How to Start a Laundry Business in 10 Steps

Laundromats can be an extremely profitable business. In fact, the laundry industry in the United States is worth $5.4 billion, with close to 30,000 businesses in operation generating a cash flow between $15,000 and $300,000 per year. Globally, the laundry services market is expected to grow from nearly $112 billion in 2022 to around $142 billion by 2026.

This makes starting your own laundry business an excellent proposition.

Want more good news? A laundry business is relatively easy to start and manage, even if you don’t have much experience in the industry. But like most startups, it doesn’t come without its fair share of competition and hiccups.

We’ve created this primer to help you understand what it takes to set up a laundry business and differentiate yours from its competition.

1. Decide on the services you want to offer
2. Choose a business name
3. Choose a business entity
4. Create a business plan
5. Obtain the necessary permits and file any required paperwork
6. Find a location
7. Open a business bank account
8. Purchase equipment
9. Hire employees, if necessary
10. Market your business

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1. Decide on the services you want to offer

While becoming a business owner can be exhilarating, you’ll need to take the time to research and plan the kinds of services you want to offer.

You could choose to open a laundromat where customers come in and use your washing machines to do their laundry, or you could offer washing and ironing services where customers drop off their laundry. Once it’s done, you can either partner up with a delivery company to send the clean clothes back, or customers can pick them up.

Different laundry services include:

• Self-service and coin laundry where customers insert coins to start the washers
• Providing private laundromat equipment to multi-tenant buildings
• Commercial laundry for uniforms, linens, and facilities
• Additional services, such as dry cleaning services and delivery services

You could also offer a combination of these services. Whatever you choose, you’ll need the appropriate equipment and a location for your business—all of which will be part of your overhead costs.

You may also want to learn what other types of businesses are in the neighborhood, understand the demand for your laundry services, and create a plan and budget accordingly.

2. Choose a business name

This may be one of the most important steps in starting a new business, so take some time to really think about your business name. Your new business’s name can be as clever or catchy as you’d like, but you may also want it to describe your business model and be easy to remember. You also may want to steer clear of complicated spelling, which could be distracting to consumers. Project Catalog™ can help you with this process and connect you to slogan writers who can develop the perfect name for your service business.

Once you’ve shortlisted a few names that you like, you’ll want to check whether or not they’re available. Most states have directories you can review. They also typically have resources that list state naming requirements.

You’ll also want to do a trademark search – using a business name that’s already trademarked could lead to legal troubles. The United States Patent and Trademark Office (USPTO) offers the Trademark Electronic Search System to search.

At the same time, consider whether you’ll be using a name other than your registered business name. If so, you’ll want to check doing business as (DBA) registrations first to see what’s available.

It’s also good practice to check what web domains are available for your business name, so it’s easy to find and access. Use a domain name search engine to check availability and register your business website.

3. Choose a business structure

Once you have your business name, you’ll want to decide on your business structure—this is often required before you can register your business. This will affect everything from how your business operates to personal liability and taxes, so consider it carefully.

Here are four of the more popular business entities:

• Sole proprietorship
• Limited liability company (LLC)
• Partnership
• Corporation

The U.S. Small Business Administration (SBA) has a helpful page that explains the differences between business structures.

4. Create a business plan

After doing initial research and deciding which services you want to offer—plus coming up with a business name and choosing a business structure—it’s time to put together a business plan for your laundry business. This is important because investors and lenders often require you to present a business plan if you need to get a bank loan or are looking for other ways to fund your business.

You’ll want to look further into your target market, shortlist your service area, and summarize your:

• Budget
• List of operations
• Specific short-term goals
• Long-term objectives

You can also get a market research analyst involved to research and design your business plan. Their market research and experience can help you understand the dos and don’ts of owning a laundry company. Or, if you’ve done that research yourself, you can get expert help drafting your business plan.

5. Obtain the necessary permits and file any required paperwork

It’s best practice to speak to a professional (like a legal consultant) to determine which local business licenses and permits you may need to apply for. These will vary depending on where you plan to operate your services.

For example, you may need to get a general business license on top of specific permits, like a health permit from the local health department, a water pollution control permit, and a sales tax permit (if you plan on selling products or additional services).

As for insurance, you may need workers’ compensation if you have employees, general liability insurance, property insurance, and commercial auto insurance if you offer a laundry delivery service.

Also, consider looking into what type of paperwork you may need to file to run your service business. Check with your state’s Secretary of State office to see what registration is needed, and if you can register online or will need to file paper documents.

If you plan to hire employees, you’ll want to look into Employer Identification Numbers (EINs) Even if you’re not at that stage yet, an EIN (often referred to as a business tax ID number) can still be helpful in the later stages.

6. Find a location

Although you can run a small business from the comfort of your own home (e.g., if you’re only doing drop-off and pickup services), depending on the volume and type of services you offer, you may need to find a commercial space.

Finding the right location is determined by several factors, including your service area, how big a space you’ll need, and how much equipment you have. Consider some tips for finding the perfect space for your potential laundry business.

• Learn the rules and regulations that govern where laundromat businesses may operate by searching the Municode Library
• Look for a location with a confirmed need for laundry services or one that’s close to your target audience
• Remember that a laundry business requires infrastructural space with specific plumbing and access to water lines—or at least the potential for these facilities to be added
• Keep track of all potential costs involved (e.g., rent, water, laundry equipment, and additional plumbing facilities to be added) to stay within budget

Your location is one of the largest and most important investments when starting a new business. Before finalizing something, take the time to visit a few different spaces and compare costs, utilities, and competition.

7. Open a business bank account

You’ll want to set up your business’s financial accounts to pay your bills, pay your workers, simplify taxes, and receive payments. And in order for you to operate under a business name, you should open a business bank account—which typically comes with associated fees.

Having separate accounts can also help you establish a business credit score, which can help you apply for business loans or attract investors if and when you require external funding to grow your laundry business.

Also, consider applying for a business credit card to distinguish your personal and business spending. It’s always wise to get some financial consulting to help you with your expenses and guide you regarding what kind of bank account, credit card, and insurance to opt for.

8. Purchase equipment

The exact equipment and utilities you need will depend on the services you choose to provide. But some basics are likely to include:

• Laundry machines
• Dryers
• Coin or change machines
• A credit card payment system
• Laundry carts or baskets
• Soap dispensers
• Detergent vending machines
• Laundry charts
• Security cameras
• Door hangers

9. Hire employees, if necessary

Your business plan should cover many financial decisions, including whether or not you need to hire employees. Depending on the kind of laundry services you provide, whether you offer delivery and pickup, and the size of your business, you may need some employees to help out.

This is a highly regulated area, and a good place to get legal advice. Keep a few things in mind:

• Compensation structure. Will you pay your employees minimum wage, or a higher salary? Will you pay them weekly, biweekly, or monthly?
• EIN. Have you registered for an EIN?
• Tax filing and withholding. There are laws governing how long employment tax records have to be kept, including forms and accounting details for state taxes. You could also be responsible for other employment taxes, and should speak with a financial consultant to understand those costs.
• Federal employment and labor law requirements. These include workplace posters, employment eligibility verification, your state’s new hire program, and Occupational Safety and Health Administration (OSHA).
• Insurance. It’s a good idea (and, in most cases, necessary) to get particular insurance, such as unemployment, safety, disability, and workers’ compensation.

Check out Upwork's Project Catalog for HR consulting for expert advice on the recruitment process, worker compensation and benefits, management, organization development, etc.

10. Market your business

Knowing the right ways to market your business is essential for building your brand image and reputation among your target audience. Your ability to sell your services can translate directly into more customers and greater revenue, making it easier to grow and differentiate your laundry business over time.

One of the best ways to market your business is to promote it around places your target audience frequently visits. For example, if most of your customers are college students, you may want to hang posters, distribute business cards, or pass out flyers at popular coffee shops, local libraries, apartment buildings, or college bars.

Having a prominent online presence is critical. You can boost your marketing by creating a user-friendly website, updating it regularly, and leveraging search engine optimization (SEO) tactics by including relevant or relatable keywords in your content to boost your ranking on search pages.

Don’t forget to share crucial details like your business address, operating hours, and contact details to help customers reach out.

You can build a solid reputation by focusing on customer service and experience. One way to do this is by responding to all customer reviews on your website, social media pages, and referral websites like Yelp and Google Business Profile, regardless of whether the reviews are positive or negative.

Positive reviews can encourage others to try out your services, while negative reviews can give you something to improve on. Either way, responding to reviews shows your customer base that you value their opinions.

But pro tip: approach negative reviews carefully. You don’t want to antagonize your customers or sound defensive. Acknowledge the constructive feedback and show the customer that you appreciate their patronage.

You can also offer services like free Wi-Fi, install televisions, and have well-stocked coffee and vending machines to provide entertainment and boost the customer experience as they wait for their laundry.

You’re that much closer to starting a business of your own

Following our primer can help you understand the path toward getting your laundry business off to a successful start. But we can’t cover everything specific to each business and region, so be sure to do your research.

You can further simplify the process of setting up and running your own laundry business with the help of expert independent professionals from Upwork. We can connect you with several professionals from a variety of fields to help you with any project at every step of the journey, from market research and building your website to client retention and expansion.

Engaging an expert with the right skills for the job is simple, quick, and cost-effective.

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Upwork does not provide legal advice, and this article is provided for informational purposes only. Each reader and company should adequately analyze the laws, and regulations, and other requirements that may apply to their business endeavor.Upwork is not affiliated with and does not sponsor or endorse any of the tools or services discussed in this resource—these tools and services are provided only as potential options for each reader to consider.