How To Start A Laundromat In 8 Steps

These costs are mainly affected by square footage, the age/condition of the building, and location. While there isn’t a strict one-to-one exchange between square footage and cost, you can expect to spend anywhere between $25 and $35 per square foot if you decide to rent.

During the duration of your lease, the condition of the building will also impact what you pay in rent. Should you decide to mortgage, you’ll need a 25% down payment on the value of the property in addition to about 5% for closing costs.

Bear in mind that it’s best to prepare yourself for higher overhead costs and prioritize buildings that give you the best combination of square footage and location. You’ll need the space for the number of washers and dryers you’ll store on site.

So, for example, although the states of New York, California, and Florida are the most expensive to operate in, laundromats in Los Angeles or Manhattan have a greater potential for reliable profits since they have better access to their target market and consistent foot traffic.

After you’ve found a prime spot, it’s time to start stocking up on washers and dryers.

The industry standard for laundromats is front-load washers. They do cost more than top-load washers — to be exact, in the range of $1,000 to $3,000 — there but are a few reasons to consider investing in these instead.

Front-load washers are better are removing stains and dirt from clothes because of the interaction between gravity and the water in the loads. What’s more, they require less water for cycles, and clothes washed in a front-load washing machine will dry faster.

You could always purchase top-load washing machines (which cost $500 to $700), but since they don’t have these same benefits, this could actually hurt you in the long run. Between longer wait times and dirtier clothes, customers might leave your laundromat for a competitor.

Although a vending machine isn’t necessary, it’s worth considering if you’d like customers to purchase snacks while they wait. Costs vary significantly but know in advance that they’ll cost thousands of dollars regardless. (And vending machines aren’t just for snacks! You can put laundry essentials in a vending machine, too: soap, dryer sheets, bleach, fabric softeners, etc.)

Lastly, to keep customers from bouncing if you purchase machines that only receive coinage as payment, you should pick up a bill-to-coin change machine. Again, though prices vary, you’ll be paying another few thousand dollars for this equipment.

Should you decide to provide laundry delivery services, you’re going to need a van to efficiently fulfill requests. This will cost you between $30,000 and $50,000 on average.

One of the neat benefits of a van is that it’s also free advertising space for your business. If you’re leasing the vehicle, ask the dealer to go over the terms of the lease with you to see if it’s possible to get a custom paint job.

There are other, smaller necessities you’ll likely need to invest in, too. These include:

• Ironing boards
• Irons
• Laundry carts
• Security cameras
• Hangers
• Cash registers
• Laundry detergent and dryer sheets

Prices for these will vary. After determining what you’ll need, research the costs across different retailers and online vendors and factor this into your budget.

Equipment loans, in particular, can help you secure funding for washer and dryer units, which are the bread and butter of your operations. There’s a bit of variety in the kinds of equipment loans you can acquire, so we recommend reading up on what equipment loans are and how they work.

If purchasing a vehicle for laundry delivery services is on your mind, a business auto loan will give you a head start with that.

One type of equipment loan that may be suitable for your laundromat business is an equipment lease. With this arrangement, you “rent” the equipment you need for a fixed time period, and at the end, you have the option to renew the lease or purchase the equipment outright.

This could work for you if you want to give different washers and dryers a try before doubling down on a purchase.

With a business line of credit, businesses can access a set amount of funds on an as-needed basis. It works similarly to a credit card, but it comes with much higher limits and lower interest rates.

This could be a great way for you to gain access to short-term funds without having to go through the process of applying for a new loan every time you need money. And with a revolving line of credit, you can borrow cash again once you’ve paid off any debts.

Unfortunately, first-time business owners are usually at a disadvantage when the time comes to seek out loans. Your business credit history probably isn’t established, and you have no prior records to show that you can be trusted to repay what’s lent to you.

Taking out a personal loan for business may be a better option in this case. Of course, the downsides are that you’re personally liable if you aren’t able to repay what you borrowed, and the borrowing amounts are typically lower.

Business credit cards can be used similarly to loans if securing one proves to be difficult. As an added bonus, nabbing a card and staying on top of your payments will increase your business credit score over time, making it easier to access other sources of business funding in the future.

It’s possible to get a business credit card with only an EIN. Plus, the best business credit cards currently available also have welcome offers, cash back, and rewards programs.

Every business owner in the making needs a business plan to put their goals, experience, strategies, competition, and budget to paper. Your laundromat is no exception.

In fact, as you’re seeking startup funds, potential lenders and investors will likely ask you for your business plan. This helps them assess the riskiness of your venture.

Traditionally, business plans span pages upon pages filled with detailed market analyses, financial projections, startup requirements, product descriptions, and in-depth business strategies aimed to demonstrate how the business will achieve success.

Depending on the kind of business you want to start and your experience as an entrepreneur, you may want to take this route to draft your business plan. However, a one-page business plan may be better suited for your purposes in the very beginning.

A one-page business plan will help kickstart the process of planning your startup’s success without drowning you in minutiae. But just be aware that if you plan on seeking large amounts of funds from outside sources, they may expect a longer business plan.

There are a few different types of business structures, each having their own legal and tax benefits.

Sole proprietorships are the easiest to get off the ground, requiring minimal fees and registration steps. However, if you wind up sued or default on your loans, you’re personally liable for the debts, and your personal assets could be seized.

An LLC provides you with more financial protection since it separates your business and personal financials. Coupling this with LLC business insurance makes that protection even more comprehensive.

In the end, you may find that the tax and legal benefits of one structure better align with your short- or long-term business goals. Do your due diligence and research what’s best for you, and definitely consider speaking with an expert to help you make a decision.

Every business is prone to risks and mistakes, many of which you may not even be aware of.

At the very least, you’re going to want a general liability plan. This will protect your business from the financial burden of medical fees and legal costs when customers or their property ends up damaged on your property.

Next, you’ll need commercial property insurance. A commercial property plan will reimburse you for damages to your equipment or building that result from physical causes, such as fires, vandalism, wind, and theft. You can also purchase endorsements that provide coverage for earthquakes, storms, and flooding (in short, flood insurance).

If you’re looking to cut down on costs, business owners policy bundles commercial property and general liability at a discounted rate. And depending on which carrier you purchase through, it could also include business interruption insurance and other useful endorsements.

In every state (excluding Texas), you’ll be required to get workers’ comp as soon as you hire your first employee. Workers’ comp will assist with paying medical bills and time off should your employees get hurt on the job.

Lastly, say you start a laundry delivery service. When you or your employees travel to customers’ homes to pick up and drop off laundry, you’ll certainly need to be covered by garage liability insurance in the event an accident happens, and you’re at fault.

At this point, you should follow up on the sources for funding mentioned above.

Sort through which options are the best fit for you and go from there.

Registration requirements vary depending on your business structure and state. Regardless of whether you need to register your business with your state government, your local government will most likely require it.

Registration is inexpensive and should be one of the first steps you take. Check to see if your city or state government websites allow you to register your business from there.

On that same note, look into whether you must register to be considered eligible for any necessary licenses or permits.

If you plan on hiring employees — realistically, you’re probably going to have to — you’ll need to register for a federal Employer Identification Number for tax-related purposes.

Lastly, make sure to register a DBA to operate your business under a name that showcases the service you provide. Come up with a name that isn’t already taken and will keep your business in the minds of customers.

Get more detailed info in our guide on how to register a business.

For starters, you’ll need a business license issued by your local government. Neglecting to obtain one could result in hefty fines, or worse, a full closure of your business.

Even if you don’t sell goods on your premises, the money you earn through providing laundry washing services counts as taxable income. As such, you’re also required to have a seller’s permit.

Other licenses and permits you’ll likely need include:

• A water pollution permit
• A fire department permit
• Zoning permits
• Sign permits if you plan on using signage for your business
• A food permit if you want to sell food at your establishment

Look into your state and local laws to see what’s necessary.

Once your shop is set up, and you’re ready to start cleaning clothes, there are a few other needs you’ll still have to address.

For example, how will you accept payments? How will you manage orders and keep track of customer information? Keeping track of inventory and your finances is important as well.

You can’t expect customers to come to you if they don’t know you exist. To have them show up, you’ll need to promote your business and highlight what makes you stand out.

Online advertising is definitely an option. Social media ads, paid search engine ads, and display advertising are all great ways to get your message in front of potential customers. Once your business is open, signage is also key, as this could grab the attention of foot traffic and drivers passing by.

Additionally, consider running promotions, discounts, or giveaways to incentivize people to check out your business and spread the word. With the right mix of advertising and promotions, you can create buzz and attract a steady stream of customers to your business.

Laundromats can be expensive to start — between $200,000 and $500,000 on average. Your best bet if you want to avoid paying out of pocket is to secure startup funds through sources such as equipment loans, business loans, business credit cards, and personal loans for business.

Owning a laundromat is simpler than many other types of businesses; your greatest responsibilities will be keeping track of your financials, managing customers, and maintaining your equipment. But don’t let the ease of running a laundromat tempt you into becoming an absentee manager, in which case, your business will suffer as a result.

Laundromats have profit margins of around 20% to 30%, and they can earn $400 to $500 a day on average. Some sources even claim you could earn up to $24K a month or $300K a year.

Your location and the equipment you invest in are your fundamentals, so start there and be on the lookout for startup funding. Next, you’ll want to register your business, obtain licenses and permits necessary for your operations, and start planning how to attract and retain customers.