Singapore is a highly developed country with one of the highest GDP and GDP growth rates. The country has a gross domestic product (GDP) of over $50,000 per capita and a constant growth rate of 7.7%, hence it is known to have one of the most stable economies in the world. They are also known to have stable electricity, proper drainage, and business-friendly laws. The favourable business conditions coupled with the profitability of laundromats are reasons why you should consider starting a laundromat business in Singapore, and this article would guide you through the process.
What We Covered In This Article
The Profitability of Laundromats
Laundromats are the most profitable sector in the hospitality industry. Some of the advantages of entering the laundromat business include:
- A success rate of up to 95%
- Up to 35% Return On Investment (ROI)
- An average yearly income between $60,000 – $90,000
- Low labour costs
The Weaknesses of Laundromats
Like most things, laundromats have both advantages and disadvantages. Some of these disadvantages are:
- Because of its high success rate, it is a very competitive industry
- Keeping a laundromat neat and tidy is not an easy task
- Fluctuating demand
- Relatively high start-up costs
Types of Laundromats
There are two major types of laundry services.
1. Self-service or Coin Laundromats
A self-service laundromat is one where customers come to wash their clothes with little to no professional assistance. There are several types of self-service laundromats but the most popular one is the coin laundromat. Coin laundromats use coin-operated washing machines that charge customers per load. Other self-service laundromats include:
- Card-operated laundromats
- Mobile app operated laundromats
- Eco-friendly laundromats
2. Staffed Laundromats
Unlike the self-service laundromat, the staff is responsible for getting the customer’s laundry done in a staffed laundromat. Staff members are hired to operate the washing machines, sell detergents and other laundry products, and oversee the laundromat. Laundromats of this nature usually offer extra services like drycleaning, ironing, and wash-and-fold, and pickup and delivery services.
Cost Estimate of Starting a Laundromat In Singapore
There are so many things to consider when budgeting for a laundromat. For example, there are equipment costs, design costs, utility costs, and licensing costs, and all these are dependent on different factors. Consequently, only a rough estimate can be provided. Here’s a rough estimate of these expenses and their costs.
1. Location costs
Depending on the location and size of the space you have chosen, rental costs could vary between $2,000 – $10,000 per month.
2. Utility costs
For the successful operation of your laundromat, you must have some basic utilities. These utilities include water, electricity, proper drainage, and gas for the machine’s operations.
- Water utility cost estimate: Between $2,000 – $ 5,000
- Electricity utility cost estimate: Between $4,000-$10,000
- Gas utility cost estimate: $1,000 – $3,000
Please note that these are just rough estimates, not specific price ranges.
3. Licensing cost
There are various licenses you need to acquire before operating a laundromat. For this reason, licensing cost could be between $ 1,000 to up to $4,000
4. Equipment cost
- Washing machines: An average laundromat has at least 40 washing machines. The cost of these machines depend on the brand and model you have chosen to purchase. The top three washing machine brands are Whirlpool, LG, and Samsung, and the machines cost $200 to $1,000 a piece.
- Dryers: Dryers are just as crucial as washers in a successful laundromat business, and a minimum of 40 is required. The best dryer brands to patronize are Whirlpool, LG, and Samsung. Commercial dryers prices range from $1,000 to $5,000 a piece.
- Detergent and other laundry supplies: Disinfectant, bleach, and fabric softeners are additional supplies needed for laundry. You should budget between $800 to $1,000 for this
- Laundry carts and other laundry equipment: In addition to laundry carts, drying racks, trolleys, drying racks, and ironing boards are necessities in a laundromat. The budget for these laundry equipment is $1,000 to $3,000.
How to Start a Laundromat Business in Singapore
1. Market Research
It is imperative that you thoroughly research the market before you begin anything, because it gets you started on the right path. Mistakes are expensive in the business world, and for this reason accurate and thorough research is a necessity. These tips would help you understand how to conduct market research.
i) Define your goals
The first step to in-depth market research is identifying what you want to accomplish with it. Have a clear image of what you want to find out.
Hint: For a laundromat, you need to find out about the relevance of laundromats to your target market, your competitors, and your target market’s preferences.
ii) Come up with a research method
You have set your goals, now you need to determine how to accomplish them. The two major types of market research are quantitative research and qualitative research. Quantitative research deals with numbers, and is usually conducted using surveys. It’s aim is to determine the percentage of people that are likely to patronize your laundromat. On the other hand, qualitative research is more interested in the reasons for that patronage. It aims to understand the thoughts that drive patronage. Choose whichever one that is best suited to your research goals, and run with it.
iii) Data collection and analysis
Collate the resulting data from the conducted research, and analyze the results. From your results, you would be able to determine the best start-up location, the services the target market needs, as well as the best business strategy to adopt, and this would make drafting your business plan a lot easier.
2. Draft a Business Plan
Behind every successful business is a stellar business plan, because a business plan guides you through the stages of managing your business. A business plan helps you identify goals, and develop the right strategy towards accomplishing them. Your business plan should contain an overview of the company, company goals, services to be offered, and an executive summary. The executive summary is a brief breakdown of your entire business plan, and it is a very important part of your business plan. Consequently, it should be clear, and concise. The company overview is a summary of the company and what it is about.
3. Location Selection
Regardless of how business-savvy Singapore is, it is unwise to choose a random location. However, there are some perks to setting up your laundromat business in Singapore. As stated earlier, Singapore is a highly developed country so finding a location with stable water and electricity, and a proper drainage system wouldn’t be a hassle. Despite this, other determinants are just as important as light and water. Factors like the number of residential areas, the market demand, and the competition in the area should be evaluated while choosing a location. Here are a few suggestions:
- Tampines: Known for its commercial areas, residential estates, and natural environment, Tampines is an excellent spot to set up a laundromat.
- Chinatown: Setting up a laundromat in this neighbourhood is certainly a great idea because this bubbly district attracts tourists. Correspondingly, you would attract both residential and touring customers.
- Marina Bay: Because of the Marina Bay Sands, Marina Bay is a known tourist spot. The multifaceted resort runs a hotel, a casino, and a residential area. However, this might not be the best option as the competition in this are is fierce, but hey, nothing’s impossible when you set high quality standards.
- Bukit Timah: Bukit Timah is a residential district in Singapore, housing different classes of people, making it a strategic location for a laundromat.
4. Licensing
i) Business license
Before you can begin operations, it is imperative that you obtain a business license. An application is submitted to Accounting and Corporate Regulatory Authority (ACRA), and this application typically costs at least S$300. The processing period is between 2 weeks to 2 months. Once the licensing requirements have been met, a business license would be issued, alongside a certificate of registration and a Tax Identification Number (TIN).
ii) Water and sanitary license
An application is submitted to the Public Utilities Board, and processing period is typically between 1 – 2 months.
iii) Fire safety license
Every company needs to meet up with the fire safety requirements to ensure they are not endangering their customers. For this reason, it is necessary to obtain your fire safety license. To accomplish this, the Civil Defense Force needs to process your application, and this usually takes about 1 – 2 months.
iv) Hazardous substance permit
The National Environment Agency (NEA) issues these, and there are rules guiding the application process. You need a business registration number to applying, and it takes about 7 working days for your application to be processed.
Depending on several factors, there are other licenses and permits to be acquired before your laundromat can begin operations.
5. Equipment Purchase
The equipment you need is dependent on the type of laundromat you have chosen to operate. However, there are some paraphernalia these laundromats have in common. For example, washing machines and dryers, laundry carts, drying racks (yes, a drying rack is necessary even if you have a dryer because some clothes require special care), trolleys, tables. All of these can be purchased and shipped in bulk by opening an Amazon Business account and making the requests on their site.
6. Staffing
Even if you have chosen to start a self-service laundromat business, your laundromat still needs to have staff members, however few. You need to employ skilled labour to maintain the laundromat and help customers with any problems they might be having.
7. Marketing and Promotion
You have put everything in place, now all that’s left is finding customers. After all, what’s a business without customers. There are various ways to promote your newly established laundromat business such as, sponsoring popular programmes, paying for TV ads, partnering with social media influencers, and many more. Your advertisement strategy depends on your budget and preferences.
Conclusion
You have made the wise decision to open a laundromat in Singapore, and an even wiser decision to read this article till the end. Remember that first impressions matter, and it would help to keep in mind that you’re always making a first impression, even if you’re years past your launch date. Like every business owner, your primary goal is to grow your customers and increase profit, but this can only be achieved when you have the right attitude. Laundromats are not a one-time investment. For your business to keep growing, it is important that you keep reinvesting in your laundromat to maintain its state. Do not let your laundromat deteriorate, or your business would too.
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