How to Start a Laundromat Business

The most successful businesses in the world are those that meet a genuine personal need. The laundromat is a great example of this type of business

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.

Laundromat business formation guide

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

Paying taxes and for your laundromat business

Deciding if you’re ready to start a laundromat business

Hiring employees, managing finances and administering your laundromat business

Planning out your laundromat business

Locating other resources for your laundromat business

Determining the best legal structure for your new organization

Following various rules and regulations

And much more

By the time you’ve read through our complete laundromat business guide, you will have all the information you need to set up and manage a thriving laundromat business. Let’s get into it.

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:
39%Renters using offsite laundry facilities
22%Renters using onsite laundry facilities
17%Commercial, industrial & service industries
13%Colleges & universities
9%Homeowners
Products and services creating revenue for laundromats include:
58%Washer receipts
34%Dryer receipts
4%Self-service dry cleaning receipts
1.4%Commercial laundry services
1.4%Maintenance & repair services
1%Other services

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 Owning a Laundromat?

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

Challenges of Running a Laundromat

Long hours

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

People management

Dealing with staff, coverage issues and other people management areas

Costs

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

Capital expenses

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

Other expenses

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

Main skills

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

Benefits of Running a Laundromat

Resilient

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

Hands off

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

Steady income

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

No inventory

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

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, a loyalty plan 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.

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.

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

We’ve got the perfect guide to writing your business plan.

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:

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 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 laundromat business.

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

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

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 for your laundromat business.

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

Start Your Business with Us, Today!

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.

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.

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.

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.

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.

Premits 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.

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.

Process

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.

The Complete "Start Your Business" Checklist

A Clear and Comprehensive Guide to Starting Your Business the Right Way

Hire Laundromat Employees

If you’re just running your laundromat business solo, you don’t need to worry about employees. If you are hiring people to work for you, you will need to know what to do. See our 10 tips on hiring employees.

Contact the IRS and let them know you will need an EIN for your laundromat business. This is a number you will use to file and pay your taxes. We put together this guide to getting your EIN.

Your employees must be legally able to work here. Carry out background checks and ensure they have all necessary legal documentation.

In most cases you will need to report the hiring of employees to your state.

You will need to calculate and keep back income tax so you can pay the appropriate bodies. You will also need to pay the employer portion of the payroll tax.

As listed above, you will need to make sure you have proper workers’ compensation insurance to cover injuries, illness, medical costs and the like.

You will need to run payroll and compensate your employees on a regular frequency. Your state may mandate how often employees need to be paid.

You do have certain responsibilities and requirements for hiring employees. In addition to getting a proper employment contract in place with them, you have a duty to provide them with a safe working environment, proper training, regular pay and certain other criteria. OSHA covers your health and safety requirements, while the U.S. Department of Labor provides information on other responsibilities.

Useful Online Tools for Your Laundromat Business

Here are some really great online tools for managing your laundromat business. They will reduce the time you spend on administration, help you collaborate with others and free up your time to grow and manage your new venture.

Ready to form your Laundromat Business?

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.

Start your Laundromat Business with us, today