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Laundromats make it easier to get laundry done when customers either don’t have a washing machine at home or need to wash more clothing than their machines can handle at home. Laundromats also sell detergents and soaps, dryer sheets, and other related items to help customers get their laundry done.
Who is this business right for?
This business is good for people who are looking for a full-time business but who also want something they can start in their spare time. Running a laundromat can either be a very hands-on or more passive business, allowing the entrepreneur to have flexible hours and scheduling.
However, as this business grows, it requires a great deal of management. Unless you can afford to hire a manager, this is a time-consuming business to own long-term.
What happens during a typical day at a laundromat?
Running a laundromat can be simple or more involved. It all depends on the type of laundromat you want to run. A simple business model for this type of business is an unmanned laundromat service.
A more involved version of this business would include daily monitoring of the laundromat, collecting money from customers, folding clothes for those who paid for full service, and managing the books.
What is the target market?
Preferred clients are businesses with long-term service contracts. However, a laundromat can also service the general public and bring in a consistent stream of revenue. Ideal customers are those living in apartments where there are no onsite laundry services or washers and dryers for self-service. This might mean placing the laundromat near low-rent or poor neighborhoods.
How does a laundromat make money?
A laundromat makes money by charging customers to wash and dry their clothes. A laundromat may choose to operate as a self-serve operation, where customers insert quarters into machines to operate the washers and dryers, or it may be run as a full-service business in which customers pay to have staff do their laundry for them.
This business usually handles transactions in cash. However, some laundromats do offer the use of credit cards, checks, and even laundromat-specific cards. Cash-based transactions help to keep costs down for the customers and owner because there are no credit card fees. However, accepting credit cards increases convenience, potentially leading to more customers.
What is the growth potential for a laundromat?
Growth potential for this type of business is almost unlimited. Laundromats can be operated at a small scale, with a single building servicing many customers with a handful of machines. You can even start a small business out of your home, offering full-service laundry and folding services.
It can also be operated at scale with multiple locations across a town or city. Some laundromats operate near colleges and dorms where college students can easily access the building to wash their clothes.
What are some skills and experiences that will help you build a successful laundromat?
Aside from having good business sense, good negotiation skills, and being mechanically-inclined, there are no special skills or education needed to start a laundromat.
What are the costs involved in opening a laundromat?
Costs for starting a laundromat are significant. Depending on the location, it can cost you between $100,000 and $200,000 to buy an existing business or it can cost up to $1 million or more.
Businesses you buy in larger cities tend to cost more. Also, some states are inherently more expensive than others. For example, buying a laundromat in California, Florida, or New York may be much more expensive than buying one in Idaho or Alabama.
If you’re starting out of your home, you can start with little to no money upfront.
Expect total startup expenses for a small business outside the home to be between $100,000 and $250,000.
A big part of the startup cost is the machines. Get “like new” machines that have been well-serviced and you can save yourself some money and lower your startup costs. However, be aware that used machines may not come with reliable or accurate service records. New machines may initially cost more, but you will also know the entire service history.
If you finance the business, rather than pay cash, you may only need to put down 10% to 30% of the total cost. Utility costs are a big expense. While the machines themselves can cost you $500 to $700 each for top loader and $3,500 and $20,000 for front loaders, utilities to run them (water, heating, etc.) can run between $200 and $2,000 per month, each.
Read our laundromat purchasing guide to learn about the materials and equipment you'll need to start a laundromat, how much to budget, and where to make purchases.
What are the steps to start a laundromat?
Once you're ready to start your laundromat, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your laundromat is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your laundromat keeps your finances organized and makes your business appear more professional to your customers.
- 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.
- 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.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- 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.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Should you consider joining a franchise?
Joining a laundromat franchise can be a good option for entrepreneurs who prefer to use a proven model rather than start from scratch. While joining one can mean slightly higher initial costs and less control, a quality franchise offers great benefits such as initial and ongoing support, marketing assistance, and brand recognition.
Opening a laundromat franchise typically requires $230,000-$600,000.
Interested in joining a laundromat franchise? Check out our favorites.
Where can I 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.
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What are some insider tips for jump starting a laundromat?
These businesses sink or swim based on location. Try to get good real estate for your laundromat. Usually, this means setting up shop in neighborhoods where local residents don’t have easy access to laundry services and machines.
Another tip is to focus on securing a few small corporate clients, like janitorial businesses and restaurants, as clients. This will give you a strong base of income to work off from.
How to promote & market a laundromat
Promoting a laundromat is pretty straightforward. Advertise in local neighborhoods and spread your marketing to areas in your town or city where there is limited access to machines and other laundry services.
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How to keep customers coming back
The best laundromats are ones that maintain a clean and friendly environment. When the inside of the building is clean and well-maintained, and when all machines are functioning normally, then customers are more likely to clean up after themselves and treat the machines as their own.
How and when to build a team
A coin laundromat doesn’t need a large staff and might be able to be non-staffed. However, you should consider hiring at least one to two employees to watch over the place, encourage customers to pick up after themselves, and to keep the place clean.
Each location can be minimally staffed, however.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain a dry cleaning license. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
It is also important for laundry businesses to comply with all Occupational Safety and Health Administration requirements related to laundry machines.
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, check out our informative guide, Sales Tax for Small Businesses.
How much can you charge customers?
Costs for laundry services are driven almost entirely by the location. In bigger cities, you can charge more. In smaller towns, less. On average, you can charge customers $3 per load of laundry, washed and dried.
What are the ongoing expenses for a laundromat?
The biggest ongoing expenses are the utilities. Expect to pay between $200 and $2,000 per machine just for the water and heating. You should also set aside money for maintenance. Maintenance costs can range from $50 to $150 per machine for simple maintenance and repairs.
How much profit can a laundromat make?
The average annual income of a laundromat in the U.S. ranges from $30,000 to $1 million, according to Brian Wallace of the Coin Laundry Association. Average profit margin is between 20% and 30%. Some laundromats make significantly less, however. An owner-operated laundromat may be able to sustain a high profit margin by doing his own maintenance, and working in the business instead of paying an employee.
A larger business, with multiple locations, may only net a 10% to 20% margin after operating costs.
How can you make your business more profitable?
One of the best ways to make your business more profitable is to offer additional services. For example, you could offer self-serve dry clean machines, sell detergent, snacks, and coat hangers, dry cleaning bags, and laundry bags. Offer free or discounted wifi Internet services for customers to help them pass the time while they wait for their laundry.
Another way to dramatically reduce costs is to operate your business in an area where taxes and utilities are lower. Check county taxes and water utility rates. These can vary significantly from one location to the next.
Do your own maintenance. Maintenance on washing machines and dryers isn’t too difficult for someone with basic handyman skills. If you purchase washers and dryers that are easily serviceable, you can save yourself several thousand dollars per year.