Did you know that you have a 95% chance of starting a successful laundromat business?

The laundromat industry in the U.S. is worth $5 billion annually. That includes over 21,000 businesses that employ more than 50,000 people.

The average laundromat makes over $238K, and up to half of that can go to the laundromat owners as profit. Do I have your attention?

Get ready to learn how to start a laundromat!

We interviewed the owners of four different laundromat businesses, including Dave Menz, the CEO of Queen City Laundry, who owns four laundromats and makes over $1.8 million annually.

Dave will share his wisdom on finding a laundromat, getting financing, how to value the business, and how to negotiate a deal. We pull in insights from other successful laundromat owners too.

Get ready to learn how to start a laundromat. You can either keep reading or click on any of the links below to jump to that section:

Case Study: Queen City Laundry

Dave Menz got into the laundry business in 2010. He told us:

He bought his first laundromat and worked at it on nights and weekends. He bought two more before he made enough that he could quit his job and still live a comparable life.

His primary services are:

• Self-service laundry
• Drop-off wash and fold
• Dry cleaning
• Pickup and delivery laundry
• Commercial laundry services

Since starting, Dave has bought four more laundromats. When he buys laundromats, he looks for locations he can fix up that offer services he can improve on to make them more appealing to local clients.

Dave maintains one company that owns the land his laundromats are on. This separate company rents the land to his laundromats, effectively making him his own landlord.

This unique strategy has built him a $3.8 million net worth and makes him over $1.8 million in revenue per year. Find out how below:

He’s currently working on upgrading from coin machines to accepting cards and PhonePay in addition to the other services he offers.

Learn About the Laundry Industry

You need to conduct market research and market analysis before you open a laundromat. Dave told us:

We’ve handled some of the market research for you in the following sections.

How much do laundromats make?

When you open a laundromat, assume that it will make around $300K in revenue annually. You can add additional sources of revenue by adding vending machines, laundry delivery, and other services.

Dave explained:

Check out our blog about laundromat earnings for more information on the breakdown between laundromat revenue and expenses.

Are laundromats profitable?

According to Cents, the average U.S. laundromat profitability is 20% to 30% on approximately $300K in revenue, assuming they’re not using leverage. Dave says that top-performing laundromats can operate with 50% margins or higher. That’s two to eight times higher than the average real estate investment margins of 7% to 10%.

A laundromat’s return on investment depends on:

• Age of machines: Maintenance costs increase as washers and dryers age.
• Recurring business expenses: Rent, utilities, and inventory can easily add up to $10K per month.
• Competition: The less competition you have, the more your new laundromat can charge. Adding full-service laundry allows you to charge more.
• Location: Like home mortgages, a new laundromat will cost more to operate in places with higher property values.
• Pricing: While a coin laundromat might charge between $1.50 and $4 a wash, you can charge by the pound when people pay for full-service washing and drying.
• Services offered: Providing services like full-service washing, drying, and delivery can increase revenue and reduce employee costs as a percentage of expenses.
• Employees’ pay: Even at minimum wage, payroll is the largest expense for most laundromat owners.
• Local taxes: Local and state sales taxes can be up to 13%.

Ancillary services like dry cleaning, pickup and delivery, sneaker cleaning, wash and fold, and other luxury services can increase your profitability. For instance, compare this dry cleaning price list to the $1.50 to $4 you’ll earn per wash for self-service laundry:

Rosie Wash Express Laundry achieves an impressive 36% margin by offering additional services and a rewards program. Want to learn more? Check out our interview with the owner:

How much does a laundromat cost?

Entrepreneurs normally spend between $100K and $1 million to start a new laundromat or buy a laundry business for sale.

Dave suggests that you should normally spend between two and five times revenue, but that you should base your business valuation on what it’s worth to you.

The startup costs to open a laundromat depend on:

• Size: Small laundromats will normally cost less than $300K, while larger laundry facilities will cost $500K or more.
• Equipment: The number of machines, capacity, and age will impact the price of a laundromat.
• Services: The startup costs will vary depending on whether you offer other services. An old store with no customers is worth less than one with a great customer base.
• Location: Every city has different property costs.
• Buy vs. build: Buying an existing laundromat will normally have less startup costs than building a new laundry business. You’ll also earn revenue faster, which should reduce the overall startup costs.
• Future operational costs: You should include a budget of approximately $15K monthly for future operating expenses, loan payments, rent, and maintenance.

Where is the best place to put a laundry business?

The best location for a laundry business will have the following characteristics:

• Population density: Laundromats do best in areas where there are at least 20K to 35K people in a one-mile radius.
• Low-income neighborhoods: Locations near apartments, colleges, low-income housing, and trailer parks tend to do better because low-income families often need to use a coin-operated business.
• Accessibility: You’ll want a location that’s easily accessible by car, bus, or foot. Signage should be easily viewable. Make sure you have abundant parking.
• Low competition: Lots of competition means lower profit margins and potential price wars.
• Good neighbors: Businesses like auto part stores, check-cashing businesses, convenience stores, and grocery stores are good neighbors for laundromats. They provide lots of traffic that might need your services.

	Dave’s Secrets to a $1.8M Laundromat Business Are Waiting for You!
	Start planning your highly profitable laundromat business today! With the UpFlip Academy, you’ll get step-by-step training directly from Dave. He’s sharing his secrets exclusively with you, including everything you need to secure funding, find the best locations, and negotiate profitable deals. Learn the strategies Dave used to build four successful laundromats generating $1.8M annually—you won’t find these anywhere else!
	Join the UpFlip Academy!

Get ready to learn step by step how to start a laundry business.

How to Start a Laundromat

Starting a laundromat means you’ll need to:

1. Choose a business model.
2. Write a business plan.
3. Build relationships with distributors.
4. Get financing.
5. Find a location.
6. Get permits and insurance.
7. Set up your business.
8. Develop a marketing strategy.

Step #1. Choose Your Laundry Services

First, you’ll need to pick a laundry business type, which means selecting your services, business structure, and business model.

Consider the different kinds of laundromat businesses:

• Coin laundry
• Private laundromat equipment for multi-tenant buildings
• Wash and fold service
• Commercial laundry for uniforms, linens, and facilities
• Pickup and delivery

Learn about each type of laundry service below.

Self-Service Coin Laundry Business

When you want to start a laundry business, you’ll find most business entities offer coin-operated machines that people use themselves. A business venture that focuses on this strategy is normally going to have the lowest profit margin of all companies that clean clothes.

That said, at Ferndale Laundry, most revenue comes from self-serve machines. The owner, Justin, says:

Check out our interview with Justin below:

You might also check out this video about a day in the life of a laundromat business owner.

Dry Cleaning Business

A dry cleaning business uses completely different laundry machines than standard washers and dryers. Dry cleaners normally charge by the garment. Common dry cleaning price ranges include:

• Shirts: $2.99 to $8
• Pants: $6 to $11.99
• Sweaters: $7.50 to $12.99
• Dresses: $13.25 to $19.99
• Suits: $14.99 to $25.95
• Coats: $15 to $25.99
• Comforters: $18.99 to $42.99

Wash and Fold Service

Owning a laundromat that offers wash and fold services can be highly beneficial. It improves your customer experience because they can drop off their clothes on the way to work and pick them up on the way home.

Laundromat prices will normally be based on the pound. That means you make more money per wash and protect your machines by not overloading them, which saves your business entity from increased maintenance costs.

Commercial Laundry Facilities

A commercial laundry facility provides uniforms and other items for service companies and hotels. This type of business picks up dirty uniforms or sheets and washes them. This is highly profitable because you make money from both renting items and cleaning them.

Check out Cintas’s website for an example of commercial laundry and uniform company offerings.

Laundromat Service for Apartment Complexes

Whether you choose to operate a coin laundry business or laundromat equipment rental business, you can make money by supplying quality equipment to apartment complexes. Check out information about multi-unit housing on the National Apartment Association’s website.

Delivery Service

Rosie Wash Express Laundry uses an app to manage its home delivery business, allowing customers to enter details and pay online. Delivery drivers receive GPS information to complete their routes.

Choose a Business Structure

In addition to deciding what kind of laundry services you’ll offer, you need to create a business entity for your laundromat. This requires selecting a business name that’s available as a website domain, trademark, and social media handle.

The two most common ways to create a business entity are a limited liability company (LLC) or a corporation. There are other types of business entities you might want to consider, but most involve potential liability you don’t want to assume.

Both LLCs and corporations limit your potential losses to the initial investment as long as you don’t sign anything guaranteeing personal liability. You can also run both on your own or with business partners.

Dave uses numerous business structures to manage his business, including LLCs and land-rent agreements between his company that owns the land and his companies that own the laundromat.

Pro Tip: Learn how to register your business and how to get an employer identification number (EIN) from the Internal Revenue Service.

Step #2. Write a Business Plan

This plan should outline your strengths, competitors, goals, and workflow. A good plan can help you attract investors or earn grants.

Iron out your vision, objectives, and strategy into a laundromat business plan that will help you accomplish essentials like securing financing or partnering with other businesses. It’s totally worth your time.

Pro Tip: If you want some extra guidance on how to write a business plan that will appeal to investors, try our business plan template.

Step #3. Build Relationships With Distributors

Dave told us that relationships with his distributors contribute to nearly 50% of his success. Some of the most common types of distributors are:

• Fly-by-night distributors: This group includes laundromat owners who are doing it because their own distributor was bad. They may work from home and play middleman. They only work with small groups of manufacturers and normally deal with bad customers.
• Plain Janes: They are more established but just do the bare minimum. They are typically very nice but don’t add much value to the industry.
• Rock star distributors: These professionals get you access to an extensive infrastructure and are well-established with a major building and service department. They normally have company vehicles that are branded and fully stocked. You’ll also have access to a full parts department with technicians who can predict problems based on the description of the issue you’re facing. They will train you as a laundry business owner and work with manufacturer reps. Plus, they’ll have a professional installation department.

But how do you find the best distributors? Do a Google search, contact manufacturers, or network with people. After you’ve found a prospective distributor, you’ll want to talk to them on the phone, then visit their location.

Step #4. Get Financing

You’ll need money to cover leasing or buying a space, hiring employees, and buying equipment. Getting into the laundromat business isn’t cheap. You’ll want to estimate how much you need to start and operate the business.

Once you’ve established how much money you’ll need, you have to find a way to get the money. Some common funding options include:

• Self-financing: If you have a cool $1M lying around, you can open a laundromat with your own money. Most people don’t have that much, though.
• Equipment loans: You can secure an equipment loan with the equipment when you start or buy a laundromat. Learn more in our blog about business loans.
• Rollover business startup: Create a corporation and a 401K, then sell your shares of the corporation to your 401K. Use the proceeds for buying a laundromat or starting a laundromat business.

The Small Business Administration (SBA) offers free courses on financing options and funding programs. Consider alternative sources of funding, like crowdfunding or even a home equity loan.

Many small business owners finance their investment at least partially through a business loan. You can apply for up to $50K of loans through Borrow Nation.

Pro Tip: Want to know how to open a laundromat with no money? Check out our blog about seller financing to find out how.

Step #5. Find a Location for Your Laundromat

Fact: 87% of laundromat customers live within one mile of their preferred location.

Taking the time to find an ideal location is the best investment of your time as a future laundromat owner. Consider a location near any of the following:

• Apartment buildings
• College students
• Tourist areas
• Hotels and motels
• Large family housing developments

Dave offers some suggestions on how to find a business location in your local market, including:

• Check business listings.
• Network, talk to distributors, and use business brokers.
• Compile a list of attractive locations.
• Visit the locations.
• Value the business.

Self-serve laundromats are normally in small towns or on the outskirts of suburban areas. Most are under 5,000 square feet and unmanned. Large laundromats are typically over 5,000 square feet and located in busy areas.

High-volume laundromats with lots of ancillary laundry locations are the biggest and largest laundry businesses and normally have four or five streams of revenue that diversify their income.

Step #6. Get Permits and Insurance

Once you’ve found a strategic location, there are things to do before you open to customers. You’ll need to get business licenses, a state tax ID or sales tax permit, and relevant insurance. Some common types of insurance include general liability, commercial property, workers’ compensation, and crime insurance.

Licenses, Permits, and Tax Forms

Regardless of the legal structure you choose, determine if your business may require any licenses, permits, or tax forms to operate legally. Use the SBA’s tool. You might also be required to collect sales tax.

Business Insurance

During his first week of operations, Jeff, the owner of Rosie Wash Express Laundry, witnessed a customer fall down, crack his head on the floor, and start bleeding. Hopefully, that shows why every laundromat owner needs commercial property insurance and liability insurance.

Both will typically be included in small business general liability insurance that you can get from trusted providers like Simply Business. Even if you have an insurance provider you trust for your personal property, it’s a smart move to work with a company that specializes in small businesses for your laundromat.

Furthermore, if you plan to hire employees, you will need workers’ compensation insurance and unemployment insurance. Find out more about insurance for a small business.

You can also check out the Coin Laundry Association (CLA) listing of insurance products that meet the specific needs of a coin-operated laundry business.

Step #7. Set Up Your Business

Get a business bank account and credit card, and purchase equipment. You’ll also need to set up software and prepare marketing materials.

Get a Business Bank Account

Whether you start a new laundromat or buy an existing laundromat, you’ll need a business bank account. You can get a business bank account from major banks, regional banks, or online banks.

Regional banks tend to provide better business loans, but online banks offer better interest rates on cash in your bank account. Learn more about business bank accounts.

Get a Business Credit Card

A business credit card can help fund your laundromat startup cost. You may have to get a secured one at first.

Purchase Equipment

You’ll need washers, dryers, and other equipment for your laundromat. This equipment is a major part of the cost to open a laundromat.

Expect to spend between $1K and $5K each for a commercial washer or dryer. Meanwhile, industrial washers and dryers can cost between $10K and $50K depending on the load size and power.

The machines’ capacity can range from 30 to 80 pounds. To learn more, check out this handy formula for calculating the capacity of a machine.

Dave explains that you want to find properties with value-add opportunities. Look at the space usage, the amenities you can add, the services you can add, and how the property can be upgraded to provide a different or better experience. He told us:

As you’re shopping and evaluating pricing, consider that new equipment comes with a warranty. Here’s a white paper about replacing laundry equipment to help you learn more. Referring to laundry equipment and services directories can make it easier to find the right equipment.

You might also want to include vending machines or a small convenience store in your laundromat to supplement income.

Technology

Technological innovations are fueling a revival of the laundry industry. Laundry apps are becoming increasingly popular, but what’s the bottom line?

• DexterPay: According to its website, DexterPay is an app “that allows laundry customers to pay for their laundry and track cycle progress via their smartphone or mobile device.”
• Speed Queen Value Center: Speed Queen is a popular laundromat equipment manufacturer that offers an app for cash users. Customers add physical cash to the value center machine, which uploads it to their payment app.
• Accounting Software: Keep track of income and expenses and run regular reports to understand how your laundromat business performs. Try accounting software such as QuickBooks.

Step #8. Develop a Marketing Strategy

You can attract customers with a good location, but you can optimize that even further with marketing such as a website, social media, and advertisements.

Dave explained that you’ll want to invest in a market differentiator that makes your laundry business stand out from competitors. He said some of the things that make a difference include:

• Clean bathrooms
• Attendants
• Air conditioning
• Doors
• Payment systems
• Other services

You can use all of these to market your business and stand out in the laundromat industry. Provide a value proposition, charge more, and market the differences without putting your competitors down.

Digital Marketing

Digital marketing includes your website, email newsletters, social media, and search engine optimization.

Google Business Profile helps you:

• Reach your customer base in Google search and maps.
• Share pictures of machine and building with local customers
• Highlight your small business reviews.

Facebook is another great site for marketing your business.

Printed Materials

Print marketing includes business cards, flyers, brochures, t-shirts, and even uniforms! Try designing yours in Canva.

You might also run advertisements in local newspapers, or Valpak mailers, which reach 10K residents for $300 a month on a five-month subscription.

Attracting Customers

Consider offering extra amenities, such as Wi-Fi. The CLA published a guide to help laundry owners through the basics of setting up a secure network.

Other ways to create a welcoming atmosphere include cleanliness, professionalism, a children’s area, and televisions.

Final Remarks About Laundromat Businesses

We’ve discussed the coin laundry industry, startup and monthly cost to run a laundromat, and how to start a laundromat business. Along the way, we provided information on how to craft a great laundromat business plan, getting a business license, financing, choosing locations, and marketing your laundromat.

It’s up to you to decide whether you want to start a new laundromat or buy a laundromat for sale. What strategies will you use to take your laundromat business idea to the next level?