Everyone knows laundromats are a timeless business plan. This is a business that’s here to stay because everyone needs clean clothes and laundromats do just that. This sounds amazing from a revenue generation and business standpoint, but laundromats fail, too.
Despite an almost foolproof business plan, laundromats fail. One of the biggest reasons for a laundromat falling through is bad management. The owners fail to stick to a pricing plan and run out of clean water, electricity, and eventually customers to keep the business afloat.
From the little details to major influences, I will list down all the reasons why your laundromat might fall through and not turn out to be profitable.
How Successful Is Owning a Laundromat?
The laundromat gig is highly successful, with high staking ROI and profit returns. Yes, there are cons to this business, and sometimes they end up not lasting for the long term. But the ROI of the laundromat business is around 20%-25%.
This may seem like an insignificant figure, but in business terms, it’s an admirable amount to look forward to.
Let’s discuss some reasons due to why a laundromat fails to take off.
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14 Reasons Laundromat Businesses Fail
#1 Unskilled Staff
Starting the list with the most obvious one: unskilled staff. Every bigshot business pays intricate details to hire its employees. This means ensuring your business prospers.
Small businesses sometimes hire unprofessional staff, which later costs them heavily. The unskilled staff makes mistakes way too often which can annoy customers and the owners to lose a chunk of their business.
Initially, business owners feel they can train the staff, but it turns out to be the opposite, and they face a considerable loss.
The unskilled staff’s customer service and in-house tasks can demotivate prospects from returning, which leads to the eventual shutdown.
#2 High Prices
How you rate your prices to the quality of your service matters a lot.
If you have an old laundromat with beat-up equipment and shabby quality, but you charge a high price, then people will simply look for a new laundromat.
Customers only ally with businesses when they see a good quality being offered at less price. Not the other way around. And so high prices for poor service will only result in your business’s failure.
Now, if you charge a low price for the good quality offered, then you can expect some traction. After all, everyone’s always looking for the best possible bargain.
#3 Lack of Funds
A lack of funds can directly put you behind your rivals; who do have enough to compete in the market.
With impending expenses flooding your plate and a declining bank balance, you cannot possibly expect your small business to last long.
It’s best for the laundromat owners to decide to keep up to 6 months’ cost on standby.
Because if they fail to pay for necessities then how can they expect to last in the long run?
#4 Extra Expenses
Most laundromats are unsuccessful because not every laundromat has the same budget line. For instance, if a laundromat owner has a shop, then their mortgage or lease cost is subtracted.
This allows him to focus on other advertisement costs and is more profitable for his bank account. So, many businesses tend to fail solely because they have extra expenses which they cannot pay for.
Since they fail to pay for the expenses, they end up losing their business altogether.
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#5 Less Open Hours
You may be aware of it already, but let me repeat that the laundromat market is highly saturated. Therefore, sometimes business revenue just depends on how you deal with your customers. This includes your availability, too.
If you’re not open for as long or longer than your competitors, then chances are your business will fail eventually.
Sporadic open timings cause mistrust in customers, so they avoid coming to you, thinking you are probably not open. This could even be the case when you are open, but since customers don’t want to bet, they go for a safer option.
And once your customer goes to a competitor’s shop, then it’s over for you.
#6 Lousy Equipment
You need to have up-to-par machinery to keep your laundromat running. People don’t like trusting their laundry with worn-out equipment.
If you’re not using advanced technology-based machines then you’ll be lagging behind your customers and face loss. The business will get too expensive for you, and handling it won’t be possible.
Besides, old equipment means frequent breakdowns and shutdowns. When your equipment is out of service, you’ll be essentially losing customers.
This puts you further back from your competitors, and people find it a nuisance as well. Not only this but practically all of your profits will go into hiring a technician every other day.
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#7 Mortgage Cost
Starting a business isn’t easy on the pocket. Many entrepreneurs take a loan to start up their laundromats.
These loans eventually mean interest is added to them or, in this case, mortgage as well. These extra makeup costs also take a toll on your profit.
Especially if your profit margin is low for the first few months.
This means you need more business to meet these costs and cover your lease and rent, along with other expenses. In such cases, businesses usually end in a massive failure.
#8 Market Saturation
The laundry industry is filled to the brim. That’s to say, one wrong move, and you can expect your business to drown already. One of the major examples of market saturation is picking the wrong location.
Site is the pillar of your business, and for such saturated endeavors, it’s always best to pick a place where you can generate traffic and have no competitors nearby.
If you want to save yourself from the disasters of business failures, then identifying the best spot for market saturation should be your top priority.
One wrong move, and you can lose your entire start-up.
#9 Untidy Atmosphere
If it isn’t clear already, laundry is associated with cleanliness. Now imagine if your shop is dirty. How can you possibly expect customers to trust you to clean their clothes?
The answer is you can’t.
The atmosphere you create is what builds people’s trust in giving you their clothes.
Because it’s laundry, people pay heed to the tiniest of dirt in laundromats.
If you can’t keep your shop clean, people will start doubting your abilities and eventually lose their trust. The effect is a kind of chain reaction, you don’t care about your place means you don’t care about their clothes either.
#10 No Parking
A major reason why laundromats fail to work is that the business location is at a place where parking is either paid or not available.
This is a big turn-off for many customers.
According to a survey: 40% of customers in the US avoid going to businesses where parking is a challenge.
This is why you cannot leave out the parking factor when opening a laundromat. If you do well, then your business won’t stay for long.
#11 Rude Staff
Even though all you’re doing in a laundromat is making sure everything goes smoothly, respect is still a big factor in customer dealing.
Those who don’t pay heed to customer relations suffer in the long run.
Such businesses don’t immediately shut down, but they don’t earn as much as their fellow competitors because word gets out about their poor service.
If you hire staff that is rude and couldn’t care less to entertain your customers or give them value, then consider your business gone.
This is a long-term side effect, so even if nothing happens right off the bat, it doesn’t mean your business will end up prospering. Maybe the consequence will show its signs months or years after.
#12 Tough Competition
As I said, the laundry industry is a saturated endeavor to jump into. While it is easy to make a profit, you have to break through the game first. Otherwise, you’ll end up experiencing a significant loss.
Many aspiring business owners believe if a place has 5 laundromats, an additional sixth is also a possibility.
Now while this isn’t harmful, it can hinder your business indirectly. Too many options mean more competition which means your potential customers will be divided amongst 6 shops instead of 2 or 1.
This significantly decreases your chance of making a profit, and you eventually shut down your business.
#13 Mismanagement
Many businesses majorly fail because of mismanagement. This could be a range of financial, marketing, or sales management.
Almost 82% of businesses fail overall due to management.
Cash flow management is dire, and any negligence to it can result in an immediate shutdown. Also, if you have timing issues and the commute to your laundromat and house is too much, that can also pose hurdles.
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#14 Unstable Water/Power Supply
Lastly, many laundromat owners have unstable water supplies. This is the reason almost all laundromats fail. This and power supply as well.
Since your business is entirely based on these two crucial factors, any hindrance in them will affect your business directly. If there’s an issue with water or power, then expect to go nowhere with the business.
When planning for a laundromat, you should seriously map out every possible backup which could overcome any power issues you may face.
If these two aren’t taken seriously then you can practically kiss your laundromat goodbye.
Are Laundromats Going Extinct?
Despite all these negative factors, it’s a fact that laundromats remain to be one of the safest business options for entrepreneurs. The business stakes are impeccably high and the start-up cost is relatively low compared to other small businesses.
Laundromats have a success rate of 95%, which shows that despite their numerous downsides, there are still reasons to invest in laundromats.
So it’s safe to say that with its nature of being recession resistant; laundromats will not be going out of the business picture any time soon.
End Word
Laundromat is a single passive income stream that has many benefits as it has cons. That is to say, even though you might get disheartened reading this article, it is in no way to discourage potential laundromat owners.
This article has the sole purpose of telling you all the different precautions you need to take care of before opening a laundromat. You can still open your laundromat but just keep these few points in mind before you do so.
Opening a laundromat is not for the fainthearted. If you’re one to give up easily then your laundromat won’t last long.
Additionally, these start-ups have low points and high points. So just because things aren’t going well right now doesn’t mean they never will.
