The following business plan will be for thefirst year of operation, the business proposed is a coin laundromat service. Themain customer base aimed are young adults whom are currently studying or whohave just begun working. The area chosen is in Burwood East in Melbourne, Victoria.The location chosen is extremely close to Deakin University therefore, therewill be many student accommodations within the designated area. Thus, gaining interestfrom the customer base that are being targeted. The goal is to provide aservice for those who do not have the time or resources to complete their dailynecessity of washing their clothes, whilst providing a modern twist to the coinlaundromat which will attract more customers. The owner has no previousexperience with businesses hence, the coin laundromat was chosen.
Coinlaundromat is a business that can be run with little to no experience. Also,the industry has already matured hence, it will be a stable business. This isproven by the fact that the growth over the last five years for this industrywas 1.9% (IBIS World, Retrieved 24th January 2018) 1 Contents Executive Summary. 2 Background. 4 Marketing.
5 Operation. 6 Budgets. 7 Funding Needs. 8 Implementation Timetable. 9 Conclusion. 9 Bibliography. 10 BackgroundThe proposed business will be a self-operated coin laundromat, thelocation chosen is close to student residentsin Burwood East, Melbourne, Victoria.
A self-service coin laundry offersfamilies and individuals whom do not have the time or resources to undertaketheir laundry at home. The operating hours are 6AM to 10PM (13 hour), theoperating hours were selected as it enables any last moment washing and dryingbefore school and work. By operating to 10PM, it provides the customers withflexibility as some work to late hence, it allows those to still be able tocomplete their laundry. The long operating hours are made possible as there areno supervision staff required.The business structure chosen is partnership, by selectingpartnership it allows the business to be easily established and has minimalstartup cost as the owners of this business has no previous experience. By havingtwo business owners, they are able to provide more capital to startup thebusiness and will also have a greater borrowing capacity. By operating as apartnership, the owners have an opportunity for income splitting.
This allows moretax savings for the company hence, greater profit for the owners. Despite beinga partnership, the business affairs of the owners are private. Given that thebusiness structure does not work out, it is easier to change the businessstructure in the future. The ultimate goal of this business is to obtain profit, however asthe proposed business is of a small structure it is inevitable that thebusiness may make no profit over the first two years. The short-term goal ofthe business is to make no profit loss whilst establishing a consistent andlarge customer base. As the business continues to operate and has anestablished customer base, the long-term goal is to make a profit margin of 35%of the annual gross income. However, for all business an exit strategy isrequired.
Therefore, the exit strategy is straightforward, first the leaseneeds to be cancelled followed by terminating of the equipment. The exitstrategy will not be written in this report as this report only outlines theinitial twelve-month period. MarketingThis particular business has no products which can be sold however,the ‘product’ that is offered is in the form a service. The service that issold on the premises is cleaning and drying of laundry in an affordable andflexible environment.
The primary target of customer demographics are peopleaged 18-35. The age chosen was based on the average lifestyle of citizens inMelbourne. People whom are older than the age of 30 generally has settled downwith a family. However, it might not be stable within the first few yearshence, it is possible that they will still use this service. The customer base for this business will be residents of the localvicinity, which can be accessed via walking or a short drive. Currently inAustralia there are no established franchises for this business market hence,there are no large competitors present. The real competitors of coin laundromatservices are other local coin laundromat services. As the primary customer baseare young individuals therefore, the use of modern technology is the best wayto advertise and promote the business.
Social media will be the primary sourceof advertisement, the use of Facebook, Instagram and Twitter are the best formsto communicate with the young individuals. As they spend most of their time onsocial media, the easiest way to attract a customer base is through socialmedia. Operation As this business is a self-operated service, there are noorganizational structure or staff members needed in this business. As there aremultiple owners, the maintenance required for this business will be carried outby the owners. This also maximizes the profit of this business as no additionalcosts are required for staff wages.
In terms of regulation considerations, theonly regulation needed is the license to operate the business. The otherconsideration needed are health and safety regulations, this can be maintainedby the owners through daily cleaning of the vicinity. In order for the businessto run smoothly, professional advisories are required.
For the proposedbusiness: Plumber, electrician and maintenance man are all required. These arewhat is required for the ‘external’ side of the business however, for the’internal’ side of the business an accountant will be required to document thetransactions of the business. The location of the business was selected based on the demographiclocation as well as accessibility. As Deakin University is located in theBurwood area, there will be a number of student accommodation. Which is wherethe primary customer base is situated.
The vicinity of the business will beleased, once a location is obtained four steps will need to be taken prior tocommencing operation of the business: Renovation of the vicinity, apply for thelicensing of the business, install security systems and purchase of equipment.The required equipment are: Drying machines, washing machines, seats/sofas andtables. These are all required for the business to be successful as they arenecessities. The coin laundromat service will apply a variety of sustainabilitydevices in order to cut down the operation cost as well as preserve theenvironment. Energy consumption and water usage will be a large sum of theoperation cost hence, the machines purchased will need to be within therequired consumption level.
BudgetsIn terms of capital, four elements will make up the capital cost:plumbing, license, renovation and equipment. After settling down with thevenue, the first step is to renovate the vicinity into a modern atmosphere inhopes to draw the attention of the young individuals as they are the primarycustomer base. During that process, the plumbing system will also be installedin hopes to maximize the area of the venue. Once the interior of the buildingis completed, the license required to operate the business will then be appliedfor. Given that the license has been successfully applied and the business isready to begin operating, the equipment will then be bought and fitted in.
The ideal load weight for the washing machine and drying machine areeight kilograms, currently there is a bundle deal at Harvey Norman with thebundle costing $1313 (Harvey Norman Online, 24th January 2018) forboth the dryer and washing machine. No negotiations have been made regardingthe machines, it is believed that since a large number of machines are requiredthe price of the bundle can be further discounted. However, for the purpose ofbudgeting the price will remain constant with the information given. For thepurpose of calculation, the figure of the machine bundle will be $1350. Theplan for purchase of equipment is eight of each machine. Therefore, the sum ofthe machines will be $10,800. Two tables will then be purchased from IKEA for$129 (IKEA Online, 24th January 2018).
Lastly, two sofas will berequired and purchased from Kogan for $79 (Kogan.com, 24th January2018). The total cost for equipment will be $11,216, which will be rounded upto $11,250. The pricing of the service will be determined by the time used. Uponinvestigating the average pricing of the services, the final set price for thewashing machine is settled at $1 for five minutes, the dryer will be $1 forfour minutes. A difference between the proposed laundromat will be theincorporation of credit cards.
All coin laundromats only accept coins for theirservices however, as the target customer base are younger individuals theincorporation of credit cards will make the transactions easier. No monthlyinventory purchases are required for the selected business however, there willbe monthly costing services such as electricity, water and gas bills. These areall under utilities, the other costing service will be repairs of machine.However, there is no schedule for maintenance hence, the sum will be averaged outover the year. There are two different costs for the operation of this business,direct and indirect costs. Direct costs for this business will be theadvertisement and equipment. As the advertisement is mainly through the use ofsocial media (Facebook, Instagram and Twitter) the ranging cost will be from$1,000 to $20,000 per month (Content Factory, Retrieved 24th January2018). However, this is through the use of sponsorship services.
As the companyis of smaller scale, the sponsorship services will not be used on Instagram andTwitter as it is not cost efficient. The only sponsorship used will be fromFacebook hence, the expected monthly cost will be $600 per month. The directcost will be $11,850 The indirect cost is organized into three separate categories:Insurance, maintenance and rent.
The rent has been deemed $4,500 per month bycomparing similar properties in the area. The maintenance cost is difficult topredict as there are different variables, on average the maintenance cost isexpected to be $500 per month. Lastly, the Insurance is expected to be 10% ofthe equipment cost as that is what the owners chose to insure. Hence, the costof insurance will be $1125FundingNeedsBefore the commencement of the company, a rough estimate for thecapital is needed. Currently, the owners are able to contribute $200,000 eachtherefore, the sum of the contribution will be $400,000. The estimated capitalis $375,000.
The capital is split into two sections, pre and post operation ofthe business. $250,000 is required prior to the commencement of the business.The following $375,000 will be required for the initial cost for the business. In terms of ongoing costs for the business, it is separated to threesections, maintenance, insurance and utilities. The insurance will be thelargest sum required at $2,500 per month followed by the maintenance at $500per month and insurance being $1125 per month. As stated previously, no staffattendance is required. Therefore, no operating cost will be spent on staff wages.As stated previously, the capital provided from the owners are enough to coverthe operating costs due to the laundromat service being a small and cheapoption.
The time funding needed for this business is minimal, due to thiscompany being self-service no supervision is required. Hence, the onlyrequirement for time funding is the collection of money and cleaning of thevicinity at a daily basis. Given the circumstances, opening a coin laundromat service will nothelp the owners gain wealth in rapid succession. It is evident through theindustry reports (IBIS World, Retrieved 24th January 2018) that coinlaundry services are an easy industry to enter and operate. However, since theoperation of this industry it relatively easy the disadvantage of this industryis the profit margin. Despite not needing a fund to operate this service, theprofit gained from this business is not a large sum.
ImplementationTimetable Timeline Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Utilities Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Loan Yes Loan Repayment Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Renovation Yes Machine Maintenance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Rent Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Business Insurance Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Security Systems Yes Licensing Fee Yes An implementation table illustrates what fees are required duringwhich period. This allows the owners to have a rough estimate on what needs tobe paid and when it needs to be paid. By having a schedule, they are able tomanage the funds in a more efficient manner hence, they will be able to pay thefees at the required time. It is evident through the implementation table thatthe initial month is where the most operating costs are required as there are afew once off payments. Despite illustrating what is required to be paid off,there will always be unexpected operating costs therefore, it is important toalways have a secondary option to pay the fees.
ConclusionThe laundromat industry is a small industry whichmeans there is little risk to enter the market. However, at the same time theprofit will be relatively lower compared to other industries. So prior tooperating the business, the profit expectation for this business should belower than others. For this business to operate smoothly, it needs to be wellmanaged as this business is all self-service. Meaning there are no staff on thepremises to supervise. As the attention required to operate the business is