Pros and Cons of Purchasing an Existing Laundromat vs Building Your Own
If you’re looking to invest in a laundromat, there are plenty of things to consider. One of the first things you’ll want to decide is whether you want to purchase an existing laundromat business or build your own. Both options present a number of pros and cons that investors should consider.
Buying an Existing Laundromat
PRO: Already generating cash flow
The goal of any business is to make a profit and, assuming you’ve done your research, you already know that the laundromat is profitable and what to expect in terms of finances. That means taking over an existing laundromat is less of a risk. Having the financial information and business plan in place means you can act more as a manager and work to grow and improve the laundromat, instead of starting from the ground up.
PRO: Easier to get financing.
Existing collateral, steady cash flow, and a proven business model make it much easier to get financing from banks and lenders, whether it’s to expand or purchase the business to begin with.
CON: Not exactly what you want.
While you may have an established cash flow and employee base, it's unlikely that the existing laundromat already looks and operates exactly how you want it to. You may be looking at a “fixer upper” type of laundry facility with outdated laundry equipment in need of upgrades and repairs. You might also inherit some employees and customers that are disgruntled by the change in ownership and management style that you’ll have to work to win over.
CON: High purchasing costs
While you won’t have to deal with as many unknowns when purchasing an existing laundromat, you’ll probably be facing a large purchase cost. That’s because in addition to the building and some equipment, you’re also paying for an existing customer base, branding, marketing, business plan, design work, and more. Any initial renovations and upgrades will also increase your costs to get started.
Building a New Laundromat
PRO: It has the most up-to-date equipment.
Opening a brand new business means there’s brand new equipment in it. Generally there are financing options for your laundromat equipment, which means less cash up front and more cash to put into launching your business. You’ll save money over the first few years of operating your new business because the new laundry equipment comes with warranties and is in good working order.
PRO: It’s all yours.
For many business owners, the best part of starting a new business is the thrill and pride that comes with turning it into the business they've always dreamed of. From the location to the equipment, starting a new laundromat business will allow you to put everything you want into place from the get-go, without having to worry about employees, customers, and processes that may have ties to the old owner or business model.
CON: More work to get it started.
Unlike an existing business, your brand new laundromat will have no customer base, marketing, employees, or existing cash flow. It’s up to you to put in the work to grow your customer base, without any kind of positive reputation or track record. You’ll also have to take care of all the licensing, permits, and other legal requirements that come with establishing a new business.
Ultimately it’s up to you to weigh the pros and cons and decide what the best option is for your laundromat business. Whether it’s starting from the ground up or buying an existing facility, Martin-Ray Laundry Systems is here to help new investors every step of the way.