Utility Deposits
Most Laundromats use Natural Gas for dryers and water heaters. There are some that use propane and a few that use power but natural gas is the most popular.
Gas companies tend to like working with Laundromats due to the high volume of usage and the consistent year-round demand.
The gas company is going to require a substantial deposit. For a smaller store that may be a couple of thousand dollars and go up from there.
Most utilities including gas, power and possibly water/sewer will accept a bond in lieu of a cash deposit. Although they will usually pay interest on your deposit I prefer to choose my own investments.
The bonds can be issued through many insurance companies and possibly even a Bail Bond type company. I went with the same company that I have my personal insurance and company car with.
The purpose of the bond is an insurance against you not paying your bill. If you go out of business and try and stiff the utility company they will just cash in your bond.
You will probably have to personally guarantee the bond. The insurance company will do credit checks and possibly have other requirements when issuing the bonds. I was OK on my first couple and then I hit a certain maximum limit so I had to provide more detailed information.
Another advantage of the bond is it becomes an expense against the income. (confirm with your CPA). The cost is very low compared to the deposit. I typically pay less than $100 a year per bond.
Many gas companies will have a sales rep for your area. Get to know them when you setup your first store. When I converted my 3rd store from propane to natural gas they did not require a bond as I had already shown a good payment history on my other two stores. The fact that they were different LLC’s was not even a concern.
When you are starting out in the Laundromat business there are a number of small items you can learn that can save you thousands of dollars in investment or expense.
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If you have comments please post them below.
Ken
