Strategies for Owning a Successful Dry Cleaning Business
The dry cleaning industry is seeing a modest return to growth after a few challenging years following the COVID-19 pandemic. Owning a dry cleaning business provides budding entrepreneurs an opportunity for success. While it is true that many consumer habits have changed over the years that are affecting the landscape of the apparel industry, there is still a lot of opportunity for growth. Dry cleaning business owners who shift their offerings and services are well primed to be profitable in the changing landscape. Since business casual dress requirements at the office are the new norm and more items are constructed using easy care fabrications, diversifying options for consumers is key. Combining a mix of traditional dry cleaning services, wash and fold, and delivery options are all essential for success.
The dry cleaning industry provides full service laundering and dry cleaning services to a variety of consumers and solves the laundry needs of households and corporations alike. In addition to dry cleaning everyday workwear staples and the industrial needs of hotels and restaurants, the industry also provides specialty cleaning services for hard to clean fabrics and items like leather, suede, and wedding gowns. Dry cleaning startup costs rely less on labor costs and more heavily on equipment, cleaning solvents, stain removers and point-of-sale technology.
What Is Required To Operate a Dry Cleaning Business?
The requirements for operating a dry cleaning business vary considerably depending on the business model and location of your establishment. In general, you’ll need commercial washing machines and dryers, cleaning solvents, and presses. You’ll also need hangers, bins, and tags that will need to be continually replaced as needed and on a continual basis. Additionally, most states require licenses and certification, so be sure to check local ordinances to make sure your business is complying.
- Specialized equipment costs may vary. The equipment required to operate a dry cleaning business includes specialized commercial washing machines and dryers, cleaning chemicals and presses. Businesses also need an ongoing supply of hangers, tags, and garment covers. Don’t forget that you’ll want to invest in a website, software and branding, marketing, and advertising, too.
- Licenses and certifications are required. Dry clean businesses have strict regulations from state and local agencies, as well as the EPA and OSHA. These regulations include properly disposing of cleaning solvents and managing energy emissions.
- Labor costs are generally low. Dry cleaning businesses may be run with minimal employees. The work is labor intensive, and salaries are nominal. Therefore, the labor costs in the dry cleaning industry are less expensive compared to other industries.
Running a Profitable Dry Cleaning Business
The dry cleaning industry as a whole is expected to grow. When determining the value of a business, there are three different methods used. The most common method for valuing dry cleaning businesses is the market-based business valuation, which compares similar businesses that have recently sold. According to BizBuySell Insight data, the median cash flow revenue for dry cleaning businesses is $130,000. The average cash flow multiple is 2.22, resulting in a median sale price for the business of $288,600. To generate a profit, many dry cleaning businesses need to ensure they meet ongoing regulations while monitoring costs, productivity, and considering whether to add additional services.
- Profits vary depending on location and customer loyalty. Areas with high urban populations tend to do best. Retaining customers can be a challenge for dry cleaners, so offering incentives such as coupons and loyalty programs can encourage repeat business.
- Ongoing operational costs can also affect profit margins. State remediation programs, expensive equipment and upkeep can result in loss of revenue. Leasing equipment, encouraging customers to bring in used hangers and stopping the usage of toxic chemicals may help to increase profit margins.
- Adding additional services can increase revenue. To attract new and keep existing customers, dry cleaners can add in additional services such as offering pickup and delivery, clothing alteration and regular wash and fold services.
The Keys to a Successful Dry Cleaning Business
Like any other business, a successful dry cleaning business requires a solid understanding of what customers need and how to best deliver unique and high-quality service. It also requires sound management skills, and the ability to keep repeat customers.
- Maintaining high quality of service. Many dry cleaners provide the same service, so it’s imperative that the service quality is high.
- Attracting referrals and local support. Keeping a steady stream of customer support is crucial to longevity. Dry cleaners can do so by engaging with customers on social media and leveraging local promotional services.
- Increase cost per visit. Businesses can grow revenue by offering additional services, discounts for cleaning multiple items or providing premium services such as cleaning designer items that require a higher cost. These efforts will help increase the average transaction price each time a customer comes in.
The dry cleaning industry is continuing to grow and is a great opportunity for interested entrepreneurs. With the right strategy and careful planning, buying a dry cleaning business can be a smart move.
Sources:
Verak, Beck. “Dry cleaners, seeking new ways to survive, take inspiration from restaurants and retail.” Chicago Tribune, 24 March 2017, http://www.chicagotribune.com/business/ct-dry-cleaning-industry-washing-up-0326-biz-20170324-story.html#. Accessed July 2018.
LaMarco, Nicole. “How to Open a Laundry & Dry Cleaning Business.” Small Business Chronicle, 29 June 2018, Hearst Newspapers, LLC, https://smallbusiness.chron.com/open-laundry-dry-cleaning-business-18752.html. Accessed July 2018.
“Dry Cleaning & Laundry Services.” Vertical IQ, 13 June 2018, https://verticaliq.com/. Accessed July 2018.
“Laundry Facilities & Dry Cleaning Services.” First Research Profile, First Research, 26 March 2018, http://www.firstresearch.com. Accessed July 2018.