How Much Money Do You Need to Start a Business? A Detailed Breakdown

Many small business owners struggle to keep their business debts under control and their business on track. While a number of them have closed their businesses temporarily or permanently in the wake of the pandemic, filing for bankruptcy can help you keep your business running by providing some debt relief. Furthermore, business bankruptcy can help the business owner close up shop quickly if ceasing operations is imminent. However, not every bankruptcy for business owners is the same. So, read on to learn what small business bankruptcy options are available for sole proprietors, partnerships, and corporations and whether you should consult a bankruptcy attorney. When Should a Business File for Bankruptcy? If your company has been going through a rough patch, it’s advisable to scrutinize your balance sheet and assess the extent of your debt. After a prolonged period of consistently being unable to settle its debts and expenses, a business unavoidably reaches financial status that makes bankruptcy imminent. At that time, filing for bankruptcy helps you escape a potentially unsustainable state and protect your valuable property from being seized during the processes that accompany small business bankruptcies.  Types of Bankruptcies for Businesses Filing for bankruptcy under Chapters 7, 11, and 13 is available for sole proprietors, while partnerships and corporations can resort to Chapters 7 and 11. Chapter 7 is effectively a liquidation, Chapter 11 is about reorganization, while Chapter 13 is a wage earner’s plan that pertains to individuals or sole proprietorships which are the responsibility of one individual. Bankruptcy Options for Sole Proprietors Sole proprietors running small businesses have a few solutions when it comes to the bankruptcy process. In sole proprietorship bankruptcy, bankruptcy law regards the sole proprietor and their business as one and the same.  This also applies to married couples running the company together. In this case, personal and business assets are the subject of a business bankruptcy. The sole proprietor has the following solutions for filing bankruptcy. Chapter 7 Bankruptcy for Small Business Owners Many business owners that file for business bankruptcy resort to Chapter 7 since it doesn't require them to give up on everything they have. In that regard, Chapter 7 discharges certain qualifying debts, both business and personal. Most small business owners can expect the process to end within four months after they file bankruptcy.  The bankruptcy process involves giving up a particular property that the trustee in charge of your case can sell and then use those funds to settle your debts toward creditors. There are exemptions in each state that allow you to keep specific business and personal assets, such as some equity in your home, car, furniture, and work tools. Consequently, you’ll be able to start afresh after you’ve regained your footing.  Chapter 7 Bankruptcy Downside You can bankrupt a small business with Chapter 7 and keep some necessities, but remember the following downsides of filing for bankruptcy. A Chapter 7 bankruptcy filer could lose property that is part of their estate, including their business if it is a company with valuable assets and the trustee was able to find a willing buyer.  So, if you own an attractive ongoing operation you can't protect, being compelled to turn to Chapter 7 for personal bankruptcy might not be a good idea after all.  Furthermore, Chapter 7 bankruptcy protection exempts small amounts of business assets. Thus, you're likely to lose most of them when you file personal bankruptcy as a sole proprietor.  Filing Bankruptcy Under Chapter 13 or Chapter 11 Subchapter V Chapters 13 and 11 are small business bankruptcy options for a sole proprietorship if the business owner prefers to continue operations instead of liquidating the company. Chapter 13 (or Chapter 11 Subchapter V if the business debts exceed the Chapter 13 limit) allows you to keep your business running as long as your cash flow is adequate for all monthly payments.  In line with that, you can file for bankruptcy if your business is steady and if the bankruptcy court approves it. In turn, you'll get a repayment plan lasting between three and five years. You'll pay an assigned trustee who will transfer the funds to creditors during that time. Chapter 13 is also a small business bankruptcy option if you have to close the company and don't qualify for Chapter 7. In this case, small businesses have three to five years to pay off business debts, and peace of mind since creditors receive financing during that time.  Bankruptcy Options for Small Business Partnerships and Corps Due to the various disadvantages Chapter 7 involves, small business partnerships and corporations usually opt for Chapter 11. The partnership filing for Chapter 7 bankruptcy will likely lose investments, face lawsuits outside bankruptcy court, and ultimately collapse. However, filing for Chapter 7 might benefit corporations and partnerships in some cases, so let's review both types of business bankruptcies. Chapter 11 for Settling Business Debts While Chapter 13 is available only to sole proprietorships and individuals, the advantage of Chapter 11 is that it’s available to general or limited partnerships and limited liability companies.  A small business entity benefits from Chapter 11 in two ways. Specifically, it can continue operations while paying smaller amounts to creditors toward business debts, which are restructured along the way. Before the bankruptcy filing, though, the company should contact a law firm and have a business bankruptcy lawyer evaluate its prospects and whether Chapter 11 Subchapter V will be worthwhile. Chapter 7 Pros and Cons for Corporations and Partnerships Unlike Chapter 11 bankruptcy, which provides a mechanism for businesses to continue operating, Chapter 7 bankruptcy results in the company's shutdown. Furthermore, the appointed trustee sells the company assets and sends the proceeds to creditors. Advantages However, Chapter 7 bankruptcy filing may benefit a failing business if it has a substantial amount of property or a considerable number of creditors. Some related advantages are: The members don't have to sell the small business's assets themselves, leaving this delicate work to the trustees. This process is public, which can help prevent creditors from pursuing legal action against the company declaring bankruptcy if they assume that partners wish to keep funds instead of paying their outstanding debts. By avoiding fraud litigation and related lawsuits, partners prevent exposure to significant legal expenses. Disadvantages Although the trustee sells the property of the entity and distributes the proceeds to creditors, the small businesses still face some risks, including the following: Chapter 7 doesn't exempt the partners from paying their business bills, holding them personally liable for the costs incurred. The trustee selling company property may seek the partners' personal assets to repay the debt. When corporations file bankruptcy at the federal court, creditors can initiate alter ego litigation, which leads to the personal liability of each shareholder for the corporation's debt. Another potential drawback of bankruptcy for business owners is that a creditor can file complaints about inadequate handling of the small business's finances. That way, business debts can become personal debts. Limited Liability Company Bankruptcy Filing Filing for bankruptcy as an LLC results in a liquidation of the business's assets to pay off debts. In an LLC, the owners aren't personally responsible for company debts if they haven't guaranteed for them. Moreover, they can file personal bankruptcy to evade liability. A struggling LLC with a plan for moving forward can file for reorganization under Chapter 11 bankruptcy. This used to be an option for large corporations only, but the Small Business Reorganization Act made Chapter 11 bankruptcy for LLC a viable alternative. It’s a good idea to consult an attorney for more information. Bankruptcy Consultations With a Lawyer Bankruptcies can be complicated, so the best course would be to establish a relationship with an attorney early on. That way, you get good advice and protection of your interests from the outset. Plus, it’s often a requirement that a lawyer file the case. The business owner in bankruptcy typically receives the following services from their attorney: Situation analysis and an estimate if a bankruptcy is the right choice Bankruptcy process explanation Advice on which chapter is the best option Cost estimate and explication of the necessary steps for proceeding with the process. Final Thoughts In line with what we discussed in the article, Chapter 7 bankruptcy results in a company's shutdown, while Chapter 11 allows the company to reorganize and continue operating. Chapter 13 bankruptcy is for businesses with a regular income and may allow you to keep your business open while repaying your debts. Even though these options seem pretty straightforward, they come with potential pitfalls. So, it would be best to consult an attorney to learn which bankruptcy for business debt settlement will work for your small business.

You’ve come to this page because you want to learn how to start a laundromat business with no money. It won’t be easy, but we’ve got some pointers to help get you going. Starting a laundromat business can be a great way to earn a decent, steady income without having to make a huge initial investment. The growing demand for self-service laundry facilities allows laundromats to generate healthy profits, sometimes even outside standard working hours. To attract customers, laundromat owners may offer extras such as WiFi, TVs, and vending machines. Some even have coffee bars or gaming areas to keep customers entertained while they wait for their laundry. There's a lot to think about before you get to this stage, so continue reading to learn how you can open a laundromat business from scratch.   How Likely Are Laundromats To Generate High Profits? Laundromats can be very profitable, with some owners running successful businesses that generate up to $300,000 per year in cash flow according to the Coin Laundry Association. Of course, making that much is far from certain; the location of your business, the size of your laundromat, and the services you offer will all affect this. There are also several unavoidable business costs, such as utility bills and salaries for full- or part-time employees, although it’s worth noting that some laundromats are unstaffed.  So, let's see what you need to take into account and do before starting earning. Key Things To Consider Before Starting a Laundromat Business You must take into account quite a few things to build a laundromat startup that succeeds, since seven out of 10 startups don’t make it to their 10th birthday. Below are some of the most important factors. Location of Your Laundry Business The location of your laundromat is one of the most critical factors in determining your success. It’s best to look for a high-traffic area, preferably with a mix of residential and commercial businesses and perhaps near a major intersection. Before you start a laundromat business, consider the competition in the area. If there are already several laundromats around, you'll have difficulty making yours stand out from the crowd.  Another vital factor to consider is the demographics of the area. The median income and age group of residents can give you a good estimate of whether this is the right target market for your services.  As a general rule, you should aim for residential areas inhabited by young people living in rental properties as opposed to upscale neighborhoods. After all, lower-income people living in smaller apartments are less likely to have their own machines, and the closer you are to your target market, the better.  Laundromat Services Laundry washing and drying are the core of laundromat businesses. While most laundromats only offer these services, some may also provide laundry folding and ironing. Some also provide pick-up and delivery services for an additional fee to maximize their laundromat business profit. Such a strategy can be a great way to attract customers who are short on time and are willing to pay more for convenience.  Of course, to do this, you'd need to hire part-time or even full-time workers, whereas you might be able to run a standard laundromat without any day-to-day staff. If you’re considering this, perform a cost-benefit analysis to estimate whether the earning potential of this service is worthwhile. Marketing Strategy A marketing strategy that works is another essential step in owning a laundromat. You can use various channels to build awareness, including social media, billboards, or TV commercials. The most important part is to ensure that your marketing strategy is in line with the overall branding of your business so that potential customers can easily recognize and remember you. Of course, word of mouth will also play a significant role in promoting your laundromat. The best way to get people talking about your business is to provide a top-notch service, which we’re sure you’ll do anyway! Choose Channels for Advertising Purposes Carefully You'll need a steady income stream to pay off your loan and ensure overall profitability if you start or buy a laundromat with no money. That’s why it’s especially important to pay attention to the media channels your target audience uses.  For example, you'll likely find younger and middle-aged people on social media, while older people are more likely to get information from watching TV. Building a professional-looking website for your business can be a worthwhile investment; it makes you look more legitimate and may help you rank better on search engines. Cost Structure (Bills, Rental Space, and Employees’ Wages) To estimate an approximate cost to start a laundromat, you must consider various expenses. First of all, electricity and water bills will be among your most significant monthly expenses. You'll need to secure highly efficient, energy-saving washers and dryers to lower these. However, buying these machines requires a hefty initial investment, so it might be better to lease them. You must also factor in the costs of detergent, fabric softener, and other laundry essentials. The price of these can quickly add up, so it's essential to find a wholesale supplier who can give you a discount for buying in bulk. Of course, don't forget the costs of renting or purchasing a commercial space. Last but not least, you'll have to consider workers' salaries if you're planning to offer additional services like laundry folding or pick-up and delivery. If you start a coin laundry business, you’ll need to decide which extra services are worth it.   Competitors You should also research nearby competitors and learn what services they offer, how much they charge, and what marketing strategies they use. Understanding your competition helps you set your business apart and find the appropriate target market for your laundromat.  Of course, finding a location with few or no nearby competitors would be great, although that can be difficult in high-potential areas. Opening a Laundromat With No Money: Estimated Costs Various factors affect the cost of setting up a laundromat, including the location, required permits, and investments like sewerage connections.  Note that you can potentially save money if you buy an existing laundromat rather than starting from scratch. That way, you can spare up to $8,000 per sewer connection per washer and up to $300,000 for laundry equipment in total.  Of course, you might still want to know how to start a laundromat business with no money from scratch. If so, you should evaluate different loans offered by banks financing small businesses to find the one that best caters to your needs. Once you make a choice, you’ll have to open a business bank account. Refer to the following table for a quick breakdown of the relevant starting expenses: Expense type Estimated cost Sewer connection per washer $200–$8,000 Top-load washer $500–$700 Front-load washer $3,500–$20,000 Dryer $5,000–$6,000 Soap machine $500 and over Water-heating system $15,000–$40,000 Optional card system $40,000–$80,000 Laundry cart for clothes $50–$75 Cleaning supplies $750–$1,000 As you can see, there can be a lot of variability in the cost of opening a laundromat, so evaluate every option thoroughly before making a decision.  Rough estimates suggest that you'll need to spend between $200,000 and $500,000 to get your business up and running – and that’s just for the basics! You'll also need to factor in the cost of hiring some help to run or maintain the place, which will undoubtedly push the price up even higher. Still, as long as you're aware of all the potential expenses beforehand, you should be able to plan and budget effectively. Devising a Laundromat Business Plan As the owner of a laundromat, you’ll need a detailed action plan. By having a clear vision for your business and developing a roadmap to bring that vision to life, you’ll increase the chances of success for your startup. A good business plan is made up of many parts. We’ve explained the process below. Executive Summary An executive summary is a short, clear overview of the business plan. It should highlight the plan's key points in an easy-to-read manner and get investors and executives interested in your offer. Ideally, the executive summary should be no longer than two pages. Company Summary You specify the owner, your goals, and how you start the business here. A company summary presents your business to potential investors. It should contain: Missions and goals Products and services Facts that make your business stand out from competitors How should the company's presence will benefit the target market Budget If you’re comfortable that you know how to start a laundromat business with no money, it's time to start budgeting. This process should include researching the cost of buying or leasing equipment, licenses required, your commercial space, workers' salaries, and insurance. There’s much more to running a successful business than simply budgeting, but without a solid idea of your costs and expected profits, you won’t know where to start. To minimize risk and reduce your initial outlay, opening a laundromat franchise might be a better idea. We’ll discuss the pros and cons of franchises later on in the article, but for now, here’s what you’ll need if you want to go it alone. Marketing Plan A marketing plan will help you raise awareness about your laundromat and promote it to the target audience. The approach you should take depends on who your customers will be. For instance, if you're targeting young people, social media platforms like Twitter and Instagram can be helpful.  If you're unsure how to proceed with this, you might want to consult a marketing expert, although that could be expensive. Power Structure You only need to create a power structure to define the business’s hierarchy if you have employees working in your laundromat. Include job descriptions and specific tasks for every employee to avoid miscommunication and boost efficiency in the workplace.  If you work independently, skip this part of the business plan. Business Objective Before starting or buying a laundromat, you need to have a vision of where you want to take it. Do you want to build a laundromat empire, or are you happy with one location, at least at first? What services would you like to offer?  Once you answer these and other questions, explaining your business objectives over several paragraphs will be easier. Target Market Identification You can’t truly begin to prepare your business until you know who your market is. Owners need to analyze their services and predict how the market will respond once they open laundromats. You'll also need to set prices for your services once you’ve researched the market to avoid charging too much or too little. With this in mind, you can identify your target market demographic, including age, gender, career type, and location.  Competitor Analysis Analyzing your competition will help you differentiate your laundry business from others that are out there. You can proceed to this step once you’ve defined your target market. Financial Goals and Objectives Next, you need to decide on your short- and long-term plans. This will include any expansions you might want to make to the business.  To do this, you'll need to research the untapped population in your target market and decide what percentage of that you think you can reach. Note that you'll need some statistical knowledge or help from an expert to complete this.  Types of Services To estimate laundromat startup costs, you need to decide what services you'll offer. In this section, you should outline whether or not you’ll provide folding, delivery, entertainment, and other relevant services. Marketing Analysis Consider factors like market segments, target households, inbound visitors, and product pricing to develop a clear marketing strategy for customer satisfaction and increase your chances of success. Strategy You have to specify how you plan your business to succeed, especially if the competition is fierce. Outlining your strategies for breaking into the market, building your reputation, and maintaining a stable business for years to come is crucial. Financial Plan You should use this section to project your business’s gains and losses, monthly and annual earnings, and break-even margins. As you can imagine, crunching the numbers is one of the most important   Common Ways To Raise Funds for a Laundromat Business You came to this page wondering: "how much does it cost to buy a laundromat?" We hope that by this stage, we’ve given you a fairly comprehensive answer to that question. But knowing how much you need and actually getting that money are two very different propositions. In this section, we’ll give you some ideas for raising the funds you need. Attract Investors Reaching out to investors is one of the best ways to secure funds for your new laundromat business. But it’s not just about money; experienced investors can give you advice that could be critical to growing and maintaining a successful business. That's why you should do your homework and present a detailed business plan to convince the right people to invest in your startup. Of course, nothing in life comes for free; you’ll have to give up some percentage of your profits and/or control of your business to get investors on board. But if it helps you get started and avoids the risk that comes with taking out a business loan, then it might be worth it. Take Out a Loan If you prefer to start independently, there are several types of loans to open a laundromat. These include: Term loans, which come with fixed monthly payments and pre-defined terms.  Equipment loans, which are suitable for financing substantial equipment purchases, with the equipment you buy serving as collateral. SBA (Small Business Administration) loans; government-backed loans with low-interest rates and long terms. The downside is that approval for these loans usually takes months.  There’s always an element of risk to taking out a loan. Make sure you crunch the numbers beforehand, otherwise you might end up biting off more than you can chew.  Open a Franchise Laundromat Opening a franchise may be the best solution if you don’t know how to start a laundromat business with no money. That way, you get help, resources, equipment, and training. Moreover, the franchisor will provide you with a proven business model and help you open quickly. Before you join, however, you should reach out to several franchisors and compare their offers to ensure you're making the best choice. It’s also worth speaking to other franchisees to see if they’re happy with how the business is run. The main advantage of this option is that you'll get brand recognition and support from the franchisor. Also, many customers trust franchises more than independent businesses. The biggest downsides are that you’ll have to pay upfront royalties and fees, you’ll have to give a percentage of your revenue to the franchisor, and you’ll never have full control over the business. Final Tips To Open a Laundromat Once you get your laundry business going, you might do better overall and increase your revenue if you take the following steps: Start a loyalty program to retain customers. Offer free products, like detergents, with every wash. Sell detergents, fabric softeners, or other related products. Open a small cafe so customers can enjoy a coffee while they wait. Install TV screens and gaming consoles to make the wait more pleasant for customers. Offer extra services, such as laundry pick-up, delivery, dry cleaning, ironing, stain removal, and folding. Conclusion You have plenty of laundromat business ideas and you now know your options, so there’s never been a better time to start planning your business. Remember that a laundromat is a significant investment, so do your homework and develop a detailed business plan before taking the plunge. 

Starting and running a business is a real juggling act. In the midst of all the chaos, the process of getting a business loan can seem daunting. You may not even know where to start, but that’s where a business loan broker can help.  Successful brokers can assist you in finding the right lender, getting the best interest rate and term, and submitting your application. But is the service worth the cost? And are there other options available to you? You should find this article helpful in finding answers to these questions. What Is a Business Loan Broker? Once you’re beyond the intricacies of how to become a business owner and are in a growth stage or are running a mature firm, you’re likely to find yourself in need of a business loan. This is where a business loan broker can help. Business loan brokers work with both banks and alternative lenders to find the best financing options for their clients. They also help with the application process and, in some cases, may be able to negotiate the terms on behalf of their clients. Types of Business Loan Brokers Brokers generally specialize in one market segment. Depending on your business size or the type of financing solutions you require, you can opt for one of the following: Startup loan brokers: You should go for this type of business loan broker if you are running a startup that’s finding it difficult to acquire a loan due to a short or no credit history. SBA loan brokers: These business loan brokers specialize in government-backed loans disbursed by the Small Business Administration (SBA). Factoring brokers: They help companies boost their cash flow while waiting for their invoices to be paid by customers. These professionals assist their clients in obtaining invoice financing and factoring products, which involve selling invoices to a third party, or factor. Equipment financing brokers: These business loan brokers help companies finance the purchase of new equipment by offering them loans or leases. Merchant cash advance brokers: The job of these brokers is to ensure their clients get cash upfront in exchange for a percentage of their business’s future sales. When Do You Need a Business Loan Broker? When deciding whether to hire a loan broker, you should consider if that would be the most cost-effective course of action for your business.  For example, startups that have never applied for a loan before could benefit from hiring a professional with industry experience and connections, while businesses eligible for an SBA loan would do best to consult an SBA loan broker. Or, if you’re struggling to get approved for a loan from a bank or credit union, working with a broker could help you secure financing from an alternative lender. Brokers may also be able to help you get a better interest rate or other terms for your loan. On the other hand, if you’re comfortable with the lending process and confident in your ability to secure financing, you may not need a broker. Just consider if working with a broker would end up costing you more in fees than what you would save on interest. How to Choose a Business Loan Broker Should you decide that hiring a small business loan broker would benefit you, there are a few things you should know before settling on one. First off, you should know where to look for brokers. A simple Google search is one way to find a business lending broker. Another is to go to specialized websites, including those of the American Association of Commercial Finance Brokers, Small Business Finance Association Broker Council, or the local secretary of state, which will list brokers licensed in your state. And if you’re not keen on finding a broker online, you can always visit the office of a local small business organization. When it comes to choosing a particular loan broker for your business, you should first look into how many and which lenders they collaborate with. This will give you an insight into the kind of offers they can get you. You should also inquire about the broker’s experience and success rate. This will help you gauge whether they’re likely to be able to get you the financing you need. It would be a good idea to check whether the business loan brokers you are vetting have a Better Business Bureau accreditation and rating. Finally, it’s important to find out about broker fees and how they’re paid. That way, you can compare the offers of different brokers and find the one that suits you based on the cost and the quality of service. Once you have a list of business lending brokers who might be a good fit, it's a good idea to look for customer reviews. The experiences of other people can tell you if a broker is worth working with. Business Loan Broker Fees Brokers typically charge a commission expressed as a percentage of the total loan amount. A majority of brokers charge between 1% and 6%, though some may ask for as much as 17%. Some brokers ask for the money upfront, while others take a percentage of the overall interest you end up paying, which, of course, translates into a higher interest rate. Alternatives to Hiring a Business Loan Broker If you decide that working with a small business lending broker isn’t for you, there are other options available. You can work directly with some of the best banks or credit unions, or use an online lending platform like Lendio to compare multiple loan offers at once. If you have a poor credit score, you may want to check out some loans for business owners with bad credit. No matter what route you choose, be sure to compare interest rates, fees, and terms before selecting a loan. And remember, always read the fine print. Bottom Line All in all, a business loan consultant can serve as a link with the right lender and get you the best possible terms on your loan. However, they typically charge a commission for their services, which can add to the cost of your loan. Therefore, you should do the math to find out whether hiring a broker would pay off before you make the final decision.