How To Open a Dry-Cleaning Business in 13 Steps

Think about the type of dry cleaning business you'd like to have. Consider the business model you'd like to use and what you can do to make your business stand out.

You should also think about the following questions:

• Do you plan to use eco-friendly cleaning chemicals?
• Is a brick-and-mortar or physical location the best business model for your profit margins? Or would a laundry pickup and delivery service set you up for a successful dry cleaning business?
• Will you offer on-demand in-home services for repeat customers?
• Is purchasing a dry cleaning franchise for you?
• Are you willing to do delivery service or same-day services?
• How can you streamline the drop-off and pickup process?

Your answers to these questions can help you decide as you implement your business plan.

Picking a name for your business may not seem very important. Your business name is one of the first things potential customers see.

Check out the names of your competitors' businesses to avoid choosing a name too similar.

Conduct a business name search that includes searching the following:

• Domain names (website names)
• Social media like Facebook, Instagram, LinkedIn, and YouTube
• State business records at the local secretary of state and clerk of court
• State database for "doing business as" (DBA) names
• State trademark databases
• United States Patent and Trademark Office database

You could encounter legal problems if you pick a business name someone has trademarked. Some states don't allow the use of a business name that is already registered.

Once you've searched and narrowed down your list, pick a memorable and unique name. Now, it's time to choose your legal business structure.

How you structure your business affects your potential liability if someone sues your business. It also affects your tax treatment by the Internal Revenue Service (IRS).

Small business owners usually choose from four main types of business entities:

• Sole proprietorships
• Partnerships
• Limited liability companies (LLCs)
• Corporations

As you begin to consider which type of business structure is best for you, consider each entity's short-term and long-term costs.

How To Form A Legal Entity

Generally, you don't have to file paperwork with the state to form a sole proprietorship or a simple partnership.

To form an LLC or a corporation, you must file paperwork with your state's secretary of state (or other agency). A filing fee for this paperwork varies from state to state. The cost varies based on state. Typically, you can expect to pay $50 to $200 at formation.

One of the most important considerations when choosing the structure for your business is liability protection. Although a sole proprietorship or partnership is the cheapest way to go, there is a downside on liability. That is because sole proprietors and partners don't have liability protection. This means they could lose their assets, such as houses or cars, due to business obligations or debts.

One of the most important considerations when choosing the structure for your business is liability protection. Limited liability is only a feature of LLCs and corporations. This is because these business entities are separate entities from the owners. If the risks in your business concern you, pay the extra costs and go through the process of forming an LLC or corporation.

Sole proprietors and partners don't have liability protection. This means they could lose their personal assets, such as houses or cars, due to business obligations or debts.

Due to the nature of a dry cleaning business and the number of customer interactions you will have on-site or in their homes, you should seriously consider becoming an LLC or corporation.

Tax Implications of Your Business Formation

It can be much easier to handle your taxes if you have a sole proprietorship, partnership, or LLC. Owners of corporations have to file a personal tax return and a tax return for the corporation itself. LLC owners have pass-through taxation, meaning they're only taxed on net revenue. Except where LLC owners elect to get taxed as a corporation, business income and losses show on members' personal tax returns. Sole proprietors and partners only have to file a personal tax return.

Talk to a trusted local accountant and business tax lawyer before deciding which structure best suits your needs.

You picked your dry cleaning business names and formed your business structure. Now, you'll need to create a business plan.

• Identify local competitors and conduct local market research in the dry cleaning industry
• Consider the location and parking availability of a retail space

Many dry cleaning businesses can make around $30,000 per year in profits. Of course, your actual profits will depend on many factors. These factors include the number of locations that you have, whether your business is traditional or eco-friendly, and how you manage your costs.

Be sure to complete a thorough cost analysis.

• How much will it cost for you to start up your business?
• What ongoing costs do you expect for the next few years?
• How much do customers spend on the dry cleaners in your area?

You can find statistics and demographics for your state or county using census data. You can also ask around the neighborhoods or areas you want to open: would people use your dry cleaning services?

Most businesses need an Employer Identification Number (EIN). An EIN is like a Social Security number for your business. The Internal Revenue Service (IRS) uses this number to identify your business for tax purposes.

Getting an EIN is simple and free. There are several ways to apply, but the quickest and easiest is through the IRS website. Don't use any other website as it is a scam and can steal sensitive information like your Social Security number.

There are two main benefits to opening up a business bank account as soon as you can. First, accounting will be much simpler if you have separate accounts for your business and personal funds. It might help to get a debit or credit card dedicated to business expenses. The second benefit is that keeping your business and personal funds separate will help maintain personal liability protection if you operate as a corporation or LLC.

LLCs and corporations generally grant the owners limited liability. But, it's possible for someone who sues the business to reach the personal assets of the owners of an LLC or corporation in some cases. This is piercing the corporate veil. Suppose you form an LLC or corporation and want to ensure you continue to have personal liability protection. In that case, you must keep your business and personal funds separate.

Business plans can help you secure business financing.

The most common option is to contact a bank or other financial institution for a business loan. If you seek a loan from a bank, you'll need to show your business plan. The Small Business Administration (SBA) offers loans to startups that can't secure funding through traditional banks.

Many people who need a loan to open their business go to family or friends for help. Interest rates can be lower through family and friends.

Many dry cleaning businesses require up to $50,000 worth of equipment at startup. If you're not sure what you might need to spend money on, consider these typical business expenses for the dry cleaning business:

• Cleaning solvents
• Cash register
• Dry cleaning machine
• Garment covers
• Hangers and tags
• Racks
• Rent and utilities

You have options when it comes to getting equipment to start up your business. Some business owners sign leasing equipment agreements rather than buy a dry cleaning machine. This way, they can make low monthly payments.

Another option to consider is buying used equipment. But purchasing used equipment could mean you'll have to spend money on repairs or maintenance that you wouldn't have to spend on new equipment. Do your best to ensure the equipment is in good working condition no matter what option you choose.

Business Ideas to Offset Equipment Costs

Remember that many dry cleaning business owners provide other services besides dry cleaning. Some ideas include:

• Alterations
• Shoe repairs
• Tailoring

Your pricing strategy should reflect how fast you wish to recover startup or ongoing overhead expenses.

• How will you charge your customers?
• Many dry cleaning business owners charge by the item for dry cleaning and by the pound for laundry services.
• Charge different prices for the items you clean, depending on the type of material and size of the item. For example, it's reasonable to charge more for dry cleaning a comforter set than you'd charge to dry clean a light blouse.

If you need help paying for your equipment, consider financing some or all the costs of opening your dry cleaner.

Find out what business insurance you need in the event of property damage or personal injury. Shop around to find out what type of general liability coverage you can get at a price that fits your budget.

If you have workers, you need worker's compensation insurance. This insurance company pays hurt workers' medical bills and lost wages. Failure to keep this insurance can result in fines for every day you don't have it.

You need a local government business license to operate your dry cleaning business. Local city and county governments offer business licenses or permits for those who seek to run a business in a particular area. The SBA is a resource for small businesses.

You also need to get a certificate of occupancy. If you're leasing your space, the building owner may have one. If you're buying your space or the space has not been occupied, make sure you have a certificate of occupancy to occupy it.

If you plan to operate out of your home, follow all home-based business guidelines. This includes checking your homeowner's association rules, zoning regulations, and any lease agreement you have to ensure you can run a business from home.

11. Understand Dry Cleaning Related Laws and Regulations

Due to the chemicals used in the dry cleaning process, your business must follow many regulations. The Environmental Protection Agency limits the amount of perchloroethylene, trichlorotrifluoroethane, and CFC-113. This includes requirements by the EPA to:

• Keep records of any leaks
• Inspect your dry cleaning equipment regularly
• Record your perchloroethylene purchases and keep them on record for at least a year

Your dry cleaning business must properly dispose of the water you use to clean and steam your customers' garments. Failure to do so will result in fines and possible shutdown of your operations. If your operation produces hazardous substances that get released, you legally must call the EPA's National Response Center. If you have questions, your local air pollution control district or air quality board can help.

You must follow Occupational Safety and Health Administration standards when operating as a dry cleaner. Make sure you understand the limits and restrictions on occupational chemicals.

Your new business's marketing can include business cards, flyers, and social media postings. Figure out what type of marketing schemes fit within your budget. Marketing is one of the ongoing costs that you'll want to factor into your business plan.

Signs and Logos

One type of marketing to consider for your dry cleaning business is signage to mark your location. Make the sign visible from the street to draw in customers.

If your location gets a lot of traffic, take advantage of the opportunity to advertise any sales or discounts you're offering on your storefront windows.

If you intend to offer a delivery service or home services, get your business name or logo printed on your van.

Website

Build a website to show customers what your dry cleaning business does and why it is better than other competitors.

For example, suppose you decide to run an eco-friendly laundromat or dry cleaning service. In that case, your website can include information about the cleaning supplies you use and the harmful chemicals you avoid. Potential customers seeking an eco-friendly dry cleaner may be attracted to this aspect of your service.

If you dry clean various materials or designer threads, let customers know they can bring these items to you. Finally, if you offer other services besides dry cleaning, make sure you make that information available on your website.

Social Media

Social media is another way to market and advertise. Many potential customers could find your social media pages and feel encouraged to try your business. You could run the social media pages yourself or get someone to help keep your pages updated and respond to customer comments or questions.

Traditional Media

Remember to pass out flyers if you start your business in a location surrounded by other businesses and homes. You can also take out ads in the newspaper or on the radio. Word of mouth works well, but any marketing and advertising you can do will also help spread the word about your new business. Contacting the local chamber of commerce could also help you become more familiar with the businesses and people in the community. Building genuine networking relationships helps people learn about your services.

You'll likely need help running your dry cleaning business, especially as it grows. You'll need trustworthy people to operate the dry cleaning machines, speak with customers, and provide any other services you offer.

The hiring process could include interviews, reference checks, and background checks. You'll have to decide if you're willing to train a person who doesn't have experience cleaning clothes or if you're only willing to hire experienced people. If you decide you're willing to train people, take some time to develop a training protocol.