While opening up a laundromat probably wasn’t anyone’s childhood dream, few business ventures are as dependably low-risk as investing in a coin laundry business. A Speed Queen study puts the success rate for laundromats at 94.8%, and though that might be pushing it, not many would argue against the fact that laundromats do good business, draw in return customers, and stay open for decades.
The reasons why opening a laundromat is such a dependent investment are simple: 1. people need clean clothes, and 2. not everyone has washer and dryer units in their home. Risk-averse entrepreneurs seeking to open a small business, but wary of entering into dynamic, demanding industries such as the restaurant business or the retail sector may find a home in the unexciting, stalwart world of the coin laundry.
In this guide, we’ll take a look at some characteristics that make a budding small business owner a good fit to open a laundromat, and then delve into the step-by-step process of opening a coin laundry.
Is a laundromat business right for you?
The relative mundanity of the coin laundry industry may turn some people off, but those with the proper skills and temperament to run a laundromat will find a lifelong calling. Here are some signs you are the right type to open a laundromat.
You aren’t seeking excitement in your professional life.
People come in and wash and dry their dirty clothes. Some opt to pay for dry cleaning or wash-and-fold services (if those services are provided). Occasionally someone forgets a sock, or a machine will break down and need repairing. That’s about it.
Operating a laundromat isn’t the most thrilling thing in the world, but many people thrive and find meaning within a solid, predictable routine. If that describes your personality, you might feel right at home running a coin laundry business. Besides, you’ll likely have plenty of free time to focus on other projects.
You have mechanical and/or electrical skills.
Washers and dryers under constant use inevitably break down or get clogged from time to time. Laundromat owners that know how their machines work and can fix most issues without calling in a repairman will save a fortune in maintenance costs.
You have the means to finance a laundromat.
Although laundromats aren’t very costly to operate once they are up-and-running (although the monthly water bill will be very high), start-up costs can range from $100,000 to $300,000 due to the number of machines that must be bought at the outset.
That’s a lot of money, and not everyone will be able to muster the required amount to open a coin laundry, even with loans and other outside help. Those seeking a small business opportunity with lower startup costs should look elsewhere.
Coin laundry industry statistics at-a-glance
- There are around 35,000 laundromats in operation nationwide.
- U.S. laundromats experience an average cash-on-cash return on investment of 20-35%
- Coin laundries can generate anywhere between $15,000 and $300,000 per year.
- More than half of coin laundries offer wash-and-fold services.
- 70% of laundromats have just two employees or fewer.
- Low-income renters are the most common users of coin laundries, while 60% of patrons are women.
- 87% of laundromat customers live within a mile of the space, and 90% become repeat customers.
Opening a laundromat step-by-step
1. Select a location
Since laundromats usually attract a certain customer base, renters in lower-income brackets, you can’t just open a laundromat anywhere and expect it to be successful.
Instead, you should open your laundromat in an area with a high concentration of the people in your target market. Generally, this means opening up shop in a working-class urban neighborhood.
However, there are exceptions: there are wealthy urban neighborhoods where the washer and dryer-equipped apartments are a rare commodity, and laundromats have their place in rural communities, as well.
Do the research and try to find a nice spot for your business in a densely populated area with a high potential for drawing in customers.
2. Decide which services your laundromat will offer
The time has come to draft a business plan: which qualities will distinguish your new laundromat from others?
Self-service washers and dryers of varying sizes are a given, but many laundromats offer additional laundry services, including dry cleaning and wash & fold service that could separate your laundromat from the pack and bring in a different clientele. Get creative with your business ideas.
Additionally, as people will likely spend at least a couple hours in the facility, it’s wise to make free public wifi available and provide some books, toys, or other distractions for kids.
3. Calculate your expenses and purchase equipment
As we mentioned before, opening a laundromat can cost one hundred thousand to several hundred thousand dollars (this couple bought an existing laundromat for $105K, which is always an option), so be prepared to make a major investment.
The following are some of the principal expenses of opening a laundromat:
- Renting or buying a commercial space – The cost of selecting a spot for your coin laundry business can vary considerably according to local real estate prices and square footage. A laundromat should be at least 2,000 square feet in order to fit all of the equipment and give people space to move around, while many are as large as 4000-5000 square feet.
- Washers and dryers – Stocking your business with machines will be costly: top-loading washers run from $400 – $700, while front-loading washers go for five to ten times that amount. Industrial dryers are pricey, too, with an average cost of $5,000 per unit.
Buy as many washers and dryers as you can afford within your budget, at least 8 of each. Don’t forget: investing in nicer models now could save in maintenance and repair costs in the long run.
- A coin machine – Customers will need to turn their cash into quarters, so you’ll need at least one. The price of a coin machine ranges from $700-$2000.
- Vending machines – Providing vending machines that sell laundry detergent, dryer sheets, fabric softener, and others with snacks and beverages is a great way of opening up another income stream.
- Card readers or a card system – It’s a bonus if you can set up your laundry machines to take debit and credit cards.
- Carts and tables – For scooting laundry around and providing places to fold clothes.
- A set of tools – Your machines will need regular maintenance, so get a nice set of tools to keep on the premises.
4. Acquire funding, choose a business entity, register your business, and obtain federal and state tax ID numbers
Refer to our How to Start a Business Guide for instructions on how to complete these essential steps.
5. Obtain the necessary licenses and permits
Opening a laundromat may require you to nab a few licenses or other certifications depending on local laws. Here are a few that you might need to obtain:
- Local business license – Certain municipalities require businesses to get a special local business license to operate in the area.
- Construction permit – Necessary if alterations must be made to the facility before the laundromat opens.
- Fire safety permits – Required when installing fire alarms or sprinkler systems.
- Sewer connection fee – Usually, laundromat owners will need to pay a fee to get each washing machine connected to the sewer system.
6. Buy insurance coverage
Insurance coverage is an essential means of protection for any business, including laundromats. In fact, if your laundromat has full-time employees, you are required by the federal government to have two types of insurance, while other types of business insurance are strongly encouraged, or required at the state level.
Here are the forms of insurance you should consider purchasing for your laundromat:
Required forms of insurance for all business with employees:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance for all businesses:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business-owned properties and possessions as a result of fire, theft, or storm.
7. Market your laundromat business
No laundromat can thrive without local advertisements and a well-established online presence. Here are the key steps for promoting your coin laundry business:
- Create a website. Register a domain name for a company website (You can use domain.com, Bluehost, GoDaddy.com, or Namecheap.com). Hire a web designer to develop the website (or do it yourself). Be sure to include detailed contact information on the site.
- Open social media accounts. Register accounts on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile. This will allow you to add pictures of your business, respond to positive customer reviews, and address customer concerns.
- Respond to online customer feedback. Register accounts on business review platforms such as Yelp and TripAdvisor. This will allow you to write thank-you notes in response to glowing reviews and address negative reviews.
- Take out ads on billboards and in local publications. It still pays to increase visibility by buying ads in local newspapers and on highway billboards.
Laundromat business resources
- Norton Supply – A leading wholesale distributor of coin-operated washers, dryers, and other essential laundry equipment and dry cleaning supplies.
- Low Laundry – Another dependable supplier with a wide variety of machines and fair prices.
- Coin Laundry Association – Becoming a member of the CLA is a necessary step for any laundromat proprietor. The organization offers a slew of products, training materials, and other essentials and regularly releases industry-specific demographic reports.