How to Start a Laundry Business: The Ultimate Step-by-Step Guide

Updated on January 31, 2020
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Laundry is an essential part of life for most people. As long as clean clothes are in demand, a laundry business will be too. After all, not everyone has their own washer and dryer, or the time (or desire) to wash their clothes themselves. This makes starting a business in the laundry industry a great option. 

This all sounds good in theory, but what does it take to launch a business of your own? If you’re wondering how to start a laundry business, this guide is here to help. There are a lot of decisions to make and work to be done, so let’s get started. 

8 Steps to Start a Laundry Business

We’re going to cover all of the crucial first steps to take to get your laundry business started. You may be eager to open your doors as soon as possible, but taking the time to plan and set up your business through the proper channels can help ensure a successful start. 

Step 1: Decide What Kind of Laundry Business You Want to Start

If you’re already thinking about starting a laundry business, you might know exactly what kind you want to open. But if you’re still exploring your options, we’ll go through a few of the laundry business formats you should consider before deciding. 

Laundry businesses are most popular in areas with lots of apartment buildings or where people don’t necessarily have their own washing machines. You may choose to open a laundry business that allows customers to come in and do their laundry using your machines, or you can also offer wash and fold services where customers can drop off their laundry and then pick it up once it’s done (some laundry businesses also offer pickup and delivery.)

how to start a laundry business, types of laundry businesses

You might also decide to offer all of these services to your customers. Whichever you choose, you’ll need washing and drying machines and a location for the business. Consider all of this before moving forward with starting a laundry business. 

You also have the option of buying into a laundromat franchise, rather than building a new business from the ground up. There are pros and cons to this type of business model, but if this is your first business endeavor, it can be helpful to work within an already existing—and successful—framework that a franchise provides.

With all of these options, you’ll want to take the time to do your research before you decide which one to move forward with. See what other types of laundry businesses are in the area, conduct a survey of people in the area, or see what type of demand there is for the possible business. This information will help you decide if there is a need for a laundry business in the first place, as well as what type of laundromat would best serve the area. 

Step 2: Choose a Business Name

One of the most fun parts of starting a laundry business is choosing the business name. Think of all the clever, catchy, and memorable names you can come up with—but make sure it’s also describing your business and is memorable and easy to pronounce. 

Once you have some ideas, you can look up whether your business name is available online in most states. The secretary of state’s website will likely be the best resource for checking business name availability, though some states have a different agency handle this aspect, such as the chamber of commerce department. 

If your business name is available, you will likely have the option to reserve it for a set amount of time. While this step isn’t required, you may choose to do so if you aren’t ready to register your business but want to ensure no other business takes your name.  

Step 3: Choose a Business Entity

Another decision about your business that you’ll have to make early on is which business entity you’ll choose to structure your business. Choosing the right business entity is crucial, as it affects how you pay taxes, how much risk you’ll be exposed to, how you’ll need to structure your business, and more. 

For example, if you decide to open your laundry business as a limited liability company, you’ll have liability protection for yourself and other business members. On the other hand, if you opt for something like a general partnership or sole proprietorship, you won’t have liability protection, but you also won’t have to register your business.

There are several factors to consider in this step, so we recommend consulting a business attorney or tax professional to walk you through the process and help you choose the best entity for your unique business needs.

Step 4: Write a Business Plan

Now that you have your business entity, business name, and business idea in mind, you can get down to writing your business plan. Your business plan will be on the longer side, think 30 to 50 pages, and it will provide a comprehensive overview and actionable plan for taking your laundry business to a profitable endeavor. 

You can either write your business plan on your own or you can use a business plan template to help streamline the process, but either way, there is some key information you should make sure to include in the plan. 

Your business plan should include a summary and information about the type of business you want to start, including your structure and any other key employees (besides yourself). It should also include a market analysis. This analysis should show that there is a high demand in your area for a laundry business, as well as outline any competitors, who your target customer is, and more. 

Your plan should also include financial information, detail where you’re getting your startup capital, whether or not you’ll be seeking any extra funding, and projections for when you think you’ll actually start making money with your new laundry business. 

Step 5: Register Your Business and Get an EIN

Not all businesses have to register with the state (sole proprietorships and general partnerships likely will not), but most will need to take this step in order to legally operate. Some states allow businesses to register online, typically through the secretary of state or chamber of commerce website, but other states require businesses to register in person with paper documents. It’s always wise to consult a business lawyer who can help you keep track of the documents and registrations your business needs to file. 

One thing to keep in mind if you chose a business entity that you’re not required to register with the state, you may still want to file a DBA or “doing business as” to operate your business under a name other than your legal name (which is the default).

It is also a good idea for most businesses to apply for an employer identification number or an EIN. This number is helpful for businesses when applying for a bank account, filing taxes, and more. It’s sometimes referred to as a business tax ID number. If you plan to hire employees, this is a required step, but even if you’re not at that stage yet, obtaining an EIN has several business benefits. You can apply for your EIN through the IRS website.

how to start a laundry businessSource: IRS

Step 6: Get the Proper Permits and Licenses

The licenses and permits you need to run your laundry business will vary depending on the state where you’ll be operating. You may need to get a more general business license in addition to more specific licenses, such as a health department license or water pollution control permit

Some states and even cities have specific laws around laundry facilities and businesses that provide laundry services. If you plan to do pickup and delivery services too, there are other licenses you’ll need, pertaining to the business vehicle. 

This is another step where it would highly benefit you to consult a business lawyer because licensing rules vary depending on the state, city, or county.

Step 7: Find a Location and Get Equipment

You’ve likely done some preliminary work on this step, especially during your market analysis, but it’s time to get serious about finding the location for your laundry business. While some smaller operations may be able to be run out of a home (if you’re only doing drop-off/pickup service, for instance), you’ll likely want a commercial space. Keep in mind, a laundry business will require specific plumbing and water line hookups—or the bones for these to be added—which will come at a cost. Just how much it costs to start up a laundry business will vary depending on several factors, but know that your physical space will likely be a large investment.

how to start a laundry business, types of machines

Finding the right space is important, but equally as important is making sure it’s in the right location. You want to make sure you’re conveniently located near your target audience. Depending on the location, this could mean within walking distance.

With your space secured, you next need to turn your attention to buying the equipment to make your laundry business operational. Depending on the size of your business, you may need over 20 washing machines and dryers—each. While writing your business plan, you should have done some calculations for how much you expect to spend on these initial startup costs, and now it’s time to find a way to finance them.  

While new businesses have a more difficult time qualifying for traditional business loans, one type of funding that can be particularly useful for laundry businesses is equipment financing. You’ll take your quote for the machines you need directly to a lender who then funds the purchase. You pay off the loan with regular payments, and the machines serve as collateral for the loan, making lenders more willing to work with less-qualified borrowers. 

Step 8: Open a Business Bank Account

You’re nearly ready to open the doors of your laundry business, but before you do, one more crucial step is to set up your business’s financial accounts. First, you’ll need to open a business bank account so you can separate your business and personal finances. This is important for many reasons, including simplifying your taxes and helping to protect your personal assets if your business is the recipient of legal action.

Having this account completely separate from your personal bank account can also help establish and boost your business credit score, which down the line will help you qualify for more attractive funding options if and when you decide to expand your business.

You’ll also want a business credit card to help keep your spending separate. While there are many great options out there, a 0% introductory APR credit card can be especially useful for startup businesses, as the intro period can serve as an interest-free loan of sorts. Just make sure your balance is paid off before the offer period ends and a variable APR sets in.

The Bottom Line

The steps above are just those necessary to get your laundry business started. There will, of course, be steps beyond these eight, but getting these out of the way will put you in good shape to launch and eventually grow your business into a success. 

The key decisions you made and included in your business plan, along with the action you took to form your business are the foundation on which you can build upon in the years to come. 

Nina Godlewski

Nina is a former staff writer at Fundera where she worked to help make complex business topics more accessible for small business owners. She was previously a staff writer at Newsweek covering technology, science, breaking news, and culture. She’s also worked as a reporter for Business Insider and The Boston Globe. Nina has a degree in communication studies from Northeastern University. Email: nina@fundera.com.
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