How to Open a Dry Cleaning Business in 9 Steps

Opening a dry cleaning business can take a lot of time and money. However, if you feel that starting up a new business in the dry cleaning industry is for you, there are steps that you can take to make sure things go smoothly.

Before you dive into the nine steps to open a dry cleaning business you should sit down and think about the type of dry cleaning business you'd like to have. You need to 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 on using eco-friendly products?
• Is franchising for you?
• Are you willing to do delivery service or same-day services?
• How can you streamline the drop-off and pick-up process?

Your answers to these questions can help you make decisions as you put your plan into action.

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1. Pick a Name for Your Dry Cleaning Business

Picking a name for your business may not seem very important, but the business name is one of the first things potential customers will see. You'll want to do your research before you put together a list of names. Check out the names of your competitors' businesses so that you can avoid choosing a name that's too similar to theirs. You should also conduct a business name search that includes searching the following:

• State business records
• State database for "doing business as" (DBA) names
• Federal and state trademark databases

You could encounter legal problems down the road if you go with a business name that someone has trademarked. Also, in some states, you can't use a business name that is already registered. For these reasons, conducting a business name search is important. Once you've conducted your search and narrowed down your list, you can pick a name that's both memorable and unique.

2. Decide on a Business Structure

The way you structure your business can affect your potential liability if your business gets sued and your tax treatment. There are four main types of business entities that business owners usually choose from: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. As you begin to consider which type of business structure is best for you, don't forget to think about the costs and the process for forming different types of business entities.

To form an LLC or a corporation , you'll need to file paperwork with the secretary of state (or other agency) for your state. There is a filing fee for this paperwork that varies from state to state. The fee could be as low as $50 or it could be much higher. Generally, you don't have to file paperwork with the state in order to form a sole proprietorship or a simple partnership.

Perhaps 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 when it comes to liability. That is because sole proprietors and partners don't have liability protection. This means that they could lose their personal assets, such as houses or cars, as a result of business obligations or debts.

However, limited liability is a feature of LLCs and corporations. This is because these business entities are considered to be separate entities from the owners. If you are at all concerned with the risk involved in your business, you might prefer to pay the extra costs and go through the process of forming an LLC or corporation.

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

3. Create a Business Plan

You've already spent some time thinking about business names and business structures. Next, you'll need to do some market research on the laundry and dry cleaning industry. Identify the businesses that would be your competition in the area. Think about the type and size of the retail space you'll need to conduct your business. You'll also need a good location with lots of parking so that it's convenient for your customers to use your services.

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.

One of the most important aspects of putting together a business plan is the cost analysis. How much will it cost for you to start up your business? What ongoing costs do you anticipate for the next few years? 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:

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

You have options when it comes to getting equipment to start up your business. Some business owners opt to lease rather than buy a dry cleaning machine. This way, they can make low monthly payments. Another option to consider is purchasing used equipment. However, purchasing used equipment could mean that 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 that the equipment is in good working condition if you decide to purchase used dry cleaning equipment.

Keep in mind that many dry cleaning business owners provide other services in addition to dry cleaning. If you want to do alterations, tailoring, or shoe repairs, you'll need to factor in the costs associated with these services, as well.

Pricing strategy is typically included in a solid business plan. How will you charge your customers? Many owners of dry cleaning businesses charge by the item for dry cleaning and by the pound for laundry services. If you decide to charge by the item for dry cleaning services, keep in mind that you might want to charge different prices for the items that you clean, depending on the type of material it's made of and the 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. Don't forget to find out what competitors are charging for their dry cleaning services. Decide if you'd like to charge less than your competitors as a way to drive customers to your business.

Business plans are helpful for entrepreneurs as they begin mapping out a strategy for opening their new business. They also come in handy if you need to get funding for your business. Many people who find that they need a loan to open their business go to family or friends for help.

Another option is to contact a bank or other financial institution for a business loan. If you seek a loan from a bank, you'll probably need to produce your business plan in order to be considered. Finally, the Small Business Administration (SBA) will often provide loans to startup businesses on favorable terms.

4. Register for Taxes

Most businesses need an EIN (employer identification number). 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.

The process of obtaining an EIN is simple, and it's free. There are several ways to apply. The quickest and easiest way to apply is through the IRS website.

5. Get Insurance

If someone suffers a loss or injury in your shop, you're going to want to have business insurance. Shop around to find out what type of general liability coverage you can get at a price that fits your budget.

You may also want to get worker's compensation insurance. Worker's compensation insurance can kick in if one of your employees suffers a work-related injury. Depending on the laws in your area, you may be required to have worker's compensation insurance.

6. Obtain Your Business Licenses and Permits

You will almost certainly be required to have a business license from local government in order to operate your dry cleaning business. Local city and county governments provide business licenses or permits for business owners who seek to run a business in a particular area. The SBA is a resource that you can use for more information about these requirements for small businesses.

You could also need to get a certificate of occupancy. If you're leasing your space, then the owner of the building may already have a certificate of occupancy. If you're purchasing your space or the space has not been occupied, it could be important to make sure that you have a certificate of occupancy to occupy the space.

7. Open a Business Bank Account

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 could be helpful to get a debit card or credit card that's dedicated to business expenses, as well. The second benefit is that keeping your business and personal funds separate will help to maintain personal liability protection if you are operating it as a corporation or LLC.

LLCs and corporations generally grant the owners limited liability. However, 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 called piercing the corporate veil. If you form an LLC or corporation and want to make sure that you continue to have personal liability protection, you'll need to keep your business and personal funds separate. You could possibly lose your house, car, or other personal assets if you don't keep your funds separate.

8. Make a Marketing Strategy

Marketing for your new business can include everything from business cards and flyers to newspaper ads. There are many options when it comes to marketing. However, you'll need to 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.

One type of marketing to consider for your dry cleaning business is signage. It'll be important to have a sign to mark your location. This sign will need to be visible so that you can draw customers in from the street. If your location gets a lot of foot traffic, take advantage of the opportunity to advertise any sales or discounts you're offering on the windows of your storefront. If you intend to offer a delivery service for busy professionals, consider getting your business name or logo printed on your van.

These days, many customers expect businesses to have websites. If you're not prepared to build a website on your own, there are options out there for you. Many services exist that provide assistance in building a basic website. You can use your website to provide basic information about your business, such as the location and phone number. You can also inform the public of things that make your business unique.

For example, if you decide to run an eco-friendly laundromat or dry cleaning service, your website can include information about the cleaning supplies that you use and the harmful chemicals that you avoid. Potential customers who are seeking an eco-friendly dry cleaner may be attracted to this aspect of your service. Similarly, if you're able to dry clean a variety of materials or designer threads, let customers know that they can bring these items to you. Finally, if you offer other services besides dry cleaning, make sure that you make that information available on your website.

Social media is another avenue for marketing and advertising. Many potential customers could find your social media pages and feel encouraged to give your business a try. You could run the social media pages yourself or get someone to help you keep your pages updated and respond to any customer comments or questions.

If you start your business in a location that's surrounded by other businesses and homes, don't forget to pass out flyers. You can also take out ads in the newspaper or on the radio. Word of mouth works well, but any marketing and advertising that 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 and help them find out about your services.

9. Start Hiring Staff

It's unlikely you'll be able to run your dry cleaning business without help, especially as it starts to grow. You'll need people you can trust to operate the dry cleaning machines, speak with customers, and provide any other services you decide to offer.

Many dry cleaning businesses are family-run operations. If you decide to go with family members as staff members, then you may be able to avoid going through a long hiring process.

If you're interested in hiring staff from the general public, though, you'll want to do your due diligence to make sure that a prospective new hire is well-suited to the job. 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 come up with a training protocol.

Thinking about Opening a Dry Cleaning Business? 

The steps that you need to take to open up a dry cleaning or laundry business could seem daunting. But you don't want to get overwhelmed and miss out on what could be a great opportunity for you to start a small business. Consider using our trusted, simple-to-use online business formation tool. We'll walk you through the steps of creating your business and help you meet all the legal requirements.

If you feel that you could use some help in making decisions about your business plan, marketing, or other related aspects of starting up a business, don't hesitate to reach out for the help that you need. An experienced attorney could provide guidance and assistance every step of the way. Contact a lawyer in your area today.