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How To Start A Laundromat Business

To start a Laundromat, one should begin with researching how to create a business plan and a marketing plan. Creating a business plan and a marketing plan for a Laundromat is the most effective way to explore the potential viability of a new or existing Laundromat business.

Business and Marketing Plans

If borrowing money from banks or investors will be needed for your start- up cost, it will be most important to start with well-prepared business and marketing plans. These will insure the banks or investors of the potential long term success of the Laundromat business. This will be a great time to think about naming your business. You may want a new name, or you may want to keep the established name of the existing Laundromat business.


Location, location, location! It is crucial to find an existing Laundromat business or to start a new Laundromat business in a demographic area that responds best to this public service. Locations that are in high traffic areas afford visibility for the Laundromat service. How to start a Laundromat in the best location, of course, is to start the business in the most visible location, but also in a community with the greatest need for Laundromat services.


The most efficient demographics for Laundromat businesses are businesses that are in high traffic areas located near apartment complexes, college students, and low income families. Many apartment complexes provide Laundromat services, however, for various reasons, the Laundromat services that are provided may not meet the needs of all of the tenants. As for college students that live on and off campus, they need available laundry services. Many Junior and Community Colleges do not provide dorm living and students attending these colleges may benefit from the use of public laundry services. Low income families’ benefit from having Laundromat business’s in their areas, because it is not always affordable to own, replace, or repair washers and dryers.

Fictitious Business Name

Name your business or keep the name of the pre-existing establishment that you are interested in purchasing. The new or old name of the business is called a fictitious business name. The fictitious business name must be registered with the City or County that keeps the vital records for the area where your Laundromat business will be in service. A fictitious business name will be needed before you are able to open up an official business banking account for your Laundromat business. Your business and marketing plans should reflect your fictitious business name.

Business licenses

Your local, state, and federal agencies are where you must start while learning what licenses you need to start a Laundromat Business. It will be pertinent to contact your city clerk’s office or your county courthouse for licenses that are needed for starting a Laundromat business. Your city or county may require special licenses or certifications for your particular area. A Federal ID Number for your Laundromat business must be issued by The State Board of Equalization. You will need to obtain a vendor’s license from the Franchise Tax Board.


Insurance for your Laundromat Business will be part of securing the business against unexpected problems. Liability and property damage insurance will cover the business against losses that customers may face, or losses that may be incurred by unexpected property damage. You may consider getting additional insurances that may cover damages that could be caused by natural disasters or some unforeseen catastrophe.


If your establishment is new, you will be purchasing commercial Laundromat equipment. There are companies that specialize in supplying vendors with new and use equipment. Speed Queen is a very popular establishment in providing services for coin operated businesses. The Coin Laundry Association is an established organization that is dedicated to servicing coin laundry vendors.

Understanding Add Backs When Buying Or Selling A Business

Small businesses are a critical part of the economic landscape. All the businesses on the Dow 30 started as small businesses, reached a critical mass that then led them to becoming a public company and grow to where they are today. Depending on whose statistics you use, small businesses make up 98% of all businesses in the US economy.

One of the benefits of being the owner of a privately held small business is that you get to take tax deductions that wage and salary earners are unable to claim. This is all part of the risk and reward scenario that comes from owning and operating a small business.

When it comes to selling the business, these tax deductions can get in the way as it reduces the true cash flow of the business, which affects the business valuation and therefore how much the buyer is willing to pay. To navigate this scenario, it’s important to understand how to deal with these legitimate tax deductions or as they are called, add backs.

An add back is a legal expense that appears in the financial statements of the business such as the profit and loss statement or tax return but has no true economic value in the performance of the business. For example, most business owners choose to take out health insurance on themselves and possibly their spouse and children. If the spouse and children do not work in the business then it would be legitimate to accept this expense as an add back. In this example there are two critical things. The spouse and children must not be currently working in the business and they must not work in the business once the buyer takes over. Other add backs the business owner may choose to run as an expense through the business includes personal expenses, auto costs be it gas, repairs, maintenance or insurance for non working family members, cell phones and vacations claimed as business trips. Another acceptable add back is the payroll tax paid against the salary earned by the business owner.

Legitimate add backs play an important role when appraising and negotiating a business. They can be contentious but the best approach is to prepare a report that shows what add backs the seller claims as reasonable so the buyer or lender can have an open and honest discussion.

The best approach when claiming add backs is to only claim them if they are sizable in nature and there are not too many of them. What is sizable? That depends on each business but I would suggest anything greater than $1,000 is a good starting point and I would not suggest trying to justify every add back or a buyer will feel too uncomfortable as in the end, they don’t want to spend too much time and energy worrying about every dollar and cent.

Andrew is a 5-time business owner that helps entrepreneurs exit or enter business ownership. His services include helping owners sell and/or buyers purchase an existing business or consult on purchasing a franchise. He also provides certified machinery and equipment appraisals and business valuations.