The Ins and Outs of Running a Laundry Business
Many entrepreneurs, who open a laundrette, have little or no prior formal training in the laundry business. Most simply run the numbers and decide that starting a laundry equals a good business opportunity. However, as is the case with any business venture, it is recommended that entrepreneurs conduct thorough research into the industry by talking to laundry owners and reading trade literature.
While formal experience may not be necessary, a background in machine repair or a knack for fixing machines helps. Owners who have experience with laundry equipment are able to cut down on the cost of repairs. But others have found that they can learn about the machines and make some repairs themselves, or hire a maintenance person and avoid the headache altogether.
Related: Free Business Plan Template Download
In addition and fundamental to successfully running any business is a solid understanding of financial, sales, marketing and management principles.
“You must have some kind of business background in order to run a business. You need to know how to keep records of transactions, salaries, expenses as well as the cash coming in”, says Tracey Lehmbeck, who has worked in the laundry industry for the last ten years.
1The Laundromat Personality
You many think that the laundry business is about clothes, but what it’s really about is people. It’s a service business, and like any service business, you need to treat your customers well if you want them to return to your shop.
If you are friendly, your customers will want to use your store. By taking the time to talk to them, you will also be able to learn about their laundry needs and preferences for services. Ultimately, this kind of information will help you improve the quality of your business so that you can attract even more customers.
Even if you decide to hire employees and leave the customer relations to them, you still need good people skills to hire and supervise employees. The more closely you work with them the better they know and like you, the better job they’ll do.
If you have an unattended laundry that you visit twice a day to clean and collect coins from the machines, you still need to greet customers with a smile on your face and an attitude that’s ready to help. So if small talk with strangers leaves you cold, you can’t stand the thought of answering customers’ questions (often the same ones over and over), the laundry business may not be the one for you.
However, if you think you’ll like meeting new people, helping them work the machines, and listening to them talk while they wait for dryers to finish, you’ll find this business rewarding. Lehmbeck believes customer interaction is very important.
“If you get to know your customers, it’s offers huge spin-offs. My staff is on a first name basis with many of our customers, and I put this down to good customer service! Word-of-mouth is the best advertising you can get, if the message is positive…and the most destructive if service is poor. In reality this business is not just about laundry as much as it is about offering brilliant customer service.”
What are the day-to-day operations involved in running a laundry business
So what’s it really like to own a laundry business? Whether you do all the work yourself or hire someone to run it for you, there are tasks you will need to take care of on a daily basis.
You will need to open and close your shop promptly each day, clean it, collect money and fill vending and change machines. You will need to keep track of which machines are being used and how often. Those laundry owners who have employees will have other duties, too. They will be hiring and supervising those employees and overseeing additional services such as wash-and-fold or ironing.
Laundries are generally open between 7am and 6pm seven days per week. Because weekends are usually the business days for laundries, you should definitely keep your doors open on a Saturday and perhaps even on Sundays. In some instances, you many want to adopt alternate hours, especially if the market you serve or the location of the laundry lends itself to having its doors open at other times of the day.
If you own an unattended coin operated laundry in an area that is close to a university, college, gym or business district you could operate on extended hours because students and some executives are notorious for keeping odd hours.
Your first duty of the day is open your laundry, and you must be on time because customers may plan their day around getting their laundry done at a certain time.
In South Africa most drop-off laundromats close at 6pm. “They are more popular than coin operated self-service laundromats”, says laundry business owner, Tracey Lehmbeck. The coin operated Laundromats can close later than drop-off laundries, sometimes as late as 10pm, but you should consider locking the door at 8.30pm, leaving enough time for the last loads of laundry to be finished.
You can either let the customers out yourself or install a lock system that allows them to leave, but prevents others from coming inside.
2Running the Store
The first order of business is for you or staff to clean your store thoroughly, at least once a day. This will take about two to three hours a day. You or your employee will need to do the following:
- Mop the floors
- Wide down the machines
- Clean the soap dispensers in your front-load washers
- Wash off the folding tables
- Clean the restroom
- Empty rubbish bins
- Wash the windows
The best time to clean is after customers have gone – that way you or your staff can clean more efficiently. You’ll also avoid the risk of customers slipping on wet floors or tripping over cleaning equipment. If you have a large or busy laundry, you may find that it requires cleaning twice a day.
You can wipe down the machines and folding tables easily while customers are in the store, but save the floor for after they’ve left or for a quiet period of the day.
One chore you’re not likely to delegate to an employee to collecting money from coin operated machines. You’ll need to empty each machine, preferably daily. You’ll want to pull (take out the coins) from one type of machine at a time so you can determine how often your customers are using each type of machine, starting with the top-loaders.
Count these coins and record how much money you made on this type of machine, follow the same procedure with the front-loaders and the dryers. For recording purposes, you should draw up a chart with seven rows, one for each day of the week, and columns for each type and size of equipment: top-loaders, front-loaders, dryers and vending machines. Then record on the chart how much money you withdrew every day.
Stocking vending machines
The last bit of daily business in the shop is restocking the vending machines. If you rent a cold drink and snack vending machine, make sure it is full every day. In South Africa, the location of the laundry plays a vital part in whether or not you would have vending machines in the shop.
“It all depends on the retail set up of the businesses that operate in the centre or close vicinity of your laundry. You don’t want to encroach on other businesses, especially if you operate a coin operated laundry. If there is a supermarket near the shop, you don’t need to sell washing powder or softener. Coffee shops and video stores in the centre eliminate the need for a vending machines of this nature in the shop’, says Lehmbeck who speaks from personal experience as she also owns Laundry XACTIX in Randburg.
Bookkeeping & Management
When you’re done with daily in-shop duties, you’ll need to take care of some additional office work. Many laundry owners do this at home, though some may find it easier to work at the laundromat if there is enough space for a small office or work area.
You’ll need to take care of accounting and track equipment usage by customers who frequent the laundry. It is important to record how often each type of machine is used so that you can determine if you’ve got the right mix of equipment.
For example, if you find that front-loaders are getting six turns a day (the number of times a machine is used each day) and your top-loaders only two, you may need to add front-loaders and remove some top-loaders. Your customers are likely waiting for front-loaders and possibly going elsewhere, so you could be losing money.
How much does it cost to set up a Laundromat?
The cost of setting up a laundry business depends on many factors and you will have to conduct your own research to determine how much money you will need to raise. There are various suppliers around the country that will be able to give you quotes on buying new or reconditioned machines.
You could also consider leasing the equipment. The needs will be based on the size of the laundry as well as the kind of services you intend to offer.
Speed Queen has supplied the commercial laundry industry for many years throughout South Africa. Contact Speed Queen and these suppliers for price details:
- Laundry Equipment Service
- Cater Zone
- Laundry Online
Contact Laundromat owners and ask them what the going salary rate is for staff. There are also franchises available in South Africa, such as Fresh Laundry, a new domestic laundry franchise. It will also be able to give you the information you require. Click on the Entrepreneur franchise directory for details.
How much money can be made owning a laundry?
The amount of money you can make from a laundry varies tremendously. If you’re planning on operating just one or two laundries, you’ll be in good company. Three quarters of laundry owners own only one shop, and very few have more than two.“There are a few local chains starting to grow in various parts of the country, but 99% are privately owned”.
A little more than half of laundry owners operate their business full-time. Others take the moonlighting approach – they manage other businesses or work a day job. But more laundry owners are starting to own larger shops and more than one.
These people are able to survive on the income larger stores or multiple stores generate.“It is a good, steady cash income”, explains Lehmbeck. The steady income that a laundry generates is a plus for many people. If you’re looking for a business that will keep cash flowing no matter what the rest of the economy is doing, you’ve found it in laundries. Clean clothes are a necessity, not a luxury, so people are going to Laundromats no matter how the stock market is performing.
The business is fairly steady, month in and month out.
4Using your Space
How much space is needed to operate a retail laundry and dry cleaner?
First determine the services you wish to offer, then work out how much space you will require to cater for those.
There is no ‘prescribed’ minimum space for a laundry and dry cleaning business. You will need to first determine the services you wish to offer, then work out how much space you will require to cater for those.
- If you wish to offer ironing as a service, you must calculate how many employees you are likely to have at any one time, and how much space they will require. Where will the clothing bundles be stored?
- Will you offer coin-operated machines and if so how many? What are the sizes of these machines?
- Will you offer a seating area for customers who wish to wait for their washing?
- Do you intend you having vending machines in store? These take additional floor space
- Where will you conduct the management of the business – the space you will manage the books and overall management? How big will this office be?
- Also, consider potential for future growth
What to look out for when buying an existing laundry business?
Six issues to consider before buying a laundry going concern.
If you are considering buying an existing business there are various issues you must look into:
- The books must be right, remember a laundry is a cash business
- Check warranties and the service history of the machines carefully
- How well known is the laundry and how good was the previous reputation of the Laundromat
- How strong is the existing customer base?
- Is there scope to attract more customers?
- Screen the staff who work at the laundry and make sure you are happy with them because good staff makes a business successful and bad staff will destroy it. After all a Laundromat is a service industry and if service and good work are not offered, customers will quickly move to a laundry that does offer excellent service
How to start a laundry business from a retail centre
Like things neat and clean? Then starting a coin-operated laundry might be your ticket to entrepreneurial success.
Internationally, the coin operated laundry industry has undergone a revolution. No longer are dingy, unsafe, boring places that customers must endure on a weekly basis, laundromats becoming fun and attractive multiservice centres that customers enjoy visiting.
“You don’t need experience, but you need training in order to operate machines and keep them running at their best”, explains Tracey Lehmbeck, who has worked in the laundry industry for the last ten years. She is a sales consultant for Lead Laundry & Catering a large suppler of commercial and industrial laundry equipment and has her own laundry in Northwold, Johannesburg.
Newer laundries are located close to coffee shops or supermarkets. Some offer a service where customers can leave laundry which is washed and ironed and pick up dry cleaning. Many laundry owners also employ full time staff to keep an eye on the shop, help customers use the equipment and do ironing.
The coin operated laundry industry is changing in response to several trends currently impacting the business. The first is that, for most of us, meeting the demands of work and our personal lives leads to a time crunch – there just aren’t enough hours in the day to accomplish everything we would like to.
Laundry owners are capitalising on this reality by offering their customers time-saving convenience in the form of wash-and fold (drop off service) and a dry-cleaning service. Many laundromats take on contract work from guesthouses, restaurants, coffee shops and factories where uniforms need to be laundered.
In addition, owners have realised that they can maximise their profits by providing customers with access to multiple services. Since they’re paying a set amount of rent on their commercial space, they might as well use that space to its fullest potential.
Many owners around the country offer a variety of other related services. Because many new laundries are bigger now than they were in the past – overheads are higher, and owners are looking for ways to cover the cost.
These additional services demand little increase in overhead because the rent is already paid for. Customers benefit by being able to use several services all in one convenient locations.
South African Laundromats offer a variety of other services which generate more business for them:
- Shoe repairs
- Dying service
- Heavy load laundry such as curtains and duvets
- Some offer ‘Spotting Stations’ which offer a professional stain removal service
Another trend laundry owners have recognised is that customers prefer to visit laundries with a more pleasant atmosphere. Many laundry owners offer coffee, keep a supply of detergents and hire staff that is friendly and helpful.
7Being the Best
Other social phenomena, like the prevalence of two-income families, suggest that convenient services such as wash, dry and iron will continue to grow in popularity as working parents have less time to attend to household chores like laundry.
In addition, office dress codes are growing increasingly less formal. And as more people wear casual clothing, (which don’t require dry cleaning) to work and leave the nicer outfits for special occasions, you may find that consumers will be making more trips to the Laundromat.
Although economic growth and property development has slowed in recent months, room for growth in this industry in South Africa remains – particularly in suburbs that are experiencing population growth. “There is room for growth in this industry, especially in developing areas, explains Lehmbeck.
“I should know, besides selling equipment, I help to install and teach owners how to get the best out of their equipment. So, I am in touch with what is going on in the laundry industry.”
Competing for the ‘Mature Market’
When it comes to established areas, new laundry business incumbents enter the industry by purchasing an existing laundry business and renovating it. Some also find that they can build a new laundry in an area with competing laundries and thrive by offering a bigger shop and more services such as an in-house tailor and better customer relations.
So, as you consider getting into the laundry business, keep the words, ‘mature market’ in mind. Don’t buy a store just because it’s for sale or build a new laundry just because you have a great idea for a new gimmick. You’ll need to be very careful to make sure there’s enough of a customer base to make your business thrive.
You may be able to draw a little extra business from people who like using your store better because of its cleanliness and because they use your wash-and-fold or ironing service, but the core of your business will be clients who just want to get their laundry done quickly and conveniently.
If there are already enough Laundromats in the neighbourhood to serve their needs, they’re not as likely to patronise your laundry.
How to run a laundry from home
Offering a service where customers can leave laundry so that it can be washed and ironed, can be a good source of income. This is because the prevalence of two-income families, suggest that convenient services such as wash, dry and iron will grow in popularity as working parents have less time to attend to household chores like laundry.
Do careful research before you start
You will have to decide how you will market your home laundry business. Research is vital. Canvas the area in which you will be operating the home business in order to determine if there is a need. Check if there are laundries near you and if there are, be sure you can offer better value and service.
Target the market
Decide how you are going to target the market that you believe will make use of the service you intend to offer. Prepare a business plan. This will ensure that you cover everything and have a plan to follow. For the business plan, work out what equipment you will need. This might include washing, dryers, folding tables, irons and ironing boards and in time, even dry cleaning equipment.
As you are operating from home, make sure that you have enough space. Equipment, unwashed clothes and washed clothes will take up space. The location of your laundry business should have adequate space to house all the necessary materials and collaterals.
Another major consideration is are you simply going to wash and fold laundry or are you offering to include ironing as part of your services? This is an important point because ironing takes so much more time and needs to be factored into your rate schedule and your business plan.
A major key to success in this type of home based business is scheduling. Taking on ironing as part of the project will definitely be a drag on the quantity of work you can do and prices should be gauged accordingly.
Using the electronic media
Consider setting up online appointments – customers can make appointments to have their laundry picked up and dropped off. If you don’t want to run a collection service you can still use SMS’s to provide automatic alerts when the laundry is ready for collection.
Some clients may want to use a credit or debt card to pay for the services that they have purchased from you. It is important that you are able to transact this way. Contact your bank for details and the costs involved in operating debt and credit cards.
Making sure that the assets of your business are properly insured is something that every emerging or already established company needs to do in order to ensure success in the long run. Not having the assets of your business such as vehicles, equipment and insurance cover for the clothing left in your care can leave your business vulnerable to loss due to crime or unforeseen disasters.
Plan for breakdowns
As you are running a service business, so you need a back-up plan if you washing machine, dryers or irons breakdown. You’ll also need to factor in time to take care of accounting and track equipment, water and power usage so that you can be sure that you are charging the correct amount and not running at a loss.
1014. Legal issues
If you are going to employ staff then you must register them with UIF and SARS. You should also notify your local council that you are running a small business from home as there maybe zoning regulations that you would have to take care of.
If you plan on running a home-based business that will have no employees and no walk-in trade, the zoning question may never arise. If employees or customers are coming and going, making noise, or taking up parking spaces that would normally be used by residents, you can expect neighbours to complain and report you to the municipality.
11How to attract more customers to the laundry
Consider giving your laundry a theme or gimmick. For example, in the United States one Laundromat plays classic black-and-white movies on their TV, and other walls are covered with photographs of movie stars from the 1920’s and 1930’s.
Another store displays the owner’s collection of antique laundry equipment. A theme gives your laundry more personality; customers will remember it, and they’ll find your laundry a more interesting place to come to. A clever gimmick may also get you some free publicity from the local press.
If you want to create a gimmick for your Laundromat, think about who your customers are and what sort of theme they will appreciate.
For the kids
When selecting a venue for your business, look at what is offered close to your shop. If there is a children’s play area in the centre, it will make a visit to the Laundromat so much more attractive to moms and caregivers. A supermarket will be a draw card and so would coffee shops, a video store, game arcade and even a hairdresser. Other options include pinball and video games; you could approach a video game supplier about having a video game console fitted in the shop and share the profits with the supplier.
If you want to start a self-service coin operated Laundromat, and you’re thinking of putting in an area especially for children, check with your insurance company that you are properly covered with regard to liability.
Professional advice is needed to help you design the area to maximise safety and make sure that you won’t be responsible in case a child gets hurt. In fact, you may need to place signs saying you’re not responsible for children’s’ safety.
Even the big kids get bored
Even adults will get bored at a Laundromat. After all, mostly what they are doing is waiting around for clothes to wash and dry. Many laundries these days have one or more TV’s mounted on the wall or has music playing and offer a selection of magazines to read.
Some laundries keep the TVs tuned to one channel, some play videos, and others let customers change channels themselves. If your laundry is unattended and you want to let customers change the channel, mount the TV low enough on the wall so they can reach the channel and volume buttons. Customers are likely to walk off with the remote control, even if it’s tacked to the table.
It’s likely that customers who are at a coin operated self-service laundry will get hungry or thirsty while waiting for the laundry to finish. Even if your shop is in a shopping area or near one, customers wisely don’t want to leave their clothes. So having a vending machine that has cool drinks, chips and sweets or even a hot drink vending machine can create extra profit.
13Where to find contacts for equipment and electrical contractors
Lead Laundry & Catering
SA Cleaning Equipment
For a complete list of registered electrical contractors throughout South Africa contact the Electrical Contractors Association (ECA).