How to Start a Laundromat in 11 Steps

The laundry industry is an essential and constantly evolving sector that provides cleaning and care services to households, businesses, and institutions. Laundromat businesses range from small, self-service facilities to large, full-service laundromats with modern equipment and technology.

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Starting a laundromat business can be profitable with the proper planning, resources, and execution. I will show you how to start a laundromat business in this blog.

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Reasons to Start a Laundromat Business

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Starting a laundromat business can be an attractive opportunity for entrepreneurs for several reasons:

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• Potential for high profitability. A well-managed laundromat can generate significant profits. According to a report by the Coin Laundry Association, the average laundromat owner can expect to earn an annual net profit of $40,000 to $60,000 per store. With multiple stores, the potential for profit increases even further.

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• Low startup costs. Compared to other businesses, starting a laundromat has relatively low startup costs. According to Nerdwallet, the startup costs for a laundromat can range from $200,000 to $500,000, depending on the location and size. This is significantly lower than the startup costs for many other businesses.

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• Recession-proof business. The laundry industry is considered recession-proof as people will always need to wash their clothes, regardless of the economic climate.

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• High demand. Some reports suggest that the average American household does around 8-10 loads of weekly laundry.

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• Stable customer base. Laundromat businesses have a regular customer base. People who need access to washing machines or dryers often rely on laundromats to do their laundry. This means that once you establish your laundromat in a particular location and build a loyal customer base, you can expect a consistent flow of customers.

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1. Market Research

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When starting a laundromat business, the first step is to conduct market research to understand the area's demographics, competition, and market demand. Collecting this information will help you find key insights that you can use to differentiate your laundromat business from the rest.

Some ways to go about your market research include:

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• Search the United States Census Bureau database. This is the best place to find data on the demographics of your target area. Here you can find income levels, population size, age distribution, employment rate, and more.

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• Run a Google and Yelp search. This is the best way to identify competitors in the area. See what services they offer, how they market themselves, how they retain customers, and what customers say about them.

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• Visit the laundromat businesses in person. Observe their operations, customer service, pricing, loyalty programs, and quality of work. Take notes and compare the strengths and weaknesses of each business.

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• Talk to customers. Talk to customers who have used the services of existing laundromat businesses in the target area to gain insights into their preferences, expectations, and experiences and to identify areas where competitors are falling short. Learn about how frequently they visit a laundromat, their preferred methods, and the types of services and packages they seek.

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• Talk to suppliers. Reach out to suppliers in the laundromat industry and ask for their insights on the market in your area. They can provide valuable information on the size of the market, pricing strategies, and market trends.

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• Scout your location. Consider factors such as population density, traffic flow, and accessibility. For example, a location near a freeway might be more accessible than another location you are scouting. We'll go in-depth on how to find the right location later in the guide.

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• Research apartment buildings. Find the website or phone number of apartment buildings in the target area and see if they offer in-unit laundry. If they don't, you can estimate how much demand your laundromat business may receive based on the number of residents in the apartment building.

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• Check-in with local businesses. Many local companies use laundromat services, including hotels and motels, salons and spas, gyms and fitness centers, and restaurants. Learn about the existing partners they might be working with, where these competitors are falling short, and what types of services and packages they seek.

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I created an example of market research for a laundromat business that you can use as a template here.

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Keep your market information organized on a spreadsheet and reference it as you make decisions for your laundromat business. For example, when determining how to staff your laundromat correctly, you can reference your spreadsheet to see, all in one place, how much demand your competitors' locations are getting per day.

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2. Business Plan

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The next step to starting a laundromat business is to create a business plan. This document will be the foundation of your car wash business and something the bank will request if you plan to finance your business through a traditional loan. 

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A good business plan is concise, clear, factually correct, and captures the reader's attention. 

The business plan for a laundromat business should include the following:

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• Executive summary. Key points of your business plan. Why will this company be successful? Focus on the strengths of your plan.

• Business description. What your business does, what services you offer, and the entity's legal structure.

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• Market research. What you learned about the area's demographics, competition, and market demand for your target area.

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• Sales and marketing. How will you attract and retain customers, and what strategies and tactics will you use to make this happen.

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• Financial projections. If your business is already open, you must keep historical records of your Income Statement, Balance Sheet, and Cash Flow statements. Otherwise, I recommend including revenue projections, expenses, and cash flow broken down by month. Cash flow projections are essential to include since there are upfront costs with a laundromat business.

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• Sources and uses of capital. How much money do you need to operate this business, and how will the money be used?

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• Management team. Who is involved, and what are the team's qualifications.

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Read this article for more information on how to write the perfect business plan for your laundromat business. 

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Don't overthink this. Your business plan can be a fluid, living document that you can update over time as you progress, get more information, and decide how to build your laundromat business.

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3. Incorporate your Business 

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The next step is to incorporate your laundromat business.

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Pick a Business Entity

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You can choose from several types of business entities when incorporating your car wash business. While I lay out the most common types below, most laundromat businesses are structured as LLCs because they provide liability protection to their owners and may offer tax advantages.

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• Limited Liability Company (LLC). It's a popular choice for small businesses and how most car wash businesses are structured.

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• Corporation. A corporation is a separate legal entity from its owners, providing personal liability protection. A laundromat business may choose to form a corporation if it plans to have multiple owners or investors, as corporations allow for the issuance of stock to shareholders. However, it's more complex to set up and maintain than other business entities.

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• Sole Proprietorship. This is the simplest form of business entity, where a single person owns and operates the business. While it's easy to set up, it offers no liability protection. This means you are liable for all debts and obligations of the company, and any profits or losses are reported on the owner's tax return.

• Partnership. A partnership is a business owned by two or more individuals who share the profits and losses. This entity type may be suitable for a car wash business with multiple owners. However, a partnership business entity offers no liability protection like a sole proprietorship.

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How to Incorporate your Laundromat

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The process of incorporating your laundromat business will vary depending on the type of business entity and state you're incorporating in. Since these legal documents can impact your business, I recommend getting help from a professional.

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While I list several options for partners below with different specialties, most of these partners provide full-service incorporation help, meaning you'll only need to engage with one. Professionals who can help you with business incorporation include:

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• Law firms. They can guide you in choosing the correct business entity, filing the necessary paperwork, and ensuring compliance with state laws.

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• Accounting firms. An accountant can guide the financial aspects of incorporating your small business, such as tax implications and financial reporting requirements.

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• Incorporation service companies. Many companies specialize in providing incorporation services for small businesses. These companies can assist with the paperwork and filing process and may offer additional services such as registered agent services, business license filings, and tax ID number applications.

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• Software companies. Companies like LegalZoom, Gust, Stripe, and AngelList have built software to help you incorporate your business. I've linked to their incorporation products. Most software companies target startups rather than small businesses, so it might not be the best option for your laundromat.

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When deciding which partner to use, consider their track record, fees, customer service, and any additional services they offer. While researching beforehand is essential, incorporating your business shouldn't take long.

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4. Open a Business Bank Account

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The next step is to open a business bank account. This is important for several reasons, including the following:

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• It's legally required for particular business structures. Any business operating as a separate legal entity from the owner must have a bank account dedicated to business transactions. So, it is legally required if your laundromat's business entity is a limited liability company (LLC), limited liability partnership (LLP), or corporation.

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• Separate business and personal finances. Opening a separate business bank account allows you to keep your business finances separate from your personal finances. This makes tracking your business expenses and income easier and ensures you're not mixing personal and business funds.

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• Build business credit. By opening a business bank account, you'll start building a financial history for your business. This can help you establish credit with lenders and suppliers and may make getting approved for loans or credit lines easier.

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• Simplify accounting and taxes. A separate business bank account can make accounting and tax preparation more manageable and accurate. You'll have a clear record of all your business transactions, which can help you track expenses, prepare financial statements, and file taxes.

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• Accept credit card payments. For many business owners, the ability to accept credit card payments is the single biggest reason to open a business bank account. A personal bank account can only accept credit card payments using a payment service provider.

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Here are the best bank accounts and a step-by-step account opening guide.

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5. Create your Website

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Next, you'll want to buy your domain name (website URL) and set up your website. In today's digital age, a website is essential for promoting your business, attracting new customers, and communicating with existing ones.

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Use Google Domains or GoDaddy to purchase your domain name. You can read this article for more information when selecting your domain name.

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Once you have your domain name, you can set up your website. You can use popular website builders, code the website if you're an engineer, or pay someone to code it. I recommend using a website builder for this step since it's fast and cheap. You can get your website up and running in 1 hour or less! I used Webflow to build Boring Business Nerd's website, but I used other 

website builders for other projects.

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Here are my favorite website builders.

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6. Obtain Licenses and Permits

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Obtaining the necessary licenses and permits is essential when starting a laundromat business. Please get the proper licenses and permits to avoid fines or even the closure of your business.

A laundromat, depending on the type of facility and location, might have the following legal and regulatory requirements:

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• Business license. You must obtain a business license from your local government before you can legally operate a car wash business. Note this is not the same thing as entity incorporation. For example, I must visit the California Secretary of State's website to obtain a business license in California and follow the instructions.

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• Public health license. Commercial laundries are required to obtain a public health license. For example, I must visit the Environmental Health's website to apply for a public health license in Los Angeles and follow the instructions.

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• Zoning and land use. Visit the website of your local government or municipality and look for information related to zoning and land use regulations. For example, I found the zoning requirements for laundromat businesses in Anaheim, California.

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• Water use regulations. Some states restrict the amount of water that a laundromat can use. Check with your state government to see if water uses restrictions apply to your business.

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• Sewer inspection. Some cities require a sewer study by a registered professional civil engineer. For example, I found this sewer inspection requirement that must be met in Anaheim, California, before any laundromat businesses can operate.

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With any business, you need to follow the legal and regulatory requirements. A laundromat business is no different. Therefore, I recommend asking for help and even calling government entities to ensure your business is compliant before investing more money and time into your laundromat business or signing a lease for a location.

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7. Fund your Laundromat Business

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The startup costs for a laundromat can range from $200,000 to $500,000, depending on the location and size.

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You can raise capital in the form of debt or equity. Debt is generally less flexible since you must make interest payments to avoid defaulting on your loan and losing assets. Equity is more complex and expensive than debt since investors get paid out by dividends at the time of sale.

Most laundromat businesses are financed through debt capital. Here are some funding options to consider when starting a car wash business:

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• Self-funding. Self-funding is an option for those with the necessary capital to start a business. This can include personal savings, investments, or borrowing from family and friends. Self-funding can give you more control over your laundromat business and help you avoid the interest and fees associated with loans.

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• Small Business Loans. Small business loans are a popular funding option for new business owners. These loans can be obtained from banks, credit unions, or online lenders.

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• SBA Loans. SBA loans are backed by the U.S. Small Business Administration and are designed to help small businesses obtain funding. These loans typically offer lower interest rates and longer repayment than traditional bank loans. The maximum amount for an SBA Loan is $5 million.

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• Franchise Opportunities. Franchising is another option for those looking to start a laundromat business. Franchise opportunities can provide you with a proven business model, marketing support, and other resources to help you get started. However, franchising typically requires a significant upfront investment, ongoing royalties, and fees.

• Equity investors. One option to fund a car wash business is raising equity capital from investors. Equity investors typically seek high returns on their investments and are willing to take on a higher level of risk than other financing forms.

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To see all of your funding options, check out this guide on how to raise money for your business.

Obtaining funding for a laundromat can be a time-consuming and arduous task. Read this article for more tips on fundraising for your laundromat.

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8. Pick a Location and Purchase Supplies

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Location and supplies are all critical factors to consider when starting a laundromat business. Choosing the right location and investing in high-quality equipment and supplies can help ensure the success of your business.

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Choosing a Location

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Picking the right location for your laundromat business is crucial for its success. Before signing a lease, consider the market research information you collected. For example, a location near a 2000-unit apartment complex with no in-unit laundry can be advantageous. Additionally, you should ensure the facility has adequate parking space and meets all the zoning and regulatory requirements. By carefully evaluating potential locations based on your market research, regulatory requirements, and funding allocation, you can find a location that is visible, accessible, and attractive to potential customers.

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Supplies and Equipment

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Based on your laundromat services, create a list of equipment and supplies you will need to operate your business. Here's a list of supplies and equipment to consider purchasing:

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• Commercial washing machines and dryers. You'll need several commercial-grade washing machines and dryers to handle the volume of laundry that your business will generate. Make sure to choose durable and energy-efficient machines to save on costs.

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• Change machines. Change machines are essential to ensure customers can quickly obtain coins for your washing and drying machines. Make sure to choose appliances that are easy to operate and maintain.

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• Laundry carts and baskets. Laundry carts and baskets are necessary to transport laundry from the washing machines to the dryers and back. Choose durable and easy-to-maintain carts and baskets that can handle heavy loads.

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• Folding tables and chairs. Provide your customers with folding tables and chairs to make it easier to fold and sort their laundry. Choose comfortable and durable furniture that can withstand frequent use.

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• Cleaning Supplies. You'll need cleaning supplies to keep your laundromat clean and sanitized. This includes mops, brooms, buckets, disinfectants, and trash bags.

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• Security Equipment. Security equipment such as surveillance cameras, alarms, and locks can help prevent theft and keep your customers and employees safe.

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• Laundry Detergent and Fabric Softener. You'll need to provide laundry detergent and fabric softener for your customers. Choose high-quality products that are effective and affordable.

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9. Build your Team

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Staff recruitment, training, and management are essential to starting and operating a successful laundromat business. It is vital to have a skilled and motivated team that can provide excellent customer service and deliver high-quality results.

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Consider the size and scope of your business to determine the appropriate staffing levels. For example, some cities legally require laundromat businesses to have at least one (1) attendant on-site during all hours of operation.

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Recruitment

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There are several ways to recruit employees for a car wash business. Here are some standard recruitment methods:

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• Online job boards. Post job openings on online job boards like Indeed, LinkedIn, or Glassdoor.

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• Local job fairs. Participate in your local job fair or career fair to connect with job seekers in your area.

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• Referrals. Encourage your family, friends, and community to refer qualified candidates to join your team. You can offer incentives, such as bonuses or gift cards, to employees who refer successful hires.

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• Social media. Promote your job openings on social media accounts like Facebook or Twitter.

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• Staffing agencies. Work with a staffing agency to find qualified candidates quickly and efficiently. Staffing agencies can help with job postings, candidate screening, and other aspects of the hiring process. This is the most expensive option on this list.

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• Paid advertising. Post an ad in your local newspaper or spend money on social media advertisements to find candidates for your job openings.

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As you can see, several ways exist to recruit employees for a laundromat business. Combining the above methods increases your chances of finding the best candidates for your laundromat business.

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Training

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Developing a skilled and effective team of laundromat employees relies heavily on proper training. Here is a sample process you can use when training new employees:

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• Provide an overview of the business. Start by giving new employees a summary of your laundromat business, including its history, mission, and goals. This can help them understand their role in the business and how their work contributes to its success.

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• Introduce equipment, supplies, and procedures. Provide a comprehensive introduction to your laundromat business's equipment, supplies, and procedures. This can include operating the washing and dryer machines, handling cash and credit card transactions, cleaning the laundry carts, and how to close up the shop for the night.

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• Emphasize customer service. Train them to deliver exceptional customer service by interacting with customers in a friendly and professional manner, resolving complaints or issues, and creating a positive customer experience.

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• Safety and compliance training. Ensure that your team receives safety and compliance training, covering topics such as handling hazardous chemicals, properly operating machinery, and following fire safety procedures.

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• Provide hands-on training. Offer practical, hands-on training to new employees to allow them to familiarize themselves with the equipment and procedures required to perform their job effectively. This can include shadowing an existing employee or practicing with actual customers.

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By following these steps, you can ensure your new employees are set up for success. Although these steps are crucial, you should invest time and effort in getting to know your employees and building positive relationships. This brings fulfillment to your work and proves to be a smart business decision.

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Management

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After successfully recruiting and training your employees, having a competent management team in place is crucial for the smooth operation of your laundromat business. Your management team should prioritize the following business activities:

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• Operations Management. The laundromat manager should oversee the business's daily operations, including scheduling staff, ensuring that job responsibilities are being performed to the highest standards, managing inventory and supplies, and ensuring that equipment is well-maintained and functioning correctly.

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• Staffing. The laundromat manager should also be responsible for hiring and training staff members. They should ensure that the right people are in the correct positions and have the necessary skills and experience to perform their job effectively.

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• Marketing and promotion. The laundromat manager should develop and implement marketing and promotional strategies to attract and retain customers. This can include social media campaigns, email marketing, and other forms of advertising.

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• Continuous improvement. The laundromat manager should always look for ways to improve the business, whether by streamlining operations, investing in new equipment, or seeking feedback from customers and employees.

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• Financial management. The manager should also be responsible for managing the financial aspects of the business, including budgeting, cash flow, and expenses. They should also ensure the company meets its financial goals and targets.

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As the owner of a laundromat business, it falls on you to select capable leaders for your management team and inspire them to achieve the goals you establish together.

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10. Marketing and Promotion

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There are numerous strategies that laundromat businesses can use to effectively promote and market themselves, both to attract new customers and retain existing ones. Here are some key tactics:

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• Loyalty programs. Offer a loyalty program to reward customers and encourage them to return. Provide discounts or free services after a certain number of visits or spending.

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• Referral programs. Encourage satisfied customers to refer their friends and family to your laundromat business by offering rewards for successful referrals.

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• Discount programs. Provide discounts to seniors, students, or first-time customers. You can also offer discounts on certain days of the week (e.g., 25% off on Thursdays) to encourage people to come during slower business times.

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• Flyers and postcards. Distribute flyers or postcards in your local community to promote your laundromat business.

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• Social media. Utilize social media platforms like Facebook, Instagram, and Twitter to promote your laundromat business. Share pictures and videos of your facility, showcase happy customers and offer special deals and discounts.

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• Email marketing. Collect customer email addresses and send regular newsletters or promotional emails to keep them engaged with your business.

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• Partnerships. Consider partnering with other local businesses or organizations to promote each other's services. This can help expand your customer base and increase visibility.

Refrain from settling for mediocre results. Instead, try out various methods and measure which ones make the biggest impact on your revenue. Then, with the right strategies in place, you can attract and retain customers like never before.

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11. Growth and Expansion

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Growth and expansion are natural aspirations for any business owner, and a laundromat business is no exception. Here are some ways to grow and expand your laundromat business:

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• Add more locations. Consider expanding to additional locations if your laundromat business is thriving and profitable. Look for areas underserved by existing laundry services or neighborhoods with high foot traffic.

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• Offer new services. Consider adding new services that can complement your existing laundry offerings. For example, you could add dry cleaning services or ironing services. This can help you attract a new customer base and increase revenue.

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• Offer delivery services. Offering a delivery service for customers who can't come to your laundromat can greatly increase revenue and attract new customers.

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• Upgrade your equipment. Investing in new, state-of-the-art equipment can make your laundromat more attractive to customers and help you save on energy costs. New machines can also offer more features, such as touch screens and mobile payment options, making the laundry experience more convenient for customers.

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• Add vending machines. Consider adding vending machines to your laundromat business to provide customers with convenient access to snacks, drinks, and other essentials while they wait for their laundry to finish. This can be a profitable additional revenue stream for your business.

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• Franchise your laundry business. Franchising is an attractive option for entrepreneurs who want to expand their laundry business while minimizing risks. By franchising, you can benefit from an established brand and operating system and access to a network of resources and support. You can generate revenue from franchise fees and ongoing royalties as a franchisor. 

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Investing in your laundromat business and making strategic decisions can take it to the next level and achieve long-term success.

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A laundromat business can be profitable if you plan well, have the necessary resources, and execute your plans effectively. If this guide helped you in any way to start or improve your laundromat business, please feel free to share your success story with me at kieran@boringbusinessnerd.com. I would love to feature your experience on the blog.

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Thank you for reading!

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