Starting a laundromat business in Ontario can be a profitable venture if done correctly. As with any business, it takes careful planning, research, and execution to ensure success.
In this article, we cover the steps to start a laundromat business in Ontario, including little-known sources of funding to start your laundromat.
Step 1: Conduct Market Research for Your Laundromat
Before starting any business, it is essential to conduct market research to determine the viability of the business idea. In this case, it means determining the demand for laundromat services in your target market.
Doing market research for your laundromat in Ontario can include the following steps:
Identify the Target Market: The second step is to identify the target market for the laundromat business. This could include college students, families, apartment complexes, or business travelers. Understanding the demographics of the target market is crucial in developing a successful marketing strategy.
Analyze Competitors: The third step is to analyze the competition in the local area. This includes identifying the number of laundromats in the area, their services, pricing strategy, and customer reviews. This information will help determine the market demand for a new laundromat and how to differentiate the business from existing competitors.
Location Analysis: The fourth step is to conduct a location analysis of potential locations for the laundromat business. Factors to consider include accessibility, population density, proximity to competitors, parking, and foot traffic.
Determine Pricing Strategy: The fifth step is to determine the pricing strategy based on the services offered and the target market. Pricing should be competitive with other laundromats in the area but also offer value to the customers.
You can gather information through surveys, online research, and speaking to potential customers.
Step 2: Create a Business Plan for Your Laundromat
Once you have determined the demand for laundromat services, the next step is to create a business plan.
A business plan should include the following sections:
Executive Summary: This section should provide a brief overview of the business, including the purpose of the business, target market, competition, and financial projections.
Company Description: This section should provide more detailed information about the business, including the legal structure, history, and mission statement.
Market Analysis: This section should include an analysis of the target market, including demographics, trends, and competition. It should also include information on the location of the laundromat and the factors that make it an attractive location.
Services and Products: This section should describe the services and products offered by the laundromat, including the type of equipment, pricing strategy, and any additional services offered such as wash and fold or dry cleaning.
Marketing and Sales: This section should outline the marketing and sales strategies for the business, including how to reach the target market, pricing strategy, and promotional activities.
Operations and Management: This section should describe the day-to-day operations of the laundromat, including staffing, maintenance, and customer service. It should also include information on the management team and their experience.
Financial Projections: This section should include financial projections for the business, including start-up costs, revenue, and expenses. It should also include a break-even analysis and cash flow projections.
Step 3: Determine the Legal Requirements for Your Laundromat
To operate a laundromat in Ontario, Canada, there are several legal requirements that must be met.
These include:
Business Registration: All businesses operating in Ontario must register with the Ontario government. This includes obtaining a Business Number and registering for the Harmonized Sales Tax.
Licensing and Permits: Depending on the location of the laundromat, there may be local licensing and permit requirements that must be met. For example, some municipalities may require a business license or a permit for signage.
Zoning and Building Codes: The laundromat must comply with local zoning and building codes. This includes obtaining permits for any renovations or construction work and complying with fire and safety regulations.
Employment Standards: The laundromat must comply with employment standards set by the Ontario government, including minimum wage, vacation pay, and overtime pay.
Accessibility: The laundromat must be accessible to people with disabilities, in compliance with the Accessibility for Ontarians with Disabilities Act.
Environmental Regulations: The laundromat must comply with environmental regulations, including the proper disposal of chemicals and wastewater.
Insurance: The laundromat must have insurance coverage for property damage, liability, and employee benefits.
Step 4: Fund Your Business
Laundromat Business typically need significant upfront capital for inventory, storefront lease deposits, equipment, fixtures, initial marketing, and working capital to cover operating expenses during the first few months when cash flow may be inconsistent. Here’s how you can secure funding for your new venture:
Before you seek funding for your Ontario Laundromat Business, start by understanding exactly what you need the money for. This could include starting costs, operational expenses, or plans to grow your store.
Before seeking outside funding, take inventory of your current resources. This includes your savings, personal assets, and any existing business equipment. Using what you already have can reduce the pressure to borrow or raise large amounts of money immediately.
Getting a bank loan can be a solid way to fund your retail business. Banks look closely at your credit history, both personal and business, to decide if you qualify. Keeping good credit scores helps your chances.
Using supplier and trade credit is a practical way to fund your retail business without needing immediate cash. When you buy goods from suppliers, they may allow you to pay later, usually within 30 to 90 days. This gives you flexibility in managing your cash flow.
You can access several government grants designed to help your Ontario retail business grow.
Here are some of the government programs available for Laundromat Business in Ontario:
BDC Small Business Loan: A BDC Small Business Loan is designed to help Canadian entrepreneurs like you fund a wide range of business needs, from purchasing equipment to covering payroll or launching marketing campaigns. You can apply easily online for amounts up to $100,000, with approval subject to review.
BDC Startup Financing: If you’re looking to launch or grow a business in Canada, BDC’s Startup Financing can help get you started with flexible loans up to $150,000. BDC is specifically focused on supporting entrepreneurs and offers advice alongside funding.
Community Futures program: The program delivers a mix of funding, mentorship, and business advisory and could be a key source of support for your small business. This federally funded initiative focuses on building resilient local economies across Canada.
Canada Small Business Financing Program: CSBFP is a federal initiative that aims to make it easier for you to get loans from major banks or credit unions by having the government share part of the risk with your lender.
Commercial Façade Improvement Grant Program: This Program provides funding to commercial property owners and tenants of commercial property in Toronto, to redesign, renovate or restore facades on commercial buildings.
Commercial Space Rehabilitation Grant Program: The Commercial Space Rehabilitation Grant Program offers matching funding of 50 per cent to commercial business operators and owners of storefronts in Toronto that are vacant (or, in certain limited circumstances, at risk of becoming vacant) to undertake interior renovations.
Retail Accelerator Program: This program provides access to retail training, advisory services and mentoring opportunities to retail businesses in Toronto. In addition, it offers a micro grant valued at $10,000 to help retail businesses develop and expand.
Commercial Vacancy Assistance Program: Program will provide financial assistance in the form of a Grant to new permanent or ‘popup’ commercial tenants of a presently vacant at, or below grade, commercial space so as to make permanent interior improvements for the purposes of improving the attractiveness and usability of the space for the intended commercial use.
Façade grant program: Offers grants to eligible downtown property owners and tenants in Downtown Kitchener who want to make street-facing building façade improvements.
Enbridge Gas Equipment Upgrades: The Fixed Incentive Program is designed to offset the cost of upgrading equipment to energy-efficient natural gas technology, whether replacing end-of-life equipment or planning to buy new equipment.
Save on Energy – Retrofit Program: The Save on Energy Retrofit program offers businesses in Ontario incentives to upgrade equipment, reduce energy bills, lower their carbon footprint and increase productivity.
The cost of starting a laundromat in Ontario can vary widely depending on various factors such as location, size, equipment, and other expenses.
Here are some estimated costs to consider when starting a laundromat in Ontario:
Rent and Leasehold Improvements: The cost of rent or leasehold improvements can vary greatly depending on the location and size of the space. It is important to find a location that has a good amount of foot traffic and is easily accessible.
Equipment: The cost of equipment for a laundromat can range from $50,000 to $250,000. This includes washing machines, dryers, and other equipment such as folding tables, chairs, and laundry carts.
Utilities: This includes electricity, gas, water, and sewer charges. Depending on the size of the laundromat and the number of machines, utility costs can be significant.
Licenses and Permits: Starting a laundromat requires obtaining certain licenses and permits from the local government, which can cost around $1,000.
Marketing and Advertising: It’s extremely important to consider how you’re going to promote your business. This can include advertising in local newspapers, flyers, and online platforms such as social media. Marketing costs can vary greatly depending on the scope of the campaign.
Based on the above costs, starting a laundromat in Ontario can cost anywhere from $100,000 to $500,000 or more. It is important to conduct thorough research and create a detailed business plan to determine the exact costs for your specific situation.
4.2. How to Start a Laundromat in Ontario with No Money
Here are some options for funding your laundromat start-up:
Business Loans: Entrepreneurs can apply for business loans from banks or other financial institutions. These loans may be secured or unsecured and may require collateral or a personal guarantee.
Small Business Grants: The Ontario government and other organizations offer small business grants to entrepreneurs starting a new business. These grants are available for specific demographic groups, such as women and Indigenous entrepreneurs.
Equipment Leasing: Entrepreneurs can lease the equipment needed to start a laundromat, such as washers and dryers. This option may require less upfront capital than purchasing the equipment outright.
Crowdfunding: Crowdfunding platforms can be used to raise money for a laundromat. This involves pitching the business idea to potential investors and offering them a stake in the business in exchange for funding.
Personal Investment: Entrepreneurs can use personal savings or investments from friends and family to finance the laundromat. This option may require less paperwork and may be more flexible than traditional financing options.
Before looking for financing, it’s essential to create a detailed business plan (including financial projections) to demonstrate the viability of the laundromat to potential lenders and grant-giving organizations.
Step 5: Choose a Location for Your Laundromat
Choosing the right location is crucial for the success of a laundromat.
The most important factors to consider when choosing a location for a laundromat include:
Population Density: A laundromat should be located in an area with a high population density to ensure a steady stream of customers. Areas with large apartment complexes, college campuses, or hotels are good locations to consider.
Accessibility: The laundromat should be easily accessible by foot, bike, car, or public transportation. It should also have ample parking available.
Competition: The laundromat should not be located in an area with too much competition. Research the area to ensure there is not already an abundance of laundromats, which could lead to saturation and difficulty in gaining a foothold in the market.
Visibility: A laundromat should be visible from the street to attract potential customers. A location with good visibility will help the business to stand out and attract new customers.
Safety: Safety is an important consideration when choosing a location for a laundromat. The area should be safe for customers to visit at all times of the day and night.
Space: The laundromat should have enough space to accommodate the necessary equipment and customers comfortably. A layout that allows customers to move freely and quickly between machines can enhance the experience.
Utilities: The location should have adequate access to water, electricity, gas, and sewer systems. Additionally, the cost of utilities should be factored into the business plan to ensure profitability.
Step 6: Purchase or Lease Equipment for Your Laundromat
Purchasing or leasing equipment is one of the most significant expenses in starting a laundromat business. You will need to purchase or lease washers, dryers, change machines, folding tables, and laundry carts.
The following is a list of equipment that is typically required to start a laundromat:
Washers: These are the mainstay of any laundromat. There are various types of washers available, including top-loading, front-loading, and high-efficiency models. The number and size of washers needed will depend on the size of the laundromat, the expected number of customers, and the types of clothes they will be washing.
Dryers: The number and size of dryers needed will depend on the same factors as the washers. It is common to have more dryers than washers to ensure that there is always a machine available for customers to use.
Change Machines: Change machines are essential to provide customers with the ability to change their bills into coins. Some modern machines also allow for payment via card or mobile device.
Laundry Carts: These are essential for customers to transport their laundry from their car to the laundromat and between the washers and dryers.
Folding Tables: These tables are necessary to provide customers with space to fold and sort their clothes.
Seating: Chairs or benches should be provided for customers to sit and wait for their laundry.
Soap Vending Machines: Soap vending machines are a convenient way for customers to purchase laundry detergent and other supplies while at the laundromat.
Security Cameras: A laundromat may be vulnerable to theft or vandalism, so security cameras should be installed to protect the property and its customers.
Step 7: Hire (and Train) Staff for Your Laundromat
If you’re not going to run the laundromat yourself, you’ll need to hire staff to manage the day-to-day operations of your laundromat.
The following are some of the key areas in which staff should be trained:
Equipment Operation: Staff should be trained on how to properly operate and maintain the laundromat equipment, including washers, dryers, change machines, and soap dispensers. This includes identifying and resolving common issues, such as coin jams, mechanical problems, or water leaks.
Customer Service: Staff should be trained to provide excellent customer service, including greeting customers, answering questions, and assisting with issues or concerns. They should be able to resolve customer complaints in a friendly and professional manner.
Cleaning and Maintenance: Staff should be trained on how to properly clean and maintain the laundromat, including keeping the floors clean, emptying trash bins, and wiping down machines. They should also be able to perform basic repairs, such as replacing faulty bulbs, repairing minor leaks, or tightening loose connections.
Cash Handling: Staff should be trained on how to handle cash and balance the cash register at the end of each shift. They should be able to identify counterfeit bills and manage the use of the change machine.
Safety: Staff should be trained on how to maintain a safe and secure environment for customers, including monitoring the premises for potential hazards or suspicious activity. They should also be trained in emergency procedures, such as fire evacuation or first aid.
Marketing: You might want to hire a marketing staff that has experience related to the laundromat business, including distributing flyers or business cards to local residents or businesses, and posting on social media or online directories.
Step 8: Advertise Your Laundromat
Advertising your laundromat is crucial to attracting customers. You can advertise through social media, local newspapers, and online directories. Offering promotions and discounts can also help attract new customers.
Here are some of the most effective ways of advertising your laundromat:
Online Advertising: Run ads on popular search engines like Google or Bing. This will help people find your laundromat when they search for laundromats in your area.
Social Media: Social media platforms like Facebook and Instagram can be effective ways to promote your laundromat. You can post updates, promotions, and specials on your social media pages to keep customers engaged.
Flyers and Posters: Distributing flyers and posters in the local area can help raise awareness of your laundromat. You can put them in local cafes, convenience stores, and other high-traffic areas.
Promotions and Discounts: Offering promotions or discounts can help attract new customers. For example, you can offer a discount for first-time customers or a loyalty program that rewards frequent customers.
Signage: Well-designed and visible signage can be an effective way to attract customers to your laundromat. Make sure that the signs are clear and easy to read and include information on the services offered and pricing.
Referral Programs: Encouraging existing customers to refer their friends and family can be an effective way to attract new customers. You can offer incentives, such as discounts or free laundry services, to customers who refer new business.
Local Directories: List your laundromat in local directories, such as Yelp or Yellow Pages. This will help people find your business when they search for laundromats in your area.
By using a combination of these advertising methods, you can increase the visibility of your laundromat, attract new customers, and build a loyal customer base.
It’s important to track the effectiveness of different advertising methods and adjust your advertising strategy as needed to maximize results!
Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business.
Click here to learn more about Moe’s background and how he can help your business.
