How to Start a Laundromat Business in Six Steps

A business plan helps you identify your business’s strengths and weaknesses. Not only will a business plan help you organize your business, but banks and business lenders will want to see it if you want a business loan or credit. Within your business plan, you should answer the following questions:

What Is My Business Model?

Will you operate a 24-hour self-service coin laundry or a full-service coin laundromat? How will you staff it?

Who Is My Customer?

Research your demographic area. Are your potential customers single professionals or families? Identifying your customer base helps you determine what laundry services to provide. For example, if you are in an urban area with many businesses, your clients may want dry cleaning. A laundromat offering wash and fold services may appeal to single adults or busy families.

Who Is My Competition?

Do your market research to see what other laundromats are in your area and what they charge. Find out who their customers are and what they look for in a laundromat. How can you distinguish yourself? Certainly, people want clean clothes, but what else can you offer them? A clean, comfortable, well-lighted area? Free Wi-Fi?

What Are My Costs?

You will need to estimate both your startup costs and ongoing expenses. Depending on whether you take over an existing laundromat or start a new laundry business, your initial investment could range from $200k to $500k.

Your two largest expenses will be real estate and equipment. Will you be leasing space or purchasing a property? Determine what commercial laundry equipment you need, for example:

• Commercial laundry equipment

• Washing machines

• Dryers

• Change machines

If you can’t buy the machines outright, look into financing options. In addition to the upfront costs of washers and dryers, you may need to buy seating, folding areas, racks, laundry carts, and signage. Consider selling laundry detergent and dryer sheets for your customer’s convenience and to earn additional income.

Calculate your operating costs, such as your gas, water, and power utilities. Will you hire employees? Even a coin laundromat needs routine cleaning and maintenance.

What Is My Projected Revenue?

Estimate how much revenue will come from your laundry business and other potential revenue streams, such as vending machines or ATM machines at your place of business. Will you have enough cash flow to support the business and also be profitable?

What Are the Challenges and Opportunities of Running a Laundromat?

Search online for articles and videos about what you need to know about running a laundromat and learn about the laundromat industry. You can find information with the Coin Laundry Association, a trade association for the coin laundry business. Address the challenges in your business plan and how you can overcome them.

You can contact your local Small Business Administration (SBA) office for help with your business plan.

Laundromat owners know that their location is a critical decision. A laundromat needs a lot of foot traffic, so it should be located in residential areas near densely populated locations. Consider the amount of available parking. Your customers will be hauling bags and baskets and want the convenience of parking near your laundromat. Also, try to find a location near other local businesses that customers may frequent. For example, operating near a grocery store may be attractive to your customers, who can do other errands while doing their laundry.

It is critical to protect your personal assets from your business liabilities and debts. You do this by forming a corporate entity such as a corporation, limited partnership, or limited liability company (LLC). Any claims or debts against the business are limited to the business’s assets.

Many entrepreneurs form an LLC, a flexible business structure that allows you to report your business income and losses on your personal income tax return. Another benefit of an LLC over other corporate entities is that there is very little paperwork and ongoing state requirements. LLCs are easy to set up. You can do it through your Secretary of State’s office or you can let our trusted partner LegalZoom handle your business formation filing for $99 plus filing fees.

You should also open a separate bank account for your business transactions. It is essential to handle all business transactions in the business name and through bank accounts in the business name. To open a business bank account, you will need an EIN number from the IRS, which you can get online.

Check with your state and local governments for business license and permit requirements.

If you hire employees, you may need to report all new hires to your state department of labor, set up tax withholding accounts, and pay unemployment insurance and workers’ compensation.

Any business is liable for injuries to its customers. In a laundromat, people could slip and fall, suffer injuries from laundry machines, etc. You should investigate what general business liability policies will protect your business interests.

Starting a laundromat business requires careful planning, from crafting a detailed business plan to choosing the right location and legal structure. The more thought you put into it, the more likely you will have a profitable and sustainable business.