Complete Guide On How To Start A Laundromat Business

A laundromat business might seem like the perfect business idea to some. To others, not so much! If you have decided to start a laundromat business, then brace yourself because the procedure is not that simple. While it is a bit difficult to set up, a laundromat business can be very profitable when started at the right location. 

This guide will tell you everything you need to know on how to start a laundromat business along with steps you need to follow to start it successfully. Following these steps will make sure that the laundromat business is based on a good strategy, registered correctly, and so, has fewer chances of failure. Keep reading to know all about it!

17 Steps To Start A Laundromat Business

Step 1. Gain Information About The Laundromat Industry

A couple of questions that you might have in mind while starting a laundromat business are: How much does it cost to set up a laundromat business? How much can you make from a laundromat business? Can you afford a laundromat business? How to own a laundromat? And so on. Let’s shed some light on these topics:

1. How much money is required to start a laundromat?

The highest expenses of a laundromat business are buying and maintaining the equipment and utilities required. The water and heating per machine can cost up to $2000. Top loaders cost up to $700 per machine and front loaders cost $3,500 per machine. Apart from that, you’ll have to keep some money for maintenance which can cost up to $150 per machine. Laundromat startup costs can range from $100,000 to $1 million. This varies as per the city you are opening the laundromat in and other things like if you are buying an old laundromat or starting afresh. 

2. The target market of a laundromat business

A laundromat is very beneficial for the general public and will bring you a consistent stream of revenue. The target customers include residents of apartments who don’t have access to any onsite laundry services. However, you should target businesses that are likely to build long-term service contracts. 

3. Is Laundromat Business Profitable?

The laundromat businesses in the U.S. usually range between $30k to $1 million. The average profit margin of a laundromat ranges from 20% to 30%. But, keep in mind that laundromats might also make a lot lesser than this margin. You can avoid that possibility by focussing on maintenance and being present in the laundry business to make it an owner-operated laundromat. If the business is larger and is present at several locations, then the net profit margin might only be around 10% or 20% after paying the employees and clearing other operational costs.

4. How to increase the profit margin of a laundromat?

You should try to offer extra services that other laundry businesses usually don’t. This works as a two-way sword because this will attract more customers and also generate more revenue. Additional services can include a lot of things like dry cleaning machines that are self-serving, detergent vending machines, tea, snacks, etc. Other such facilities include coat hangers, laundry bags, newspapers, chairs to sit on while the washing gets done, and so on. 

5. How does a laundromat generate income?

A laundromat business generates income by charging customers for washing and also drying their laundry. Usually, a laundromat works as a self-serving store. The operation begins with the customer inserting coins into the coin machine which would allow them to use the laundromat washing machines and dryers. There are full-service laundromats as well where the staff does the laundry for the customers. 

Step 2. Make A Laundromat Business Plan

Write down a draft laundromat business plan first. And jump into details from there. You can describe the procedure and flow that your laundromat business will follow. List down all the services your laundromat will provide with special perks as well like pickup, delivery, and wash and fold. Also, figure out your target customers and perform research accordingly to know how well the other laundry services in the area are meeting their needs. 

Then, come up with new ideas and insights to distinguish your laundry service from the rest. You need to write down and keep a clear picture of your marketing plans as well. And don’t forget the budget you need for all the supplies and what all supplies your business needs. 

Step 3. Pick The Laundromat Business Type You Want To Go For

Opening a laundromat involves a lot more than just setting up laundry equipment in the store. You can choose from the following types of laundry business:

1. Coin laundry
2. Private laundromat equipment for buildings
3. Wash and fold laundry service
4. Commercial laundromat (meant exclusively for uniforms, linens, and other facilities)
5. Other services such as pick up and delivery.

Gain detailed information and pros and cons for each of these options and then try to figure out which one you would be most comfortable with. Also, you could simply buy an already existing laundry business and start making money right away. This will also save the extra work of having to buy and install equipment. 

Step 4. Pick An Ideal Location

Another important and deciding factor in your laundromat’s success is the location of the laundromat. The right place will ensure that your laundromat will have a good profit margin. Now, how should you select the right location? 

The following locations could be very profitable for laundromat businesses:

1. College students residential location
2. Tourist spots
3. Hotels/motels
4. The residential areas of large families
5. Apartments
6. Old neighborhoods

Opening a laundromat in and around old neighborhoods that have aging buildings could be very profitable. This is because owners of old buildings do not invest in laundry and related plumbing work to support in-building laundry utilities. 

Step 5. Setting Up The Equipment

Given below is the list of equipment that you need to operate a laundry business:

1. Washers
2. Dryers
3. Coin or card machine
4. Detergent vending machines 
5. Hangers
6. Laundry carts
7. Folding Tables

You can choose to buy all new equipment for your laundromat or opt for a combination of old and new utilities. Both these options come with a list of pros and cons. The new equipment will offer lower overhead and costs and also come with a warranty. New good quality larger laundromat washing machines can cost around $5000 to $10,000 per machine. While smaller laundromat washing machines come for around $1000 or so. So, you can save some money by choosing to buy second-hand or old equipment. 

Step 6. Skills To Develop For Laundromat Business

Obviously, a laundromat business won’t require you to develop any special skills, training, or educational qualifications. One of the skills you need to possess to run any business, especially a laundromat is customer care. Always focus on giving a positive customer experience because ultimately that will pay off. Building a great customer care service will help you develop a bigger clientele. Moreover, people like returning to a store that provides great customer service.

Other than that, you’ll also have to do a little bit of appliance repair and know about detergents and laundry-related things.

Step 7. Branding And Logo Design

Every business needs branding! The brand is everything that defines your laundry business and also sets up how the public views your business in general. You can get a logo designed for your business. Getting a logo is quite important because people will link your laundry store with the logo. 

Step 8. Naming Your Laundromat Business

It’s important to pick a unique and catchy name for your laundry business so that customers can remember it. Also, it should include the word laundry. Other than that, the spelling of the name should be easy enough to allow customers to spell it out and pronounce it easily. 

You can also tag the location of your laundry store in its name to give it some weightage. Lastly, the name of your business should tie in properly with the branding you wish to have for it. 

Step 9. Setting Up A Business Website

Once you have decided on a name for your laundromat business along with the branding strategy and the business logo, next you need to create a laundry business website. These days every legitimate business has a website. So, you need to build an online presence for your business. Also, the business should have a mailing address and presence on social media.

Step 10. Handling Finances Of Your Laundromat Business

You might have understood by now that getting into the laundromat business is not that cheap. So, first things first, you need to make a budget and then stick to it. In addition to that, you also need to account for all the coins that you collect via the laundry business. Keep a record of the income and expenses of your business to know how well your business has been performing.

You can increase your laundromat business revenue by installing self-serve laundromat washing machines. You wouldn’t have to spend much on manual maintenance because your customers would clean up after themselves. Next, expanding your laundromat to include wash and fold will not only increase your customer base but also create a new source of revenue for you. Also, you can get a contract with some local vending companies to receive some extra commission. 

The highest expense for any laundromat owner includes the payroll of its employees. Other than that, the utility bills include water expenses and sewer and storm drainage. The cost could reach up to $3k per month for a medium-sized laundry size. If your business uses a water heating system, then the respective bill can range from $4k to $6k. Other expenses include electricity and gas, ozone injections, and maintenance

Step 11. About Taxes

All businesses need to register for state and federal taxes to be functional. First, your business should apply for an EIN via the IRS website. It comes for free and is easy to acquire. So, make sure that you don’t forget to enroll your business for taxes like small business taxes or whatever it falls under.

Step 12. Banking accounts

Then you need to open a dedicated business banking account to protect your personal asset. If your personal and business banking accounts get entangled, your personal assets will be at risk if your business gets sued. Moreover, this also makes filing taxes and business accounting easier. 

Getting a business credit card will help you build your business’s credit history which you can use to get investments and raise money later.

Step 13. Legal Entity For Your Laundromat Business

If you establish your laundry business as a legal business entity like an LLC, sole proprietorship, etc., that will protect your business from being held liable in case it gets sued. Some of the most used business structures are a partnership, limited liability company (LLC), corporation, and sole proprietorship. To start your LLC, you need to hire an LLC service for a certain fee or pay the state LLC fee. 

Step 14. Licenses

Your business may need certain licenses, tax forms, or permits to function legally. To know all this and apply for the same, you need to use the SBA’s tool. Other than that, you are also required to collect sales tax.

Step 15. Business Insurance

Every business needs to have liability and property insurance in place. Moreover, if you hire employees, then you’ll also need to get Workers’ Compensation Insurance. What if an employee hurts themselves while working on a machine! In that case, your business insurance will save the day. Make sure you gain information about this topic and buy the appropriate insurance product for your business.

Step 16. Marketing Your Laundromat

You can market your laundry business in your local neighborhood by handing out flyers or pamphlets to people. Make sure that you include all your services provided in the hangers. Also, don’t forget to offer discounts and coupons while starting your business. You can make your laundry service unique by offering specialized services like keeping couches and TV at the store. Other than that, you need to hang the flyers on bulletin boards, place ads in local newspapers. Don’t forget to utilize the power of digital marketing.

If you want to keep customers coming back, you need to maintain a clean and friendly environment. The building’s inside should be clean and maintained properly. Also, make sure that the machines are functioning alright. That would encourage customers to clean up themselves and treat the machines well.

Step 17. Safety Protocols To Enforce At Your Laundry Store

Last but not least – you can’t miss out or compromise on safety There is a myriad of things that can get messed up in a laundromat. So, you need to list down certain safety concerns and make sure everybody in and around your laundromat is safe. Some such considerations include:

• Safety around heavy machinery that has fast-moving parts. 
• Not allowing huge quantities of water around high-voltage electricity sources or equipment. 
• Not permitting people to climb onto large pieces of equipment.
• Scattered rolling laundry carts
• Detergent spills that can be slippery
• Compliance with the Americans with Disabilities Act (ADA) for both customers and staff.

Safety is something that shouldn’t be neglected at any cost. It is your utmost responsibility to maintain the laundromat as a safe space otherwise you might end up in lawsuits. Make sure you review the OSHA and CLA guidelines to get a better picture of safety protocols.

Wrapping Up

That was all you needed to know on how to start a laundromat business. Needless to say, setting up a laundry business can be expensive. Go through each of the above points and do your own research as well before you commit to your laundry business. Hopefully, you’ll find this guide helpful and will be able to successfully start a laundromat business. 

The post Complete Guide On How To Start A Laundromat Business appeared first on Entrepreneurship Life.