My friend Dave “Laundromat Millionaire” Menz always says that laundromats are the best small business in America. I would agree with him on that. There are a lot of great reasons to own a laundromat, but there are also some cons. My rough start in this industry exposed me to some of the cons the hard way early on. I’ll bring them up here so you’re prepared the easy way.
Laundromats are a great business with many attractive qualities for savvy investors and business owners. However, there are also some negatives to the business to be aware of. Following are 3 pros and 3 cons to owning a laundromat business.
Pros to Owning a Laundromat Business
I made an in-depth video of the pros and cons of owning a laundromat business. You can watch that video below, but I want to highlight some of the pros and cons here in this blog post so that you can decide if owning a laundromat is right for you.
1. High Cash Flow
The main reason most laundromat owners love laundromats is that they are a high cash-flow business. If you’ve ever read the book Rich Dad, Poor Dad, then you know that cash flow is king and is the path to personal and financial freedom. Laundromats can help you reach your cash flow goals quicker than most other investment vehicles, including stocks and real estate investments. This freedom that laundromats can provide you is reason enough for many investors to take a second look at laundromats.
2. Flex Time
While we’re on the subject of personal freedom, another huge perk of owning laundromats is the flex time that owning this type of business affords the owner. Laundromats don’t require their owners to be present 24/7. In fact, when set up correctly, owners can expect to spend about 5 hours per week on average managing their laundromat. You have the freedom to earn money while you’re doing something else! Even more attractive is that those 5 hours per week can be at times that are most convenient for you. If you have to schedule it around your full-time job or around traffic hours, no problem!
This flex time can be enhanced even further when utilizing a management tool such as Cents. Cents is a business-in-a-box solution for laundromat owners to minimize their time spent on their business while maximizing the impact of that time on the growth of the business. Cents gives you the tools you need to ensure your business is running optimally while giving your customers the best experience in town.
3. Wealth-Building Potential
Beyond the cash flow we already mentioned, laundromats have the ability to accelerate wealth building in a few ways. First, you can build equity in your business that creates value towards your net worth. You can do this by paying down loans (using revenue generated by the business) and/or by increasing the net income of the business. Second, laundromats come with great tax advantages. Speak with your CPA about this but running expenses through your business is a great way to reduce your taxable income. You can also write off depreciating assets like your washers and dryers. Third, laundromats are scalable. Whether that is expanding into more laundromats or adding services such as fluff and fold or pick-up and delivery, there are ways to scale your laundromat business to rapidly increase your wealth. Software solutions like Cents make it easier than ever to scale your business. And Cents grows with your business. Wherever you start and wherever you grow to, Cents can meet you where you’re at and take you where you’re going!
Cons to Owning a Laundromat Business
While there are many pros to owning a laundromat business, there are some cons to be aware of, as well. Let’s talk about a few of them.
1. Laundromats Have a Physical Location
The trend lately has been to start and automated, online business that is basically just a cash crop. Laundromats are not that. They have a physical location, they utilized machines that can break, and you’re dealing with people live and in-person. These are not necessarily bad things, but if your expectation is to spend minimal time at your laundromat and have minimal problems, you will probably be disappointed. Machines break. Whenever you deal with people and their stuff, you’ll have some problems. Laundromat ownership is simple, but it’s not always easy. Be prepared for that and you should be ok.
2. Cash Businesses Are Difficult to Leave
Going back to the pros side, laundromats are cash businesses. This is very attractive for many owners for a variety of reasons. However, the cash nature of the business is double-edged. It can act as a tether to you and your business. If you love taking long vacations you’ll probably need to adjust your business model a bit. Trusting even a close family member with cash collections can lead to problems or mistrust. However, utilizing a card or app payment system with a business management software like Cents will get you back on the road, or sitting by a lake, or lounging by the ocean, or whatever you like to do for fun.
3. Laundromat Customer Demographics Can Be Tougher
Finally, one con to consider is the demographic of people a typical laundromat serves. Let me start out by saying the people are the real pro of owning a laundromat. Most of the people that will frequent your laundromat will be great. It really is what makes this business so special. However, with that said, not all people in your laundromat’s neighborhood will be gems. Laundromats tend to attract vandalism, homeless people, and transients. Usually it is because laundromats are indoors and unattended. It can be a tricky balance between empathy for those with needs and keeping your store clean, safe, and reliable for your customers. But if you can manage to do that, you’re on your way to a profitable and fulfilling business!