The proposed business plan will be over acourse of twelve months, 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 Universitytherefore, there will be a number of student accommodation within thedesignated area. Thus, gaining interested from the customer base that are beingtargeted. The goal is to provide a service for those who do not have the timeor resources to complete their daily necessity of washing their clothes, whilstproviding a modern twist to the coin laundromat which will attract morecustomers. The owner has no previous experience with businesses hence, the coinlaundromat was chosen. Coin laundromat is a business that can be run with littleto no experience.
Also, the industry has already matured hence, it will be astable business 1 Contents Executive Summary. 2 Background. 4 Marketing.
5 Operation. 6 Budgets. 7 Funding Needs. 8 Implementation Timetable. 10 Conclusion.
10 Bibliography. 11 BackgroundThe proposed business will be a self-operated coin laundromat, thelocation chosen is near student accommodation in Burwood East, Melbourne,Victoria. A self-service coin laundry offers families and individuals whom donot have the time or resources to undertake their laundry at home.
Theoperating hours are 6AM to 10PM (13 hour), the operating hours were selected asit enables any last moment washing and drying before school and work. Byoperating to 10PM, it provides the customers with flexibility as some work tolate hence, it allows those to still be able to complete their laundry. Thelong operating hours are made possible as there are no supervision staffrequired.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. Byhaving two business owners, they can have more capital to startup the businessand will also have a greater borrowing capacity.
By operating as a partnership,the owners have an opportunity for income splitting. This allows more taxsavings for the company hence, greater profit for the owners. Despite being apartnership, 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 proposed business:Plumber, electrician and maintenance man are all required. These are what isrequired 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 averagedout over 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 the capitalis needed.
Currently, the owners are able to contribute $200,000 each therefore,the sum of the contribution will be $400,000. The estimated capital is $375,000.The capital is split into two sections, pre and post operation of the business.$250,000 is required prior to the commencement of the business. The following $375,000will be required for the initial cost for the business. As the prediction over the course of the year will vary from monthto month, the estimate of $120,228 will be needed for the year.
The cost issplit into multiple sections: first being Utilities – $2,300 per month, second being Machinemaintenance – $300 per month, third being Insurance – $300 per month liabilitycost of $500,000 which includes both the property as well as machines. Lastlybeing Loan repayments – $8,595 which is a fixed cost. As the costs above areall running costs meaning it will be needed every month, the business ishopeful to use the profit earned from the month prior to fund the running costof the following month.
As the business proposed offers only services and not goods, thelabor requirement will differ greatly from other businesses. As a self-operatedlaundromat, it requires little to no attendance throughout the day. As abusiness owner, they must be able to check in daily for at least an hour toclean up for the day as well as collect the coins from the machines. The mainservice provider in this business are the machines, in order for the businessto operate accordingly the machines must be functional. Hence, it is the ownersresponsibility to ensure all machines are working before the start of the day.However, if maintenance is required the issue needs to be solved as soon aspossible.
Prior to opening a business, the owners must evaluate theirfinancial situation. The amount of money to operate a business is quite highand in usual cases, most owners must loan money from the bank. In the proposedbusiness, the owners will need to loan money from the bank in order tosuccessfully open the laundromat. Each owner will contribute a total of $50,000each (two person partnership). The first half of the money will be used for thecapital, the second half will be used for the running costs.
As the estimatedcapital is $350,000 an additional $250,000 will need to be loaned from thebank. 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 The timetable provided shows the when and which funds are needed, byhaving the implementation timetable it clearly indicates to loaners or othersviewing the business plan the timeframe in which the funds are needed. The loanprovided in the timeline represents the security residential property whichdoes not include the money needed to repay the loan. It is evident through thetable that all funds will be needed in the first month therefore, the total sumneeded in the first month or prior to opening the business is where majority ofthe money will be inputted. Afterwards, the monthly payments are all fixedhence the owners will have a good indication on when and how much fund isneeded.
Machine maintenance fee will occur irregularly hence, the proposed feesthroughout the year will be averaged out monthly. ConclusionAs the laundromat market is relativelysmall, the risk of entering this industry is low however the profit made isalso low. In order to manage the business appropriately, knowing the localdemographic is important. As Oakleigh East is a safe area, the business will bemuch easier to manage. As the laundromat is self-service, the labor needed tomanage the business is extremely low.
The business must be inspected daily foran hour to clean up the business as well as collecting of the money. As thelabor is little to none it is still possible for the owner to have a day jobdue to the laundromat not needing attention for the whole day. The proposedbusiness is a low risk low reward business, the attention required to operatethe business is minimal therefore the profit earned is low. BibliographyEntrepreneur, 2018 Starting a Business, Retrieved on 24/1/18