How to Start a Commercial Laundry Business in 11 Steps

With a 95% success rate and an ROI of 20-35%, laundromats are great investments because they’re so profitable. While metrics for related businesses like dry cleaners may differ, as a whole the laundry sector is known for its money-making potential. If you’re an entrepreneur who wants to enter the industry, this guide on how to start a commercial laundry business in 11 steps outlines the research and preparation needed to launch a successful operation.

Choose a Business Type

The first step in learning how to start a commercial laundry business is determining what you want to offer. Common types of clothing and other fabric cleaning businesses include:

• Self-Service Laundromats – Known for their coin-operated machines, laundromats are what come to mind when most people think of opening a commercial laundry business. 


• Full-Service Laundries – According to TideCleaners.com, full-service laundries, sometimes known as “Wash and Folds,” offer customers more convenience by washing, drying and folding their clothes and linens. In fact, some even offer pickup and delivery. 


• Commercial Laundry Services – Instead of targeting individuals or households, commercial laundry services wash, dry and package fabrics for schools, hospitals or gyms.


• Dry Cleaners – These establishments provide chemical-based cleaning for delicate fabrics like formal wear, suits and silks. With a median cash flow revenue of $130,000, dry cleaning businesses can be good money-makers.

Go Independent or Franchise 

Next, you need to decide between opening an independent business that you build from nothing or a franchise, a business that uses an existing brand. When deciding between an independent vs franchise laundry business, it’s important to consider issues like:

• Costs – Both have significant startup and ongoing costs, but franchise owners must pay a recurring royalty fee for the right to use the brand.


• Brand Recognition – If you go independent, you’ll have to work hard to build a good reputation. On the other hand, existing brands have an established reputation that people already know and trust, making it easier to attract your first customers.


• Freedom & Flexibility – Building your own brand gives you the flexibility to experiment with different services, prices and policies while franchises are locked into a set business model.

Find a Location

As with any business, choosing a location is one of the most important steps in starting a commercial laundry business. If you’re not sure how to identify a good location, here are a few things to look for:

• Apartment Complexes – Multifamily housing doesn’t always have in-unit washers and dryers, especially near universities or in up-and-coming neighborhoods.


• High-Traffic, Low-Speed Streets – As explained in a LaundryLux.com article, a busy street with a low speed limit is one of the best locations for a laundromat because people will be going by slow enough to notice your business.


• Complementary Businesses – A linen rental business might need help cleaning bedding, towels and other items quickly and efficiently, so locating nearby can make working together easy.


• Office Parks – Office workers need suits, pants and dresses cleaned professionally, so opening a dry cleaner near an office park is a good move.


• Large Businesses & Institutions – Commercial laundry service clients include schools, universities, animal clinics and even salons, so choosing a location near these organizations can give you an edge.

Write a Business Plan

According to the Small Business Administration, writing a business plan helps you identify your goals and develop a plan for achieving them. While there’s no set way to write a business plan, almost all types include:

• Executive Summary – A brief overview of the proposed business’ leadership and location, along with its mission statement.


• Products or Services – What will your laundry business provide and what makes your product or service unique? It’s also a good idea to include information on pricing in this section.


• Market Analysis – An overview of the commercial laundry market in the area. Who are your competitors? Why are they successful? What can you do better? 


• Marketing Strategy – Your plan for promoting your new business to attract and retain customers.


• Financial Projections – Include income estimates and targets, as well as funding requests.

Form a Legal Entity

Now that you have a plan, it’s time to form a legal entity that’s recognized by the government so you can pay taxes and protect yourself from liability. Common business structures for commercial laundry businesses include:

• Sole Proprietorship – A sole proprietorship is the simplest business entity because no paperwork is required. However, if you want to use a name other than your legal name, you need to file a Doing Business As (DBA) name.


• Partnership – A partnership, such as a general or limited liability partnership (LLP), will allow you to go into business with other people without much paperwork.


• LLC – If you want to protect your personal assets and avoid double taxation, a limited liability company (LLC) is likely the best legal structure for a laundromat, dry cleaner or other commercial laundry business.


• Corporation – Corporations offer even more protection, along with the ability to raise capital by selling shares, but require more paperwork and recordkeeping than LLCs.


• S Corporation – Although not all states recognize S Corporations (S Corps), they allow business owners to avoid some of the taxes that a corporation would normally pay by passing profits through to the owner’s personal income.

Obtain an EIN Number 

Once you form a legal business entity, it’s time to apply for an employer identification number (EIN number), a business identification number used for tax purposes. While not all businesses need an EIN number, getting a business identification number can help you:

• Hire Employees – A large commercial laundry business will need employees, and an EIN number is necessary for organizing a payroll system.


• Prevent Identity Theft – Using your social security number too frequently puts you at risk for identity theft, so it’s better to use your EIN number when possible.


• Applying for Licenses – In most cases, an EIN number is required when applying for business licenses and permits.


• Open a Bank Account – Even if you’re a sole proprietor, getting an EIN number so you can open a bank account will make managing your finances much easier.

Open a Bank Account

One of the most important steps in learning how to start a commercial laundry business is opening a business bank account. By separating your personal and business finances, you can:

• Meet Legal Obligations – If you have an LLC, corporation or other pass-through entity, you’re legally required to have a business bank account.


• Simplify Tax Preparation – Being able to see all your revenue and expenses in one account makes paying taxes a lot more straightforward.


• Build Business Credit – Will you need a loan to purchase a space or buy equipment? If so, having a bank account will help you build a relationship with a bank. 


• Minimize Personal Liability – Separating your business and personal finances protects you from liability in the event that you get sued or owe money.

Get Permits & Licenses

Before opening to the general public, you’re going to need several laundry business licenses. While the number of permits varies by location, many cities and states require the following: 

• General Business License – Some states require that all businesses, including laundromats, dry cleaners and full-service laundries, have a general business license.


• Zoning Permit – If you’re making significant changes to the building you’re buying or leasing, you’ll need a permit to make sure you’re following local land use laws.


• Fire Safety Inspection Permit – The local fire department needs to inspect your laundry business to make sure you have a sprinkler system and fire extinguishers, among other things.


• Seller’s Permit – Where applicable, dry cleaners and wash-and-folds need seller’s permits so they can charge state sales tax on their services.

Purchase or Lease Equipment

Just like how a restaurant needs refrigerators and ovens, a laundry business needs equipment in order to fulfill its main purpose. Whether you buy equipment outright or lease it over time, your business will need:

• Washers – Front-load, top-load or stacked, you’ll need washing machines to clean clothes and other fabrics.


• Dryers – From tumble and conveyor to stack and specialty, you’ll need plenty of dryers, too.


• Steamers – Steamers help keep wrinkles out of clothes, especially those made of fine fabrics like silk that are difficult to iron.


• Laundry Carts – Wheeled carts make it easy to transfer clothes from the washer to the dryer quickly and efficiently.

Consider Hiring Employees

While most businesses rely on employees, staff members may not be needed for a commercial laundry business. In fact, there are three levels of staffing you can consider:

• Unstaffed – Some self-service laundry with coin-operated machines don’t have any employees, eliminating labor costs for the owner.


• Partially-Staffed – Even though adding one or two employees will increase costs, people will feel safer knowing there’s staff in the facility, increasing the likelihood they’ll choose you over competitors.


• Fully-Staffed – On the other hand, dry cleaners, full-service laundries, and most commercial laundry services need employees to do the work. While labor costs will increase, profits probably will, too.

Market Your Laundry Business

Even if you offer competitive prices and great service, a new laundry business won’t be successful if potential customers don’t know about it. In order to get the word out, remember to leverage:

• Website SEO – After making a website for your wash and fold, laundromat, dry cleaner or other laundry business, optimizing your laundry business’ website so it appears at the top of Google will bring in a lot of customers.


• Google Ads – Not getting as many clicks to your website as you’d like? Try some paid ads to put your site near the top of Google.


• Social Media Ads – If people see an ad about your new laundry business while scrolling through Facebook or Instagram, they might stop by to check it out.


• Traditional Marketing – Mail fliers, newspaper ads and radio spots are an option, too.