How to Start a Dry Cleaning Business

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Quick Reference

Have you ever paid for dry cleaning and thought about how profitable it might be?  Well, someone is making a good living from that dry cleaning business.  Why not you?  It could be a profitable opportunity for you to be your own boss.

Business Overview

A dry cleaning business offers dry cleaning of clothing and other garments, as well as other laundry services.  Some offer pick-up and delivery service as well.

Industry Summary

According to IBIS World, the market size of the dry cleaning industry is $8 billion.  Globally, according to Business World, the market size as of 2018 was $118.9 billion and was expected to grow 10.9% per year through 2022.  70% of the market is households, and the rest of the market consists of hospitals, restaurants, hotels, and other organizations.

Related Industries

Laundromat
Sewing Business

Industry Trends

The industry is being driven by the desire of consumers for convenience, particularly with pickup and delivery services.  However, the industry overall is expected to show some decline in growth due to the adoption of business casual attire.  Economic downturns also affect the industry.

Target Market

Your target market will be those seeking the convenience of laundering and dry cleaning services.

Skills, Experience, and Education Useful in Running a Dry Cleaning Business

There are several specific skills that you will need to open a dry cleaning business.

  • Experience.  Experience working in a dry cleaning or laundry business is valuable, particularly in management.
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.

Costs to Start a Dry Cleaning Business

Here are the typical startup costs you will face when you open a dry cleaning business.

  • First month security deposit for rent $1,500 – $5,000
  • Dry cleaning equipment such as washers, dryers, garment conveyor, presses, etc. $50,000 +
  • Supplies such as hangers, cleaning chemicals, etc. $2,000
  • Initial marketing such as Facebook ads or search engine optimization for your website $500 – $1,000

Steps to Starting a Dry Cleaning Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your dry cleaning business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect dry cleaning business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

You need a location that is extremely convenient for customers, preferably close to or along a route that many business travelers will take.

In addition to accounting for lease or rent costs, the cost for utilities will need to be figured in as well. Also, be sure there is a sufficient water supply coming into the building as insufficient water will make it difficult to operate this business properly.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

You may need to obtain the necessary permits and licenses to operate. These permits and licenses can vary based on the state and town where the business is located. Check with your state for specific license and permit requirements for your dry cleaning business. Some other common local, state, and federal registrations a dry cleaning business may need include a sales tax permit and an Employer Identification Number.  

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing but getting the funding to start a dry cleaning business is another.  In order to get a small business loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

A dry cleaning business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a dry cleaning business include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your dry cleaning business greater visibility online.

Related: Low-cost ideas to market a new business

Step 9: Get Insurance

A dry cleaning business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hiring Employees

You may need employees to help you run your dry cleaning business.  Make sure that you select people with appropriate experience and training.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your dry cleaning business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Dry Cleaning Business?

The profit for a dry cleaning business can easily be $200 or more per day, which is an annual revenue of $73,000 per year.

Other profit centers include alterations, severe stain removal, replacing buttons or zippers, and cleaning rugs and curtains.

Things to Consider Before Starting a Dry Cleaning Business

Running a dry cleaning business or any small business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

Marketing and acquiring customers will be your biggest challenge and an ongoing expense. Online marketing and search engine optimization will be your biggest source of customers, so you will need to have a budget for that.

You will face competition, so you need to offer high-quality services and good customer service at competitive prices.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other dry cleaners to see what they offer and what prices they charge.

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