How to start a laundry business in 10 steps
On the hunt for a business idea that will get you all spun up? Do you want to own a business with a 95% success rate and a great return on investment? Then, perhaps owning a laundry business is the opportunity for you.
The keys to success in this business model include offering attractive and diverse services and amenities, increasing online presence, and being transparent with your customers about sanitization and COVID-related protocol.
Here are 10 steps we recommend taking if you want to own a laundry business that gets nothing but good returns.
1) Choose the type of laundry services you’ll provide
There are several different types of laundromats: self-service (also referred to as coin laundry), fully-staffed, wash and fold, and dry cleaner. Each offers a unique set of benefits to both the business owner and customer and they all operate differently.
- Self-service: At a self-service laundromat, the customer does all the washing and drying themselves, with little to no staff to assist. These are more commonly found in areas where there are a lot of college students and the customer base is younger.
- Fully staffed: If you want to employ full-time staff and offer a more “luxurious” experience to your customers, a fully-staffed laundromat is the business model for you. Aside from coin-operated washers and dryers, these laundromats provide other services such as wash and fold and dry cleaning.
- Wash-and-fold: At a wash-and-fold laundromat, all the work is done for the customer. A team of trained laundry pros does the washing, drying, and folding. All the customer needs to do is drop-off and pick up, or some businesses may even deliver directly to a customer’s house. Laundromats with wash and fold services are typically found in areas with more families and a higher income.
- Dry cleaner: Dry cleaners are full-service establishments where delicate or expensive clothing is washed and cleaned with a chemical solution instead of water. Owning a dry cleaning business can be fairly lucrative, as the cost to dry clean clothes tends to be higher.
2) Create a laundromat business plan
After determining what services you want to offer, it’s time to start constructing a business plan. Here are the key elements you should include:
- Executive Summary: What is your target customer's “problem,” and how will you be solving it? Will you offer other services in addition to laundry? For example, some laundromats also offer tanning. This may seem like an odd combo, but there’s a market for everything!
- Overview: What’s the business background? Who is your management team? Are you an LLC or INC?
- Industry Analysis: What does the laundromat business landscape look like in your area, including size, opportunity, trends, and the necessary regulations? Is there room for suppliers to gain bargaining power?
- Competitive Analysis: Who are your competitors, direct and indirect? Your direct competitors would be laundromats in your niche; indirect are those that offer similar but not identical services.
- Marketing: Where are you most likely to connect with your target market? Social media, organic search, advertising? Will outside contractors be involved in these efforts? Just a pointer: Facebook and PPC advertising are most effective for laundry businesses.
- Management: What does the ownership structure look like, including the internal management team and external management (business consultants, lawyers, accountants, etc.)? What unique skills does your management team bring to the table, and do they have extensive experience operating or fixing the appliances?
- Operations Plan: What do the day-to-day operations look like? What are the necessary facilities and equipment (bathrooms, appliances, and other amenities) needed to attract and maintain customers?
- Financials: What are your estimated cash flow, expenses, and profit projections for the first 5 years of business?
3) Find your laundry business niche
Finding a specialty is arguably just as important as drafting a business plan. Your specialty is what sets you apart from all the other laundry businesses in your area.
Trying to appeal to every single type of customer is nearly impossible--though some may try. Common specialties include, but are not limited to:
- Medical: There are laundromats in existence that specialize in caring for healthcare linens and scrubs. There are not many out there, however, so this might be a market worth tapping into.
- Hospitality: Many commercial laundromats will wash bed linens, napkins, and other textile-based goods you may find in a hotel or restaurant setting. However, you can certainly make this your sole focus. Just make sure there are plenty of hospitality establishments in your area.
- Consumer Apparel: This is the most common item you will find at a laundromat. People need clean clothes, so there will always be a demand for this service. You can either be a full-service or self-service coin laundromat to cater to this need.
4) Uncover your USP
The Unique Selling Proposition (USP) is a description of what sets you apart from other salons. What makes you shine above every other laundry business out there? Do you accept credit cards? You may offer certain amenities to your customers to enhance the experience. Some examples of amenities are:
- Cold/hot beverages and snacks
- Vending machines
- Comfortable lounge seating
- Free wifi
- Phone charging station
- Arcade games
- Machines with a card system
You may also offer other perks such as rewards programs and curbside pickup. Whatever your USP is, make sure it persuades customers to choose your business over others in the area.
5) Pick your business name
Choosing a name is one of the fun parts of starting a business. It is your opportunity to get creative! If we can impart any advice, we suggest choosing a name that is a nod to the service(s) you offer.
For example, if you are an upscale, self-service laundromat that also sells all-natural laundry products, you could name your business “Luxe Laundry Bar.”
6) Choose your location and supplies
Choosing an ideal location for a laundry business takes a bit of hunting, and it’s heavily dependent on how much space you need and the services offered. There are some important questions to answer during the search:
- What is the local demographic and income in the area of interest?
- Does public transportation serve the area?
- Will you be purchasing an existing laundromat or a new laundromat? With an existing laundromat, the procedure will be much different.
- Will surrounding businesses appeal to your customers? For example, are there places for people to grab a bite to eat while waiting for their laundry?
- Will you be leasing or purchasing a space?
- Is there a competitive lease agreement?
- Is there enough space for storage?
- Would there be enough space for customers to wait while their clothing is being washed?
Once you have nailed down a location, your next objective is purchasing equipment. The following items are fairly universal, no matter what the specialty is:
- Commercial washing machines and dryers Lounge furniture (for waiting area)
- Laundry carts
- Desks (one for reception and one for office, if needed)
- POS system
- Laundry products
- Sanitizing chemicals
- Trash and recycling bins
- Face masks and gloves
7) Figure out your financial plan
There’s a lot of money to be made in the laundry business, and you want to be as safe with saving as you are smart with spending. It can cost anywhere from $200,000 to $500,000 to open the average laundromat, with the bulk of the cost attributed to the commercial washer and dryers. So, unless you have that kind of money hanging out in a bank account to pay for these upfront costs, you may need to raise funds. Here are a few sources to consider:
- Friends and family
- Private investor
- Line of credit
- Equipment loan
- Business loan
There are other startup costs to consider. These include, but are not limited to:
- Payroll (if you have employees)
- Advertising and marketing
- Heat, hot water, and electricity
That being said, it is not entirely impossible to start a laundry business with no cash on hand. You can take advantage of business and equipment loans and get a business grant (if you choose to utilize green products and machines, you can get a green grant or operate your business out of your home as a sole proprietorship). The possibilities are virtually endless.
8) Get your paperwork in order
This isn’t the fun part of starting a business, but you’re getting close to opening day!
a) Trademark your brand name and logo
It is important to protect your brand name and logo to prevent someone from coming along and snatching it up!
b) Register your business name
Before you are up and running, you need to register your business name with the state. Also, you’ll need to pick a business structure such as a Limited Liability Company (LLC) or corporation.
c) Apply for an EIN
The Employer Identification Number (EIN) identifies your business for taxes. It’s pretty simple and easy to get and can be done in minutes here.
d) Obtain permits and licenses
Permits and licenses are a key component of operating any business. They can vary greatly depending on the location. Here’s what you need for a laundry business.
- Health permit. This can be obtained from your county’s health department.
- Water Pollution Control Permit. Not every state requires this, but some may. View a full list of states that do require this permit, and contact your town to ask if this permit will be necessary for operating a laundromat.
- Sales Tax Permit. If you plan to sell additional services or products in your laundromat, you will need a sales tax permit.
State and local laws surrounding permit and license requirements vary, so always be sure to contact your Secretary of State to determine how to get the business licenses and permits you need to operate a laundry business.
e) Insuring your laundry business
Insurance is often the last thing business owners think about when starting up, but one of the most important! Here are the types of insurance coverage you will need for a laundry business:
- Workers’ compensation: Say one of your employees falls on the job and gets injured. You want them to be protected, right? It is required by law almost everywhere in the United States, and most states require that you purchase workers’ compensation coverage as soon as you hire your first employee.Estimate your rate in minutes with our workers’ comp calculator.
- General liability insurance: Your business must be protected if a customer is injured in your salon. In fact, 40 percent of small businesses will have a liability claim filed against them within the next 10 years, and your business will be at serious financial risk without this insurance. Luckily, Huckleberry’s got you covered here, too!
- Property insurance: Commercial property insurance is essential to every small business. If you are robbed, or your building is damaged, business property insurance and business personal property will save you. Business property insurance (also known as commercial building insurance) will pay to replace or repair your building if it’s ever seriously damaged. Business personal property insurance will pay out to replace or repair the contents of your building.
- Commercial auto insurance: If you offer laundry delivery to customers, you will need a vehicle(s). Thus, you will need commercial auto insurance. Keep in mind: They need to be insured with a commercial policy, even if you own them personally.
9) Hire your first employees, if necessary
If you are a full-service or self-service laundry business, you will need to hire employees (full-service will require at least 1 or 2 full-time employees). Here are the various people you will need on staff:
- Laundry attendant
- Repair person
- Driver (for delivery services)
You want to hire individuals who are the best fit for your business and are well-versed in laundry machines and how they work. So, make a careful decision when onboarding new employees and do not rush the process! Hiring the right folks now will save you a lot of hassle and money in the long run.
10) Spread the word about your laundry business
This next step is exciting; you get to promote your business! Here are some recommendations for getting your name out there and bringing in customers:
- Build a website. Getting a URL and working website has never been easier, thanks to websites like Wix and Squarespace. There are tons of tutorials online to guide you through the process, as well.
- List your business on Google and Yelp. Once you are listed, here’s how you can get great reviews on both platforms. Just a pointer: If a bad review is left, reply with kindness and an incentive to bring the customer back!
- Create social profiles. Social media is king these days, but it’s not crucial for a laundry business. However, if you do have additional amenities in your laundromat—such as an arcade—it might be nice to advertise on socials. A lot of laundry businesses are utilizing TikTok to give followers a peek into their business. Check out these helpful tips for marketing your business on the platform.
- Invest in digital advertising and content. Facebook and pay-per-click ads are great drivers of new business and can be easily done if you are not experienced in the area.
- Partner with local businesses. Partnering with local businesses is an underrated pipeline for new customers to come in and do laundry. Consider teaming up with local coffee shops and boutiques. Free dry cleaning with the purchase of 5 coffees?
Tips for running a successful laundry business
Starting and running a laundry business is fairly low-risk, but it won’t come without its challenges. Luckily, there are plenty of resources on the web to help laundry business owners along the way! Here are some we recommend checking out:
- Coin Laundry Association: The Coin Laundry Association offers current and aspiring laundromat owners information to help them successfully start and grow their businesses. Their collection of video content is especially educational and informative.
- Martin-Ray: A leader in commercial laundry equipment and business solutions, Martin-Ray also offers valuable insight into the laundry industry on their blog.
- LaundryLux: LaundryLux is a supplier of high-end commercial laundry equipment, and they also have a great blog where they share insights into the industry and tips for laundromat businesses.
There’s a lot of misconception out there that laundromats are a dying business, and we’re here to say they are far from it! The global dry cleaning and laundry services market is slated to grow to $104.6 billion by the end of 2021. So, while you may face some challenges along the way, don’t be quick to throw in the towel. If you are new to entrepreneurship, it may not hurt to ask yourself some important questions before jumping into the deep end.