Start, Run & Grow a Laundry Business

A laundry is a place where clothes (and other home textiles such as bedding and curtains) are washed and dried.

Market Need
A laundry caters to people who don’t have a washing machine, don’t have time to do their washing or are too lazy to do their own washing.

There are two business models adopted by laundries: self-service and staffed (or serviced).

A self-service laundry (aka coin-operated laundry) is where people wash and dry their clothes without any help. The machines are usually coin operated. A self-service laundry will usually have large amount of washing machines (usually Speed Queens) and dryers, that is because this is a numbers game. It charges significantly less than a staffed laundry, so you need more machines to make this a successful business.

How this works is there will be self-service washing machines with a certain capacity (let’s say 7.5kg) and people will pay per load, like you pay for a game at Wonderland. People have to bring their own washing powder or they can buy at the laundry. And they will usually have change available to convert your notes to coins.

In a staffed laundry, the owner basically wash other people’s clothes much in the way they would their own. People drop off their clothing, and laundry staff washes and dry it. Staffed laundries have become really popular because not everyone wants to or has the time to wait around for their clothes to be finished. A staffed laundry has another advantage in that it can be started with consumer level washing machines as it charges significantly more money. A staffed laundry can also have another advantage over self-service in that clothing can be tried on a washing line instead of a tumble drier which many people don’t like to be used on their clothes.

How this works is that people will bring in their laundry. There would be a price per kilogram (kg) for washing. There would be a price per kg for drying and folding. And a price for ironing per kg. Or a price for two (drying and ironing) or all three (wash dry and iron). As I have stated before a staffed laundry charges significantly more than a self-service as these are labour intensive tasks, the staffer needs to be paid and the laundry need to make a profit. It is not unusual to pay per kilo here what 7.5 kilograms will cost you in self-service. Staffed laundries also have special pricing for large items and items that require more care. Such as duvets and curtains. Some people use laundries for this purpose only due to the work involved.

Target Market
People who don’t have a washing machine
Working / Busy People
Lazy People
Hotels, guest houses, sports clubs, companies and other places with bulk laundry requirements.

This is a business that offers a commodity service, the market does not perceive any differentiation. Laundries all provide the same purpose and there is no difference in the benefits between them.  A coin operated laundry using Speed Queens will do the same thing as another laundry with the same equipment. How do you compete if you do have competition that offers the same as you? This is not a business where you can have a premium or differentiating strategy, everybody knows how to wash clothes, they just don’t have time or they too lazy and paying someone else to do it for them is only worth so much, that is why laundries often charge as little as possible. What can you do? The best would be to get a good location, easily accessible. I’ve seen some laundry have a special machine to wash pet clothing, some offer extra services such as dry cleaning (which is outsourced), alterations etc.

Budgeting and Forecasting
While it does exactly the same these two different models have different requirements and different paths to profitability.

Requires coin-operated washing machines, and very little staff. One person is sufficient to run this business to sell washing powder and give change. Requires much more investment in the way of machines. Con-operated machines cost more as well.

The forecasting works a bit differently as well. If you have five machines and five dryers and each charge R25 for a 30 minute cycle this means that the maximum you will make on those ten machines is R500 per hour. It is obviously not going to run the whole day at full capacity but you need to get as close as possible. Your location is very important in this case as you depend on numbers. On the other hand because it is so efficient to operate it is not unheard of for coin operated laundries to operate 24 hours.

You have to figure out how much electricity it costs to operate those machines per cycle and how much water the washers use. Other than that your rental and staff cost. Your other profit driver will come from detergents, maybe you can sell fabric softener alongside the washing powder as well as other refreshments.

Staffed Laundry
A staffed laundry can be operated with less machines but will require more manpower. Here you need to know your costs per kg. Water, electricity, washing powder, labour. Yes, you can still use time as a guide, as in how many kg can you wash, dry and fold in an hour. Take what you are paying your labour per hour. Take your rent divide by operating hours to get your rental cost, add all together to get your cost price and add markup. Make sure you know how much you are paying for water.

Operations & Management: Growth
These two businesses differ in which they can be grown as well.
Self-service: A self-service laundry can be easily grown by adding more machines or more locations which significantly less effort than a staffed laundry.
Staffed: A staffed laundry is more challenging to grow because it has the human factor. A human can only iron and fold so many clothes in an hour, some humans will be able to fold more than others.

Location, Location
Sales channels are very important in business, especially one that requires a lot of foot traffic but does not have the turnover to be able to rent space in a place with a lot of foot traffic like a mall. Ideally at a business place in a densely populated area, maybe a petrol station or a neighbourhood strip mall. One of the best locations for a self-service laundry is inside an apartment block. Some apartments have retail space on the ground floor perfectly suited for this.

Staffed Laundry
A staffed laundry does not need that many clients to be successful and can even be operated from home or from a smaller neighbourhood than self-service. You can collect, wash, dry, iron, fold and deliver and charge a significant premium for this service. I have seen places that charge per kilo of wash, dry and iron what a coin operated machine and tumble dryer costs wash and dry for 7.5 kg. That means R50 per kg for this service. If you have a 6kg washing machine then you can potentially gross R300 per load. If you drying it naturally you won’t even be using electricity for drying.

Marketing Activities
This is a local business. Nobody is going to drive very for to your laundry and this has to be taken into consideration when marketing. Gumtree has replaced the yellow pages, but marketing in local Facebook groups is even better or if you have local WhatsApp groups that will work as well.

As you can see both business models has its pros and cons. Self-service cost more to set-up but is less-labour intensive and needs a busy location, whereas a staffed laundry will cost less to setup, will have significant higher markup but is more labour intensive.