How to Start a Laundromat Business

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.

Let’s get started!

Step 1: 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.

Laundromat industry trends

With an impressive 95% success rate, laundromats boast an average return on investment of nearly 30%, according to industry expert Martin Ray Laundry Systems.((https://martinray.com/p-33942-key-statistics-laundromat-investors-should-know.html#:~:text=The%20laundromat%20industry%20sees%20about,between%2020%2D35%25%20ROI.))

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

• Industry size and past growth – Market analyst IBISWorld values the laundromat industry in the US at more than $5 billion.((https://www.ibisworld.com/industry-statistics/market-size/laundromats-united-states/)).  
• 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.((https://www.ibisworld.com/united-states/market-research-reports/laundromats-industry/))
• Number of businesses – There are more than 18,000 laundromat businesses in the US as of 2022.((https://www.ibisworld.com/industry-statistics/number-of-businesses/laundromats-united-states/))
• Number of people employed – The industry employs more than 47,000 people.((https://www.ibisworld.com/industry-statistics/employment/laundromats-united-states/)) 

Trends and challenges

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

• 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?

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.((https://www.zippia.com/laundromat-manager-jobs/demographics/#gender-statistics))
• Average level of education – Almost half of laundromat managers in the US are high school graduates, while 30% hold an associate degree.((https://www.zippia.com/laundromat-manager-jobs/education/))
• Average age – Most laundromat managers are over 40 years old.((https://www.zippia.com/laundromat-manager-jobs/demographics/#age-statistics))

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. 

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?

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?

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

Step 2: Hone Your Idea

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

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

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 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. 

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.

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

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 laundromat location

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.

Consider accessibility and convenience, ensuring that the location is easily reachable by foot or public transportation, and has ample parking.

By strategically choosing the right location, you can establish a profitable and successful laundromat business that caters to a diverse range of customers and stands out from competitors. 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:

• 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. 

Step 3: Brainstorm a Business Name

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: “Wash World Laundromat” over “Industrial Laundry Solutions”
• 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 fingertips.

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. 

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.

Step 4: Create a Business Plan

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: A brief summary of the entire business plan, highlighting key points and objectives.
• Business Overview: An introduction to your laundromat, including its name, location, and a concise description of what it does.
• Product and Services: A list of the laundry services you offer, such as self-service machines, dry cleaning, or special features like eco-friendly detergents.
• Market Analysis: An examination of the local market, including demographics, customer needs, and potential demand for laundry services.
• Competitive Analysis: An assessment of your competitors in the area, highlighting their strengths and weaknesses.
• Sales and Marketing: Strategies for promoting your laundromat, including advertising, pricing, and customer acquisition plans.
• Management Team: An overview of the key individuals involved in running the business, including their qualifications and roles.
• Operations Plan: Details on the day-to-day operations of the laundromat, including hours of operation, staffing, and equipment.
• Financial Plan: Projections of your laundromat’s finances, including startup costs, revenue forecasts, and break-even analysis.
• Appendix: Additional information that supports the business plan, such as market research data, legal documents, and any other relevant materials.

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

Step 5: Register Your Business

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

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

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.

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 an 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.

Step 6: 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. 

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.

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

Step 7: Fund your Business

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.  

Step 8: Apply for Licenses/Permits

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. 

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.

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.

Step 9: Open a Business Bank Account

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.

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. 

Step 10: 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.

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.

Step 11: Prepare to Launch

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

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 business tasks. 

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.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. 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.

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. 

Marketing

For your laundromat business, the marketing strategy should focus on showcasing the convenience, cleanliness, and efficiency of your services. Emphasize the state-of-the-art facilities, the range of services you offer (like self-service, drop-off laundry, or additional amenities), and any unique aspects like eco-friendly machines or comfortable lounging areas. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should convey cleanliness, reliability, and ease of use. This includes a recognizable logo, clear signage, and a well-maintained facility.
• Direct Outreach: Network with local businesses, community centers, and residential complexes to introduce your services. Offering opening discounts or loyalty programs can attract initial customers.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a website that highlights your location, services, pricing, and any special features like free Wi-Fi or extended hours. Use SEO best practices to rank for local searches related to laundromats, laundry services, and self-service laundry.
• Social Media Engagement: Utilize platforms like Facebook and Instagram to share updates about your laundromat, customer testimonials, and promotions. Engage with local community groups online.

Content Marketing and Engagement

• Laundry Tips Blog: Share informative content about laundry tips, fabric care, and efficient washing and drying practices. This can position your business as helpful and knowledgeable.
• Email Newsletters: Keep your customers informed about any changes in hours, new services, or special offers.
• Video Content: Create video tours of your facility, highlighting any unique equipment or services, and share customer testimonials.

Experiential and In-Person Engagements

• Community Events: Participate in or sponsor local community events to increase brand visibility and engage with potential customers.
• Promotional Days: Host promotional events, such as “free wash days,” to attract large crowds and introduce new customers to your laundromat.

Collaborations and Community

• Partnerships with Local Businesses: Collaborate with nearby businesses for cross-promotion. For example, offer discounts to customers of a neighboring coffee shop.
• Student Discounts: If located near a college or university, offer student discounts to attract the student population.

Customer Relationship and Loyalty Programs

• Loyalty Rewards Program: Implement a program that offers incentives for repeat customers, such as every tenth wash free or discounted drying services.
• Referral Incentives: Encourage word-of-mouth marketing by offering incentives for customers who bring friends.

Promotions and Advertising

• Targeted Local Advertising: Use local newspapers, community bulletin boards, and online platforms like Google Ads to reach potential customers in your area.
• Flyers and Local Mailers: Distribute flyers or mailers in local neighborhoods, especially those with high concentrations of apartments or rental properties.

Focus on USPs

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 

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.

Step 12: 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. 

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. 

Step 13: Run a Laundromat Business – 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.

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!