Preparing a business plan to repay your loan
When determining what level of finance to offer qualified laundry business owners and investors breaking into the field, Eastern Funding considers a variety of factors. It is important to us that borrowers have a realistic business plan that can support their monthly payments. There are always uncertainties in creating a predictive model, but there are some factors that will help you to narrow down the lines of probability.
By including the following factors, you can increase the chances of receiving a loan that will cover the investments you want to make, and rest easy with the knowledge that you will be able to make your monthly payments.
Owner qualifications and responsibilities
While your level of qualification isn’t a monetary figure, it is important to include it in your business plan. This is because it will help Eastern Funding to assess the level of risk that you represent personally – and your ability to make realistic predictions about revenue and expenses.
In projecting your revenue, you are essentially estimating the number of turns that each machine will do per day and multiplying this by the dollar value charged by each machine. There are a variety of factors that go into determining this metric, including:
- Population within close proximity – Rarely do people travel a long distance to do their laundry. Generally, you should look to the number of people living within one or two miles – walking distance – to your facility.
- Population demographics – Affluent areas often have less demand for laundromats than middle- and lower-income areas. Residents of the former group tend to have washing and drying machines in their homes, negating the need for a laundromat. This doesn’t mean that a laundry business can’t be successful, but business owners attempting to operate in these areas should have a plan to avoid this potential pitfall.
- Competitive analysis – How many directly competing laundromats are within your intended area of operation? Many laundry businesses thrive in close proximity to competitors, but you should have a plan to differentiate yourself in a meaningful way.
- Marketing plan – Simply setting up a laundromat and opening your doors isn’t enough in the modern competitive environment. At the same time, spending large sums of money on advertising may not result in a return on investment. You should have a realistic strategy to make people in your target area aware of your laundry business and its positive features.
- Other services – Many laundromats offer auxiliary services, like dry cleaning or fold and press service. These may represent an additional source of revenue that should be included.
These factors should be used to give an estimate of the number of “turns” that each machine will do each day. In general, Eastern Funding prefers that the average number of turns per machine that an untested laundromat needs to break even remain at two or three to produce a realistic estimate of cash flow.
Expenses are anything that your laundry business will need to spend money on in a given month. There are any number of possible expenses, but a few common ones that need to be included are:
- Employee wages
- Utility bills
- Loan payments
Using these factors, you should be able to create a realistic business plan that will demonstrate the viability of your proposed laundry business. If you already have a successful laundry business and wish to expand, many of these factors will be hard numbers, rather than projections, which may allow you to qualify for more attractive loan terms or a larger loan. When you are ready, speak to a representative at Eastern Funding.