laundry business

How Much Money Do You Need to Start a Laundry Business

 

Doing laundry can be a huge chore, especially when clothes seem to pile more quickly than you can get through them. To top it all off, many washing machines in the Philippines don’t come with built-in dryers, and even if they do, they aren’t all that reliable. Hang-drying, when the rain showers fall erratically, can be a pain, especially when there’s no one at home to save semi-dry clothing from being drenched once again. And there rarely is anybody at home -- Filipinos are now more focused on their careers, businesses, and other work-related activities that they can no longer spare the hours it takes to do a load of laundry multiple times a week. 

As a result, laundry businesses have been booming as of late. They flourish in virtually every part of the metro and have been seeing demand in rural districts as well. As a result, it’s always a great time to start a laundry business of your own. Along with its demand, laundry services also don’t require significant technical skills, so it isn’t a challenging industry to enter. To help, we at Gobear have come up with an estimated breakdown of how much money you need to prepare to establish a laundry service deal. You mnay decide to save, apply for a personal loan or maximize your credit card limit to fund this investment. 

 

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Laundry equipment

To save as much time and electricity as possible, it’s pertinent that you’re well-equipped with high-quality laundry equipment made for professional use. Most washing machines used in this type of trade are not ordinary automatic washers. You need to choose an appliance that can handle a large capacity of loads with a decently-sized drum and can finish a cycle in a short amount of time. It may or may not come with a built-in dryer. If you choose a machine without a dryer, consider purchasing a separate one with a built-in sensor that can detect moisture to prevent the engine and clothing from overheating. 

Apart from that, it would be best if your machines are capable of operating for over five hours a day. Traditional appliances cost about Php20,000, but if you plan to open a self-service laundry service, then a modern washer or dryer with card or coin inserts are sold for Php50,000 and above. Some equipment packages range from Php500,000. It includes three sets of stackable dryers and washers, which is a good amount to start a business. Retailers make things easier for you by providing set-up and renovation services. 

 

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In addition, you’ll want to have steamers and irons to iron clothing. The usual rate per load doesn’t include pressing services, but some customers are willing to pay extra in exchange for crisp clothing, so it’s a good idea to have the equipment on-hand. If you’re ready to go the extra mile -- and if your budget can stretch further -- then consider purchasing a dry cleaning machine as well. There are a lot less dry cleaning services than regular laundry services available, but they’re in high demand, especially during the prom, wedding, and debut seasons. 

Business permit

Budding entrepreneurs in the country need to face legal and bureaucratic fees associated with business set-up costs. You’ll have to register your business with the DTI if it’s an independent venture and with the SEC if you’re a corporation or working with a partnership. Afterward, you’ll need to register for a business permit with your municipality. Depending on your location, you might need to set aside around Php40,000, as the Mayor’s permit alone can cost around Php12,000, which you need to pay upon submission of the business transaction form. Apart from that, you’ll need to visit the Bureau of Internal Revenue (BIR) and pay for a Certificate of Registration and TIN.  These are required so that your business can have receipts printed. Note that you can only legally operate a business upon completing these requirements, so you should start processing everything you need as soon as possible.

 

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Rental costs

If you plan to open a home-based laundromat, then you can save a lot on rental fees. Otherwise, you may want to allot around Php25,000 monthly for rent. Most landlords require two months’ deposit, a one-month advance cash payment, and postdated checks for the remaining months. As a result, your initial rental fee would cost anywhere between Php75,000-150,000. However, the landlord will refund your deposit after your rental cycle. The base price for rent may increase depending on your location, so take the time to scout for a good deal. Prices may also increase every year, so make sure that you discuss that possibility with your prospective landlord and try to negotiate a lower yearly rental increase. 

Renovation fees

A laundry business space needs to have the right plumbing system for water supply to be generated and flushed out systematically, as well as proper ventilation for safety. If you’re opening a self-service laundromat, then you’ll want to have a waiting area for customers to sit while waiting for their laundry to finish comfortably. If the place you’re renting doesn’t have the right system for you to operate, then you’ll want to allot about Php200,000 for renovation costs. This price includes a provision of a unique plumbing and electrical wiring structure. 

 

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Salaries of employees

Ideally, you want your laundry business to be well-staffed and ready to take on an influx of orders. There are many ways you can go about this, depending on the type of service that you offer. Ask yourself the following questions: how far are you willing to deliver? Is your laundromat self-service or not? Do you intend to personally work or hire staff to work on every non-managerial function? 

One cashier, one staff for delivery and assistance, and one driver is a great start. But if you’re only delivering to nearby areas, then you might be able to forego a driver and hire an additional member to work on laundry instead. Alternatively, if you’re starting a self-service laundry business, then one to two staff members will be enough for the first three to six months of operation. 

As your business grows, you can gradually add personnel depending on the demand. The minimum wage in the metro is about Php12,000 plus benefits for 25 days of work and is the average salary of a laundry shop employee. Always pay your workers on time and treat them well to avoid legal complications and high retention rates.

 

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Monthly bills and taxes

Business with gross annual sales not exceeding Php1.5 million will have to pay a percentage tax. It usually equates to about 3-5% of your monthly profit, depending on your business’ bracket. On the other hand, monthly bills highly depend on how much energy your shop uses and how energy-efficient your appliances are. For a shop with 5-10 machines and an air-conditioning system, electric bills can range from Php20,000, while water bills can sum up to Php15,000 per month. Consequently, it’s vital that you choose machines that don’t waste electricity and water, as it saves you money and helps the environment at the same time. 

Contingency cushion

Every laundromat needs to have a contingency plan in case a machine breaks down, or an employee quits, and you become short on staff. Since you’re working with a lot of appliances, set aside some money for maintenance fees and repairs. You can set up a fund for this now or wait until you’ve started your business before setting aside a percentage of your income for maintenance. On the occasion that a staff member quits, have a list of contacts on-hand and prepare an in-depth training program that can get them onboard to their duties as soon as possible. 

 Estimated Total Cost of a Laundry Business

Accounting for all the expenses mentioned above, you’ll need more or less Php900,000 to start a laundry business, including renovations. However, actual pricing depends on where you live and how you scale your business. For instance, if you plan on keeping a home-based family-operated service where members of the family contribute in their free time,  then you can save significantly more money. That eliminates the cost for rent, renovation, and staff, but you’ll also earn less as you can take less orders. 

Don’t be too pressured to go all-out, especially if this is your first business venture. It’s always a good idea to test the waters before going on a full dive, lest you find yourself in a cold sea with no fish. Make sure your area has enough interested customers, advertise your services to neighbors and online, and put in the effort of making your venture work out. 

 

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Like any other business, it isn’t easy to build a laundromat from ground-up. But knowing how much money you need is the first step in creating a realistic plan that can help you re-scale or adjust your goals. Note that the pricing mentioned above are merely estimates based on research, but actual expenses may either be higher or lower, so don’t use the exact values for your business plan. Check your area for rental, electricity, and water prices, keep a lookout for sales, and ask around for fully functioning second-hand equipment. Many things can help you save on start-up fees. 

If you don’t have enough cash on hand, apply for loans from Citibank and other lending institutions, and compare loan packages on https://www.gobear.com/ph/personal-loan. Stop hesitating and start making your entrepreneurial dreams come true.