One way to invest in your laundromat is to take out a small business loan. Once you receive funding, you could use it to afford day-to-day expenses, purchase equipment, or pay for inventory. However, there are no limits on how you can utilize additional funding for your laundromat. In this post, we’ll explain how to select the right funding option for your laundromat. Then, we'll provide actionable ideas on how you can use a loan to improve your business.
Laundromat Financing OptionsSelecting a funding option for your business is an important decision that shouldn't be taken lightly. You'll need to weigh the interest rate, funding amount, terms, and lender's reputation, among other factors. In addition, you'll need to ensure that the type of funding fits your financing needs. Before you apply for financing, educate yourself on these additional working capital options:
Term LoansWhen you take out a laundromat business loan from a reputable lender, you'll receive financing with a set repayment term.
Small Business Administration (SBA) LoansIf you don't qualify for traditional funding options, you can apply for a loan from the SBA.
Credit CardIf you aren't ready to apply for a loan, you may consider applying for a credit card. Although credit cards provide convenience, it's pivotal that you pay off your balance each month. If you go into debt, this will hurt your credit score, making it difficult to qualify for a loan.
Business Line of CreditBusiness credit lines are a set funding amount that you can borrow against and repay as needed. If you need funding on an ongoing basis, this could be your best funding option.
5 Ways to Use a Small Business Loan for Your LaundromatBefore you take out a laundromat business loan, you should evaluate how having access to financing can elevate your laundromat. While some business owners take out a loan simply to have additional cash flow on-hand, other business owners
1. Buy Additional MachinesAs a laundromat owner, you should consider how frequently you’ll need to repair or replace your machines. A high end commercial washing machine will typically last for around 8,000 cycles or 10 to 14 years. Commercial laundry machines can vary greatly in price, but you should expect to pay around $1000 for a new machine. Depending on how much space you have, you may want to purchase additional machines so that you can serve more customers. Even though investing in machines is expensive, you can pay for them with equipment financing, then increase revenues in the future.
2. Improve Your SpaceReplacing or purchasing new washers and dryers is only one part of improving your laundromat space. There are other developments you can make to create a welcoming and useful space for your customers. Ask yourself, does your business's interior space need to be updated? A coat of paint on the walls or replacing the flooring can make a room look brand new. Other small changes that can make a big difference include:
- Adding a a seating area
- Installing plugs so that customers can charge their phones
- Purchasing ending machines
3. Open Another Laundromat LocationDepending on where your business is located, opening a new location for your laundromat can cost hundreds of thousands of dollars. When calculating the cost of expansion, you’ll need to consider costs such as:
- An additional lease
- Renovation expenses
- Business insurance
- Necessary equipment.
- Hiring more employees
4. Offer New ServicesWith so many laundromats nationwide, it’s crucial that you set your business apart from the competition. You can successfully grow your business by making laundry more convenient for your customers. For example, in 2016, about 61 percent of laundromat owners reported an increase in delivery services. If you aren’t already offering services like this, you’re missing out on potential profit.
5. Hire Additional StaffAs your business grows, you’ll need to hire more employees to assist customers and provide additional services. Once you receive a small business loan, you can use funds to hire more employees. When hiring additional employees, you’ll also need to consider costs associated with that. Common hiring expenses include insurance, training, benefits, and other costs.
6. Increase MarketingOnce you make your laundromat a clean, customer friendly location, you’ll need to let people know about your services. Using your small business loan, you can create a marketing plan, including investments such as:
- Social media marketing
- Radio advertisements
- Email marketing