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.

Executive Summary

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.

Laundromat Business Plan - 3 Years Profit Forecast

Laundromat Business Plan 1
Bank/SBA Business Plan
Document for raising debt funding from financial institutions to meet the expectations of the banks, SBA, and government agencies.

Company Summary

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. Often ask yourself “how much money do i need to open a laundromat”? Below is the financial analysis for Cleanspot.

Laundromat Business Plan - Startup cost

Start-up Expenses  
Legal $3,000
Consultants $1,500
Insurance $15,000
Rent $12,000
Research and Development $10,000
Expensed Equipment $8,000
Signs $3,000
TOTAL START-UP EXPENSES $52,500
Start-up Assets $0
Cash Required $90,000
Start-up Inventory $35,000
Other Current Assets $15,000
Long-term Assets $7,000
TOTAL ASSETS $18,000
Total Laundry Business Requirements $20,000
START-UP FUNDING $0
START-UP FUNDING $70,000
Start-up Expenses to Fund $30,000
Start-up Assets to Fund $20,000
TOTAL FUNDING REQUIRED $0
Assets $18,000
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
TOTAL ASSETS $0
Liabilities and Capital $0
Liabilities $0
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $0
Capital $0
Planned Investment $0
Investor 1 $15,000
Investor 2 $18,000
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $95,000
Loss at Start-up (Start-up Expenses) $42,000
TOTAL CAPITAL $45,000
TOTAL CAPITAL AND LIABILITIES $30,000
Total Funding $120,000

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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 laundry machine for business 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.

Note

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.

Laundromat Business Plan - Market Segmentation

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

Strategic/Operational Business Plan

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.

5.1.4 Visitors

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.

Market Analysis
Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
Corporate Exucitives 25% 23,000 26,000 29,000 32,000 35,000 10.00%
Middle Class Households 22% 20,000 23,000 26,000 29,000 32,000 12.00%
Business Owners 20% 17,000 20,000 23,000 26,000 29,000 9.00%
Visitors 18% 14,000 17,000 20,000 23,000 26,000 11.00%
Sport Clubs 15% 11,000 14,000 17,000 20,000 23,000 12.00%
Total 100% 80,000 95,000              110,000 125,000 140,000 15.00%
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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.

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Strategy

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.

Laundromat Business Plan - Unit Sales

Sales Forecast      
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
Sales
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
TOTAL SALES
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
Books $140,000 $160,000 $180,000
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

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Personnel Plan

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
  • Cashier
  • 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.

 Personnel Plan      
Year 1 Year 2 Year 3
Manager $50,000 $70,000 $90,000
Cashier $25,000 $27,000 $30,000
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
2 Cleaners $45,000 $48,000 $51,000
Assitant Manager $40,000 $44,000 $48,000
Total Salaries $292,000 $334,000 $377,000

Financial Plan

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.

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 12.00% 14.00%
Long-term Interest Rate 6.00% 6.00% 6.00%
Tax Rate 12.00% 14.00% 16.00%
Other 0 0 0

8.2 Brake-even Analysis

Cleanspot Brake-even Analysis is indicated in the graph below.

Laundromat Business Plan - Brake-even Analysis

 Brake-Even Analysis  
Monthly Units Break-even 10,000
Monthly Revenue Break-even $250,000
Assumptions:
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
Sales $400,000 $450,000 $500,000
Direct Cost of Sales $50,000 $60,000 $70,000
Other $0 $0 $0
TOTAL COST OF SALES $50,000 $60,000 $70,000
Gross Margin $300,000 $350,000 $400,000
Gross Margin % 75.00% 80.00% 85.00%
Expenses
Payroll $300,000 $320,000 $340,000
Sales and Marketing and Other Expenses $6,000 $8,000 $10,000
Depreciation $1,000 $2,000 $3,000
Leased Equipment $0 $0 $0
Utilities $4,000 $4,000 $4,000
Insurance $2,000 $3,000 $4,000
Rent $15,000 $15,000 $15,000
Payroll Taxes $25,000 $30,000 $35,000
Other $0 $0 $0
Total Operating Expenses $230,000 $260,000 $290,000
Profit Before Interest and Taxes $40,000 $50,000 $60,000
EBITDA $12,000 $14,000 $16,000
Interest Expense $0 $0 $0
Taxes Incurred $22,000 $26,000 $30,000
Net Profit $120,000 $130,000 $140,000
Net Profit/Sales 25.00% 35.00% 45.00%

8.3.1 Monthly Profit

Laundromat Business Plan - PROFIT MONTHLY

8.3.2 Yearly Profit

Laundromat Business Plan - PROFIT YEARLY

8.3.3 Monthly Gross Margin

Laundromat Business Plan - GROSS MARGIN MONTHLY

8.3.4 Yearly Gross Margin

Profit and Loss Analysis for Cleanspot Laundromat business is shown below.

Laundromat Business Plan - GROSS MARGIN YEARLY

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.

Laundromat Business Plan - Projected Cash Flow

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $60,000 $75,000 $90,000
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
Cash Spending $22,000 $25,000 $28,000
Bill Payments $12,000 $16,000 $20,000
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
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $34,000 $41,000 $48,000
Net Cash Flow $15,000 $18,000 $21,000
Cash Balance $20,000 $25,000 $30,000

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
Current Assets
Cash $280,000 $320,000 $360,000
Accounts Receivable $20,000 $22,000 $25,000
Inventory $4,000 $5,500 $6,500
Other Current Assets $5,000 $3,000 $3,000
TOTAL CURRENT ASSETS $309,000 $350,000 $394,500
Long-term Assets
Long-term Assets $15,000 $20,000 $25,000
Accumulated Depreciation $15,000 $20,000 $23,000
TOTAL LONG-TERM ASSETS $3,000 $2,000 $1,000
TOTAL ASSETS $300,000 $350,000 $400,000
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $18,000 $23,000 $28,000
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $12,000 $16,000 $20,000
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $12,000 $16,000 $20,000
Paid-in Capital $20,000 $20,000 $20,000
Retained Earnings $20,000 $30,000 $50,000
Earnings $80,000 $100,000 $120,000
TOTAL CAPITAL $230,000 $280,000 $260,000
TOTAL LIABILITIES AND CAPITAL $180,000 $210,000 $240,000
Net Worth $220,000 $250,000 $290,000

8.6 Business Ratios

Cleanspot Business Ratios, Ratio Analysis and Business New Worth are indicated below.

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 12.00% 38.00% 45.00% 6.00%
Percent of Total Assets
Accounts Receivable 7.00% 6.00% 5.00% 9.00%
Inventory 5.00% 3.5 2.00% 10.00%
Other Current Assets 5.00% 4.00% 3.20% 27.00%
Total Current Assets 105.00% 120.00% 135.40% 60.00%
Long-term Assets -6.00% -18.00% -24.00% 45.60%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.00% 5.00% 3.00% 27.80%
Long-term Liabilities 0.00% 0.00% 0.00% 32.00%
Total Liabilities 6.00% 3.00% 1.70% 50.00%
NET WORTH 85.00% 75.00% 105.00% 38.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.00% 70.00% 76.00% 0.00%
Selling, General & Administrative Expenses 50.00% 65.00% 70.00% 75.00%
Advertising Expenses 5.00% 3.00% 1.50% 3.20%
Profit Before Interest and Taxes 25.00% 30.00% 32.10% 2.50%
Main Ratios
Current 8 12 16 2.1
Quick 20 25 30 3.2
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.
Activity Ratios
Accounts Receivable Turnover 5 7 9 N.A.
Collection Days 90 100 110 N.A.
Inventory Turnover 12 17 22 N.A.
Accounts Payable Turnover 10.1 15.5 20.4 N.A.
Payment Days 20 20 20 N.A.
Total Asset Turnover 3.2 2.6 2 N.A.
Debt Ratios
Debt to Net Worth 0 -0.06 -0.04 N.A.
Current Liab. to Liab. 0 0 0 N.A.
Liquidity Ratios
Net Working Capital $300,000 $320,000 $340,000 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 1.45 2.48 3.32 N.A.
Current Debt/Total Assets 8% 5% 3% N.A.
Acid Test 28 32 35 N.A.
Sales/Net Worth 3.3 2.5 1.7 N.A.
Dividend Payout 0 0 0 N.A.

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