Coin-Operated Laundry Shop Business

Posted by Kirhat | Monday, October 06, 2008 | | 2 comments »

Photo courtesy of Giando

At present, the cost of operating a laundry business depends largely on the operational expenses like supplies, rent, utilities and wages. It involves a lot of balancing act of lowering the cost and increasing sales to keep the business afloat. However, with economic downturns and market uncertainties, laundry business is evolving into a dynamic opportunity while maintaining its high rate of success for today’s investors.

Despite the continued fluctuation and instability of the Philippine currency, there is one thing that remained certain: Everyone has to wash clothes! With companies downsizing and people looking to create new identities for themselves, the idea of opening or transforming a typical laundry business into a coin-operated one emerges as an enticing option.

The fact that old-school laundry owners viewed this as a passive business has allowed the new era of laundry owners to blow the top off and create a wonderful, thriving business that has not even come close to peaking. The opportunity is just waiting out there for someone to cash in.

Unlike the usual laundry businesses where workers sit and wait for someone to walk through the door, the coin-operated laundry business has become a 'go-get-you' business. Meaning that there is no shortage of people who wash clothes, because it is one of the basic necessities of life.

If a prospective entrepreneur wants to buy an existing ordinary laundry shop, there is a need to be realistic and willingness to look at the business as what it could potentially develop into, which, hopefully, is the perfect laundry in the buyer's own eyes.

There is always room for improvement when a new owner of a laundry business shop takes over. This is one of the reasons why buying an up-and-running laundry shops is a better opportunity compared to opening a new one. Every location out there, with very few exceptions, is not being operated at even close to 100 percent of its full potential, and that means there is still a lot of room to make a lot more money by turning it around and go on to have a financially rewarding experience.

Washing Machines

One of the first things to improve and purchase are washing machines. If the prospective entrepreneur wants the lowest price on machines, then he or she should expect minimal support. However, if the entrepreneur wants someone to watch his or her back and make sure that they are managing their business and keeping it on the right track, then they are not going to get the cheapest price.

Some of the possible sources of coin-operated washing machines aside from appliance centers are eBay.ph and sulit.com.ph. However, many distributors on these sites seem to only want to sell their machines which could cost at least PhP 100,000 each. Hence, it is important to do a little research so as not be oversold by anyone. The key here is trust! Do research and check the credentials of distributors and brokers before deciding who is the most qualified and who has the best reputation.

There are plenty of good people in the distribution business, but this is a manufacturer-driven industry. This is the reason why trusting a distributor with a lot of experience in the industry and a successful track record with its customers should be key to determining which is best.

Building a business takes time, and the distributor should help guide and not try to jam the buyer with new washers and dryers all at once.

Investment Cost

When large amount of money is involved, due diligence is required. For example, a prospective entrepreneur wants to buy an existing ordinary laundry shop for PhP 400,000.00 and the bank wants 30 percent as a down payment plus some outside collateral. If it is assumed further that the entrepreneur has the money to put as down payment and the equity to do the deal. There is still a need to be careful because there is much more involved with getting the deal done. There is a great potential of committing a mistake of not having enough capital and turning the business upside down.

The bank is only one part of the deal, and although that is a big part of making it happen, there is still a lot more money needed to pull the deal together before the business can be successful. Listed below are many of the different points that will require additional cash:

  • A rent deposit, which may include up to three months worth in some cases.
  • Utility deposits — in many cases, the price charge by both Meralco or Electric Cooperatives and Water District Offices will vary depending on the location.
  • Coin changer, which may require somewhere between PhP 5,000 to PhP 10,000 per week.
  • Soaps and supplies - This is required if the shop owner is planning to sell over-the-counter goods.
  • Some cash set aside for marketing, and coming out of the box.<.li>
  • Most laundries do not have security cameras, and it is highly recommend to get one.
  • Legal fees, which depends on how complicated things get.
  • There might be be some closing costs and/or bank fees, which will vary on each deal.
  • Miscellaneous expenses, which can include mops, buckets, cleaning supplies, paint to spruce up the place, stereo or MP3 players, television, sofa sets and more. This normally range between PhP 30,000 to PhP 50,000 one-time investment cost.
Doing the math will give a prospective entrepreneur a clearer picture of how much money is still needed to buy an existing coin laundry business.

It is not advisable to make a deal if the prospective entrepreneur is not financially sound otherwise the dream of owning a coin laundry might turn out to be a financial nightmare.

Possible Income

With both the average family and business establishments washing between 15 to 25 kilos a week, it is easy to see just how much a coin-operated laundry business can gross in the same period. If the business is catering to about 50 customers a week at PhP 50 per 5 kilos (each machine can wash at most 5 kilos in one setting), the business can gross between PhP 7,500 and PhP 12,500 on washers and the same amount could also be generated if customers also use dryers.

This is excluding the possibility of a full-blown, over-the-counter vending and service program, and items such as food, bags, phone cards, Internet terminals and bulk sales products (such as big boxes of soap and large bottles of bleach). There are also drop-off service and commercial accounts to go after. All of this, in some cases, could mean an additional cash flow of up to 30 percent of the gross income.

An ordinary laundry shop may offer as low as PhP 25 per kilo, but the coin-operated laundry shops offer PhP 20 per kilo for both washing and drying plus the added feature that the customer is now assured that their clothes will not get lost. For the owner of a coin-operated laundry shop, saving can be generated terms of wages since the company can employ only 1 person to maintain the whole operation.

Known Issues

  • Unlike the ordinary laundry shops, coin-operated laundry businesses requires larger space, at least 100 square meters.
  • Only a few establishments in the Philippines are doing this kind of business and could mean not enough references can be made to develop a comparative business plan.

2 comments

  1. Kirhat // October 8, 2008 at 1:55 PM  

    This was a post made by Cookie Sunshine on October 8, 2008, 10:41 AM, but was wrongly placed in another topic:

    My father owned coin operated laundromats when I was a little girl. I loved it when someone put too much detergent into a front loader and suds would come rushing down the isle. He didn't like it so much.

  2. rohith grank // March 12, 2014 at 3:39 PM  

    Excellent post! I must thank you for this informative read. I hope you will post again soon.
    Kind regard
    Laundry Business In India

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