street, there are numerous opportunities to explore. How to start a laundromat business plan has identified the following customer segments.
5.1.1 Corporate Executives
Because of their busy lifestyles, the working class doesn’t have ample time do their own laundry. Alternatively, they need a well-equipped and modern laundry facility to do their laundry. Given the fact they earn an income, they’re a lucrative customer segment for Cleanspot because they are expected to generate the highest income revenue for the business. Laundromat business model intends to fully embrace technology and the highest standards of professionalism to attract working class professionals.
5.1.2 Middle Class Households
Households belonging to the middle class category regularly need professional laundry services. In this regard, a good number of customers seeking laundry services from Cleanspot will be come from many middle income households in the neighborhood. In most cases, a lot of laundry is done for households and therefore, the business intends to set up in a large, spacious and welcoming environment to boost revenue.
5.1.3 Business Owners
Just like residential customers, businesses too are in need of regular laundry cleaning services. In this laundromat business model, entrepreneurs have been identified as a lucrative customer segment with potential to generate impressive revenue for the business. In order to focus on key services, business owners opt to outsource their laundry needs to professionals.
Newport and Jersey City receive several visitors both on holiday and business trips. Cleanspot hopes to tap into this market by offering quality self-laundry services to visitors looking for a good facility within the neighborhood.
5.1.5 Sport Clubs
Due to engaging in sports activities, sports gear gets dirty and therefore, needs to be cleaned. With numerous sports clubs around Newport, the business hopes to leverage on this revenue opportunity.
|Potential Customers||Growth||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5||CAGR|
|Middle Class Households||22%||20,000||23,000||26,000||29,000||32,000||12.00%|
5.2 Business Target
Cleanspot plans to setup in superb and strategic location with access to a huge population in need of expert laundry services. Using modern technology and best customer service practices, Cleanspot hopes to implement this laundromat business plan sample to achieve its goals. The business hopes to register an annual sales growth of between 15-20% in the first three years.
5.3 Product Pricing
Pricing of laundry services will be done after extensive market research in order to come up with a competitive pricing structure.
In order to realize her goals, Samantha Clever has worked hand-in-hand with experts to formulate a sound marketing strategy that will drive business growth. The sales strategy for how to open Laundromat business is explained below.
6.1 Competitive Analysis
Cleanspot plans to focus on rolling out a unique and topnotch service delivery package to ensure clients get the best value for their money. Even though there are other laundromat businesses, Cleanspot has identified areas to target in order to maximize revenue.
6.2 Sales Strategy
For Cleanspot to realize its goals, the following strategies have been identified to help the business gain market entry.
- Organize a party to celebrate the opening of the Laundromat business in order to create awareness
- Advertise Cleanspot on local media channels such as television, radio as well as local newspapers
- Create a website for the business and maintain an active social media presence on major channels such as Facebook, Twitter and Instagram
- Place signage and banners at strategic locations to let the public know about the business
- Hire marketing experts to make the Laundromat a top choice for people looking for professional laundry services
- Embrace direct mailing coupon marketing strategy
- Maintain high standards of customer service to ensure all clients who visit the facility feel welcomed
- Market the business using road shows around the neighborhood to create awareness about Cleanspot
6.3 Sales Forecast
In order to fully implement this laundromat business plan startup venture, a sales forecast is shown below to provide an insight into how the Cleanspot is expected to perform.
|Unit Sales||Year 1||Year 2||Year 3|
|Self-service washing services||250,000||270,000||290,000|
|Dry cleaning services||230,000||250,000||270,000|
|Ironing and folding of clothes||200,000||220,000||240,000|
|Snack and coffee bar||180,000||200,000||220,000|
|TOTAL UNIT SALES||0||0||0|
|Unit Prices||Year 1||Year 2||Year 3|
|Self-service washing services||$200.00||$220.00||$240.00|
|Dry cleaning services||$150.00||$170.00||$190.00|
|Ironing and folding of clothes||$130.00||$150.00||$170.00|
|Snack and coffee bar||$100.00||$120.00||$140.00|
|Self-service washing services||$240,000||$260,000||$280,000|
|Dry cleaning services||$200,000||$220,000||$240,000|
|Ironing and folding of clothes||$150,000||$170,000||$190,000|
|Snack and coffee bar||$100,000||$120,000||$140,000|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Self-service washing services||$2.00||$3.00||$4.00|
|Dry cleaning services||$1.80||$2.80||$3.80|
|Ironing and folding of clothes||$1.20||$2.20||$3.20|
|Snack and coffee bar||$1.00||$2.00||$3.00|
|Direct Cost of Sales|
|Self-service washing services||$45,000||$60,000||$75,000|
|Dry cleaning services||$20,000||$30,000||$40,000|
|Ironing and folding of clothes||$42,000||$55,000||$68,000|
|Snack and coffee bar||$247,000||$305,000||$363,000|
Cleanspot is focused on providing superb services in order to meet expectations. Before starting a business, it is important to ensure there is a good personnel plan in place. Laundromat business ideas should include conversations about staff structure and management.
7.1 Personnel Plan
The Laundromat business is owned by Samantha Clever who will also be the general manager of the business. The business intends to hire the following staff to work in the facility.
- General Manager (Owner)
- Assistant Manager
- 2 Laundromat Assistants
- 1 Snack Bar Attendant
- 1 Marketing Executive
- 2 Cleaners
- 1 Security Guard
Successful applicants will be trained in all aspects of the Laundromat to prepare them to serve customers.
7.2 Average Salaries
Cleanspot intends to pay its staff the following average annual salaries in the first three years of operation.
|Year 1||Year 2||Year 3|
|2 Laundromat Assitants||$50,000||$55,000||$60,000|
|1 Sales and Marketing Executive||$32,000||$34,000||$36,000|
|1 Snack bar Attendant||$25,000||$28,000||$31,000|
|1 Security Guard||$25,000||$28,000||$31,000|
Cleanspot has prepared a comprehensive financial plan that will show the financial status of a business and offer a path to success. How to start your own laundromat business demands initial startup capital. In this case, Samantha Clever will use capital from her savings assisted by two investors. In addition, a loan shall be secured to provide additional capital.
Below is key financial data for Cleanspot Laundromat business.
8.1 Important Assumptions
Financial forecast for Cleanspot shall be based on the assumptions below.
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||12.00%||14.00%|
|Long-term Interest Rate||6.00%||6.00%||6.00%|
8.2 Brake-even Analysis
Cleanspot Brake-even Analysis is indicated in the graph below.
|Monthly Units Break-even||10,000|
|Monthly Revenue Break-even||$250,000|
|Average Per-Unit Revenue||$200.00|
|Average Per-Unit Variable Cost||$3.00|
|Estimated Monthly Fixed Cost||$300,000|
8.3 Projected Profit and Loss
Profit and Loss information for Cleanspot calculated on a monthly and annual basis is indicated below.
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$50,000||$60,000||$70,000|
|TOTAL COST OF SALES||$50,000||$60,000||$70,000|
|Gross Margin %||75.00%||80.00%||85.00%|
|Sales and Marketing and Other Expenses||$6,000||$8,000||$10,000|
|Total Operating Expenses||$230,000||$260,000||$290,000|
|Profit Before Interest and Taxes||$40,000||$50,000||$60,000|
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
Profit and Loss Analysis for Cleanspot Laundromat business is shown below.
8.4 Projected Cash Flow
Below is a summary of pro forma cash flow, subtotal cash spent, subtotal cash spent on operations, subtotal cash from operations and subtotal cash received.
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$10,000||$14,000||$18,000|
|SUBTOTAL CASH FROM OPERATIONS||$70,000||$89,000||$108,000|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$60,000||$70,000||$80,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$34,000||$41,000||$48,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$34,000||$41,000||$48,000|
|Net Cash Flow||$15,000||$18,000||$21,000|
8.5 Projected Balance Sheet
Below is a Projected Balance Sheet for Cleanspot that shows capital, assets, liabilities, current liabilities and long term assets.
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$5,000||$3,000||$3,000|
|TOTAL CURRENT ASSETS||$309,000||$350,000||$394,500|
|TOTAL LONG-TERM ASSETS||$3,000||$2,000||$1,000|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$12,000||$16,000||$20,000|
|TOTAL LIABILITIES AND CAPITAL||$180,000||$210,000||$240,000|
8.6 Business Ratios
Cleanspot Business Ratios, Ratio Analysis and Business New Worth are indicated below.
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||5.00%||4.00%||3.20%||27.00%|
|Total Current Assets||105.00%||120.00%||135.40%||60.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||50.00%||65.00%||70.00%||75.00%|
|Profit Before Interest and Taxes||25.00%||30.00%||32.10%||2.50%|
|Total Debt to Total Assets||5.05%||3.00%||2.50%||44.00%|
|Pre-tax Return on Net Worth||70.00%||80.00%||90.00%||2.50%|
|Pre-tax Return on Assets||66.00%||50.00%||70.00%||5.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||23.00%||26.00%||29.00%||N.A.|
|Return on Equity||55.00%||60.00%||65.00%||N.A.|
|Accounts Receivable Turnover||5||7||9||N.A.|
|Accounts Payable Turnover||10.1||15.5||20.4||N.A.|
|Total Asset Turnover||3.2||2.6||2||N.A.|
|Debt to Net Worth||0||-0.06||-0.04||N.A.|
|Current Liab. to Liab.||0||0||0||N.A.|
|Net Working Capital||$300,000||$320,000||$340,000||N.A.|
|Assets to Sales||1.45||2.48||3.32||N.A.|
|Current Debt/Total Assets||8%||5%||3%||N.A.|
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