Wash and dry new towels BEFORE first use to make them more absorbent and ready to accept dye and paints.
This will help release lint. Get rid of the lint now! Put all cotton towels in a dryer before their first use. Nothing will "bang" more lint out of the towels than a few good spin cycles in the dryer. This may release a lot of lint. Remember to clean the dryer lint trap before and after each drying cycle.
Do NOT use bleach if possible. When choosing store-bought whiteners, look for products marked "non-chlorine bleach" which means they're made with either hydrogen peroxide or sodium percarbonate. Several of the "green" liquid oxygen bleaches are mainly hydrogen peroxide.
Do not use fabric softener or dryer sheets. Fabric softener is essentially a wax-like coating that surrounds the towel fibers. The wax-like coating will repel water not allowing towels to absorb as they should. This coating also prevents towels from breathing properly, trapping mildew odors.
Wash color towels separately. Wash with like colors. Colour towels will bleed. Never wash white towels with colors
Tumble dry low. Less shrinkage, wear and tear. Cotton shrinks. It's a fact of life. Just like your favorite jeans and t-shirts, cotton towels and rags will shrink in the laundry.
Shrinkage varies. It depends on your laundering equipment and methods. The higher the heat in the wash/dry process, the more severe the shrinkage. After laundering, you might find it shrinks more on one side than another. We call that character.