March 2023
Adam Hoeksema
The IRS publishes tax return data each year on the roughly 28,000,000 sole proprietorships in the U.S. We analyzed the 2,566,546 tax returns that were filed in the personal and laundry services industry to pull out some key statistics and insights to help our customers ensure that they are creating realistic financial projections for their laundromat.
We hope that this data will be helpful for you as a “reality check” for your financial projections and laundromat business planning process. We hope you create a forecast for your unique situation and plan, and then use this data to make sure your projections seem reasonable based on industry averages.
Here is what we will cover in this article:
Learn How to Use this Financial Data
If you are creating projections for your startup business, or you just want to see how your existing business stacks up to industry averages, you can take your income statement and compare key ratios and percentages for your business compared to this industry average data. Keep in mind that this category of tax returns that we analyzed likely has many laundromat businesses, but it also has other types of businesses included in the data set as well. Anyone who filed a tax return in 2019 as a sole prop in the personal and laundry services category would be included in this data set.
How many laundromat businesses are there in the US
There are between 18,000 and 35,000 laundromat businesses in the US. We specifically analyzed the 2,566,546 personal and laundry services companies that filed a tax return as a sole prop in 2019.
Average annual revenue for a laundromat sole proprietor
The average annual revenue for all sole proprietorship businesses in the personal and laundry services category in the U.S. was just $27,743 in 2019. That being said, since the data includes businesses that are not laundromats, we also found a second source that estimates the average annual revenue for a laundromat to be roughly $142,000.
This may differ depending on the size, location, and type for each laundromat. In our blog post How to Start a laundromat we discuss the different types of laundromats and the passive income that can result.
If $27,743 seems low to you, I think we need to remember that this tax return data includes all sole proprietors that categorize themselves in the “laundromat” industry. Depending on location, size, and type the potential revenue may vary.
This underscores the importance of actually creating your own laundromat projections based on your specific number of washer and dryers and pricing.
Average annual expenses for a laundromat
The average annual expenses for all sole proprietorship laundromat businesses in the U.S. was $19,889.
The average annual expenses for a laundromat will be made up of the rent, utilities, and maintenance, but these all could vary depending on location and age of the business, so again let’s not focus too much on the specific dollar amounts here. What we can gain from this tax return data is an understanding of expenses and profits as a percentage of revenue rather than a specific dollar amount.
Average net profit margin for a laundromat business
The average net profit margin for a laundromat business was 28%.
How much can I make by owning a laundromat business?
In order to calculate the earnings potential of a laundromat you can take the following assumptions:
- # of available machines
- Utilization percentage of the machines
- Revenue/Price per machine per day
- # of facilities
These assumptions will allow you to come up with a revenue forecast for your laundromat. From there you can apply the 28% profit margin.
Top 10 expenses for a laundromat business
Based on the tax returns of roughly 2,566,546 sole proprietors operating in the personal and laundry services industry, the following were the 10 largest business expenses as a percentage of revenue.
Average rent paid for a laundromat business
The average laundromat business spent 9% of annual revenue on rent.
This would encompass rent paid on any facility, but it could also include rent for equipment such as dryers and washers.
Average spent on other business expenses for a laundromat
The average sole proprietor laundromat business spent roughly 8% of annual revenue on Other Business Expenses. This is a bit of a catch all often for any odd expense that may come up and could vary depending on the type.
Average material cost of goods sold for a laundromat
The average sole proprietor laundromat spent roughly 8% of annual revenue on material costs of goods sold.
It is not clear exactly what this might include, it could be water, detergent, and perhaps even utilities. We also see that business owners categorize 5% of revenue as utility costs.
Average supplies for a laundromat
The average laundromat spent roughly 7% of annual revenue on supplies. This is also likely referring to the soap and detergent and any other product used to clean the clothes. Again this could vary depending on the level of service.
Important Details about the Data
I want to point out a few key items about the data:
- You can download this data for free from the IRS website.
- The data includes 2,566,546 personal and laundry services sole proprietorships in the U.S. in 2019.
- This data will include businesses that operate full time, and businesses that only operate on a part time basis.
- Because of this, you should take the raw numbers for revenue, expenses and profit with a grain of salt, but the percentages can still be quite valuable when trying to forecast expenses for your business.
- This data includes businesses from all across the country, keep in mind that revenue and expenses can vary greatly based on your specific geographic location.
- We used 2019 data because we felt it was most likely to be representative of a “normal” environment for the industry. COVID-19 caused disruption to almost every business in 2020 and 2021, so we wanted to utilize “normalized” data.
If you have any questions about the data or how to utilize the data in your financial forecasting process please don’t hesitate to reach out to us!
