The cleaning industry in total can be bifurcated into residential cleaning, commercial janitorial services, specialty cleaning and laundry/ dry cleaning services and sometimes specialized cleaning like shoe laundry business. In 2015, there were around 875,000 laundry businesses employing over 3.5 million people globally. And the growth rate is likely to increase by 6% by the end of 2020. Laundry business typically comprises of self-service facilities, wash-and-fold service, and dry cleaning business. There are around 33,000 businesses in the laundry segment with a revenue of about $11 billion in 2015. Moreover, recent innovative models and specialty offerings like green cleaning are boosting the business
A laundry business can be an easy and profitable business idea to start. And because everyone prefers clean clothing regularly, more and more entrepreneurs are starting a laundry business and expecting increased demand for their product. Starting your own small laundry business could cost somewhere between RS 15,00,000 to Rs 50,00,000 depending on its location, your choices for equipment and financing and how much of the operation you intend to own rather than rent or lease. Let us take a look into some of the crucial steps that are needed to start a laundry business.
In a laundry business, there are several aspects that one can think of engaging himself in. Choosing the right type of services is the first and foremost important step in starting a laundry business. Most of the services revolving around the cleaning business are uniformed services. One can think of starting the following type of laundry business:
- Home Pickup and Home Delivery Business
- Laundry Franchise Business
- Coin Laundry Store
Also, before choosing the right niche, do not forget to consider the demographics and personal preferences of your customers. Doing this will enable you to understand your audiences in a better way and you can mold in services accordingly.
Here are kind of target audiences one can think of catering to, in order to extend their laundry services:
- Men Formal and Casual Clothes
- Women Formal and Casual clothes
- Old people
- Sick people and Hospitals
Business Plan for Laundry Business
Next thing is to describe the way you intend to run your laundry business. List down the services that you plan to provide, highlight the specialized ones like wash and fold, pickup and delivery to catch the eye of your customers. Find out your target market, be it college students, residential building customers, working professionals etc. and find ways to promote your services to them, keeping in mind tactics followed by other laundry services. Describe your marketing plans, pricing and supplies you’ll need, such as detergent vending machines, washers, dryers and folding tables.
In case you plan to start a delivery based model, you can also consider creating an app that allows customers to use a software tracking system to keep a track of their delivery. Also, make a list of reliable supplies from where you plan to procure your supplies and equipment. Basically, every important detail needs to be incorporated into your business plan.
- Licensing fee: Rs. 1 lakh
- Rent for location: Rs. 1 lakh per month
- Equipment- Rs. 5-20 lakh
- Supplies- Rs. 50K/ month
- Card Reader System- Rs. 1 lakh
- Utilities (electricity, phone, internet, back office): Rs. 1 lakh/ month
- Staff (2 delivery boys, cleaning experts, front office) – Rs. 1lakh per month
- Uniform for employees- Rs. 50,000
- Insurance cover- Rs. 1 lakh
- Marketing- Rs. 2 lakh
Unless your business plan revolves around operating from home, one needs to choose the location wisely. The location for your laundry business should be such that it is accessible to the target market that you are catering to. If you plan to target residential customers, rent a space in close proximity to apartment buildings so that you can easily attract customers who do not have laundry machines at home or have limited time to do their laundry. Scan the area completely to figure out the nearby competition. Keep in mind that the location should be such that it facilitates easy commute for your employees as well and there is ample parking space for your delivery vehicles.
Some factors that are to be considered for choosing an appropriate location are proximity to off-street parking areas, a busy marketplace, close to public transport and so on. If you plan to rent a space, keep in mind the budget also so that it does not exceed your budget. The location should also be equipped with facilities like installation of new water pipes, provision of electrical outlets and access to the sewer to include new and advanced technology. There also needs to be a separate section for ironing for customers who only need ironing services. Utilize the medium of the internet to research about the most suitable location for your business. Also, one can look for the suitable location in local publications like newspapers. The laundry facility should be at least 600 to 700 square feet so that there is enough room for the reception and carrying out administrative tasks. A separate space needs to be allocated to set up machinery and various supplies.
Equipment and Employees
Once the location has been finalized, the next important step is to procure modernized machinery to carry out laundry operations. Make sure that these machines are provided with lengthy warranty as they involve a great deal of repair and maintenance. Here is a list of all the equipment and supplies that are needed for a laundry business:
- Washers with large load capacities
- Dryers, preferably with a moisture sensor to save on utility costs
- Card system to keep a track of the number of loads a customer has done so that you can change your prices accordingly.
- Detergent vending machines
- Coin machines
- Laundry Carts
- Pressing machines, with good safety controls and safety measures
- Steam Boilers
- Door hangers
- Computers and mobile phones
- First Aid kit
- Cleaning Chemicals
- Soaps and detergents
Choose modernized machinery that suits your budget. Top load washers can economize your money and won’t burn a hole in your pocket. Alternatively, you can also rent or lease equipment and run your business initially till you are capable of buying your own equipment.
Hire staff who is dedicated to optimum customer service. They should also know how to operate these modernized machines with ease. The staff should be competent yet friendly so that their customers can feel valued and respected. Figure out their wages as per industry standards and give them incentives from time to time to boost their morale.
Registration and Licensing
The next thing is to obtain permits and registration since laundry business is accompanied by certain entity formation requirements. One needs to find out which business entity is the best that suits your business needs. There are various kinds of legal entities available like a sole proprietor, partnership, Limited liability Company (LLC), S Corporation and C Corporation, depending on the country that your business is based in. Visit your local chamber of business to learn about licensing requirements. Consult your municipality to see if they require a health department license, fire department permit or air and water pollution control permit, in addition to a general business license. Pay for waste water fees as per your local city needs. Different countries have varied permit requirements.
Also, there are several insurance documents needed for this kind of business. In most of the countries, here are a few simple insurance covers that are needed for a laundry business:
- General Liability Insurance
- Professional Liability Insurance
- Workers’ Compensation Insurance
- Hazard Insurance
- Business owners’ policy insurance
Also, find a list of legal documents that are needed to operate a laundry business:
- Business Plan
- Business License
- Certificate of Incorporation
- Medicare and Insurance
- State permits
- Employment agreement
- Non-Disclosure Agreement
Make sure to set competitive and fair prices for your services for the ease and convenience of customers. For delivery based business, you might also have to cover the cost of your fuel and also make some money over it. You can do this by establishing the cost of operating your vehicle per mile and include tire and regular maintenance charges too. Also include road tolls or parking fees, whichever is applicable. Not to forget the wages that you would pay to your employees. Once all these factors have been included, you can establish a flat fee per pickup and delivery or charge by the mile from each customer’s location.
Have a payment policy handy and an agreement as and when you sign up a new customer. Include important points like pre-payment, Cash on Delivery (COD), collection days, holidays, delays due to harsh weather and so on. Every agreement needs to be fed into the computer program along with customers’ personal information. This information can be used at a later stage. Inform your customers if they have to pay by cash or cheque, before or after the services.
Advertising and Marketing
The next crucial step is to market your laundry business well. Here are ways to do so:
1. Advertise locally by placing door hangers in your neighborhood and include a list of services that you are catering to.
2. Highlight your specialized services to make your business stand out.
3. Print ads in local newspapers and place fliers on local bulletin boards.
4. Offer bonus services like giving wash and iron two clothes for free for every dozen clothes a customer brings and pays for. Bonus services are a great way to attract a lot of customers.
5. Start customer loyalty and reward system. Give every customer a special card and ask them to bring that with them on their 10th or 20th visit, let us say. You can then exchange these cards with free services, gifts or even coupons.
6. Offer discounts to your customers from time to time. When customers know that they are offered to pay less for a service, it is likely to increase your sales.
7. Encourage word of mouth advertisement and inform your neighbors about your services.
8. Visit offices, workplaces and corporate organizations and let them know the type of services you offer.
9. Place directional sign post at strategic locations at prominent locations.
10. Make a website. List all your services and create a good business profile on your website.
11. Opt for free marketing by listing yourself on free directories like Google Places, Yahoo, and Craigslist. Utilize platforms like Facebook, Twitter, Google+, Linkedin and more and encourage users to engage, like, comment and share your pages. Offer them incentives free extra services on their first order if they contact you through Social Media sites.
12. Paid advertising can be used too, depending on your budget, like Facebook ads, Google Adwords, Microsoft Advertising and Yahoo search.
I would recommend you to go through basic steps of starting a business also where we have mentioned about fundraising, initial sales generation etc. which will help you in running your overall business.