How Much Does It Cost to Start a Laundry Business?

by Mackenzie Maxwell ; Updated October 25, 2018
Man doing laundry in laundromat, view from the inside of washing machine

Many people see laundry as one of life's necessary evils. However, entrepreneurs know that a laundry business can be a profitable endeavor. In fact, laundromats are popular first-business options. Before you decide to start your own company like this, you should know about the different types of laundry businesses, the startup cost considerations and the earning potential.

Choose a Type of Laundry Company

It's important to dispel the notion that a laundry company can only be a dingy, unsafe building with old facilities. Things have changed in the industry, which means there are several ways to earn money by washing clothes. You should know the differences and decide which works best for you before figuring out starting costs and profits.

First is the coin-operated laundromat. These businesses are relatively easy to operate. Owners need several industrial washing and drying machines that take quarters, a well-equipped building and someone to monitor the establishment.

Some more advanced laundromats moved away from the coin-based machines and accept credit cards. These companies have the same basic costs as their change-based counterparts. However, customers may appreciate the added convenience of not having to carry quarters.

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Dry cleaning is another popular choice in this industry. You'll need a convenient location, specialized equipment and a few employees. Some dry cleaning businesses lease their equipment, which can minimize the up-front risk.

You could also start a business that picks up, washes, folds and returns clothes. These companies can cater to college students, busy parents or families that use cloth diapers. You can also add this service to a dry cleaning company for a premium.

Each of these types of laundry businesses have varying startup costs. However, there are a few commonalities that all prospective owners should consider.

Fees for Becoming a Corporation

The first significant cost that all would-be laundry business owners should consider is the paperwork. Before you can get keys to a building, you should have a company on paper. Depending on if you file as an LLC, S-Corp or some other type of business, your fees may vary.

The first cost on many entrepreneurs' list is the incorporation fee. This can be between $100 and $250, depending on your state. You also pay the lawyer or online service that files this for you. This service can cost $500 to $5,000.

Some states also charge taxes of up to $1,000 for the first year of franchising. Other states waive this fee altogether, which can make the climate friendlier for new businesses. The state may also charge various filing fees of up to $200.

Find the Perfect Location

Once you officially have a business, you can sign a lease or buy a commercial property. Be sure that the building has enough room for all the equipment you need. For a typical laundromat, this may mean 30 washing and drying machines, benches for your guests and tables for folding. No matter which type of laundry company you open, you want to give yourself room to grow.

The location is vital for your business, especially if you don't pick up and drop off clothes. Location not only determines the rent you pay but also the number of customers who can conveniently reach you. For example, dry cleaners may prioritize areas with lots of commuters. Business people can appreciate the convenience of picking up their clothes on the way home.

Before signing a lease, you must consider the costs to renovate. Laundromats and other laundry businesses often need more plugs and water hookups than other places. If you take over an existing building that was never used for laundry, you may need to make significant renovations.

Equipment Cost to Open a Laundromat

The significant cost that sets these businesses apart is the equipment. To fill an average laundromat, you may need $150,000 to $450,000. The cost depends on how sophisticated the machines are. However, you don't want to be fooled into thinking the cheapest choice is always best.

Energy-efficient machines can save you plenty of money in the long run, even when they cost more upfront. Furthermore, machines that operate with cards or other non-coin systems can attract new customers. Consider your prospective clientele and what they would want to use.

While budgeting for equipment, you should also consider signage outside. Furthermore, think about things like change machines, benches, tables and even televisions. Anything that can make your customers have an easier time in your establishment can pay in dividends.

Equipment for Other Companies

Dry cleaners and delivery services have different needs than their laundromat cousins. Wash and fold companies need fewer units. However, these entrepreneurs should still consider energy efficiency in their machines.

Costs for dry cleaning equipment can range widely. Leasing these machines can save up to tens of thousands of dollars on startup costs. However, leases can cost you more in the long run. Furthermore, dry cleaning businesses spend up to $2,000 per month on plastic bags, hangers and other supplies.

Budget for Marketing

While you can hope for word of your new business to spread like wildfire, you shouldn't count on it. Instead, have a generous marketing budget that can allow you to get the word out yourself. In today's world, a website may be the perfect start.

If you pay a professional to design a custom website for your business, you can expect to spend at least $5,000 on the project. Business owners with some technical skills can significantly cut these costs with do-it-yourself website services that cost only a few hundred dollars.

While you're online, you should also consider marketing on social media. Some sites allow you to spend your marketing budget wisely with highly targeted ads. You may also invest in making sure your website ranks on relevant searches. Doing these things yourself can bring down costs significantly, but you may get more for your money with an expert.

You may also wish to budget for more traditional advertising tactics. Ads in local papers, flyers, mailers and attractive signage can all bring customers to your door.

Franchising and Buying an Existing Business

Opening your business under a franchise can decrease your marketing costs and make it easier for customers to find you. However, you'll also want to account for the franchising fees. Whether this is a worthwhile trade-off depends on your willingness to take risks and your expertise in marketing.

Buying an existing business means not having most of these upfront costs. Instead, you'll pay a flat fee for the company. While this may seem easier, you should watch out for some potential pitfalls. For example, buying a business with outdated equipment could mean you find yourself purchasing all new machines in just a few years.

Make Your Money Back

Laundry businesses can have extraordinary costs to start. However, being a savvy entrepreneur can help you make back your investment and then some. The average laundromat business profit is between $5,000 and $7,000 each month.

Owners who want to earn this much should be sure to keep their facilities clean and safe. They should also be willing to innovate to bring in new business when necessary. Perhaps most importantly, laundry business owners need to ensure their pricing is right.

For laundromats, you should calculate how much it costs you to run each washer and dryer about four times each day. Then consider your overhead costs like rent. Divide your total by the number of loads you expect to run each month in all machines. This gives you the minimum to break even.

You can then use this rough figure to adjust your pricing structure. Give yourself some wiggle room to save for equipment maintenance and emergencies. Add 20 to 30 percent for profit, and you have a good range to work within.

About the Author

Mackenzie Maxwell is a small business owner. She has two businesses, including a martial arts gym in Texas. Prior to building her own, Mackenzie worked with small businesses and organizations to create effective marketing - from churches to insurance companies. She enjoys helping businesses with the startup spirit grow. Mackenzie has been writing in this field for six years and shows no signs of slowing.

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