The classic American laundromat continues to be a staple of large and small cities across the country. Research by the Coin Laundry Association found that the approximately 29,500 coin laundries in the U.S.—most of them owner-operated—generate almost $5 billion a year in gross revenue, with a business success rate of 95%.
However, in wealthier cities like San Francisco, where residents are earning higher salaries than they previously did, the need for laundromats is decreasing. Total industry revenue dropped at a rate of 0.1% per year between 2013 and 2018, including a decline of 1.6% in 2018.
This, coupled with the increasing gentrification of urban areas and the construction of residential buildings with built-in washing machines, is giving rise to an uncertain future for laundromat owners in the wealthiest cities.
If you live in a city, town, or suburb where laundromats are still in demand, you might be wondering how you can start your own. There are loads of important things you need to know about the laundry business, so follow the steps below.
How to Start a Laundromat:
Starting a laundromat takes lots of careful planning. You'll need a business plan, a location, and a strategy for operating a successful business with lots of satisfied repeat customers. Follow the steps below to find out what you need to do to start your own laundromat business.
Find someone who can be on-site every day.
Find a good manager to partner with.
If you can't afford to hire a manager, you need to see that you have enough time to invest in your laundromat. A full-time manager will be able to keep a close eye on your business operations and ensure that any concerns customers may have are addressed before they become problematic.
Determine which type of laundromat you would like to open.
Choose a category.
Laundromats fall into two broad categories:
Fully-staffed, full-service coin laundry businesses have staff and provide various laundry services. This type of laundromat generally provides different sizes of coin-operated washers and dryers, as well as a range of services like wash-and-fold, dry cleaning, and laundry delivery services.
Unattended, self-service coin laundry businesses are popular in city centers and university campuses.
The Coin Laundry Association identifies two distinct laundromat industry segments, namely coin-operated laundries and coin-operated machines in apartment buildings. The latter segment is known as the route laundry business or the multi-housing laundry business.
Conduct market research.
Find out if your idea is feasible.
As you begin your research, ask questions like:
- Will enough people with enough spending power use your laundromat?
- Who are your prospective customers?
- Will they be interested in your service?
You could hire a professional market research firm to get accurate market information. You can also teach yourself to do market research, and use data analytics software.
Laundromat customers vary considerably, but the typical laundromat customer falls in the middle-to-low income bracket and lives in a condominium, apartment building, mobile home, college campus, or similar accommodation.
Align your business with customers' needs.
By adding additional services/amenities to your laundromat, you may be able to attract more customers. For example, rather than simply having a laundromat, you could include a basic cafe with free WiFi in your facility.
Make a list of what you need.
Most laundromats need a variety of equipment, including the following:
- Commerical washers.
- Commercial dryers.
- Seating for customers.
- Coin machines.
- Vending machines.
- Folding tables.
You may also need a delivery vehicle if you plan on offering commercial laundromat services.
Write a business plan.
Gather all of the information that you need.
A business plan includes important financial and practical details that investors will be eager to hear about.
Essentials for a Laundromat Business Plan:
- Executive summary.
- Company description.
- Products and services.
- Marketing plan.
- Operational plan.
- Ownership's personal financial statements.
- Financial plan.
Speed up the process by starting with our laundromat business plan template at the top of this page.
Form a legal entity.
Choose a legal structure.
A business can be established as either a sole proprietorship, LLC, partnership, or corporation. Most laundromats are incorporated as either LLCs or corporations for tax purposes. You can usually file articles of organization with your state in order to incorporate and you will be charged a small filing fee.
If this is your first time starting a business, considering seeking professional legal counsel as your set up your business.
Get an Employer Identification Number.
If you plan on employing anyone at your laundromat, you need an Employer Identification Number (EIN). An EIN is a number that the IRS assigns to your business to track all taxes that are withheld from your employees' paychecks.
To get an EIN, simply apply on the IRS' website
Apply for an SBA loan.
These loans are managed by the Small Business Administration, and help businesses with limited financial alternatives through federally backed lending to access funding at low-interest rates.
Get a loan from your financial institution.
Your laundromat can use a small business loan from a bank to purchase equipment, inventory, and more. Small business lending includes microloans, bank loans, venture capital, and credit cards.
Find private investors.
If loans aren't an option, network until you find your investor/s. Approach family and friends who have the capital to invest in your cleaning business. You could also try to get an angel investor, which is an affluent person who invests in you rather than in the viability of your venture.
Find a location.
Research your area.
Ideally, your laundromat should be easily accessible by people who live in apartments and dormitories since these are the most likely groups to need laundromat services. Try to identify locations in your city/town that are close to a university or multiple apartment complexes.
Focus on visibility and accessibility for your laundromat. The business should be easy for customers to get in and out of, and visible from the street so that is feels secure and welcoming.
Consider nearby businesses.
Typically, laundromats are more successful when they are within walking distance of other businesses, such as grocery stores, convenience stores, banks, etc.
The perfect size for a laundromat is between 1,500 and 6,000 sq. ft. Glass storefronts are more welcoming to customers.
Decide how many workers you need.
According to research by the Coin Laundry Association, in 2015 the average laundromat had three employees and spent an average of 18% of its gross revenue on payroll. Positions that you may need to fill include:
- Maintenance worker.
If you have a small laundromat, one employee may be able to take on a variety of responsibilities (i.e. maintenance, janitorial work, customer service, and more).
Use a job posting site like Indeed, as well as local job boards, to spread the word and attract local candidates.
Train new employees.
Your new employees will need training before you let them work on their own. Training at a laundromat often includes:
- Ensuring the cleanliness of my laundromat.
- Maintaining equipment.
- Processing wash-and-fold orders proficiently.
- Providing excellent customer service.
- Handling money proficiently.
- Selling over-the-counter items.
- Focusing on safety procedures.
Market your laundromat.
Launch a website.
You can either hire a web developer or create your own website using a free website builder like Wix. Your website should include important information about your laundromat business, including:
- Contact information.
Create social media pages.
It only takes a few minutes to set up accounts on Facebook, Twitter, and other social media platforms. You can link these pages to your website and use them to make announcements to customers. If your business has just opened, social media is a great way to share pictures of your new laundromat.
Turn your vehicle into a billboard.
If you have a delivery vehicle for your laundromat business, customized decals with your business name, logo, phone number and address could help to promote your business as you drive around.
Laundromat Equipment Costs:
|Laundry carts||$50.00 – $75.00 each|
|Signs, trash cans, cleaning equipment, etc.||$750.00 – $1,000.00|
|Folding tables||$618.00 – $704.35 each|
|Soap vending machine||$429.99|
|Top loaded washer/dryer||$500.00 – $700.00|
|Front loaded washer/dryer||$3,500.00 – $20,000.00|
|Card reader system||$40,000.00 – $80,000.00|
|Water heating system||$15,000.00 – $40,000.00|
How much does a laundromat make in a year?
The amount of money you make from a laundry business varies. The annual gross income from one store ranges from $30,000 to $1 million, according to the Coin Laundry Association. Running costs of a store range between 65% and 115% of gross income.
How much money do you need to open a laundromat?
Our research found that starting or purchasing a laundromat can cost between $50,000 and over $1 million, depending on the location and whether you buy an existing business or not. Laundromats in cities cost more, and also in some states. A laundromat in California may be more expensive than a laundromat in Alabama, for instance.
What does it cost to build my own laundromat?
Building a 2,000 sq. ft laundromat typically costs between $200,000 and $500,000. Laundromats are bigger than in the past—3,000 or 4,000 sq. ft. at times.
How much does a laundromat owner make?
According to the Coin Laundry Association, cash flow from a laundromat could vary from $15,000 to $200,000, and the profits you make from a laundromat depend on the size, efficiency and popularity of each business. Research found coin laundry owners see an average of 20% to 35% return on investment (ROI).
Do laundromats have growth potential?
Depending on the city you operate in, laundromats have virtually unlimited growth potential. You can operate your laundromat in a single building with a handful of machines, or with multiple locations across a town or city.
Were laundromats profitable in 2018?
Even though coin laundries in the U.S. generated nearly $5 billion a year in gross revenue between 2013 and 2018, industry revenue dropped at a rate of 0.1% per year, including a decline of 1.6% in 2018.
Is a laundromat business profitable?
Coin laundry owners see an average of 20% to 35% return on investment (ROI), but this will differ according to the size, efficiency, and popularity of your laundromat.
How much does a laundromat make per month?
The average monthly gross income from one store ranges from $2,500 to $83,333, according to the Coin Laundry Association. Running costs of range between 65% and 115% of gross income.
Should I buy a laundromat?
You would first need to determine if this is the right business for you. As a laundromat grows, it needs a lot of managerial input. If you don't hire a manager, you need to see that you have enough time to invest in your laundromat. You also need to invest a large amount of capital to start a laundromat, as laundromats have high startup costs.
Are laundromats a dying business?
Although the laundromat business continues to be profitable, industry revenue is on a decline, dropping at a rate of 0.1% per year with a decline of 1.6% in 2018.
How do laundromats increase revenue?
Laundromats can increase their revenue by offering various additional services.
- Dry-cleaning services.
- Door-to-door laundry services.
- Mailbox rentals.
- Free internet access.
- Play areas for children
- Laundromats attendants at all times.
Do I need a license to open a laundromat?
The licensing requirements for laundromats vary from state to state. Go to sba.gov to find out what the licensing requirements for your laundromat are.
How do I start a successful laundromat?
- Be hands-on or get a manager.
- Inspect your machines regularly.
- Keep your laundromat clean.
- Be friendly to your customers and ensure their safety.
- Market your laundromat extensively.
How do I jump-start my laundromat?
If you have a full-service laundromat that provides various laundry services, you can market your services to janitorial businesses and restaurants. These clients will give you a strong income base.