How To Start a Laundromat: Costs and Pro Tips

If you're an entrepreneur looking to start your own laundromat business, then read on for costs, pro tips, and how-to's on the process.

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Entering into the laundry business can be challenging because there are so many factors to consider — you will need to analyze your target demographic, develop a financial plan, and choose a prime location.

To help alleviate some of your stressors, follow along for a guide on everything you need to know about starting your own laundromat.

Why starting a laundromat could be right for you

People everywhere need clean clothes, so starting a laundromat seems foolproof. Laundromats are self-service facilities (generally coin-operated) where patrons have the space and equipment to wash and dry their clothes without the help of a professional.

Related: How to Start a Coin-Operated Laundry

Laundromats and dry cleaners are not the same, as laundromats are self-service, and dry cleaning is maintained by professionals who complete the task of cleaning special-care clothes for their patrons.

The self-service nature of the business might sound attractive because laundromats can be low maintenance to run. However, before entering any new industry, getting a feel for the lay of the land is essential. To do that, you must weigh the pros and cons of your potential endeavor.

Pros of owning a laundromat

Ready for the perks of owning your own laundromat? They may include:

  • Steady revenue stream
  • High return on investment (ROI) potential
  • Recession-proof business
  • Simplicity of operation
  • Work hour flexibility
  • Zero eCommerce competition
  • Potential for multiple locations
  • Low management maintenance

Cons of owning a laundromat

When looking at the downside of owning a laundromat, you may find:

  • Capital intensive business
  • Barrier to entry
  • High utility expenses
  • Possible costly repairs

How to purchase and open a laundromat

Now that you've considered both sides of the coin, it's time to get into how to start a laundromat business.

1. Initial research

Before you create a business plan, you'll need to complete some initial research to better understand what ballpark you're in. This step can help guide your business plan and its parameters.

There is no real way to give an exact number on cost because there are so many factors. However, a broad range for how much it may cost to open a laundromat is $200,000 to $500,000.

Factors that can influence cost include:

  • New business vs. existing business
  • Independent or franchise
  • Location
  • Property
  • Utilities
  • Equipment
  • Insurance
  • Marketing and advertising
  • Employee wages

Related: Start a WaveMax Laundry Franchise

2. Business plan

Once you've completed preliminary research, you'll have a better idea of how much this process will cost and the steps needed. Now that you've got some more information, it's time to create a business plan.

Your business plan should include the following:

  • Executive summary
  • Business description
  • Market strategies
  • Competitive analysis
  • Design and development plan
  • Operations and management plan
  • Financial factors

Related: How to Write a Business Plan

3. Secure financing

Starting a new business is no cheap feat, so you will likely need some type of financing. There are many avenues to take regarding this topic, but the Small Business Administration (SBA) is the best place to start. The SBA offers countless resources and guides but can also connect entrepreneurs with interested investors and financiers.

The Small Business Administration can help you to:

  • Determine the amount of funding you'll need
  • Complete the self-funding process
  • Connect with venture capital investors
  • Fund your business with crowdsources
  • Obtain a small business loan
  • Use Lender Match to find SBA-guaranteed loans with verified lenders
  • Research SBA investment programs

4. Secure location

Ready to scope out real estate? One of the most significant assets a laundromat business can have is its location. You may need to complete market research to determine whether or not it will succeed in that prospective community.

Ask yourself:

  • Are there apartment buildings in the area?
  • Do those apartment buildings have washer and dryer units?
  • Is there real estate within walking distance of the apartment complex?
  • Are there competitor businesses in the area?

Other factors to consider about your location are the potential for:

  • Optimal lighting
  • Layout with adequate space for equipment, seating, and customers
  • Welcoming interior design
  • Space for interior and exterior signage
  • Accessibility for all customers

5. Choose the type of business structure

As you finalize your business plan, you should also consider what type of business entity you want your laundromat to be. Check out the different types below.

Related: Choose Your Business Structure

Limited Liability Company

A Limited Liability Company (LLC) is a flexible business structure that combines a corporation, partnership, and sole proprietorship.

With this structure, the business owner is legally separate from the business, which dictates tax filing, operations, and management. LLCs are generally safer and more easily manageable than other small business entities.

S corp

An S corp is a small business entity that files for federal corporate income tax exemption. Because of the structure of this business, the shareholders are responsible for income, loss, and tax return credits.

Sole proprietorship

A sole proprietorship is a common type of business structure that is a common but riskier choice. It is risky because the business owner is not separated from the business and assumes all financial risks.

Licensing and taxes are simple with this choice, but the weight of the business is all on the owner and their personal finances.

Partnership

If you plan to team up with another entrepreneur in this venture, you may consider a partnership. A partnership is two or more people that share ownership, control, profits, and losses of a business.

In a partnership, the business and the person are the same, much like in a sole proprietorship. This means that the company's legal responsibilities fall upon you and your partners.

6. Choose business name, register the business, obtain IDs, licenses, and permits

At this stage of the process, things are beginning to take shape. It's time to name your business and tackle some legal paperwork.

Choose business name

When registering your business, you will likely need to create a name for your new laundromat. Your business should be named something that reflects the nature of your business and aligns with your brand identity.

Register business

After you've chosen your name, you must register your business. There are four different ways you can do so, which include:

  • Entity: State-level protection
  • Trademark: Federal-level protection
  • Doing Business As (DBA): No legal protection, but some states require
  • Domain name: Online presence shown through website and URL

Obtain IDs, licenses, and permits

You must obtain a federal tax ID to legally open a business bank account, employ a team, and apply for licenses and permits.

Federal and state governments have different requirements for licenses and permits based on your industry. It is always best to stay up-to-date with the latest requirements through information from the SBA.

7. Open a bank account

Having a business bank account that is separate from your personal bank account offers you protection in your business life and balance in your personal life.

The benefits of opening a business bank account include the following:

  • Protection and professionalism
  • Purchasing power (credit limits)
  • Special introductory offers, interest rates, and fees

Choosing a bank is personal to each business owner. Make sure you complete your due diligence and create a pros and cons list for at least three different banks and what they can offer.

8. Secure equipment

Equipment costs can depend on buying an existing laundromat or starting from scratch. If you are buying an operating store, you should check on all the laundry machines' condition.

If you are starting fresh, you may need to research commercial laundry equipment like:

  • Industrial washing machines: $700 - $3,000+ depending on size, and top-load versus front-load
  • Industrial dryers: $900 - $4,000 depending on size, and top-load versus front-load
  • Card system (if you are going to offer credit card payments): Wide range, averaging around $15k if you're adding card readers to all of your laundry machines
  • Bill-to-coin change machine: $800 - $7,000
  • Water heater system: $10,000+
  • Laundry detergent
  • Fabric softener
  • Laundry carts

There are also comfort items to consider to make your patrons comfortable while they wait for their laundry:

  • Vending machines
  • Furniture
  • Office supplies
  • TVs and cable
  • Wifi

9. Employees

The next step is assembling a team for your new business. Once your business is up and running, it is relatively low maintenance. However, that does not mean that you will want to be the sole employee.

When it comes time to hire employees, it's vital to business operations that you find a team that is reliable, positive, and full of integrity.

A few ways to get the word out about open positions are:

  • Utilize multiple job boards (LinkedIn, Craigslist, Indeed, and flyers)
  • Include descriptive job postings with transparent wages and role responsibilities
  • Require references and letters of recommendation
  • Conduct a thorough interview process

Related: 15 Tips for Improving Your Skills Interviewing Job Candidates

10. Open

At this stage, everything has started to come together. Before you open, create a marketing plan to promote the grand opening event.

Marketing for the opening can help raise awareness and promote engagement. There are many ways you can market that are low-cost and effective.

Cost-effective marketing tools include:

  • Social media posts
  • Local business networking
  • Word-of-mouth
  • Flyers and posters
  • Local business collaborations (especially with apartment complexes)
  • Offer discounts

In addition to a solid marketing plan, you should also create a Google Business profile.

Google Business profiles make it easy to:

  • Display your business hours online
  • Communicate with customers
  • Maintain general updates
  • Read customer reviews to stay in-the-know

Finally, when it comes to the actual grand opening, put a fun spin on your event. Allocate a bit of your budget and make it a neighborhood event.

Splurging on simple things like coffee and donuts, a randomizer wheel of prizes, and other fun promotional items can go a long way if it broadens your customer base and spreads the word about your new business.

Related: No Money? No Problem. 30 Low Budget Marketing Ideas for Your Busines

Pro tips for opening a laundromat business

As an entrepreneur, it's essential to stay as on top of your game as possible. While you continue your journey of being a successful laundromat owner, there are a few critical pieces of advice to remember.

Pro tips for small business owners include:

  1. Conduct regular SWOT analysis — examining and reflecting on your business is never a bad idea.
  2. Make customer loyalty a priority and stay involved in your community.
  3. Maintain a watchful eye on your cash flow.
  4. Stay creative, adaptive, and passionate.

Related: 4 Tips for Small Business Owners as They Navigate an Economic Downtur

Is starting a laundromat right for you?

Laundromats might sound like a lot of work, but so is any business. The greater truth is that laundromats can be an excellent investment for a business owner because they are generally steady and straightforward businesses. While they might require a hefty startup cost, the profit margins can be worth it in the long run.

No matter the weather (literally and metaphorically), people always need to do laundry. No matter the economy, people need clean clothes. And no matter how much trends change, fresh clothing will never be out of style.

Looking for more guidance? Explore Entrepreneur for advice on starting your own business, managing business finances, and more

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