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How to Start a Laundromat Business

The most successful businesses in the world are those that meet a
genuine personal need — they provide basic necessities to people to
help them feel safe, comfortable and looked after. The laundromat is a
great example of this type of business, providing a basic but essential
service. If online selling or being
a digital nomad isn’t for you, a laundromat is a reliable, sustainable alternative.

Like cleaning businesses, laundromats help your customers meet their
most basic needs — cleanliness and comfort. It might not have the kudos
of consultancy or the flashy screens of the latest consumer device, but
people will always need clean clothes. Coin-operated laundromat
businesses don’t need a huge amount of administrative overhead either,
so they can be a good way to break into the entrepreneurship space.

Laundromats are also referred to as coin-op laundries, coin laundries,
coin-operated laundries or self-service laundries.

The most successful businesses in the world are those that meet a genuine personal need — they provide basic necessities to people to help them feel safe, comfortable and looked after. The laundromat is a great example of this type of business, providing a basic but essential service. If online selling or being a digital nomad isn’t for you, a laundromat is a reliable, sustainable alternative.

Like cleaning businesses, laundromats help your customers meet their most basic needs — cleanliness and comfort. It might not have the kudos of consultancy or the flashy screens of the latest consumer device, but people will always need clean clothes. Coin-operated laundromat businesses don’t need a huge amount of administrative overhead either, so they can be a good way to break into the entrepreneurship space.

Laundromats are also referred to as coin-op laundries, coin laundries, coin-operated laundries or self-service laundries.

In this guide we’ll explore everything you need to do to set up your laundromat business and maximize your chances for success. We’ll cover:

  • Understanding the world of the laundromat
  • Deciding if you’re ready to start a laundromat business
  • Planning out your laundromat business
  • Determining the best legal structure for your new organization
  • Following various rules and regulations
  • Paying taxes and for your laundromat business
  • Hiring employees, managing finances and administering your laundromat business
  • Locating other resources for your laundromat business
  • And much more

Understanding the World of the Laundromat Business

Key Laundromat Business and Background Data and Statistics

The size and success of laundromat businesses might surprise you:

$4B

Revenue of laundromats in the U.S. in 2016

$4.3B

Revenue is expected to grow by 2020

$666M

Total wages in the industry in 2016

50K

People are employed by Laundromats

The major segments of the population
using laundromats are:

  • Renters using offsite
    laundry facilities: 39%
  • Renters using onsite
    laundry facilities: 22%
  • Commercial, industrial &
    service industries: 17%
  • Colleges & universities: 13%
  • Homeowners: 9%

Products and services creating revenue
for laundromats include:

  • Washer receipts: 58%
  • Dryer receipts: 34%
  • Self-service dry cleaning
    receipts: 4%
  • Commercial laundry
    services: 1.4%
  • Maintenance & repair
    services: 1.4%
  • Other services: 1%
  • There are nearly 30,000 coin laundries in the U.S.
  • The market value of an established coin laundry can vary between $50,000 and $1 million
  • Annual growth in the overall market is expected to be between 1 and 1.5 percent
  • A typical coin-operated laundry will generate yearly revenues of between $15,000 and $300,000 depending on size, location, usage and services
  • Laundromats are normally sized between 1,000 to 5,000 square feet with an average of nearly 2,200 square feet
  • Laundromats have been used for over
    70 years
This all points to the laundromat industry being ripe with new opportunities for focused entrepreneurs, so now might be the perfect time to dive into starting your laundromat business. Incfile is here to help you form your laundromat business and understand the ins and outs of owning a laundromat company.

What Your Laundromat Customers Are Looking for

A laundromat is a simple concept: you provide reliable, efficient, commercial washers and dryers in a retail space and request payment for the usage of the machines. Most laundromats are self-service, simply requiring that the customer purchase a certain amount of time using a washer or dryer.

Your customers want simple, easy-to-use machines that provide fast, effective washing and drying of clothes at a reasonable price. Ideally, you will want your laundromat business to be well-located, so placing your business in densely-populated, renter-occupied areas is a very good idea.

Access to and from your site needs to be straightforward, and you should have adequate parking for all your customers. Coin-operated machines are the standard in the industry, but card operated machines are also available — you can even combine these with membership schemes and incentives to keep customers loyal.

There are two main types of laundromat businesses: standard independent retail laundromats, and laundromats that are located inside apartment buildings to serve the residents. This second type of laundry business is known as the multi-housing laundry business.

What Are the Challenges and Benefits of a Laundromat Entrepreneur?

If you want to start a laundromat business, it’s important to know what to expect.

Challenges of Running a Laundromat

Choose the Right Business Structure and Register Your Amazon Business

Long hours

Laundromats typically open between 6 a.m. and 10 p.m.

Limited Liability

Costs

The main operational costs of a laundromat are staff wages and capital expenses

Series LLC

Capital expenses

Laundromat owners will spend a substantial amount on buying, upgrading, maintaining and repairing machines, coin changers, vehicles and other items

S Corporation

Other expenses

other major expenses include property tax and utility costs (especially electricity, water and wastewater)

C Corporation

Main skills

You will need skill in maintenance, collections, employee management, bookkeeping, administration and several other areas

Benefits of Running a Laundromat

Choose the Right Business Structure and Register Your Amazon Business

Resilient

Laundromats do well in any market conditions, as people will always need clean clothes

Limited Liability

Hands off

In many cases, laundromats do not need an enormous amount of staff oversight

Series LLC

Steady income

Laundromat owners will spend a substantial amount on buying, upgrading, maintaining and repairing machines, coin changers, vehicles and other items

S Corporation

No inventory

You do not need to take in and sell stock, meaning you don’t have money tied up in inventory

C Corporation

Upselling services

You can provide further services, laundry detergent, offer snacks, sell coffee, etc.

Plan Your Laundromat Business

Before you start your business, there are a few key areas you need to focus on. You will need to establish whether there’s a demand for your laundromat in your area, look at potential benefits and pitfalls, understand how your business finances might look and ensure everything is in order.

In short, you need a business plan — here’s how to think about your business idea.

Do Market Research and Validate Your Laundromat Products and Services

Before you launch your laundromat business, you need to understand if there’s a demand. That means carrying out market research and “validating” your services. Here’s how to go about it:

  • See if there are any market research reports for laundromat businesses: Search locally, nationally or internationally. There are several in-depth market research reports available for the laundromat business in the U.S. You will also want to research demographics in your proposed area — you’re looking for densely-populated areas with lots of renters or students.
  • Look at who your competitors are in the space: Having competitors is a good thing as it shows there’s a market. See how many other laundromats are operating in your town or city and their “catchment area” — try to find an optimal location so you’re not competing too directly.
  • Talk to clients: Speak with potential customers to understand what they want from your laundromat. You can use this to tailor what your location offers.
  • Identify your business’s unique selling points (USPs): These are the areas that will set you apart from competitors and encourage customers to come to you. You might have better pricing, a higher-quality service, more convenient location or some other special feature.
  • Get involved with business communities and discussion groups: Ask questions about laundromat businesses. You can find links to some excellent discussion groups later in the article.
What Are the Main Challenges for an Amazon Seller Entrepreneur?

Understand Your Laundromat Business Model and Financial Projections

All businesses need a business model, which is how you will generate sales, provide services and make money. Think about your business model now, because it’s better to have that in place so you can start acquiring customers and generating revenue from day one.

You will also need to look at financial projections for your laundromat business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others?

If you can, try to plan your revenue for the next month, three months, year and two years. It’s vital to take into account the high capital cost of setting up a laundromat in the first place, also factoring in utility, staff and other costs.

What Are the Main Challenges for an Amazon Seller Entrepreneur?

Write a Business Plan for Your Laundromat Business

Finally, you should put your business plan together. Business plans do vary slightly, but they should cover the following areas:

  • 1 An executive summary with the most important points from your business plan
  • 2 Your goals and what you hope to achieve with your laundromat business
  • 3 A description of your business, background information and context
  • 4 A market analysis and likely demand
  • 5 An overview of how your business is structured
  • 6 Your business model
  • 7 How you will market and sell your offerings
  • 8 Financial projections, revenue and profitability
  • 9 Appendices

Choose the Right Business Structure and Register Your Laundromat Business

Now that you have all the background information for your laundromat business, it’s time to make it into a reality. Starts by choosing the right structure or “legal entity” for your business. In the U.S., there are four main business structures. They are:

Choose the Right Business Structure and Register Your Amazon Business

Sole Proprietorship

This is the "default" business
structure and is what your
business will be if you decide
not to create a more formal
structure. We don't
recommend this type of
business as it doesn't give
you the legal protections you need.

Limited Liability

Limited Liability
Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your real estate

Series LLC

Series LLC

This is a special type of LLC entity that's only available in certain states. It allows you to create "mini" LLCs, each with their own limited liability and separate assets, under the umbrella of a master LLC.

S Corporation

S Corporation

This is a more complex type of
business and isn't generally
recommended for smaller
organization.

C Corporation

C Corporation

These are the largest and most
complex types of businesses
and are far more than the
average entrepreneur or
business owner will need.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you've still got questions, we've answered them to help you choose the right business structure.

In most cases our recommendation would be to create an LLC, We've got a complete guide to everything you need to do and we can set one up for your Amazon Seller business. LLC formation dose vary from state to state, but we've got you covered, wherever you are.

Setup Your Laundromat Business

Once you've legally created your laundromat business, you’ll need to get some other things in place.

Location of your business

This is one of the most essential parts of your laundromat. Finding the right location with the perfect demographics, great access, a good footprint and other factors will be essential to your success.

Equipment

What equipment do you need to manage your laundromat business? You will need enough washers and dryers to handle peak demand and may also want to invest in other equipment like coin changers, soap dispensers, furniture, computers and other areas. You may want to buy a van or other vehicle if you plan to pick up or drop off laundry. Make sure you understand exactly what you need to spend so you can write it off against business expenses.

Marketing

Most of your marketing is likely to be shop front, local advertising and word of mouth. Focus on local SEO and listings and take out ads in papers and other local media.

Processes

You will want an efficient way to collect revenue from your laundromat. Since much of your money is going to be in the form of cash and coins, it makes sense to process all that money in an efficient way. Make sure you have good banking processes. You should also have good processes in place for maintaining and repairing machines.

Employees

Do you need to hire employees to help you? Although it’s possible to just run the laundromat yourself, you may want to hire janitorial staff who can look after it in your absence.

Permits and licenses

Running a laundromat business comes with certain rules, regulations and legalities you need to be aware of. Incfile offers a Business License Research Package for you, or you can take the time to do the research yourself. Some states do require a specific laundromat license.

Finances and taxes

What kind of bank account will you get? Do you need a business credit card? How will you pay your business taxes? These are important questions to consider so your laundromat business stays in the green. Here at Incfile, we can even help you file your taxes.

Business maintenance

Most states require businesses to file an Annual Report once a year. You will also be expected to pay estimated taxes on what you plan to earn in the current business year. Your federal, state, regional and city business licenses and permits may need to be renewed on a regular basis, typically once a year.

Our Start a Business Checklist will get your laundromat business going in the best possible way.

Conclusion

If you’re after a straightforward, easy-to-understand, in-demand business and have the money to invest in machinery, owning a laundromat could be a great opportunity. There’s not a lot of administrative overhead, and with the right location you will have a resilient income stream for years to come. Do your research and find the right space; you can develop a thriving laundromat business to serve the needs of your local community and provide you with a good living.