Start a laundry and dry cleaning business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your laundry and dry cleaning business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a laundry and dry cleaning business?
Unless your business is a work-from-home operation, you will need to pay the deposit for the lease and the first month’s rent for the storefront. In a high-traffic area, expect to pay $3 to $10 per square foot per month for the retail space. You will need to have signage on the front of the store that makes it very visible to those that drive by the store. You will need to have laundry and dry cleaning equipment and a cash register. You will need to have cleaning supplies, coat hangers, and plastic bags. You will need to have a mechanical clothes rack that rotates the finished clothing to keep it in order and ready for customer pick up. Most of these businesses start with about $50,000 worth of equipment, which can be leased and about $2,000 in supplies.
What are the ongoing expenses for a laundry and dry cleaning business?
The ongoing expenses include rent, equipment lease payments, insurance, utilities, supplies, and marketing costs (printing and delivery expenses for promotional flyers).
Who is the target market?
This is essentially a retail business, with repeat customers coming from the local area. This business sometimes offers subscription services to customers which can lead to increased profits. Regular customers help create a reliable customer base. Laundry Stork is an example of a store that offers subscription services.
Full-service launderers must consider possible allergic reactions in customers and take steps to prevent these from occurring. This is an important consideration as customers will not be choosing the products that will be used in the laundering process.
Many people are concerned by the chemicals used by traditional dry cleaners. Many consumers are also concerned by the environmental impact of this type of business. A business using less harsh chemicals and more organic cleaning methods while reducing its carbon footprint may be preferred such as the example of eco laundry company.
How does a laundry and dry cleaning business make money?
Items for dry cleaning are charged per piece. Regular laundry is charged per pound. Additional charges may apply for special services, such as severe stain removal or making repairs, such as fixing tears or replacing missing buttons.
In a major metropolitan area, the competition for laundry and dry cleaning services may be very intense. Because of this, many stores offer dry cleaning services for shirts and blouses at $1 per piece in order to attract customers. Premium prices are charged for same-day service.
How much can you charge customers?
The price per pound of regular laundry ranges from $0.99 to $1.99 depending on whether the items need folding or pressing. Dry cleaning of items starts at $1 per item for shirts or blouses, $5 for pants, $10 for suits, and goes up to $29 for a comforter.
How much profit can a laundry and dry cleaning business make?
This business, when it serves an active customer base, is very profitable. Revenues easily exceed $200 per day and costs are less than half of that. A small shop can make at least $30,000 in profit per year after paying all expenses. Many entrepreneurs have become very wealthy owning and operating multiple storefronts in this business.
How can you make your business more profitable?
Ways to make this business more profitable include offering pick-up and delivery service for an additional fee to help individuals with a busy schedule, offering clothing alterations/tailoring service, and shoe repair/polishing. Opening multiple locations, once finances and demand permit, will also lead to increased profits.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Laundry and Dry Cleaning Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your laundry and dry cleaning business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate laundry and dry cleaning business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Labor safety requirements
It is important to comply with all relevant Occupational Safety and Health Administration requirements: Here is a link to OSHA’s laundry specific regulations.
Certificate of Occupancy
A laundry and dry cleaning business is generally run out of a storefront location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a laundry and dry cleaning business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your laundry and dry cleaning business will be in compliance and able to obtain a CO.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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How to promote & market a laundry and dry cleaning business
The best way to promote this business is to use hand delivered flyers that offer a discount coupon and put them under the doors of homes and apartments in the nearby neighborhood.
How to keep customers coming back
The most common form of advertising is to have a big neon sign in the window saying shirts cleaned for $1. Being very friendly to the customers when they walk in encourages them to come back. Calling them when their clothes are ready adds an extra touch of good customer service.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Laundry and Dry Cleaning Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
To do well in this business you will have to enjoy cleaning clothes and making them nice for others. It is important to pay attention to the details, not lose track of the customers’ items and make sure the results of the washing, cleaning, pressing and/or folding are excellent.
You will need to work with many different chemicals, some of which are known to be quite toxic. You will have to be comfortable with handling dirty laundry. Some might be very smelly and even disgusting before it is cleaned. Wearing gloves and protective equipment will be an important thing to do to protect your health.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a laundry and dry cleaning business?
This business is all about being on schedule. Opening the store on time, keeping public and employee areas clean, and making sure that orders are fulfilled in a timely manner are all activities you can expect on a daily basis.
If the store processes the laundry and/or dry cleaning on site, you will also need to make sure the equipment is operating properly, and load up the washers and dry cleaning machines with additional clothes that need cleaning to keep making good progress for all of the customers’ orders.
What are some skills and experiences that will help you build a successful laundry and dry cleaning business?
You will need to be friendly with the walk-in customers and very careful with their items. Attention to detail is important and you will need to notice things like stains or damage to the clothing to point them out to the customers when they drop off the clothing for laundry or dry cleaning.
There is always a tight schedule of work necessary to get everything ready on time. Customers can be very unforgiving if they come back to the store when their clothes are supposed to be ready and they are not available on time for pick up.
Perhaps the most crucial skill is the ability to remove stains. Here is a list of common stains and the best way of getting them out of clothing.
What is the growth potential for a laundry and dry cleaning business?
There is a business model that uses the retail space as only drop off and pick up location, while all the washing and cleaning is done at another location. it is possible to have many retail locations that are supported by an industrial location where all the cleaning of the clothes occurs.
There are also franchise opportunities in this industry. It is possible to start with a single store and then expand to own many more.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
Most of these businesses are family run and operated by just a few people. The time to build up a team comes after the success of operating one store and opening another one. Workers are often paid minimum wage.