Starting a laundry business is a venture that not many people consider. It is, therefore, crucial for on to know the basics on how to start the business at home.
How to Start a Laundry Business at home
With many moms deciding to stay at home and take care of their kids, there is a rise for the need to start a home-based business. Starting a laundry business is a great idea because you can do it from your home, either from the basement of your house or in the field.
What concerns to be entrepreneurs is how to go about it, the machines required to start the business, the initial capital required, and how to run it. To provide answers to such concerns, I have compiled a laundry business plan that will cover the business summary, the entire operations of the business, and a financial breakdown on what you will require.
(The amounts are in pounds you may convert them to your local currency). Starting a laundry business being in the service industry, the client should always come first. It, therefore, requires commitment and patience, and extensive marketing.
Laundry Masters Business Plan
Executive Summary
Laundry Masters is a partnership, start-up business that will be established in Brighton with the aim of offering the best services which will be convenient, quick and eco-friendly. The purpose of the business would be to offer dry cleaning services, ironing, and cloth- fixing, provided with consistent house delivery as well as pick-up services. The business will be based is a rented basement of one of the partners, and will not require a retail store due to the pick-up and delivery services. The business will require a delivery truck that will be operated by a well-trained driver. The clients will have the option of choosing to pay upon every delivery, or monthly through a credit card. The delivery person will present the statements to every customer that would select that particular option, detailing service payments and the cost of the package at the end of every month. The venture will offer door-to-door laundry services in Brighton that will appeal the attention of clients. Both the employed and unemployed clients will find our services convenient and will definitely want to try them. When a customer is satisfied with a particular service, they are highly likely to be recurrent clients and refer the services to other people. The more the customers embrace the services of Laundry Express, the image of the business will be enhanced, which will result in an improved market share. The sales forecast is that the sales will go up progressively in the subsequent years, as more clients are referred to the business, and more profits attained which will assist the business to advertise progressively.
Venture Overview
The entire size of the laundry business is valued at more than 300 million tons every year and the rate of growth to be around 6%. This is proof that the business has a substantial potential for growth because the external background establishes more prospects than threats. The growth and success of the business will depend on several factors:
· The number of clothes that we shall be able to handle in a specified period of time.
· Reasonably priced services that will ensure the business financial sustainability.
· Access to the market: penetration and procurement of market share
· Effectiveness and efficiency of the services, not only in the laundry but the after-services as well.
· There is at present a measure of processes and technologies that are eco-friendly.
The laundry industry features an established number of companies which are developing at a fast speed. The laundry business similarly has several self-service businesses which are commonly located in shopping regions. They have machinery that is operated using coins and call for the customer to source their individual laundry powder and other essentials like fabric softeners. Key industry players comprise of big, standard and small laundry and dry cleaning service companies. Enormous commercial laundry businesses offer services to big institutions that necessitate a continuous flow of hygienic linen, costumes, and other costumes. They work for institutions such as hospitals, boarding houses, and other administrative departments. Middle-class companies, mostly comprise the laundry and dry cleaning service established inside key shopping centers. Finally, small companies comprise vicinity laundry and dry cleaning service industries, which is where Laundry Masters will initially lie, but with the projection of becoming a high-end business serving the corporates.
The present challenges that businesses in the cleaning industry face are:
a. Incompetent and poorly- skilled employees
b. Lack of capital to either start or run the business.
c. Lack of the right equipment’s for a particular type of job.
d. Poor maintenance of the available machines or mechanical issues.
Financial Plan Overview
Purchasing new equipment instantly will require us to have approximately 45,000 pounds. Having them on hire purchase will cost the business an excess of 5000 pounds, but will be the best option because it will be paid in monthly installments. Moreover, since the business is at a start-up stage, it will be a good option to first get the machines, then pay for them using monthly installments. Some of the machinery that will be needed are: A delivery van, a computer to monitor the operations of the business, a washer, a dryer, a dry cleaning equipment, an ironing table, and an iron box. The two owners will each invest an initial capital of 15000, with an additional of 15000 pounds being borrowed from the bank.
Business Objectives
The business has both short-term, medium and long-term objectives.
Short-term objectives
a. To search for investors for the business
- Acquire a capital kit and fund the working capital necessities of the venture.
c. Come up with processes, practices, and organizations for the undertaking.
d. Set up a working team
Medium objectives
a. The business will work towards penetrating the market more and more and competing more professionally and commendably.
b. To make the business to be a one-stop suitable and consistent laundry and dry cleaning services industry
Long-term objectives
a. To not only serve clients from the Brighton region but to the neighboring regions as well.
b. To further expand the business by incorporating additional after-sale services like offering discounts to consistent clients. To expand the services offered by the business to comprise car cleaning as well as cleaning of carpets, as the working capital would allow the acquisition of specialized machinery. Similarly, the restoration of water and fire loss will add-on to major services, and even though less recurrent demand is seen in these regions, the focused characteristic of them provides a greater profit edge. The business will as well be considering venturing into the cleaning of wood floors since the major competitors do not offer such services.
Some of the guiding factors that will enable the company to achieve the above objectives are:
-Since the business will be entering its initial year of set-up, a widespread marketing approach will be vital.
-The clients are paying for the services, and they, therefore, require high-class services as well as value for their money, and will only come back if they receive satisfactory services.
-The hours in which the business will be open ought to be convenient to cater for not only the working clients but also to the stay-at-home clients. This will call for longer opening hours as well as deliver in the evening when the working customers would be home after work.
Source of competitive advantage
Unique amongst the local competitors, Laundry Masters will distinguish itself through reliable productiveness and exceptional customer service. Having carried out a research of the Brighton area and understood what the customers prefer, the business is in a position to respond to the client’s corporate approach and doubt in the customer service sector. Laundry Masters will provide reliable, speedy and courteous services. The business will also stay ahead of the competition by expanding the customer service provision by proposing reasonable prices, well-trained, inspired, and knowledgeable employees.
Inspiration will be supervened by a Customer Service Gratification Study that will be established for a response that will let the business guarantee that it has the businesses “best- proficient” service specialists in addition to, a view that will be important in determining what the business should do to improve or do a particular thing differently. Laundry Masters strives for punctuality and a high-value work code.
The level of competition in the laundry/ dry cleaning industry in Brighton region is not severe. Most of the laundry businesses in Brighton offer the traditional services of dropping the clothes. The one competitor that offers the convenience of offering door-to-door delivery service is the St. James’s Laundry Centre. It is our believe that at the start this will be the businesses, key resident competitor. We similarly believe that we shall be in a position to earn the trust of clients from the consistent, drop-off challenges by improving the peace of mind of our clients by using that will enable them to take a picture of their clients and track them using a specifies reference number. This app will save time, and reduce the incidences of laundry mix up or even loss of clothes.
Critical risks/threats and opportunities
Opportunities
· The money that people spent on clothing is growing, which include some very expensive gowns that require specialized care, therefore, the demand for laundry services offering specialized handling is also growing.
· The population of women is increasing. Traditionally, women have been known to do more laundry themselves and also most of the cleaning chores at home. In the contemporary world, women are become more and more corporate and engaging in 5-7 jobs just like the males. Since a higher percentage of the target market is the working and professional population, the market will keep on growing as long as more women are getting into the job market.
· The average income of the Brighton people is also increasing, which translates to them being in a position to save some for laundry services.
· The modern day client prefer having a professional do the cleaning instead of leaving it to the house girls who do not do it to perfection.
· In 2010, the forecast for the demand of dry cleaning services was projected at a growth of 8%, which means that seven years have done the line the percentage has grown even more.
· Since this is the service industry, the probability of clients returning is high when they are satisfied with the service. Additionally, it does not require repeated promotion since word of mouth will play the major role.
· There is a high likelihood of decreasing the fixed cost as the volume of sales goes high.
Threats:
· The success of the business will prompt other people to enter the market, who will pose an enormous competition because they will offer similar services and may have more capital and immediately offer the services that we intend to offer in the future.
· As the world grows, so does technology. New changes in the technology used in the dry cleaning industry may bring forth different washing machines convenient for home use, and may reduce the number of clients seeking our services.
Market analysis Overview
The market comprises of both residential households and commercial agencies, with growing demand, especially for the period of holidays since most people get ready for observances, visitors and amplified traffic. There is a substantial real estate marketplace in the Brighton region, with significant and anticipated throughput especially in the spring season, both in a secluded apartment group of people and in the residences from learners attending the nearby colleges.
Brighton has a progressively growing populace and lodging market. The spring season presents an opportunity in the nearby colleges to offer cleaning services to the students as they close for the spring holidays. These two elements signify a requirement for dependable and reliable duvet and carpet cleaners that may require the services of Laundry Express or will present an opening in the market that will require our contribution. Laundry Masters will aggressively contend for all those openings in the regions service area. The market demand stays robust, yet the proportion of capital required for entrance into this area of operation to attend to customer request means that the restricted amount of direct contestants stays relatively steady. Laundry Masters will establish itself for the next here years, as an innovative and client-focused business offering outstanding services. The business expects to intensify into other services of vacuuming, like air ducts, wood, and cement, as well as power washing. The venture also anticipates adding pet stench elimination as a specified package as the industry is getting severer on amenability control. The promotion efforts would be aimed at reaching every individual living in the Brighton area.
Research has shown that one of the key elements that people consider when selecting a particular service like dry cleaning and laundry, is not the pricing, rather, how convenient the services are. As stated above, the disposable income of the Brighton population is increasing, therefore, the clients will be inclined at choosing a provider bases on the effort and time the amenities will save them. This leads to an improvement in the living standards which consequently makes the people have limited time to do chores like laundry. The women are mostly tired after going home from work and prefer having someone else doing the house chores for them. Furthermore, the petition on professional garments of the working clients (particularly in the services sector) regularly increases proportionally with their salary. Purchasing more attires, specifically costly outfits, results to them paying more responsiveness to the maintenance and washing of those clothes. With cautious investigation, this business will focus on employed and proficient class clients as an objective section market. Even though there are a number of conventional door-to-door laundry /dry cleaning service suppliers in the region, Laundry Masters will principally market its expedient supply service to the busy clients who are keen to get such package, because it saves them the effort and time for other undertakings.
Competitor Analysis
The main competitors are St. James Laundry Center and Preston Street launderette.
St. James Laundry Center is a major competitor. This company is not very hostile in their promotion efforts and depend on general advertisements to keep their local clienteles. They have no specialized employees especially cleaners, which makes them delegate most of the work they are required to do to minor companies. The value of work is also undefined, as they have incomplete omission of the subcontractor’s conveyance of client communication as well as services. Similarly, the management is not keen on following up their clients to establish their level of gratification, missing supplementary openings for recurrence and/or value added provisions.
The second main competitor is Preston Street launderette. They have been in operation for several years, and have managed to maintain a great client base. However, they have moved away from domestic and more in the direction of offering services to the corporate sector.
Laundry Masters will, therefore, take advantage of the openings offered by the transforming or else insufficient attention of our competitors by seriously tracking the market with a key stress on client service and gratification. We shall apply the most present and effectual kit, presenting the fastest services (less than a day) and using an exceptional bumper head that expends more water. Our business will be considered to be the best and more professional in our dealings and associations with clients.
One main element that the competitors will enjoy is that they will have an advantage over our business because they have been in the region for a while, are more established and hence more costly. Watching the day-to-day operations of the competitors will be crucial in understanding the do’s and don’ts in the industry. Understanding the services that the clients prefer will also play a crucial part in knowing what to include on the menu.
Management team
The overseer of the business will serve as both the director and the accountant. A professional cleaner will be hired and will oversee the daily operations together with the quality of the services. The delivery team will comprise of two individuals; a trained truck driver and another person who will collect and deliver the clothes to the doorsteps of the clients.
Key people and Advisors
The business will only be run by two people, who will give the orders and to whom orders and payments will be made. Upon receiving the orders, they will delegate the duties to the other members. The key advisors will be individuals from various parts of Brighton, who have experienced the services of the competitors. One main reason why they will be a key advisor is because they will offer us information regarding the services of the challenges, and what should be done differently. Another advisor who would also be key is an individual who has been in the business for a long period of time preferable from that region. He will play a key role in offering us advice on the ups and downs of the industry.
| Description | No. of Hours in a week | Salary per Hour( in Pounds) |
| 2 Managers/ Accountant | Full-time | 23 |
| Driver | 40 | 7 |
| Delivery person | 40 | 12 |
| Laundry person | 48 | 10 |
Operations Plan
There are two key approaches that the clients would take to get full advantage of our services. They would be in a position to sign a contract with our business so as to be able to receive our services regularly. There will also be the option of requesting for our services through an email or the telephone. In terms of making the payments, clients will be able to choose whether they will pay after the service, or they will make monthly payments which will be discounted to encourage new customers to be regular clients. The initial activities of the business will comprise of; Installation of the machines, distribution of flyers and moving door to door informing prospective clients of our services.
Funding Request
Start-up Funding
The expenses of starting the business will be made through a combination of the owner’s capital, who will both contribute a total of 15000 pounds. An additional funding will be made through a funding from a local bank and will be a sum of 15000 pounds.
The funding request will be completed and presented to the bank five months prior to starting the venture. Upon receiving the money, the owners will purchase the needed equipment. The business will also pay a yearly interest of 10% without deferring.
Exit Strategy
If the business makes the decision to exit the market, it will be sold to the highest bidder. The cost at which the business will be sold will depend on the cost of the equipment and the contributions of the owners. This will only happen if the objectives of the business are not met, and the business is making more losses than profits.
Market Analysis
It is important to come up with the reasons for selecting the line of business before immersing oneself in the business. Some of the areas that require a keen consideration are:
- How the client prefers paying for the services; through cash or cheque, or a credit card.
- What should be done to avoid stagnancy of capital?
- What the capital necessity for acquiring commercial laundry gear is, and whether the risk of getting involved in this type of business will be high or low.
- The request for using dry cleaning services is increasing because of the changing lifestyles, salaries, and the rise in clothing expenses.
Market Segmentation
Laundry Masters will be mainly targeting clients in the Brighton region. The business will spin off by presenting services to the Brighton populaces but will also purpose to extend the services to other regions. The business will as well target both full and part-time employed clients who would appreciate the convenience of Laundry Expresses’ Services. The assumptions that the business has is that it will receive a minimum of fifty clients per day during the odd season. The number is however expected to go up to 100 clients especially when the colleges and schools close for their holidays.
Start-Up Requirements
Start-up Expenses (Amount in Pounds)
Stationery 31,000
Brochures 5,000
Recruitment & training 3,000
Rent 2,000
Leased equipment 4,500
Other 4,500
TOTAL START-UP EXPENSES 50,000
PROJECTED SALES (in pounds)
YEAR 1 YEAR 2 YEAR 3
Sales
Dry Cleaning 216,892 150,960 196,548
Laundry 185,079 241,603 311,784
Alteration Services 12,729 29,547 38,412
Other 0 0 0
TOTAL SALES 324,700 422,110 548,744
Direct Cost of Sales Year 1 Year 2 Year 3
Dry Cleaning 15,027 19,235 24,706
Laundry 13,806 18,248 24,023
Alteration Services 6,819 8,864 11,524
Subtotal Direct Cost of Sales 35,652 46,348 60,252
Projected Profit and Loss (Amount in Pounds)
YEAR 1 YEAR 2 YEAR 3
Sales 324,700 422,110 548,744
Direct Cost of Sales 34,652 45,348 61,252
TOTAL COST OF SALES 34,652 45,348 61,252
Gross Margin 290,048 376,762 487,492
Gross Margin % 89.02% 89.02% 89.02%
Expenses
Payroll 115,860 121,653 127,736
Rent 14,400 15,000 16,000
Utilities 11,100 12,000 13,000
Maintenance 1,200 1,500 2,000
Instalments 20,000 20,000 20,000
Total Operating Expenses 162,560 170,153 278,736
Profit before Interest and Taxes 83,888 152,409 241,756
Net Profit 78,672 17,744 36,980
PROJECTED BALANCE SHEET (in pounds)
YEAR 1 YEAR 2 YEAR 3
Assets
Current Assets
Cash 79,650 175,200 350,326
Inventory 3,008 4,210 7,773
TOTAL CURRENT ASSETS 82,658 179,410 358,099
Long-term Assets
Long-term Assets 24,000 24,000 24,000
Accumulated Depreciation (3,500) (7,500) (12,500)
TOTAL LONG-TERM ASSETS20, 500 16,500 11,500
TOTAL ASSETS 103,158 195,910 369,599
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable 13,279 13,710 15,546
Long-term Liabilities 17,555 17,555 17,555
TOTAL LIABILITIES 30,834 31,265 33,101
Paid-in Capital 35,000 35,000 35,000
Retained Earnings (20,000) 31,345 130,670
Earnings 55,300 101,315 165,700
TOTAL LIABILITIES AND CAPITAL 101,134 198,925 364,471
Net Worth 72,324 164,655 336,498
PROJECTED CASH FLOW
YEAR 1 YEAR 2 YEAR 3
Cash Sales 145,300 185,300 200,050
SUBTOTAL CASH RECEIVED 145,300 185,300 200,050
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending 30,250 32,000 32,050
Bill Payments 75,100 95,150 100,500
SUBTOTAL SPENT ON OPERATIONS 105,350 127,150 132,550
Long-term Liabilities Principal Repayment6, 200 40,050 40,050
SUBTOTAL CASH SPENT 111,550 167,200 172,600
Net Cash Flow 33,750 18,100 27,450
Break-Even Analysis
The break-even analysis per month is estimated as below. It is based on the assumption that as revenue supersedes the break-even point, the business will begin to yield the profit. As projected, the demand for laundry services will continue to grow in the next three years, therefore, if our services will satisfy the clients, they will keep coming back and bring new clients with them as well.
BREAK-EVEN ANALYSIS
Monthly Revenue Break-even 18,100
Assumptions:
Average Percent Variable Cost 11%
Estimated Monthly Fixed Cost 16,400