Is It Better to Buy or Build a Laundromat (Or Any Small Business)?

A common question I get is: “Should I buy an existing business or start one from scratch?” While people often ask this specifically about laundromats, my advice applies to any small business. Let’s break it down.

Buying vs. Starting: What’s Less Risky?

In my experience, buying a business carries less risk. I personally prefer acquisition because it offers more predictability—if a business has performed well for years, it’s a good sign that it will continue to do so with the right effort. You already have historical cash flow to review, giving you better insights into its potential success.

On the other hand, startups can be risky. Even with projections and great ideas, there are unknowns. With a startup, you won’t really know how things will pan out until you’re in the thick of it.

The Real Cost of Startups

The cost of starting a business varies greatly. There are certain online businesses with very low startup costs. For example, let’s say you’re starting a consulting business. Maybe you need to pay for a website, some subscription services, and advertising. If you focus on free or low cost ways to get the word out about your business, your startup costs might only be a few hundred dollars.

That’s going to be a lot less than starting up a laundromat, or another type of small business with a physical location and equipment. Starting a business like this from scratch comes with significant expenses. You’ll need to invest in build-outs, plumbing, electrical work, and equipment. Just to give you an example: two new 40lb washers I bought cost me $21,000, including installation. Now imagine buying equipment for a whole new mat.

And let’s not forget about market research—is there enough demand in your area? If there are already multiple laundromats offering pickup and delivery services nearby, it might be hard to stand out. Is there an amenity your laundromat will offer that competitors don’t?

Similarly, taking over a struggling laundromat—often called a “zombie laundromat”—can also be expensive. These businesses often need major equipment upgrades, which can run into the tens (or even hundreds) of thousands of dollars.

Beyond equipment, there are other considerations too. Why did the previous owner abandon the mat or stop putting as much effort into it? Maybe there were significant security concerns or other problems that all new machines won’t fix.

Problems aren’t a bad thing–every business has them. But it’s important to understand what types of problems you’re likely to encounter and if you’re willing and able to deal with those problems.

If you’re considering starting a laundromat from scratch, or buying a zombiemat, consider if the investment of time, money, and energy aligns with your goals and if the potential ROI will make the endeavor worthwhile.

The Advantage of Business Acquisition

When you buy an existing business, you’re inheriting something with a proven track record and an established customer base. For example, when I bought my laundromat, it already had loyal self-serve and wash & fold customers. That gave me confidence I could maintain its performance—and by strategically raising prices along with improving operations, I even boosted profitability.

Plus, you’ll have access to more favorable financing options. SBA lenders love to see historical cash flow, which makes them more comfortable offering loans. SBA loans for business acquisitions typically only require 10% down. In contrast, startup financing usually requires more cash upfront—often 30% to 40% down. And lenders will scrutinize your experience more carefully if you're building a business from scratch.

It All Comes Down to Risk Tolerance and Experience

If you’re new to business ownership, I generally recommend buying over building. Acquisitions let you skip the learning curve of setting everything up from scratch. As a loan broker specializing in SBA loans, I’ve seen firsthand how much easier it is to secure financing when you’re buying a business with a solid history.

That’s not to say startups can’t succeed. Plenty of people have made a lot of money from their startups. If you have experience in the industry or know the right people to help with construction and operations, and are willing to take on the additional risk, building a business could be the right path for you.

Final Thoughts

In the end, whether you decide to buy or build, both paths require a meaningful investment of time, effort, and capital.

If you’re unsure about which route to take, I’d be happy to help you explore your options. As someone who has both bought and sold a business, I understand the challenges and rewards of acquisition. Feel free to swing by my Office Hours or book a one-on-one Laundromat Consultation with me.