Washing Machine Business Plan
When people search "washing machine business plan," they're almost always talking about a laundromat business plan. (The other interpretation - selling washing machines as a retailer - is a different category we don't cover.) This article walks through what actually goes in a laundromat business plan and what lenders care about.
It's part of the Laundromat Business guide.
When you need a formal plan
You need a formal plan if you're applying for:
- SBA 504 financing for laundromat acquisition or new construction
- SBA 7(a) for working capital plus equipment
- Conventional commercial mortgage on a laundromat property
- Equipment financing on a major refresh
Most laundromat operators acquire or refresh with significant financing, so the formal plan is the rule, not the exception.
What lenders actually look at
Laundromat lending is a real estate-flavored process. Lenders read these sections carefully:
- The deal summary. What you're buying or building, where, how much, and what for.
- The sponsor's (your) financial profile. Net worth, credit, prior business experience.
- The market study. Local population density, household income, percent of housing without in-unit laundry, and existing competition.
- The pro forma financial projections. Year-by-year revenue, expenses, NOI, and debt service coverage. Lenders typically want 1.20-1.40x DSCR at stabilization.
- The cap rate justification at the purchase price.
- The operating expense ratio (utilities, maintenance, staffing, software, marketing). Well-run laundromats run 50-70% of revenue in operating expenses.
- The equipment age and replacement schedule. Lenders care about how soon major equipment refreshes will hit.
Sections lenders skim:
- Industry overview
- Long marketing strategy sections (laundromat marketing is mostly local signage and Google Business Profile)
- Generic SWOT analyses
- 5-year customer growth projections (laundromat demand is mostly fixed by neighborhood)
The lean version (1-2 pages)
1. The deal
| Item | Value |
|---|---|
| Address | [physical address] |
| Type | Laundromat, [number] washers, [number] dryers, attended/unattended |
| Total square footage | [sq ft] |
| Current annual gross income | $[X] |
| Current annual NOI | $[X] |
| Asking price | $[X] |
| Current cap rate | [X]% |
2. The market
| Item | Value |
|---|---|
| Population within 1 mile | [X] |
| Population within 3 miles | [X] |
| Median household income | $[X] |
| Percent of nearby housing without in-unit laundry | [X]% |
| Number of competing laundromats within 2 miles | [X] |
| Distance to nearest competing laundromat | [X] mi |
3. The pro forma
| Line | Year 1 | Year 2 | Year 3 | Year 5 |
|---|---|---|---|---|
| Gross income (washers + dryers + ancillary) | $X | $X | $X | $X |
| Vacancy / non-paying machines | -$X | -$X | -$X | -$X |
| Effective gross income | $X | $X | $X | $X |
| Operating expenses | -$X | -$X | -$X | -$X |
| NOI | $X | $X | $X | $X |
| Debt service | -$X | -$X | -$X | -$X |
| Cash flow | $X | $X | $X | $X |
4. The operating expense breakdown
| Category | % of revenue |
|---|---|
| Water and sewer | 8-15% |
| Electricity | 4-10% |
| Natural gas (for dryers) | 8-15% |
| Maintenance and parts | 5-10% |
| Insurance | 2-4% |
| Property taxes | 3-8% |
| Software and POS | 1-3% |
| Marketing | 1-3% |
| Staffing (if attended) | 5-15% |
| Misc (legal, accounting, supplies) | 2-4% |
| Total | 40-70% of revenue |
The utility line (water, sewer, electricity, gas) is the dominant operating cost for laundromats. Together they typically run 25-40% of revenue. Operators who don't watch this carefully see margin compression.
5. The financing structure
| Source | Amount | % |
|---|---|---|
| Down payment | $X | X% |
| SBA 504 / 7(a) | $X | X% |
| Conventional bank loan | $X | X% |
| Seller financing | $X | X% |
6. The DSCR
The single most important metric:
DSCR = NOI / Annual Debt Service
Lenders typically want 1.20-1.40x at stabilization. A laundromat with $120,000 NOI and $90,000 annual debt service has a DSCR of 1.33x, which most SBA lenders will accept.
7. The equipment age and replacement schedule
Laundromat equipment has 12-20 year lifespans. Lenders care about whether the existing equipment is at the start, middle, or end of its life cycle. A laundromat with 15-year-old machines is going to need a major refresh in years 1-3 of your ownership, and the lender will want to see that planned in your pro forma.
8. The risks
"Main risks: (1) utility cost increases compressing margin; (2) major equipment failures requiring unplanned capex; (3) competing laundromat opening within 2 miles; (4) gentrification of the surrounding neighborhood reducing the customer base over time; (5) landlord lease renewal terms (if leased)."
The formal plan structure
For an SBA loan, expand the lean plan into:
- Executive Summary
- Property Description
- Market Analysis (demographics, competition)
- Operations Plan (staffing model, hours, software, marketing)
- Financial Projections (5-year)
- Equipment Schedule and Replacement Plan
- Sponsor Financial Profile
- Funding Request and Use of Funds
- Repayment Plan
- Appendix (sponsor resumes, environmental Phase I, property condition report, comparable sales)
What we'd actually do
For a first-time laundromat buyer:
- Find an existing laundromat for sale through a broker who specializes in laundromats
- Get the OM and review the financials
- Build the lean plan with both the seller's claimed numbers and a more conservative version
- If both versions support 1.25x+ DSCR at the asking price with your planned financing, the deal might be worth pursuing
- Hire a CPA to review the pro forma before submitting it to a lender
- Hire a commercial real estate attorney for the purchase agreement
- Plan for 90-180 day closing process
Next steps
Or back to the Laundromat Business guide for the rest.