How to Start a Laundromat Business | SkillsAndTech

Would you be interested in owning a relatively hands-off business that makes you money when you’re not even there? If so, operating a laundromat could be for you!

Of course, this doesn’t mean owning a laundromat requires no work. Getting a successful business up and running requires many steps, and then you’ll have to keep the shop clean, the machines functional, and, most importantly, your customers happy.

This step-by-step guide provides all the information you’ll need to launch your successful laundromat business, from examining the industry to registering and marketing your new company.

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Let’s get started!

Decide if the Business is Right for You

Before you tackle the world of laundry, you should familiarize yourself with the industry.

Pros and cons

Every business has their pros and cons, so it’s important to weigh both before starting your business.

Pros

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• No experience or expertise required
• Constant demand, as clothes will always need cleaning
• Minimal inventory requirements
• Laundromat’s have a near-perfect (95%) success rate
• Generates passive income once operations are running smoothly

Cons

• Potentially a 24-hr job
• Utility costs are rising
• Risks of broken equipment

Laundromat industry trends

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With an impressive 95% success rate, laundromats boast an average return on investment of nearly 30%, according to industry expert Martin Ray Laundry Systems.

Google Trends data backs up the success rate of laundromats, showing consistent demand for laundry services in recent years.((https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=laundry%20services))

Industry size and growth

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• Industry size and past growth – Market analyst IBISWorld values the laundromat industry in the US at more than $5 billion.
• Growth forecast – Demand for laundromats is expected to increase in areas near colleges and universities as in-person classes resume. Laundromats in densely populated areas with many renters are also expected to perform well.
• Number of businesses – There are more than 18,000 laundromat businesses in the US as of 2022.
• Number of people employed – The industry employs more than 47,000 people.

Trends and challenges

These are some of the latest trends in the laundromat industry:

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• Shift toward technologically advanced machines that accept all forms of payment (credit, debit, cash, coins, loyalty cards, and mobile payments) and offer easy-to-use digital interfaces
• Use of apps that enable the laundromat owner to keep a close eye on the business from anywhere

Some challenges remain such as:

• High fixed costs such as utilities and supplies
• Competition from wash-and-fold services

What kind of people work in laundromats?

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Laundromat managers maintain the machines, collect the money, purchase supplies, keep the laundromat tidy, and manage the staff.

• Gender – About 52% of laundromat managers are male, while more than 47% are female.
• Average level of education –Almost half of laundromat managers in the US are high school graduates, while 30% hold an associate degree.
• Average age – Most laundromat managers are over 40 years old.

How much does it cost to start a laundromat business?

You could start a laundry business for as little as $100,000, or as much as $1 million or more. The average laundromat owner lays out about $200,000 to get started.

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On the lower end, this is what your startup costs would look like, excluding the purchase amount or rental of your shop, which would depend on the location, size, and condition:

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 – $200	$175
Business licenses and permits	$100 – $300	$200
Insurance	$100 – $300	$200
Business cards and brochures	$200 – $300	$250
12 Washers	$42,000 – $60,000	$51,000
6 Stacked dryers	$30,000 – $36,000	33000
2 Large dryers	$3,000 – $4,000	$3,500
Website	$1,000 – $3,000	2000
Total	$76,550 – $104,100	$90,325

How much can you earn from a laundromat business?

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A laundromat can generate $100-$1,500 in daily revenue, with an average of around $500. Best of all, a laundromat stays open every day of the week, so your $500 a day will result in more than $180,000 in annual revenue. After accounting for expenses, you might end up with a margin of 33% and take home a tidy $60,000 in profit.

As you gain more customers, you could add more washers and dryers, hire staff, and  increase your daily income to $1,500. This means an annual revenue of nearly $550,000 and, with a smaller profit margin of 20%, a profit of about $110,000.

What barriers to entry are there?

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It’s good to be aware of any potential barriers to entry so that you don’t have any surprises when you start your laundromat.

Here are some of them:

• High utility costs or sewer connection fees in your area
• Laundry machines are expensive
• Many residential areas have serious competition in laundry

Related Business Ideas

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If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

Hone Your Idea

Now that you have a bird’s-eye view of the laundromat industry, let’s start crafting your actual business idea.

Why? Identify an opportunity

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It’s important to scope out your competition to see what they offer — and what they do not. Maybe they have outdated machines, charge too much, or have no drop-off service.

Look to improve on your competition’s weaknesses by offering a better laundry service and a more comfortable customer experience.

What? Determine your products or services

It’s a good idea to aim for a full-service laundromat if you’re looking to immediately attract many customers and increase your revenue fast. Besides the coin laundries and dryers, you can also offer self-service dry cleaning.

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You can also encourage customers to just drop off their laundry and have your staff wash and fold for an additional fee. You might also want to consider offering commercial laundry services for restaurants and hotels. Some laundromats have expanded their services to include a coffee shop, video games, and other activities that will keep customers busy.

How much should you charge for laundromat services?

Your best bet is to look at what laundromats in your area are charging and use that as your baseline. Then you should work out whether this price range will give you enough profit to make your time worthwhile.

Generally it costs $1.50 to $4.00 for U.S. customers to wash a load of laundry, with the national average at $2.00.

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Once you know your costs, you can use this Step By Step profit margin calculator

Who? Identify your target market

There are a couple of options for your target market. Traditionally, low-income renters, such as university students, are the primary users of laundromats. So you might open your laundromat in a university town or near student dorms. You might also focus on people in urban areas with no washing machines in their apartment or building.

Where? Choose your business premises

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Since a laundromat is a physical service business that attracts customers who live nearby, you’ll need to find a location in a high-traffic, mainly residential area.

You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

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• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Even if you find the perfect location, you might not succeed if there is an existing laundromat next door! So keep your eyes out for competitors.

Brainstorm a Business Name

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Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “laundromat” or “laundry”, boosts SEO
• Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertip

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart.

Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Create a Business Plan

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Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

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Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

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Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to laundromats.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

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Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your laundromat will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

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Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Fund your Business

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Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a laundromat business. You might also try crowdfunding if you have an innovative concept.

Apply for Licenses/Permits

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Starting a laundromat business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.

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You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Open a Business Bank Account

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Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your laundromat business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

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Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

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Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

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Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many

You may want to use industry-specific software, such as CleanCloud, DragonPOS, and Geelus to manage your laundromat, enhance customer experience, and strengthen customer loyalty.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

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Marketing

Some of your business will come from the casual passerby, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Visit Us Now”. This can sharply increase your client base.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

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Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as being the 10th customer every Thursday.
• Signage – Put up eye-catching signage at your store and website.
• Flyering – Distribute flyers in your neighborhood and at industry events.
• In-Person Sales – Offer your products/services at local markets, trade shows.
• Seek out referrals – Offer incentives to generate customer referrals to new clients.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Create infographics – Post infographics and include them in your content.

Develop your website

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Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

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Unique selling propositions, or USPs, are the unique characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your laundromat meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Some signature USPs for your laundry business could be:

• Add a small shop or vending machines with snacks, drinks, detergents
• Arcade games, free wifi, and a child’s play area would provide added entertainment
• Open a small cafe, bar, or pizza place within the laundromat, embracing the global industry trend
• Install the most advanced, energy efficient equipment

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Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential.

Maybe that Facebook friend you met in college is now running a laundromat business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in a laundromat for years and can offer invaluable insight and industry connections.

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in laundromats.

You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

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Build Your Team

Initially, if you’re willing to work long hours at your laundromat, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a laundry business would include:

• Maintenance — take care of machines, clean the shop, etc.
• Marketing Lead — SEO optimization, social media strategies
• General Manager — oversees operations at several laundromats

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

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Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Start Making Money!

For a laundromat to succeed, location is extremely important. If your laundromat is easily accessible, it can provide you with a stable source of income. There’s no time for complacency, though. It’s wise to always strive to improve your services and inspire your customers to keep coming back. Perhaps you can add a coffee shop, provide a lounge or reading area for your customers, or offer a workspace with internet.

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You now know all the steps needed to get your laundromat up and running. Now it’s all about getting to work and making money! Best of luck on your entrepreneurial journey!

Laundromat Business FAQs

Is a laundromat business profitable?

Laundromats boast around a 90% success rate, and it is a mature market meaning that they have been around for a long time. According to Laundry Solutions, laundromat owners report an average net profit of $5,000 to $7,000 per month. So we’d say that opening a laundromat is profitable!

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How much does a laundromat make per month?

While numbers will vary depending on your location and the size of your store, laundromat owners report an average net profit of $5,000 to $7,000 per month. So there is an opportunity to make some decent profits.

Are laundromats a dying business?

While there has been a 20% decrease in the number of laundromats since 2005, the industry isn’t dying by any means. The laundromat industry still generates around $5 billion in gross revenue each year.