How to start up a dry cleaning business

Dry cleaning businesses clean textile items that can't be wet washed. Some position themselves as 'multi-service' outlets to attract as many customers as possible. Our practical guide will help you start up and run your own dry cleaners.

Research your target market

It's quite likely that you will have a mix of retail and trade customers.

Retail customers

Your retail customers will be private individuals with clothing and other textile items that need to be dry cleaned rather than wet laundered. Retail customers might typically include people who need their work clothing cleaned and pressed on a regular basis, people who need an outfit cleaned for a special occasion and perhaps those who require a specialist service, for example cleaning and packaging a wedding dress or dry cleaning curtains.

If you offer 'convenience' services such as ironing and service washes, you may also attract busy working people who don't have time to do these chores themselves.

Find out about the types of people living and working in your area and try to match the range of services that you offer to their needs.

Trade customers

Some of your work may come from other businesses that need dry cleaning and laundry services on a regular basis, such as:

  • hotels, restaurants and other caterers
  • hairdressing and beauty salons, health spas and so on
  • clothing hire businesses, for example suit hire and fancy dress shops
  • other businesses and organisations that issue their staff with a uniform or workwear that requires dry cleaning

You may decide to offer other services that might be used by your business clients, such as cabinet towel rental and workwear hire.

Make a list of businesses in your area that might be potential clients. A browse on Yell.com will help you to find their names and addresses. You could then send out a mailshot advertising your services, or even visit some of them personally.

Local competition

Once you have decided who your customers might be, you need to find out how well served they are already by other businesses. How many dry cleaners are there in your area (say, within a 6 mile radius or so of your outlet)? A browse on Yell.com will help to establish this. Look out for nearby branches of large specialist chains like Johnsons (now part of the Timpson Group) and try to find out if they are planning to open new outlets in your area. Also check to see if any of your local supermarkets offer a dry cleaning service (this is quite likely to be a concession operated by one of the national chains). Bear in mind that Timpson plans to open a significant number of new stores at supermarkets in the next few years and in doing so increase its share of the dry cleaning market. Be aware that some local shops might act as 'receiving units' for dry cleaning businesses that are located elsewhere. Some milkmen do this too.

You can find out quite a lot about your competitors by looking at their advertisements and visiting their outlets. Make a note of the range of services that they offer and the prices that they charge. You might even get some good ideas for extra services that your own business could offer. Notice what their outlets are like - are they clean and modern, or could they do with updating? Do staff seem friendly and helpful?

Look out for any gaps in the market. You might, for example, identify demand in your area for a specialist service such as antique textile cleaning and preservation.

Research current trends, plus legal and tax issues

Decide which services to offer

Dry cleaning

As well as general dry cleaning of everyday clothing, you may decide to offer a range of specialist dry cleaning services. This will depend on your own skills (or those of your staff) and on the range of equipment that you have available. Some examples of specialist dry cleaning services that you might offer are listed below:

  • suede, leather and sheepskin garments, including motorcycle leathers
  • waxed jackets and skiwear
  • high value and antique items
  • bridal wear
  • hats
  • silk garments
  • soft toys
  • rugs, duvets, loose covers, curtains and other household textiles
  • solvent free water based (aqueous) cleaning for dry-clean only textiles
  • dry cleaning using non-perchloroethylene solvents such as hydrocarbon, liquid silicone (for example Green Earth) or the Solvon K4 organic solvent

Other textile services

You might also decide to offer other textile services to your retail customers. Examples include:

  • general laundry services
  • rental of carpet cleaning appliances
  • stone-washing
  • ironing and forming
  • repairs (including 'invisible repairs'), alterations, and general tailoring
  • waterproofing and flameproofing
  • preservative packaging

Convenience services

As well as textile and laundry services, you may decide to offer other convenience services from your outlet. These could be carried out in-house, or they could be passed on to a specialist. These services may include:

  • key cutting
  • shoe repairs
  • photo kiosk
  • film and image processing
  • engraving and sharpening

Services for other businesses

If you intend to offer dry cleaning and laundry services to other businesses, it may be advantageous to offer them a 'one-stop' package for all of their textile requirements. These might include:

  • cabinet towel rental
  • workwear rental
  • linen hire

'Added value' services

The dry cleaning industry is competitive and you may decide to offer both your retail and your trade customers a range of 'added value' services. These might include, for example:

  • a collection and delivery service
  • online ordering
  • a freephone telephone line
  • a loyalty scheme

Price your services

You will need to work out a price list to cover all of the different services that you offer. You will probably set standard prices for cleaning different types of item, for example men's suit, jacket, trousers, dress, skirt and so on. Curtains are generally charged per square metre (or sometimes by weight) and the price will be more for curtains that are lined. The price for cleaning loose covers is usually fixed by reference to whether the cover is for a chair, a two-seater sofa or a three-seater sofa. When setting your prices, consider the following:

  • the level of local competition
  • what your competitors charge for a similar service
  • whether you intend to win business away from your competitors with low prices
  • if people in your area will be able to afford your prices

Decide whether you will charge a higher rate in certain cases, for example if a garment is very heavily soiled.

Above all you should make sure that your prices are sufficient to cover all of your costs and leave you with enough profit to cover your own drawings.

If you act as a 'receiving unit' for certain services (for example shoe repairs), then it may be the case that the specialist who actually carries out the service will set the price. If other outlets are going to act as receiving units for your dry cleaning business, then you will need to decide how much they will keep as their commission.

Discounts and special offers

You may decide to offer various discounts and incentives to your customers. For example, your price list might include a special discount if two or more suits are brought in at the same time. You could also consider offering the following:

  • discounts for pensioners, and perhaps students - eye-catching promotions like Timpson's offer to dry clean outfits for unemployed people attending a job interview free of charge can generate considerable publicity and goodwill
  • a loyalty scheme that rewards regular customers
  • occasional special offers, for example 'two for the price of one' deals

Trade prices

If you carry out dry cleaning and related services for other businesses on a regular basis then they will probably expect you to offer them a special trade rate. As with setting your retail prices, you will need to consider how much your competitors would charge and how much you need to earn to cover your costs and make a reasonable profit.

Think about whether you will offer services such as collection and delivery, and whether or not they will be free of charge. Think about the practicalities of operating such a service, and the cost.

Franchises

When starting up a dry cleaning business, you may decide that you would benefit from being associated with a well known, established organisation. This is made possible through franchising.

There are several franchises available to UK businesses within the textile and cleaning industries, including some specifically for dry cleaners. Other industries in which franchise schemes are active include shoe repairs and key cutting.

Franchises range in size from large national schemes to small regional and local operations. Although different schemes vary in detail, most feature the following key points:

  • as a franchise holder, you will remain self-employed but will use the identity (ie corporate colours, logos, trade name and so on) of the franchisor
  • in return, you will pay the franchisor a fee - this might be a one-off investment or a monthly charge, or a combination of both
  • both you and your franchisor will have to fulfil certain obligations; the franchisor might, for example, agree to allocate you an exclusive territory, while you might agree to maintain your outlet to a particular standard

Many franchisors will provide you with training if you need it, as well as advice and support on a range of business and technical matters.

Details of the above points are set out in the franchise agreement or contract, which both you and your franchisor will sign. The agreement will also deal with other matters, for example the minimum period for which the franchise will run.

Before entering into a franchise agreement, it is advisable to compare the terms of different franchisors to be sure that you are getting a good deal. Go through the contract with your solicitor before signing anything.

Receiving unit

One way of increasing the amount of potential customers that your business can reach is to appoint a number of collection and drop off points - or 'receiving units' - in various locations within the area that you intend to serve. This is much cheaper than opening new outlets, but still enables you to reach customers who would not otherwise travel to your main outlet.

A receiving unit is a collection point where people can bring their items for dry cleaning. You or one of your employees would then visit all of your receiving units on a regular basis (probably daily or every two days), picking up any items that need cleaning and dropping off any that have been cleaned. Shops like convenience stores are well placed to act as collection points for local dry cleaners.

Another bonus of using shops like convenience stores as receiving units is that they often open for very long hours, helping you to reach customers who would not be able to visit your outlet during the normal working day.

In return for dealing with your customers, you will normally pay your receiving units either a percentage of your normal price or a fixed fee. You will have to decide how much to pay your receiving units, bearing in mind how much your competitors would pay (if you're able to find out) and making sure that your own business is left with enough profit. Alternatively, you might charge receiving units a special trade price and allow them to add their own profit margin to it.

It would be a good idea to set out your terms of trade in writing and agree a formal contract with your receiving units. The contract should cover such matters as each party's obligations, payment terms and amounts and so on.

It is possible that your own business might itself become a receiving unit, perhaps for shoe repairs or other specialist services.

Promote your business

It is important to promote your business effectively to let your potential customers know who you are, where you are and what you can do for them.

Some of your customers will get to know about your shop when they walk or drive past it. Others may not know of a dry cleaner in their area and will have to actively search for a business to use.

Telephone and online directories

An entry on Yell.com or other online equivalents can be an effective way of advertising your business. However, many of your competitors will have done the same. Some firms spend a lot of money on large, eye-catching display advertisements. You will have to decide whether to compete head on with these firms, or look for a different way of attracting customers. You could, for example:

  • focus on your own unique selling point (USP) in your advertising material. This might be, for example, "Family run firm", "Free collection and delivery" or "Fast turn-around"
  • advertise in other ways. For example, you could distribute a paper flyer or sticker with your business name and telephone number on it as part of a mailshot that you do. You might ask some local clothes shops if you can leave a pile of your flyers on their counter

Other ways of advertising

Think about other ways that you could advertise and promote your business. For example:

  • joining a trade association. Many trade associations operate a directory of members and some go to quite considerable lengths to promote their members' services
  • joining local business groups and networking societies. A local Chamber of Commerce, for example, is a good way of getting in touch with fellow business people in your area, some of whom may regularly require laundry services
  • making direct contact with people who regularly make decisions about outsourcing their laundry needs. These might include hotel managers, restaurateurs, salon owners and so on
  • launching a website. More and more people search for local services online, so a website could be effective. You could even offer online ordering if you run a collection service. Cheaper alternatives to creating your own website include starting your own blog and using social networking websites like Facebook and Twitter
  • advertising in a local newspaper

Try to tell people as many of the good things about your business as possible in your advertisements, particularly things that make your business stand out from its competitors.

Remember that, if you have a business vehicle such as a van, it can be a very effective means of advertising if you have it sign-written and keep it clean and presentable.

Word of mouth

Word of mouth recommendations are valuable to your business. You will have to earn your reputation by offering a good, reliable service - but even small things like friendliness and helpfulness can pay big dividends. Make sure that any staff you employ are good ambassadors for your business too.

Buy an existing business

You might decide to buy an existing dry cleaning business rather than start your own venture from scratch. Buying a going concern can mean that:

  • the premises and equipment are already in place
  • there are established customers
  • the business can generate income immediately
  • suppliers have been identified and relationships established with them
  • the business has a track record, which can help if you are looking for finance
  • staff are already in place
  • a business website has already been set up

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.

Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • whether one of the multi-service chains like Timpson is planning to open an outlet close by - Timpson has been growing rapidly in recent years and recently bought the Johnsons chain of dry cleaners
  • the state of the premises, fittings, equipment and so on. Will you have to spend money refurbishing or replacing assets
  • is the existing owner prepared to give you some training after you take over
  • existing staff rights
  • how to retain key personnel once you've taken over
  • whether the business owes money that you will be responsible for
  • if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure that you budget for other professional fees such as legal fees and valuation and survey costs.

Several business sales agencies specialise in laundry and dry cleaning businesses. These may be able to give you advice about finance, training and legal issues.

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