This is one of the few business areas where the entrepreneurs can enter the market with little or no prior training. The process of running a laundry business is simple. However, if you are able to catch up the right sector of customers, the return on investment would be very high.
About the market
The market is an underrated star market. The number of organized competitors is very low making it an attractive sector. You can gain a large customer base in no time. The entry to the market is very liberal as the start up cost is very low. The switching cost of the business might be low, but the customers do not have much choice to switch thus, it is a vendor driven market.
Capital and return on investment
You would need a few laundry equipments, detergent powder stock, cater zone and a few support staff. The office space would not cost you more than 10,000 rupees per month. The equipments can be leased or bought through EMI scheme. The other major investment is the vehicle for delivery system (if required). Thus, the total capital that you would need to start up a medium scale laundry business in India is 5 lakh to 7 lakh rupees.
If you are planning to handle it by yourself and not include the delivery system, you can cut short the capital to 4 lakhs to 4.5 lakhs. The capital involved would be reduced if you are opting for EMI or lease the equipments.
Even if you charge a market friendly pricing system, you can have an assured 15% return on investment in the first six months and if you could gather more customer base, the ROI can increase to 60% and above in the first year.
The number of competitors is quite low in this market. But, it does not mean that you can grow without any effort from your side. According to experts, there is no place for competitive pricing as the pricing for washing and dry washing is almost the same with all the players in the market and lowering the price would cause serious decrease in the return on investment. The best way to make you attractive is to add more value services like heavy laundry for curtains and duvets, spot removal and so on. You can also hire a small time tailor and provide repair services.
High end customers would be the regular household customers and customers with special needs like dry washing their sentimental clothes. Small time hospitality business would also look for alliances with laundry businesses. Thus, a marketing book or brochure is very essential. To get a better customer base, you need to advertise your business in the online and offline yellow pages and other directories. It would be effective if you are able to create a website where people can book your services. The other tip to attract more customers is to provide loyalty rewards like membership cards and discounts.
Scope of the market
With more number of working women in the country, this business has a better scope than it had, a decade ago. It is estimated that by the end of 2020, more than three million households would be requiring similar service in a weekly or even daily basis. It is better to start up your business in the most populated cities. Delhi is already controlled by the washer men and thus, it is better to focus on the south Indian cities where the exposure of the market is very less.
Starting the business near the places where a lot of bachelors are present is another way to create a niche. All the households would have a small washing machine hindering the business. In case of hostels, mansions and other places where bachelors are found, the presence of washing machine would be doubtful. Thus, your stand in the market would be better, if you are serving such a clientele. There is a 3.5% increase in the number of people who are using the laundry service in India every year. However, there is no subsequent increase in the supply. Thus, this is a market in demand.
- You can either start a full-fledged laundry service or lease a few coin laundry machines. But, the latter method is not very popular in India and with the cheap rate of washing machine, the business is not profitable.
- Start with less amount of human resource as you would be using machines to handle your load.
- It is better to have a tie up with a small time repair person or a service company to take care of the maintenance and repair work, as and when required.
- Add some dissimilar value services like shoe repairs to increase the traffic to your shop.
Provide urgent services to increase customer satisfaction. Make sure to have an entertainment place for the kids or at least a small screen television for the people to watch, while they wait for their package.