Dry Cleaning Business Plan – UK Only

Guildford Dry Cleaning Service is a start-up enterprise in Guildford, Surrey. We offer dry cleaning, laundry, and garment alterations with home pick-up and delivery services.

Our production facility eliminates the need for a retail shop front. Instead, we provide delivery vans and customer service trained drivers.

Customers can choose to pay at each delivery or through monthly credit card billing. Contract customers receive statements itemizing service fees and charges at the end of each month.

We provide a convenient door-to-door dry cleaning, laundry, and alteration service in Guildford. Satisfied customers are likely to become repeat customers and recommend us to others, helping us gain more market share.

Sales are projected to gradually increase over Years 1-3, reaching a total of £324,700. We expect significant growth in sales and net profits by the third year.

Guildford Dry Cleaning Service will offer dry cleaning, laundry, and clothing alteration services with free home pickup and delivery. Our high quality and convenience will save time for customers. The comprehensive marketing strategy will be the key to success of the business. Our target customers have money and want a high quality service, so they will only use this service if they are entirely satisfied. The hours of operation must be convenient and service completion must be timely so that customers are not harried after a long day working.

In providing laundry and garment alteration services for customers in Guildford area, we aim to attain a 30% market share by the end of the first year, have first year total sales in excess of £324,000, and produce net profits of over £75,000.

Guildford Dry Cleaning Service is a sole trader, start-up enterprise, to be established in Guildford, Surrey. The company will provide dry cleaning, laundry, and garment alterations, offered with regular home pick-up and delivery services. We will have a production facility, but will not need a retail shop front because of our pick-up and delivery service. However, we will need delivery vans and customer service trained drivers. Initially, the production facility will be rented. Cleaning equipment will be leased with accompanying maintenance contracts. Start-up financing will be through owner investment and bank loans, with a line of credit established for operational eventualities.

The proposed legal form of business is sole trader. The business can immediately start without complicated procedures associated with partnerships, limited liability companies, or co-operatives. The owner/founder will be the director and will initially handle the bookkeeping responsibilities.

Capital resource plan

A lending plan has to be completed and submitted to the bank six months before starting the business. A loan will be needed two months in advance.

Leasing equipment: Buying new machines costs approximately £30,000 as opposed to leasing which costs £10,000 per year including maintenance. Evaluating the leasing solution shows NPV higher than that of buying machines. Moreover, the business is new and has less experience in maintenance and repair of machine breakdown, therefore the optimal solution is leasing machines. The following machines will be leased:

– 1 Washer – 17kg capacity, high spin, microprocessor control, electric heat

– 1 Tumble dryer – 18kg capacity, stainless steel drum and gas heated

– 1 Dry cleaning machine – 11kg

– 1 Roller Iron 1000 x 300 mm, variable speed and vacuum exhauster

– 1 Ironing table with steaming vacuum board, integral 7 litre boiler, iron, water pump and light

Capital plan: The owner will invest £32,000 in the business. Additional capital for the business will be borrowed from a bank.

– Buying a new van, and office/facilities equipment (computer, printer, fax, telephone instrument, tables, chairs, shelving, work tables, racks, etc…) and initial leasing of laundry machines: £19,500

– Buying another new van in April: £7,000

Annual interest of 6.48% has to be paid on the long-term loans secured with fixed assets.

Start-up Expenses:

– Legal: £150

– Stationery etc.: £1,200

– Brochures: £2,250

– Recruitment and Training: £400

– Insurance: £570

– Rent: £600

– Utilities: £500

– Leased Equipment: £834

– Research and Development: £0

– Expensed Equipment: £5,000

– Other: £2,790

– Total Start-up Expenses: £14,294

Start-up Assets:

– Cash Required: £10,000

– Start-up Inventory: £500

– Other Current Assets: £0

– Long-term Assets: £14,000

– Total Assets: £24,500

Total Requirements: £38,794

Start-up Funding:

– Start-up Expenses to Fund: £14,294

– Start-up Assets to Fund: £24,500

– Total Funding Required: £38,794

Assets:

– Non-cash Assets from Start-up: £14,500

– Cash Requirements from Start-up: £10,000

– Additional Cash Raised: £12,706

– Cash Balance on Starting Date: £22,706

– Total Assets: £37,206

Liabilities and Capital:

– Liabilities:

– Current Borrowing: £0

– Long-term Liabilities: £19,500

– Accounts Payable (Outstanding Bills): £0

– Other Current Liabilities (interest-free): £0

– Total Liabilities: £19,500

– Capital:

– Planned Investment:

– Investor 1: £32,000

– Investor 2: £0

– Other: £0

– Additional Investment Requirement: £0

– Total Planned Investment: £32,000

– Loss at Start-up (Start-up Expenses): (£14,294)

– Total Capital: £17,706

– Total Capital and Liabilities: £37,206

– Total Funding: £51,500

Services:

Guildford Dry Cleaning Service will provide the following services for customers in the Guildford area with free home pick-up and delivery:

– Dry cleaning

– Laundry for personal clothes and large items such as blankets, duvets, curtains, etc.

– Alteration service

Operations Plan:

Customers can sign contracts with Guildford Dry Cleaning Service for regularly scheduled service, or order over the telephone or email. Payment can be made at the time of each delivery or through monthly credit card billing. Statements will be sent to contract customers at the end of each month. No retail shop will be rented. The operations facility will be divided into four main sections: machine installation and cleaning activities, sorting and storage of dirty garments, storing cleaned garments prior to delivery, and a garment alteration workroom. The operation process will be controlled and monitored by a laundry expert employee, and managed by the business owner.

Market Analysis Summary:

Reasons for choosing the dry cleaning, laundry, and alteration service industry include:

– Variety of payment options: cash, cheque, or credit card.

– Low capital requirement for purchasing equipment.

– Minimal staff needed.

– High demand for laundry services.

– Lack of alternatives.

– Increasing demand due to changing lifestyles and incomes.

Market Segmentation:

Labor market proportions:

– Males employed full-time: 2001/2002

– Males employed part-time: 2001/2002

– Females employed full-time: 2001/2002

– Females employed part-time: 2001/2002

Guildford economic change:

– Change in GDP per head (1995-1998)

– Change in average gross weekly earning (1999-2002)

– Change in total employment (1991-2001)

Sources: Local knowledge, Local futures, http://www.guildford.gov.uk/NR/rdonlyres/1F571647-185A-4470-9D3F-06B31BB5D10A/0/GuildfordAuditReportfinal.PDF

Market Analysis:

4.2 Target Market Segment Strategy

Table 1 in the previous topic shows the percentages of males and females working full time from 2001 – 2002, which are higher than those working part time. Employment, income, and GDP trends show an increase in recent years.

These tables show that more people have money, but less time for housework (laundry) in Guildford. They are tired after work and tend to hire someone else for housework. Additionally, professionals tend to buy more clothes, increasing the need for their care and cleaning. This business focuses on working and professional class customers as a target market.

4.3 Service Business Analysis

In Guildford, there are two competitors in dry cleaning, laundry, and alteration services: Trend Cleaners and Woodbridge Hill Cleaners and Launderers. They have many customers, but do not offer free door-to-door service. Here are the strengths, weaknesses, opportunities, and threats for this business:

4.3.1 Competition and Buying Patterns

Strengths:

• We offer a new choice for dry cleaning and laundry services.
• We provide quick and convenient service to save customers’ time.

Weaknesses:

• Strong competition from established businesses in Guildford.
• Starting with no market share.
• Less experience than competitors.

Opportunities:

• The demand for clothing care is increasing with higher expenditure on clothes.
• More women are working outside the home, creating a target market for this business.
• Average income in Guildford is increasing.
• People prioritize leisure activities over housework.
• Dry cleaning and laundry services are in a growing market.
• There is potential for repeat business.
• The ability to decrease fixed costs as sales volume increases.

Threats:

• Potential new competitors in the same service.
• New technology changes may impact the industry.

Strategy and Implementation Summary

Evaluation

The following areas will be monitored to evaluate business performance:

• Monthly and annual sales
• Monthly and annual profit
• Repeat business
• Customer satisfaction

Success will depend on service quality and convenience, customer opinions, and competitor response.

Optimism

This business provides a new door-to-door dry cleaning, laundry, and alteration service in Guildford. Working customers may find this service convenient and become repeat customers. As more customers use this service, Guildford Dry Cleaning Service’s image is enhanced and market share increases.

If monthly and annual sales meet forecasts, profit will be achieved.

Difficulties and Risks

Guildford Dry Cleaning is a start-up with less experience and no market share. Initial marketing efforts are necessary to gain customers. Competitors may resort to aggressive actions, which could make it challenging to establish a foothold. Risks caused by competitors must be monitored and evaluated to continually improve.

Worst Case Risks

The worst case scenario is that the business cannot support itself. Costs may be underestimated or sales may be less than expected. Economic, political, or inflationary changes may negatively impact the business.

5.1 Competitive Edge

As the UK’s economy grows and quality of life increases, people prefer to spend time and money on leisure activities rather than housework. Guildford has three dry cleaning and laundry shops, but they require customers to bring and pick up their garments. Our service offers free door-to-door delivery, saving customers time and eliminating inconvenience and parking problems.

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5.2 Marketing Strategy

Place: We trade directly with customers in their houses in Guildford, eliminating the need for a shop. We provide free home pick-up and delivery service.

Product: We offer convenient and high-quality dry cleaning, laundry, and alteration services.

Price: Our prices are set to match those of our competitors. We target working and professional customers who prioritize service quality and convenience over price.

Promotion:

• Advertise in local newspapers, online, and public areas.
• Offer incentives for one-year contracts and loyal customers.

5.3 Sales Forecast

Sales are forecasted to gradually increase over the year, reaching a total of £324,700. October, November, and December sales remain relatively stable. Turnover and the price of dry cleaning and laundry services are expected to increase. Sales estimates are based on competitors’ turnover in 2002.

Turnover projections of £324,700 were generated in the following areas:

Sales Forecast

Year 1 Year 2 Year 3

Dry Cleaning £116,892 £151,960 £197,548

Laundry £185,079 £240,603 £312,784

Alteration Service £22,729 £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 £14,027 £18,235 £23,706

Laundry £14,806 £19,248 £25,023

Alteration Service £6,819 £8,864 £11,524

Other £0 £0 £0

Subtotal Direct Cost of Sales £35,652 £46,348 £60,252

Management Summary

The owner of the business will be a full-time director and accountant.

A laundry expert will be employed to oversee garment cleaning. Workers will report to the laundry expert, who in turn reports to the owner.

Personnel Plan

Based on consultation with the British Cleaning Council, job descriptions for the laundry expert and workers will be prepared. Advertisements for employment will be placed in newspapers. The laundry expert and two part-time workers with laundry experience will be hired.

The laundry expert will be responsible for operation and quality control. Workers will be responsible for cleaning and sorting and will report their daily work to the laundry expert. The expert will report their results and any problems to the director.

Two part-time drivers will work from 17:30 to 21:30, Monday through Saturday, for pick-up and delivery.

Staff should meet the following conditions and requirements:

– Understand and apply dry cleaning and washing processes.

– Meet set standards by following instructions.

– Work in hot, humid conditions.

– Perform continuous work.

– Overtime may be required during peak seasons such as spring and autumn.

Number of staff and salary for the period January to March 2006:

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