For decades, a local laundromat business was a staple of any urban community.
But in recent years, their popularity has begun to fade.
If you’ve ever considered starting a laundromat business, you’re probably wondering if it can still be done.
And even more importantly…
Should you start a laundromat in 2021?
Well, I’m going to help you answer both of those questions in this article.
I'm Ippei, your friendly neighborhood passive income and local lead generation specialist...
And I’m going to cover the realistic startup costs of the laundromat business model and the average profit margins so that you know exactly what you’re getting into.
So without further ado…
Let’s get right into it.
How to Start a Laundromat Business in 2021
Considering Opening a Laundromat in 2021? Here's What You Should Know:
A laundromat business can be found in almost every densely populated city or urban area. But if you want to get started with your opening a laundromat business, you will need to create a solid business plan, find the perfect location in a viable market, and invest in quality equipment.
Start Up Costs
While this list is not a comprehensive compilation of everything you need to start a laundromat business, it provides a snapshot of what you need to add into your business plan.
Annual Revenue of Established Laundromat Business
According to Laundry Solutions Company, the average annual revenue of this kind of business is: $30,000-$1,000,000
Profit Margins of Established Laundromat Business
According to this website, the average Profit margin of this kind of business is: 35%
7 Step Quick Start Checklist:
1. Write Business Plan
It might appear at first glance that starting a laundromat business would be relatively simple…
Just rent a building, install a handful of washers and dryers, and collect the change.
Bada-bing, bada-boom!
Right?
And if your goal is simply to start a laundromat, then this is perfectly sufficient.
But in actuality, if you want to start a successful laundromat business…
Then you’re going to need a plan.
Which is why you really need to sit down and map out a strategic laundromat business plan before you do anything else related to starting your business.
Here is a simple business plan outline that will help you get started in the right direction:
Basic Things to Include in a Business Plan:
While the neighborhood laundromat has been a staple of modern, densely populated, urban society since the 1950’s…
There has been some question as to whether the laundromat business is dead.
Even though many laundromat businesses still remain…
The business isn’t exactly booming the way it used to be.
So if you’re dead set on opening a laundromat business, then you will need to come equipped for the battle ahead.
Without a doubt, the location of your laundromat will be one of the biggest decisions you have to make…
Which is where the market analysis portion of your business plan comes into play.
Your business plan will help you to evaluate whether or not you are even entering a viable market.
And it will set you up with practical systems and financial goals that will keep you on track for the business road bumps ahead.
2. Getting Legal
Uncle Sam is going to expect you to pay your dues…
Whether your laundromat business is a complete flop, or you’re raking in more quarters at the end of the day than you know what to do with!
So before you even think about your grand opening, and fling wide the doors of your brand new laundromat business for all to see…
Before the soap, suds, and rinse cycles can commence…
You need to get the back end of your business neat, tidy, organized, and most importantly: legal.
There are four key steps that you will need to take before you are ready to open your laundromat facilities for business:
Registering your business as an LLC is just one of several business entity structures that you can choose from…
But it is generally the most practical and applicable business structure for small business owners.
The other options are:
Your business will be automatically classified as a Sole Proprietorship…
But this structure is impractical for most businesses and offers little to no legal protection for the business owner personally.
And a Partnership only applies to those going into business with someone else.
An S. Corporation is generally reserved for much larger and more complex business structures, and they rarely apply to small business owners.
Being registered as a Limited Liability Corporation offers you personal protection as the business owner should legal action be taken against your laundromat business.
Only your business and business assets are at risk, rather than your personal assets, such as a house or a car.
Once you have chosen the business entity that is right for you…
You can move on to applying for your EIN number.
This process is relatively simple, and can be done online for free at the IRS’s website.
It will act as your business’s tax identification number, and will be necessary for everything from filing your taxes and hiring employees, to opening a business bank account.
Which is the next item on your checklist!
Opening a business bank account is important because many small business owners assume that they can get by with using their personal bank account at first.
While this is technically true…
It gets very messy and complicated to mix your personal finances with business finances.
Avoid the mess by taking care of this step before you make a single dime, rather than procrastinating and dealing with the headache it will cause during tax time later!
Finally, your laundromat business will need insurance.
Primarily, you will need a General Liability insurance policy for your laundromat…
Just in case anyone spilled detergent on the floor, slipped and fell, and then wanted to blame you for it!
You can also consider looking into:
3. Choose the Right Location
Location is everything.
Let me say that again:
Location. Is. EVERYTHING.
If you take one section away from this article before starting your own laundry business…
I really hope that it’s this one.
Because here’s the thing…
When you are entering into an industry that is heavily dependent upon convenience, demographics, and market viability…
You can’t just pick any random spot to open up shop.
When you are choosing a location for your laundromat, you have to be strategic if you want to succeed.
When you are looking at potential locations, evaluate them based on the following criteria:
First of all, you have a couple options on the table as far as what type of location you can look at:
All of these options are viable, however I recommend against building a space from the ground up…
As it requires such a significant amount of capital that you would probably wait years before seeing a return on your investment.
Assuming your business could even survive that long.
Leasing a space or buying an existing laundromat facility are the most affordable options to start out with.
However, if you do go the route of buying an existing laundromat…
There are several things you should consider first.
For one thing, why is this laundromat for sale in the first place?
Yes, all the equipment and the setup is there, which will save you money…
But is it for sale because the location and market are no longer viable for this business model?
Or is it for sale due to poor management?
The second scenario shows potential for growth if you are prepared to reopen this location under new management, and announce this to the community.
But don’t make the mistake of buying an old laundromat and assuming you can turn things around if the community genuinely no longer needs these services.
This is why evaluating your demographics will be so important.
Are there apartment complexes that don’t offer laundry facilities on the premises?
Are you located in a college town where students will need a place to wash their clothes at all hours of the night?
Are you within city limits of a densely populated area with lower income communities?
All of these factors and so many more will play into the viability of the market you are dealing with.
And don’t be afraid of a little competition!
Because competition can actually be a good sign.
In an area with several existing laundromats, it might be a sign that you are in a viable market, and by establishing a better facility…
You have an opportunity to capitalize on existing business.
4. Licensing, Permits, and Fees
At this point, you’re probably wondering what licensing and permits are required to open a laundromat.
Fortunately, there aren’t any major licensing or permitting requirements that are involved with the laundry business.
But there are a list of permits and fees that you should be prepared for:
Depending on the state that you are located in, and the specific services that you are looking to offer…
You may also need to obtain a dry cleaning license.
Another license that varies from state to state is the self service laundry license.
Always contact your local officials, planning and zoning, and health department to confirm what will be required of you before you can open your laundromat.
It’s always better to know what you will need ahead of time.
That way you are prepared, and will only need to make small changes based on the various inspections you have to pass before opening.
If you fail to do your homework, you may find yourself set back by a period of months rather than days or weeks if you fail to obtain the proper licensing and permits.
5. Necessary Equipment
After the purchase, lease, and/or remodel of your laundromat facilities…
The most expensive part of opening a laundromat business will be the equipment.
Without the washer and dryers…
You obviously won’t have much business!
Here is a basic list of equipment that you will need to purchase before opening your laundry business:
Laundromat Equipment Checklist:
One thing to really consider is whether you will purchase brand new equipment, or save money by purchasing everything used.
This decision will come down to weighing the value of efficiency and quality against your current budget.
Efficient machinery will not only allow for more customers during a single day, but it will also help to reduce the costs of your utility bills!
While purchasing used washers and dryers might be the more affordable way to get started…
They may actually cost you more money in the long run.
Not only because they will take a longer time to get the job done, or because they will use massive amounts of water and electricity…
But also because old equipment is bound to break down.
Spending your time repairing washers and dryers left and right is not only a waste of your time and resources…
But it’s money you’re missing out on while they are out of order.
For this reason, consider investing your money in new, efficient washers and dryers.
Even if you can’t do this right away, consider making the switch as soon as you have some cash reserves built up!
You might be surprised at how much it will boost your profit margins.
And if you can’t afford to make the switch in one fell swoop…
Take it one piece of equipment at a time.
A dryer here, a washer there…
Until your laundromat facility is fully upgraded!
6. Staying Relevant
It’s no secret that laundromats aren’t exactly the hot spot that they once were.
If anything they are almost becoming “vintage” as the cool kids fondly like to say.
Which means that one of your biggest hurdles will be keeping your laundromat relevant to the modern consumer.
Fortunately, there are a variety of ways to go about this.
And it primarily comes down to thinking about your average customer and how you can better meet their needs!
If you want to put a spin on the classic laundromat business model, consider starting a “wash and fold” or even a laundry “drop off” business that capitalizes on the modern day demand for convenience.
By offering to wash, fold, and return people’s laundry for a reasonable price…
Without them having to lift a finger other than dropping it off…
You solve a major problem for busy parents, overwhelmed college students, and other small business owners that are out there hustling.
Let’s face it…
Very few of us enjoy doing laundry in the first place!
So a wash and fold business model can fill a need within the current laundry market, as well as bring a much needed relevance to your laundromat business idea.
But if this doesn’t float your boat, you can also put effort and thought into maximizing the physical space within your laundromat building.
You can maximize your space and increase your profit margins by including things like a snack bar or mini mart, and maybe even free wifi for people to use while they are there!
Another great way to put your customer’s needs first is to build out a kids play area in your laundromat.
Going places with kids can be hard enough…
And any business that creates space for kids to be kids so that parents can relax and do what they need to do…
Is always a win-win.
Additional ideas for your laundromat would be to offer:
Having video games in your laundromat can be a great way to attract a younger crowd…
Because I can guarantee that their dormitory laundry facilities don’t have snacks and video games to pass the time!
And if you don’t want to commit to purchasing and maintaining the video game or vending machines yourself…
Consider partnering with other vendors and splitting the profits!
But if you're still struggling to attract business...
Take a look at our local lead generation course for small businesses, here!
7. What to Expect
Before you decide to start a laundromat, you need to know what you can expect from this business model.
Being in the laundromat industry is a unique business model that comes with its own set of challenges.
Beyond just finding a viable location, you will need to be prepared to work long hours.
Unless you are planning to hire a manager, which will likely be an unattainable expense when first starting out…
You will need to be present on site to manage your laundromat.
And laundromats typically operate on strange hours.
Many of them are open 24/7!
Think about that.
If the store is open, then you have to be available.
Even if you have someone else working the weird night shifts…
You are still on call as the owner and store manager if anything comes up or happens.
This is a huge responsibility.
In addition to this, you will have to be responsible for the maintenance of your store.
Keeping the space clean and welcoming and ensuring that your employees maintain the space as well is hugely important for your customer experience and the success of your laundromat business.
If you choose to go into the laundromat business, understand that it won’t be easy.
Once your store is opening and ready for business…
Your work as the owner is really just beginning.
This is a hands on business model that requires hard work and consistent amounts of your time and daily life.
Pros and Cons
of starting a laundromat business
Pros
The biggest thing that the laundromat business model has going for it is that it meets a basic human need. Whether the world is in a recession, or a booming economy, people will need to wash their clothes! And in urban communities where not everyone has a washer and dryer, a laundromat business serves that basic need. Unfortunately, those without the convenience of a home washer and dryer are becoming fewer and fewer.
The secret to making your laundromat business a success is finding the right location. Typically, this will be a densely populated urban area. Look for things like large apartment complexes without on-site washer and dryers, or college campuses.
Cons
Unfortunately, the harsh reality of the laundromat world is that they are a dying breed. Personal washers and dryers have become the norm, and it has rendered the laundromat business nearly obsolete in many areas. The shrinking market will mean that starting a laundromat business, or taking over an existing location, will be a risky business endeavor.
It is also an extremely time intensive business model. You will be working hands-on at your laundromat most days until you reach the point of hiring an on-site manager who can take your place. And this may or may not happen. Whether it’s counting the coins, refilling the detergent stations, or balancing your books behind the scenes… You will have your workload cut out for you.
Another aspect to starting such a hands-on business model is that many laundromats are open 24/7. This means that you will spend more of your week working than not, and potentially working extremely strange hours. Remember, as a business owner, you really only sleep when your business does… So if the laundromat is open, you will always be on call!
While it is true that the right location can really set you up for success… The wrong location can set you up for disaster. Because the laundromat business is a shrinking market, you will be hard pressed to find an ideal location near you. And this really isn’t the type of business you relocate your life for!
Starting a Laundromat Business Can Work, but Lead Gen is Better...
Here's Why:
If your goal is to run a business that requires your hands on time and attention seven days a week for the foreseeable future…
Then by all means, start a laundromat.
Or if you enjoy the challenge of starting a business in shrinking market….
By all means, start a laundromat.
But if you can sense the sarcasm in this, and you are looking for a business model that can set you up for sustainable passive income and long term wealth…
Don’t start a laundromat.
If you are interested in learning more about how we can help you get started with local lead generation,
I personally left my traditional 9-5 job over six years ago now in pursuit of something more.
I tried everything from affiliate marketing to drop shipping…
But ultimately, I found my greatest success with local lead generation.
The online lead generation business model literally took me from making 2K per month at my old job…
To making over 50K per month in less than five years!
(Trust me, you’re not going to find that kind of change in your laundromat coin machines!)
And the beautiful thing about local lead gen, is that anyone can learn this skill.
Through leverage the localization abilities of Google, and targeted SEO strategies, local lead generation creates a steady stream of new leads for small businesses…
And a form of passive income for you once the initial work and due diligence is complete.
From there it is practically a self sufficient system!
you can click here for more information.