Select Page

Blog

How a Laundromat makes 165% ROI year in, year out.

What’s the Plan, Stan?
This owner is hoping for a plan to make a 150% return on his investment. Let’s see how these assumed numbers work for him:

The business plan for a laundromat should begin with a section explaining the goals and purpose for the company, which should also highlight its unique value proposition.

Goals – As a business, it’s likely you’ll have a Financial Goal.
Let’s work it out
Revenue
If you have 20 machines
In use 20 times a day at $1 per wash
Your expected revenue will be $400 per day.
Production
Capable of 4000 washes between Major Services – a major service costs $500 – at 20 washes per day = every 200 days (less than $1000 per year ie est $20 per week, an overestimate)
Full Machine replacement after 20000 washes = $40,000 – provision for replacement will be $40,000 every 1000 days or 2.74 years or $14958 per year or $287 per week
Costs
Capital outlay of $2000 per machine
Rent $200 per week
and utilities $40 per week
+ Insurance is $1700 per year
Buy 20 new machines to start – capital outlay $40,000 under finance for 1 year costs $860 per week at 11% interest (simple interest)
Revenue $2800 per week
Rent -200
Utilities – 40
Insurance – 33
Finance -860 (year 1 only)
Service Fee – 20
Provision for machine replacement – 287 per week
Maintenance $100 per week
Per Week
Total Revenue $2800
Total Outlays $1540
Profit $1260 per week before tax

If your Financial Goal is a weekly ROI (return on investment) of 150%
What is your investment in this venture? Its $40,000
The figures above are paying off the machines in one year and providing for the purchase of new ones after 1000 washes ie 2.74 years.
After 1 year you have no Finance liability for your investment.

What is your business worth after 1 year?
What difference is there to your business if you choose a Sole Trader business structure vs a Company structure?

In 2.74 years you will have made 1260 per week before tax ie $65.520, fully paid off the machines and have recouped the $40,000 for use either in a new set of machines or a different venture. That’s IF you can sell 400 washes per week.

One way to calculate ROIC is:

65520 / 40000 = 1.64 or 164%

Using these figures you are getting a 165% ROI per year for the first year

Purpose / Unique Value Proposition – This is the aspect that sets the business apart from others

* 24-hour service
* Free wireless Internet access

Market Research – It may be necessary to conduct competitive research in order to choose a value proposition that fills a specific gap left by the other laundromats nearby.
Your competition isn’t your biggest problem as a business person – its consumer demand.
Always consider the 5P’s. Product, Place, Promotion, Price, and People

The competitive analysis also helps create realistic growth projections and expansion plans, which should also appear in the business plan. Its hard to know for sure what your competitor’s costs are but you can make assumptions and this is how everyone does it. We make assumptions with a basis in reality that we can rely on (to a certain degree)

The plan also needs to contain the startup costs of the operation, including renting the operation space, purchasing the washing machines and dryers, and obtaining the appropriate licenses and permits from the county
Business plans also need to include data about the monthly operating costs of the business in order to make revenue projections about obtaining profitability and paying back any pending business loans.

Another important section is the marketing plan, which includes specific actionable steps to promote the company, such as television commercials or special events.

Copyright 2017 Dianne Jewell All Rights Reserved

How a Laundromat makes 150% ROI every year.

So, what’s the plan Stan?

The business plan for a laundromat should begin with a section explaining the Goals and Purpose for the business, which should also highlight its unique value proposition.
Purpose / Unique Value Proposition – This is the aspect that sets the business apart from others
• 24-hour service
• Free wireless Internet access

Market Research – It may be necessary to conduct competitive research in order to choose a value proposition that fills a specific gap left by the other laundromats nearby.
Your competition isn’t your biggest problem as a business person – its consumer demand.
Always consider the 5P’s. Product, Place, Promotion, Price, and People

The competitive analysis also helps create realistic growth projections and expansion plans, which should also appear in the business plan. It’s hard to know for sure what your competitor’s costs are but you can make assumptions, and this is how everyone does it. We make assumptions with a basis in reality that we can rely on (to a certain degree)

The plan also needs to contain the startup costs of the operation, including renting the operation space, purchasing the washing machines and dryers, and obtaining the appropriate licenses and permits from the county
Business plans also need to include data about the monthly operating costs of the business in order to make revenue projections about obtaining profitability and paying back any pending business loans.

Another important section is the marketing plan, which includes specific actionable steps to promote the company, such as television commercials or special events.

Goals – As a business it’s likely you’ll have a Financial Goal – this owner wants at least 100% ROI each year.

Let’s work it out using some assumptions

Revenue
If you have 20 machines
In use 20 times a day at $1 per wash
Your expected revenue will be $400 per day.
Production
Capable of 4000 washes between Major Services – a major service costs $500 – at 20 washes per day = every 200 days (less than $1000 per year i.e. Est $20 per week, an overestimate)
Full Machine replacement after 20000 washes = $40,000 – provision for replacement will be $40,000 every 1000 days or 2.74 years or $14958 per year or $287 per week
Costs
Capital outlay of $2000 per machine
Rent $200 per week
and utilities $40 per week
+ Insurance is $1700 per year
Buy 20 new machines to start – capital outlay $40,000 under finance for 1-year costs $860 per week at 11% interest (simple interest)
Revenue $2800 per week
Rent -200
Utilities – 40
Insurance – 33
Finance -860 (year 1 only)
Service Fee – 20
Provision for machine replacement – 287 per week
Maintenance $100 per week
Per Week
Total Revenue $2800
Total Outlays $1540
Profit $1260 per week before tax

If your Financial Goal is a weekly ROI (return on investment) of 150%
What is your investment in this venture? Its $40,000
The figures above are paying off the machines in one year and providing for the purchase of new ones after 1000 washes ie 2.74 years.
After 1 year you have no Finance liability for your investment.

What is your business worth after 1 year?
What difference is there to your business if you choose a Sole Trader business structure vs a Company structure?

In 2.74 years you will have made 1260 per week before tax ie $65.520, fully paid off the machines and have recouped the $40,000 for use either in a new set of machines or a different venture. That’s IF you can sell 400 washes per week.

One way to calculate ROI is:

65520 / 40000 = 1.64 or 164%

Using these figures, you are getting a 165% ROI per year for the first year

His challenge is to sell 400 washes per week. That’s where the Marketing Plan and Marketing Strategy come in.

Copyright Dianne Jewell 2017 All Rights Reserved

Crossing the Streams / Friending a client on Facebook

Crossing the Streams / Friending a client on Facebook

Should you friend your clients on Facebook?

Nothing good can come from crossing the line from Professional to Friend where a client is concerned. Your Personal page is for friends and colleagues not clients. This is why you have a Business Page. Your business page is for client contact.
Don’t offer and never accept a friend request to and from a client.
Keep that sort of engagement for Linkedin.
Know the media you are using and whats appropriate for which one.
Breaking these very simple rules or guidelines can result in a blurring of the lines. They pay you for services rendered. Lets leave it that way.
Never ever ‘friend’ your workforce on Facebook, you simply don’t have that sort of relationship with them and it can get very messy indeed. Folks have been fired, ended up in court and lives have been ruined from crossing these very separate streams.