How to start a laundry business from the ground up

Starting a laundry business can be a rewarding venture, blending a knack for detail and customer care with smart business planning. The industry is worth billions, driven by consistent demand from busy professionals, families, and local businesses.

This guide will take you through the practical steps of selecting the right location, acquiring equipment, securing funding, and obtaining necessary permits to help you launch a successful laundry business in the U.S.

Step 1: Plan your business and validate your idea

Define your market

Start by analyzing the demographics of potential neighborhoods. Use the U.S. Census Bureau's data explorer to find areas with a high density of renters, who are your primary customers. Also, identify local businesses like restaurants, gyms, and small hotels that might need commercial laundry services.

Analyze your competition

Once you have a few locations in mind, map out every laundromat within a three-mile radius using Google Maps. Don't just count them. Visit a few to check the condition of their machines, their pricing, and how busy they are during peak and off-peak hours.

A frequent oversight is to ignore online sentiment. Read customer reviews on Yelp or Google to discover common complaints like broken machines or poor customer service. These are opportunities for you to do better and attract their unhappy customers.

Estimate your startup costs

A clear financial picture is necessary for your business plan. Initial investment for a laundromat can range from $200,000 to over $500,000. Understanding this scope from the start helps you set realistic funding goals without surprises down the road.

Here is a typical cost breakdown. Commercial washers and dryers can run from $40,000 to $150,000. Building renovations, including plumbing and electrical work, often cost between $50,000 and $150,000. Add another $5,000 to $20,000 for lease deposits and initial rent.

Here are 3 immediate steps to take:

• Survey three potential neighborhoods to assess demographics and identify commercial clients.
• Create a spreadsheet of five local competitors, noting their pricing and customer review scores.
• Draft a preliminary budget with estimated costs for equipment, renovations, and rent.

Step 2: Establish your legal and licensing framework

Choose your business structure

You might want to consider forming a Limited Liability Company (LLC). It protects your personal assets if the business faces debt or lawsuits. An LLC also offers pass-through taxation, so profits are taxed on your personal return, which simplifies paperwork.

An S Corporation is another option that can offer tax savings on self-employment taxes once your business is profitable. Discuss which structure fits your financial goals with a CPA before you file any paperwork.

Secure federal, state, and local permits

First, get a free Employer Identification Number (EIN) from the IRS website. You will need this for taxes and to hire employees. The process is online and takes just a few minutes to complete.

Next, contact your city or county clerk for a general business license, which can cost between $50 and $400. You will also need specific permits. A health department permit might be required and can run from $100 to $1,000.

A frequent cause for delay is the wastewater discharge permit. Contact your local water authority early. This permit ensures you comply with environmental regulations and can take 60 to 90 days to get approved, so start the application as soon as you sign a lease.

Here are 4 immediate steps to take:

• Consult a CPA to decide between an LLC and an S Corp for your business.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Contact your city clerk’s office to get the application for a general business license.
• Research your local water authority’s requirements for a wastewater discharge permit.

Step 3: Secure your insurance and manage risk

Types of insurance you will need

Protecting your new business from day one is a must. You will need a few specific policies. General liability insurance covers customer slips and falls, with a $1 million policy typically costing between $500 and $1,200 annually.

Property insurance protects your expensive machines and building from fire or theft. Also, if you have employees, workers' compensation is legally required in most states to cover on-the-job injuries. Consider commercial auto insurance only if you plan to offer a delivery service.

A frequent oversight is skipping Bailee's Insurance. This policy specifically covers customer property in your care. If a washer tears a customer's clothes or a pipe bursts and ruins a load, this insurance handles the claim, not your general liability.

When you look for coverage, you might want to get quotes from providers like The Hartford, Hiscox, and Next Insurance. They often have business owner's policies (BOPs) that bundle general liability and property insurance at a better rate.

Here are 4 immediate steps to take:

• Request a quote for a $1 million general liability policy.
• Ask potential insurers specifically about adding Bailee's Insurance for customer goods.
• Contact three insurance providers to compare rates for a business owner's policy.
• Check your state’s requirements for workers' compensation insurance if you plan to hire staff.

Step 4: Secure your location and equipment

Find the right space

Look for a location between 1,500 and 3,000 square feet. This provides ample room for machines, folding tables, and customer seating. Your spot must have commercial zoning, typically C-1 or C-2, so confirm this with the local planning department early on.

When you find a place, you might want to negotiate a long-term lease of 10 years or more to protect your investment. Also, ask the landlord for a tenant improvement (TI) allowance. This can help pay for the significant plumbing and electrical work your machines require.

One thing many new owners miss is checking the utility infrastructure. Before you sign any lease, have an engineer verify the building can handle the high demand for water, gas, and electricity. An upgrade after the fact can be very expensive.

Purchase your equipment

With a location secured, it is time to buy your machines. Commercial front-load washers typically run from $3,000 to $7,000 each, while stacked dryers can cost between $5,000 and $10,000 per unit. You will need a mix of sizes.

You will also need change machines, soap dispensers, and a robust water heating system. These items can add another $10,000 to $30,000 to your startup costs. Contact distributors for brands like Speed Queen or Dexter Laundry for equipment package deals.

Here are 4 immediate steps to take:

• Verify the zoning classification for two potential locations with the city planning office.
• Ask landlords about their willingness to offer a 10-year lease and a tenant improvement allowance.
• Request equipment package quotes from two different laundry equipment distributors.
• Hire an engineer to inspect the utility capacity of your top location choice before you sign a lease.

Step 5: Set up your payment system

Choose your payment solution

While many laundromats are still coin-operated, accepting cards is now expected. For services like wash-and-fold or commercial accounts, you will need a reliable way to process payments. Many new owners get stuck with high fees or clunky hardware.

Look for a solution with transparent pricing. Average commission rates from other providers often range from 2.5% to 3.5% plus monthly fees. This can eat into your profits quickly, especially when you are just starting out.

For laundry businesses that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit and digital wallets directly through your smartphone - just tap and done.

At just 1.99% per transaction with no hidden costs or extra hardware needed, it's particularly useful for your wash-and-fold delivery service or when collecting from commercial clients. The lower rate makes a real difference to your bottom line.

Here is how it works:

• Get Started: Download JIM app for iOS
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
• Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers

Here are 3 immediate steps to take:

• Compare the transaction fees of two traditional payment processors with JIM's 1.99% rate.
• Download the JIM app to explore its features for your wash-and-fold service.
• Outline a payment process for commercial clients, including invoicing and on-site payment options.

Step 6: Secure your funding and manage finances

Find your funding sources

You might want to start with an SBA 7(a) loan, which can provide up to $5 million. Lenders typically look for a credit score of 680+ and a 10-20% down payment. Interest rates often sit at the prime rate plus a small margin.

Another path is equipment financing, which distributors for brands like Speed Queen and Dexter often provide. The equipment secures the loan, which can make approval simpler. Expect interest rates between 6% and 12% for this type of financing.

A frequent misstep is to approach lenders without a detailed business plan. Your plan must include three-year financial projections. This shows you have a clear roadmap to profitability and can handle the loan payments.

Calculate your working capital

Beyond the initial purchase costs, you need cash for day-to-day operations. You should budget for at least six months of working capital. This typically ranges from $20,000 to $50,000 to cover rent, utilities, insurance, and marketing.

Many new owners get caught up in the large equipment costs and forget this buffer. This operating cash is what will sustain your business while you build a steady stream of customers during the first few months.

Here are 4 immediate steps to take:

• Check your personal credit score and resolve any outstanding issues.
• Draft a business plan with three-year financial projections for lenders.
• Contact an SBA-preferred lender to discuss pre-qualification for a 7(a) loan.
• Calculate your working capital needs to cover at least six months of operating expenses.

Step 7: Hire your team and set up operations

Build your team

Your first hire will likely be a Laundry Attendant. This person handles customer service, wash-and-fold orders, and keeps the facility clean. Depending on your location, expect to pay between $12 and $16 per hour for this role.

For a typical 2,000-square-foot laundromat, one attendant per shift is a good start. A frequent oversight is understaffing during peak evening and weekend hours. You might want to schedule a second person for those busy times to maintain service quality.

Streamline your daily operations

To manage shifts, you can use scheduling software like Homebase or When I Work, which often have free plans for small teams. These apps simplify communication and let employees track their hours from a phone.

No specific certifications are required for attendants, but you should provide thorough on-the-job training. Teach them how to handle common machine errors, process wash-and-fold orders, and manage customer issues professionally. Also, create a simple inventory tracking sheet for supplies.

Here are 4 immediate steps to take:

• Write a job description for a Laundry Attendant with pay and responsibilities.
• Map out a weekly staff schedule, adding extra help for peak hours.
• Explore a free plan on a scheduling app like Homebase to manage shifts.
• Create a checklist for daily opening and closing duties for your staff to follow.

Step 8: Market your business and attract customers

Establish your digital storefront

Start by claiming your free Google Business Profile. This is your most important marketing asset. Fill it out completely with high-quality photos of your clean facility, your hours, and a full list of services.

Many new owners neglect local search terms. You might want to include phrases like "24-hour laundromat [your city]" or "wash and fold service" in your profile description to attract customers who are ready to buy.

Run targeted local campaigns

For residential customers, a grand opening special can work well. Consider a "Free Dry with Every Wash" promotion advertised through flyers in nearby apartment complexes. A 1-2% response rate is a realistic target for this method.

To land commercial accounts, you have to be direct. Walk into local restaurants, clinics, and spas with a professional price sheet. Offer a free trial of your linen service. This personal touch builds trust faster than any email.

A common mistake is to spend heavily on broad digital ads. Your customer acquisition cost (CAC) should be low, around $20-$40 per new regular customer. Focus on these hyperlocal efforts first to build a solid base.

Here are 4 immediate steps to take:

• Claim and fully populate your Google Business Profile with photos and services.
• Design a grand opening flyer to distribute in local apartment buildings.
• Create a list of 10 local businesses to visit for commercial sales pitches.
• Set up a simple social media page to post updates and promotions.

Step 9: Set your pricing strategy

Analyze the local market

Start with a spreadsheet of prices from at least three competitors in your area. Note their costs for different washer sizes and their per-pound rate for wash-and-fold. This data gives you a baseline so you can price competitively and avoid a price war.

Set your service prices

For self-service, you might want to set tiered prices. A standard top-load washer could be $3.50, while a large-capacity front-loader could be $7.00. A frequent misstep is to price all machines too similarly, which misses the chance to earn more from larger units.

Your wash-and-fold service should be priced per pound, typically between $1.50 and $2.50. You can set a 15-pound minimum charge to make small orders worthwhile. To hit a 40-50% gross margin, be sure to calculate your cost per pound for labor, soap, and utilities.

With your retail prices set, you can then create a rate sheet for commercial accounts. These are often priced lower per pound due to volume but provide steady income. You could offer a rate of $1.25 per pound for a restaurant that needs 200 pounds of linens cleaned weekly.

Here are 4 immediate steps to take:

• Create a price list of three local competitors for their self-service and wash-and-fold options.
• Set tiered pricing for your small, medium, and large capacity washers.
• Calculate your cost-per-pound for wash-and-fold to ensure a 40-50% profit margin.
• Draft a separate rate sheet for commercial clients with volume-based discounts.

Step 10: Maintain quality and scale your operations

Set your quality standards

Start with a clear quality checklist for your team. For wash-and-fold, this means every item is checked for stains before washing and all clothes are folded uniformly. A frequent oversight is not having a clear process for damaged items, so establish one from day one.

You can track quality with a simple metric. Aim for fewer than one customer complaint per 100 orders. Also, monitor machine uptime. Your goal should be 98% operational readiness, which means a machine is down for repairs no more than one day a month on average.

Know when to grow

Growth decisions should be data-driven. When your wash-and-fold service consistently handles over 500 pounds per week, it is time to hire another part-time attendant. If your peak-hour machine usage stays above 70% for a month, you might want to add more machines.

To manage this growth, look at industry-specific software. Programs like Cents or CleanCloud help you track orders, manage customer accounts, and run your point-of-sale system. This simplifies the process as you scale your operations and add services.

Here are 4 immediate steps to take:

• Create a one-page quality checklist for your wash-and-fold service.
• Set up a simple spreadsheet to track customer complaints and machine downtime.
• Define the weekly poundage for wash-and-fold that will trigger hiring a new attendant.
• Schedule a demo for a laundry management software like Cents or CleanCloud.

Starting a laundry business is about creating a reliable community hub. Remember that consistent service and a clean space will keep customers coming back. You have the roadmap, so take that first step with confidence.

And as you start, make payments simple. JIM turns your smartphone into a card reader, so you can accept payments without extra hardware for a flat 1.99% fee. This helps manage your cash flow from day one. Download JIM to get set up.