What's New In the Laundry Business

The time has finally come.  Your customers just aren’t gravitating to your mega load washers like they did when you installed them in 1982.  Whether it’s to keep up with your competitor down the street or replace the prehistoric energy mongers you call dryers, most laundry owners need to upgrade their equipment at some point.

Surely there can be some sticker shock when shopping for new machines, which leads many to consider used equipment.  While the burden on the bank account is a strong motivator, other considerations besides price should be taken into account before signing on the dotted line.  Asking yourself these questions should help when its time for an upgrade.

How long do I plan to own my laundry?

If your laundry is going to be a fact of life for some time to come it may not be such a bad idea to think about buying new.  Today’s manufacturers offer very competitive warranties, up to 5 years in some cases, keeping your parts and repair cost near zero for the foreseeable future.  Buying new also means you won’t be tempted to replace your machines for at least 15 years, another benefit if you plan on staying in the business.  On the other hand, if the upgrade is simply to rid your store of your ancient equipment so it is more attractive to potential buyers, then good used equipment is probably a very good option for you.  Well maintained commercial equipment will run for 15-plus years and still do a good job.  The cost will typically be 40-50% less than new, meaning no large equipment notes saddling your business when it comes time to put it on the market.

What is my competition?

Many markets are mature at this point, meaning most laundromats aren’t the only game in town.  Your customers have options, and your equipment and its condition can be deciding factors.  If your closest competitor has brand new, high-efficiency equipment that offers time and cost savings then your choice may have already been made.  Customers may expect you to follow suit.  Laundries are like any business in that people will gravitate to the place that serves their needs best.  If like you, your competitors machinery isn’t the latest and greatest an upgrade with used might be just what you need.  Remember, customers have no idea when your equipment was built and a rebuilt machine can look just like a new unit.  Customers will appreciate your efforts to provide them a significantly upgraded facility and best of all it will take a lot less quarters to pay for itself!

Are depreciation and tax credits important?

While making money from your business is nice, many owners take advantage of more than just cash flow.  Depreciation on equipment is also a great benefit to owning a laundromat.  Talk with your tax advisor and make sure you understand what benefits new equipment can bring to your overall bottom line.  This is usually an area where buying new may suit you better than going used.  Furthermore, today’s focus on sustainability has led to many different rebates and taxes credits at both the state and federal level.  If buying new, make sure you take a look.

What can my business afford?

While everything we talked about is important, this question remains paramount.  Upgrading aging equipment, new or used is a good idea for all businesses.  One thing any owner needs to think about is how much the business can afford.  Many times, owners will talked into spending big money on equipment that that their business simply can’t support.  Owning a business is challenging, but it should also be enjoyable.  That enjoyment is lost when you are caught under a stressful debt load.  So, do your homework.  Do everything to forecast what you will get out of your investment.  Many upgrades will be rewarded with increased revenue and pay for itself in months.  Others, if poorly thought out can have some ugly consequences.

Whatever your decision, be sure to analyze all aspects of making a major equipment purchase and what it will mean for your business.  Done right, most equipment purchases will keep customers, new and old alike coming though your door and leaving satisfied for years to come.