Want to start a laundry business? Well, your timing couldn’t be better.
As the economy is getting back to its track, the scope of launching a successful small business is only increasing. Today, we have brought you a complete guide on “how to start a laundry business in 2021”.
There is no surprise that many small and large scale businesses have become the victims of the COVID-19 pandemic so the laundromat industry. However, the new statistics have predicted compounded annual growth rate ( CAGR) of 5% from 2021 to 2023 in the laundry business
The most important fact is that the laundromat business is full of opportunities. You can start many low-cost small-scale businesses quickly and then develop further. By starting a laundry business, you can help many working class, students, and large families who do not have time to deal with laundry.
What Are the Pros And Cons Of Starting a Laundry Business?
We admit starting a laundry business in 2021 doesn’t sound as cool as others but it is one of the most profitable and recession-free businesses. Even at the time of the pandemic, the laundry business has its fall, but they don’t shut down entirely.
Here are some pros and cons to help you make up your mind to select the best laundry business plan and get a glimpse of your future endeavors.
- The laundry business has a great return on investment (ROI). an average ROI in laundromat business is between 30-45%.
- Unlike any other service business, the laundry business needs less inventory management and stock refilling.
- It is an evergreen lucrative business not seasonal. You only need to rely on your customer service and social skills to operate it successfully.
- Hiring is the least of your worries. Many employees in laundromat businesses work part-time or on an hourly basis.
- This business doesn’t require any technical skills. You just need to get familiar with the fundamentals of the laundromat business and you are good to go.
- You don’t have to spend much on maintenance. The equipment and customer do most of their work as many laundries offer self-service. It is one of the simplest business models.
- This business is highly competitive even though the success rate is 95% in starting a laundry business. As you are not just competing with other laundry businesses in your area but multi-housing facilities as well who offer laundry services to their residents.
- You have to work under time limits and have to cater to the needs of the customer on an emergency basis. Because it’s all about customer service despite your flexible hours
- Finding a suitable location with growth prospects can be a tricky errand.
- To start a laundry business, you require a huge start-up cost.
- Water and sewage are a big concern and will require all your attention, effort, and money.
What Tools Do You Need to Start a Laundry Business In 2021?
The tools and equipment you will need to start your own laundry business depend on the type of services you are offering to your customers. Besides that, there are some types of laundry equipment which you can either rent or buy such as washers and dry-cleaning machines.
Basic tools and equipment you will need to start a laundry business are as follows:
- Chest-type ironers
- Steam boiler
- Thermal fluid heater for ironer
- Door hangers
- Laundry carts
- Coin-machine or card machine
- Detergent vending machines
- Lint control devices
- Linen folders
- Linen carts
- Laundry sinks
- Air compressors
- Laundry scales
- Dry-cleaning equipment, if needed
These are some of the professional laundromats’ tools and equipment that you will need to start a successful laundry business in 2021. make sure all your tools and equipment are professional-grade and come with a warranty.
A large sum of your start-up cost goes to laundry equipment. If you need any help or suggestion or want to know from where you can arrange this equipment in your budget, then you can join the “Coin Laundry Association or CLA” and become a part of the laundromat community.
Some other essentials you will need to run a promising laundromat are:
- Business license
- General liability insurance
- Commercial auto insurance and permit
- Signage permit
- Fire department permit
- Air and water pollution permit
- Public improvement fees
- Impact fees
- Sewer connection fees
- Sewer and wastewater fees
- Dry-cleaning license based on state regulations
- Official website or mobile apps
What Are the Basic Setup Costs For Opening a Laundry Business?
Till now you have got an idea that the basic setup cost to start a laundry business is generally high. How high? That depends on your business model. The basic setup cost could fall between $200,000 to over $1,000,000.
However, to determine how much it will cost accurately for your business model you need to assess a few things. Cost of your equipment, cost of your commercial laundry space (both buy or lease), cost of your permits, registration, licensing, and insurance, basic ongoing and future expenses, cost of commercial vehicle, website creation, vending machines for detergents, water, and sewage connection.
Once, you analyze the size of your laundry business idea and its requirements. You can easily calculate your basic setup cost. But if you are not sure, how much it could cost then you can take the expert’s help or attend events and webinars at CLA.
How Do You Prepare for Starting a Laundry Business?
While you are learning “how to start laundry business”, you should also prepare yourself to learn the ways to attract and grow your business simultaneously.
What good it would do if you launched your business and nobody knows that you exist. You need to start learning how to promote your business effectively.
Laundromats are located near their target market. Therefore, it is best to use local SEO tools to advertise and promote your business.
We would also advise you to invest in exterior signage and join the local charities. You can promote your business while giving back to the community.
It is also one of the best ways to build trust and brand value. Ask the community charities to list your business on their websites and social media platforms to gain attention.
Doing thorough market research will help you in the long term and stop you from investing and opening at the wrong location or providing less attractive kinds of services.
Market research will help you to identify the demand for your services, your potential target market, and your competitors. You will also be able to determine which area has fewer and more laundromats and what type of services they offer.
Another advantage of doing thorough market research is knowing how you can save money and reduce your start-up cost. You can either buy an existing laundry business or open a whole new business. Only the market research will tell you what the best option for you is according to your budget and locality.
Business Name and Logo
Now, it is time to decide the name and logo for your laundry business. You need to make sure whatever business name and logo you choose delivers a clear message to your customers.
Sure, it should be catchy or simply intelligent and smart and easy to pronounce. Also, make sure it is easy to read and understand. No matter what your laundry business idea is? Make sure your business name is clever and memorable and it should be describing your business.
The Asia Pacific and North America hold the largest region in dry-cleaning and laundry services with 34 and 33 percent respectively of the global laundromat industry. You can divide the laundry and dry-cleaning business by “TYPE, END-USE, and DISTRIBUTION CHANNEL” globally.
- By Type:
- Coin-operated laundromats or self-service
- Non-coin operated laundromats with customer service
- Linen and uniforms
- By End-Use:
- Commercial laundry business
- Laundry from hotels, restaurants, and resorts
- Professional textile cleaning and management
- Health care
- Residential dry-cleaning and laundry business
- Wash and fold service
- Delivery service
- Commercial contracts such as event management and wedding
- Vending laundry services
- Coin-operated laundromat business only
- By Distribution channel:
- Offline laundry services or regular laundromats
- Online laundromat businesses run via mobile apps such as Delivery.com
Select Target Market
Mapping out your potential target market is vital for opening a laundromat. Your location and target market have a cordial relationship.
Your target market determines your location and vice-e versa.
You can divide the target market into 2 categories: commercial and residential.
- The commercial target market includes:
- Textile care industry
- Fashion and film industries etc.
- The residential target market includes:
- Anyone above age 18
- Elderly societies
- Apartment on rent areas
- Large families that fall in the low-income bracket ( >400,000)
- Working women’s hold 72% of the target market
- Competitor’s customers
There is no specific skill set required to start a laundry business. It’s not like you have to gain some technical knowledge or skills before you learn “ how to start a laundry business”.
You just need to polish your few existing skills and utilize them in more effective ways. If you have a general working knowledge of laundry equipment, then it surely is an advantage but you can also hire someone to get the work done.
The laundry business is all about customer service mainly.
Here are a few other laundry business tips and skills to make your laundromat exclusive are:
- Monitoring equipment like watching gauges and dials to make sure everything is running smoothly
- Monitoring and assessing the performance of equipment
- Critical thinking
- Time management
- Knowledge of public safety and security
- Organizing, planning, and prioritizing work
- Creating and maintaining interpersonal relationships
- Ability to perform general physical tasks
- Helping others
How To Source Raw Materials for a Laundry Business?
Sourcing raw materials for your laundry business plan is not that hard. You just need to search locally both online and offline and you will be able to find your raw material easily.
Few raw materials suppliers are:
- Green Dolphin Eco-solutions– suppliers of detergents, cleaning agents, fabric softeners, etc.
- Luxe Chem LLC – supplier of polyacrylic acid such as carbomer 940
- Hamburg industrial LLC- Detergent raw materials taxation, HPMC, Pine oil, Castor oil soap, etc
Or simply you can become a part of the CLA or Coin Laundry Association and they will help you find affordable raw materials and equipment locally.
How To Setup Your Price Structure?
The very simple method of setting up your price structure is to find out the cost structure of your competitors for similar services in your area. Consider your target market as well. You see students and the working class can’t afford high laundry prices.
Besides that focus on your services instead of trying to become a cheap service provider and focus on smart strategies. Offer discounts and sales options such as after 10 wash 11 loads of laundry is free.
We cannot stress more on customer service and satisfaction. If your customers are satisfied you can even increase the prices when it is necessary.
Do You Need Office Space?
Now, let’s discuss your location or office space. When it comes to learning “ how to start laundry business”. It is all about LOCATION. It is one of the main contributing factors besides your niche and equipment.
Before choosing to buy or renting a space for your business you must consider few factors:
- Open a laundromat near your target markets such as student housing, apartment buildings with renters, condos, or mobile homes.
- Make sure the average household size in your area is 2 or more.
- Most low-income bracket people use laundry services so make sure at least half the population of surrounding houses in your area earn less than $50,000 per year.
- Make sure your location is safe, secure, and well-lit. Contact your local police station to find the crime of burglary stats in your area.
- Your location should be highly visible, centrally located. Also, make sure whatever facility you choose goes well with your long-term plans in case of extension and growth.
- Last but not least, check out your competitors and the laundry services they offer. If you all have the same business model and they are located nearby your shop then your chances of success and ROI will reduce significantly. Also, check the customer reviews of your competitors.
Well, arranging finance to start a laundry business can be a bit challenging due to higher start-up costs.
Don’t lose hope! You see the success rate of a laundry business is higher than any other small-scale business and therefore finding the right investors or getting a loan from the bank or other financial institutes only need a proper business plan.
You just need to mention your target market, laundry business plan, location, and expected ROI in a specific time frame and you are good to go.
But if you are looking for investors within the laundromat industry then you must join CLA and get sponsored by experienced industry investors who won’t just lend you their money but resources and contacts as well.
You can also approach investors online via fundraising apps such as GIVELIVELY.
Do You Need to Hire?
Depending on the size of your business, you need at least 2 to 10 employees to launch a successful business for cleaning and managing the customers, for maintenance of equipment, marketing, or accounting.
However, you don’t have to hire full-time employees as it could be difficult to manage the salary amount at the starting. Hire part-time or hourly basis staff and services as per your requirement only.
What Could Be the Possible Hurdles In Starting Laundry Business?
You have gained all the knowledge on “how to start a laundry business successfully”. now it is time to get familiar with the possible hurdles in the laundry business so that you prepare yourself in advance to deal with them.
- Competition is one of your biggest problems. There are more than 35,000 laundromats and dry cleaners in the United States. You must distinguish yourself from them by offering lower prices or attractive service packages.
- Supply of clean water and sewage management of a proper sewage system is essential. It consumes most of your operational cost. Therefore, you always have to be on this issue. One day without a water or sewage system malfunction can destroy your image and you might have to lose your customers.
- Equipment maintenance must be constant and on time. Your equipment will depreciate with time, but proper and regular maintenance can extend their life by double. Gain some appliance repair knowledge so that at least you can monitor and assess the situation efficiently.
- Time restrictions are part of the job. If you can’t deliver your services on-time, then the customer will never come back to you. Moreover, your business will lose its credibility and trust.
- Lack of organization can cause several issues such as missing clothes, stained or burnt clothes, etc. You need a proper documentation and tag system to resolve these kinds of issues. We admit such a thing could still happen but it is better to happen once or twice but regularly. It could tarnish your image and make your customer frustrated.
Conclusion: How to Start a Laundry Business In 2021- A Complete Guide
Well, as we say irony is the opposite of wrinkly. Similarly, it is better to be prepared and learn the fundamentals of the laundry business than jumping in without any knowledge. Starting a laundry business requires a buck load of money and effort.
Even though raising funds and getting low-cost raw materials and tools are easy, they could crumple down easily without knowing “how to start a laundry business successfully”.
The market is full of competition and so is ROI. Don’t be greedy and gather as much knowledge as you can. Also, don’t forget to check out the legalities to start a laundry business in your state.
- How Much Can You Earn Monthly Through a Laundry Business?
You can make an average of $20-30K per month. However, the figures can fluctuate mostly higher depending on the size, niche, and target market.
- Is Laundry Business Profitable?
Yes, the laundry business is highly profitable as it is recession-proof and has a 95% success rate. Moreover, laundry is the real never-ending story where there are always new customers.