The Importance of a Business Plan When Opening a Laundromat

For many would-be-entrepreneurs opening a laundromat presents an exciting opportunity with strong ROI’s and low barriers to entry. One of the joys of the laundromat industry is that it can be very easy to get started, you don’t need years of prior experience. But don’t be fooled into thinking that means that running a laundromat is easy, or that it’s a passive business. Like any buiness a successful laundromat is only possible with a solid plan in place. Not convinced? According to Investopedia, up to 20% of US businesses fail within the first 2 years, and one of the leading reasons is failure to put together a strong business plan.

A good business plan will help serve as a roadmap for success, helping you set objectives, plan your finance and manage your risk. Without one, you’re operating on little more than a wing and a prayer. 

Whether you’re a first time laundromat owner, or a seasoned entrepreneur, it never hurts to revisit the basics. In our blog we’ll explore why you need a business plan, and the key elements to consider when putting together a plan that will lead to success. 

Do I really need a business plan?

The short answer is yes. Having a detailed plan is crucial when opening a laundromat. It serves as your primary guide, helping you set short and long-term goals and clear objectives. Here’s how:

Clarify Business Objectives

A solid plan will help you focus on what you want to achieve in your day to day operations as well as helping you understand what long term success looks like. For example, will you provide high-quality wash, dry, and fold services? Or are you going to opt for a coin-operated laundromat model and allow customers to self-serve? Does your model include pickup and delivery services? By setting clear goals from the get go, you can make sure that every decision you make along the way ladders up to your overall vision.

Understand the Local Market and Competition

Creating a business plan is the ideal opportunity to conduct thorough market analysis. This will allow you to really get to know the location in which you’re setting up your business, covering everything from local demographics to competition. Understanding how your soon to be competitors are operating is important if you want to gain a competitive edge, helping you determine everything from pricing to which services you will offer. For a more detailed walkthrough of what to think about when conducting competitive analysis, check out our blog on understanding market research.

Once you have a clear understanding of the local market, you can begin to develop marketing strategies to help you attract your target market and retain customers. This may include offering in-demand services such as PUD, a subscription model, loyalty programs or additional conveniences such as free Wi-Fi or a play area for parents with kids. By taking the time to plan out what will set your business apart, you can start to build a loyal customer base from day one. 

Identify Potential Risks

We’ve established that a business plan helps you to clarify business goals and understand the wider competitive landscape. A solid plan will also help you identify any potential risks that could impact the success of your laundromat. For example, you may be planning on offering wash and fold, coin operated services and pick up delivery, because you want to maximise your revenue potential. That’s great. But how many turns a day will you reasonably be able to manage? Is there enough demand in the location for all of these services? By putting together a strong plan, you’ll more easily identify these risks and can develop strategies to minimize their impact. You’re essentially creating a risk management plan which will help to guarantee your success. 

Key Components of a Business Plan

Clearly, a business plan is a prerequisite to success in the laundry industry. But how do you go about creating one? In this section, we will outline the key components that should be included in your business plan, providing you with a detailed framework to follow.

Business Structure

Before you begin work on your plan, make sure you have your business structure finalised. This is the legal structure which determines how your business is organized, taxed, and the extent of your personal liability. Common structures include:

Sole Proprietorship: This is the simplest and most common form of business ownership. In this model, you are the single owner and operator of the business. One of the benefits is that you have full control over the laundromat, however it does also mean that you are fully liable for the business - the good and the bad. 

Partnership: If you’re going into business with a partner who will have a share in the business, you’ll likely set up a legal partnership. There are two main types:

• General Partnership: Partners share equal responsibility for managing the business and are personally liable for business debts.
• Limited Partnership: Includes both general partners, who manage the business and are liable for debts, and limited partners, who invest capital but have limited liability and involvement in daily operations.

Limited Liability Company (LLC): An LLC provides the liability protection of a corporation with the tax benefits and operational flexibility of a partnership and is a popular choice for many laundromat owners. Owners, known as members, are protected from personal liability for business debts and claims, but profits and losses can be passed through to their personal income without facing corporate taxes.

Corporation: A corporation is a more complex business structure that is a separate legal entity from its owners, providing the strongest liability protection. There are different types of corporations:

• C Corporation: This type is taxed separately from its owners, but it offers the benefit of allowing an unlimited number of shareholders.
• S Corporation: Similar to a C corporation but allows profits and losses to be passed through to the owners' personal income without being subject to corporate tax rates, with some restrictions on the number and type of shareholders.

Executive Summary

The executive summary is essentially an introduction and overview of your business. Include details such as the types of services you will offer and the types of equipment you will use, but remember to keep it short and succinct - this is the elevator pitch of your business. You can dive into more of the detail in the following sections. Strange though it may seem, you may opt to leave this section to the very end as it’s the outcome of everything else you’ll document in the plan. You need to complete the rest of the plan, before you summarise it.

Business Description and Goals

In this section you can build out more detail about your business and what you want to achieve. Your business goals should be clear, measurable and have a timeline. A good goal might be ensuring a positive customer service experience. A better goal is to aim for a customer satisfaction rating of 90% on a satisfaction survey, or aiming for 10 5-star ratings online in your first 6 weeks. You might set financial goals - for example yo might set a revenue goal from your wash dry fold services for month 1, with a goal of growing it by 10% month on month in the first year. Whatever your goals are, your business plan is the place where you should set them, and then measure against them. 

Market Analysis

As we’ve already discussed, as part of your business planning process you'll need to conduct an analysis of the local market and target demographics. When we talk about demographics what we really mean is, who are the customers? What are their ages - are they college students? Families? Young professionals? What is the average income of the neighbourhood - is it affluent or is it struggling economically? Does it have a community vibe, or not? Understanding the market will help you tailor your services and facilities to meet any specific preferences. For example, if your laundromat is located near a college, then you may benefit from offering late-night hours and discounts for students. If you are in an area of families or commercial customers who have larger loads of laundry, then you may want to invest in large-capacity laundry machines.

Once you’ve understood your demographics, you can start to look at the competitive landscape, and what other laundromats in the area are offering. Evaluate their strengths and weaknesses, as well as their services, pricing, and overall reputation. This research will help you differentiate your business and capitalize on gaps in the market. Additionally, stay informed about the latest industry trends by networking with other laundromat owners or conducting online research. This will help you adapt your business strategy to meet evolving customer preferences, such as the growing demand for cashless payments or eco-friendly options.

Management Team and Staffing Plan

Running any business requires staff, and the same is true in the laundromat industry. Think about the different staff members you'll need to ensure operations run smoothly. 

Staffing Plan

Detail the staffing needs of your laundromat, including the number of employees required, their roles, and their responsibilities. Typical positions might include:

• Laundry Attendants: Assist customers, maintain the cleanliness of the facility, and handle minor equipment issues. Provide excellent customer service and ensure a positive customer experience.
• Maintenance Personnel: Responsible for regular upkeep and repairs of the machines and facility. Ensures all equipment is functioning properly and addresses any technical issues promptly.
• Customer Service Representatives: Handle customer inquiries, complaints, and service requests. Ensure customers have a seamless and satisfactory experience.

And crucially - don’t foget to outline all of the associated costs in your P&L. 

Marketing and Sales Strategy

Marketing Plan to Attract Customers

Now that you have established the core aspects of your business, including your overall goals, structure, and staffing plan, you’ll nede to develop an effective marketing strategy to attract customers to your new store. A well-crafted marketing plan will create awareness about your services, ensure your laundromat is visible to your target customers, and position your business as the preferred choice for laundry services. Want to know more? We have a detailed breakdown of the various digital marketing strategies and offline methods that laundromat owners can implement available here.

The first step to take with any marketing strategy is understanding your target audience. This ties in with our previous point of conducting a thorough market analysis. Analyze the demographics, preferences, and behaviors of your potential customers, tailor your services to their specific needs, and then think about the best way to reach them. For example if you’re in a college town and you want to offer WDF to local students you might develop an offer exclusively for students. To get this message across you might post on social media platforms, and contact the local college and ask about opportunities to flyer or put posters up in dorms or communal areas. In contrast, more senior customers might be more receptive to traditional methods such as direct mail or adverts in local papers. 

To find out what locals in your area are looking for in a laundry service, you can conduct surveys or focus groups to gather insights into what your target audience values most. This might include convenience, affordability, eco-friendly options, or additional services like pickup and delivery.

Having a strong online presence is the ultimate marketing method in today’s digital age, and is a tool which is becoming increasingly important as more people begin to search and pay for services online. In fact, 43% of small businesses are planning to invest more in improving their websites' performance. When opening a laundromat, it is a smart move to create a professional website that provides information about your services, pricing, and special offers. If you offer pickup and delivery services, embedding an online booking tool provides an accessible way for customers to place orders online. As a CleanCloud user, you have access to a website builder tool that allows you to easily create and design your own site linked to your account. Additionally, we offer a booking tool that can be embedded directly onto your preferred landing page.

Sales Strategy to Drive Revenue

Along with a solid marketing plan laundromat businesses need a sales strategy to help drive revenue growth and guide the overall long-term success of your business.

A core aspect of your sales strategy is a your pricing strategy. Getting your pricing right is key to remaining competitive and to running a profitable laundromat. Consider offering tiered pricing for different service levels, such as basic, premium, and deluxe packages. Setting up bundled packages is a great way to provide better value to customers while encouraging them to use multiple services.

You’ll also want to consider whether you’ll be offering any promotions or discounts to boost sales. Or a loyalty program to help you establish a loyal customers base.

Don’t worry if you’re not certain what will work at this stage. The important thing is to have a plan, test it, and then make any adjustments as needed. 

Financial Plan

It goes without saying that one of the vital ingredients for a successful laundromat is having a clear financial plan. This means clearly outlining any start-up costs, funding requirements, financial projections, and profitability forecasts. When it comes to writing this important section there are lots of helpful articles on how to structure it, most are generic business plans but still relevant to the industry, such as this guide from indeed.com. Key components to consider include:

Startup Costs

Depending on whether you build or buy, and the condition of the equipment if you choose to buy, your start-up costs could quickly mount up. It’s therefore important to fully cost up before you launch your laundromat. Start up costs to consider include expenses for equipment such as washers, dryers, and other stations, as well as building improvements like plumbing, electrical work, and renovations. Need more advice on the equipment you’ll need to start up? We’ve got a blog that takes a deep dive on equipment you’ll need and also leasing options. Additionally, you'll need to prepare your initial inventory, including detergents, cleaning supplies, and laundry carts. Acquiring the necessary licenses and permits too legally operate your business also incurs costs. For a detailed breakdown of the different permits required for a laundromat, you can check out our blog here. Moreover, it’s crucial to have extra funds to cover the first few months of operations, including rent, utilities, payroll, and costs associated with using a specialized POS system, such as CleanCloud.

Financial Projections

Providing detailed financial projections will give a clear overview of your laundromat's expected financial performance. This section of your business plan should include forecasts for your income, cash flow and balance sheet. These projections help you, potential investors, and lenders understand the financial viability and future profitability of your business.

An income statement, also known as a profit and loss statement (P&L), shows your projected revenues, ongoing expenses, and net income over a specific period, usually monthly or yearly. Once you know your pricing and have an idea of demand you can estimate the revenue your laundromat will generate including income from the various services you offer. This statement will also include the direct costs associated with providing your services, such as water and electricity used per wash. In our blog on verifying the financials of a laundromat we look at how you can estimate water costs. Ensure you provide all other expenses necessary to run your business, such as rent, utilities, salaries, marketing expenses, and maintenance.

A cash flow statement tracks the movement of cash in and out of your business, this includes bills, salaries, and other expenses. Inflow will include cash entering your business, such as customer payments, loans, and investments. Outflow will detail any cash that has been spent. So far, so simple.

Finally, the balance sheet provides a snapshot of your business’s financial position at a specific point in time. It shows what your business owns (assets), owes (liabilities), and the equity invested by the owners. Providing detailed financial projections will offer you a clear overview of your laundromat’s expected financial performance, helping you make informed decisions.

Set for success

Opening a laundromat requires careful planning and well-executed strategies, which can only be achieved through a solid laundromat business plan. This plan serves as a roadmap, guiding you through the different stages of developing your new laundry business, from setting business objectives and understanding your target market to securing finances and managing risks. By following the guidelines outlined in this blog, you can create a business plan that not only helps secure funding but also sets your laundromat up for success.

To see how CleanCloud can help your business, start a free trial or book some time with one of our expert sales team who will be happy to answer any questions.