The owners of this business has no previous experience.

The proposed business plan will be over a
course of twelve months, the business proposed is a coin laundromat service. The
main customer base aimed are young adults whom are currently studying or who
have just begun working. The area chosen is in Burwood East in Melbourne,
Victoria. The location chosen is extremely close to Deakin University
therefore, there will be a number of student accommodation within the
designated area. Thus, gaining interested from the customer base that are being
targeted. The goal is to provide a service for those who do not have the time
or resources to complete their daily necessity of washing their clothes, whilst
providing a modern twist to the coin laundromat which will attract more
customers. The owner has no previous experience with businesses hence, the coin
laundromat was chosen. Coin laundromat 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1     Contents

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Executive
Summary. 2
Background. 4
Marketing. 5
Operation. 6
Budgets. 7
Funding Needs. 8
Implementation Timetable. 10
Conclusion. 10
Bibliography. 11
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Background

The proposed business will be a self-operated coin laundromat, the
location chosen is near student accommodation in Burwood East, Melbourne,
Victoria. A self-service coin laundry offers families and individuals whom do
not have the time or resources to undertake their laundry at home. The
operating hours are 6AM to 10PM (13 hour), the operating hours were selected as
it enables any last moment washing and drying before school and work. By
operating to 10PM, it provides the customers with flexibility as some work to
late hence, it allows those to still be able to complete their laundry. The
long operating hours are made possible as there are no supervision staff
required.

The business structure chosen is partnership, by selecting
partnership it allows the business to be easily established and has minimal
startup cost as the owners of this business has no previous experience. By
having two business owners, they can have more capital to startup the business
and will also have a greater borrowing capacity. By operating as a partnership,
the owners have an opportunity for income splitting. This allows more tax
savings for the company hence, greater profit for the owners. Despite being a
partnership, the business affairs of the owners are private. Given that the
business structure does not work out, it is easier to change the business
structure in the future.

The ultimate goal of this business is to obtain profit, however as
the proposed business is of a small structure it is inevitable that the
business may make no profit over the first two years. The short-term goal of
the business is to make no profit loss whilst establishing a consistent and
large customer base. As the business continues to operate and has an
established 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 is
required. Therefore, the exit strategy is straightforward, first the lease
needs to be cancelled followed by terminating of the equipment. The exit
strategy will not be written in this report as this report only outlines the
initial twelve-month period.

 

 

 

 

 

 

 

 

 

Marketing

This particular business has no products which can be sold however,
the ‘product’ that is offered is in the form a service. The service that is
sold on the premises is cleaning and drying of laundry in an affordable and
flexible environment. The primary target of customer demographics are people
aged 18-35. The age chosen was based on the average lifestyle of citizens in
Melbourne. People whom are older than the age of 30 generally has settled down
with a family. However, it might not be stable within the first few years
hence, it is possible that they will still use this service.

The customer base for this business will be residents of the local
vicinity, which can be accessed via walking or a short drive. Currently in
Australia there are no established franchises for this business market hence,
there are no large competitors present. The real competitors of coin laundromat
services are other local coin laundromat services. As the primary customer base
are young individuals therefore, the use of modern technology is the best way
to advertise and promote the business. Social media will be the primary source
of advertisement, the use of Facebook, Instagram and Twitter are the best forms
to communicate with the young individuals. As they spend most of their time on
social media, the easiest way to attract a customer base is through social
media.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operation

As this business is a self-operated service, there are no
organizational structure or staff members needed in this business. As there are
multiple owners, the maintenance required for this business will be carried out
by the owners. This also maximizes the profit of this business as no additional
costs are required for staff wages. In terms of regulation considerations, the
only regulation needed is the license to operate the business. The other
consideration needed are health and safety regulations, this can be maintained
by the owners through daily cleaning of the vicinity. In order for the business
to run smoothly, professional advisories are required. For the proposed business:
Plumber, electrician and maintenance man are all required. These are what is
required for the ‘external’ side of the business however, for the ‘internal’
side of the business an accountant will be required to document the
transactions of the business.

The location of the business was selected based on the demographic
location as well as accessibility. As Deakin University is located in the
Burwood area, there will be a number of student accommodation. Which is where
the primary customer base is situated. The vicinity of the business will be
leased, once a location is obtained four steps will need to be taken prior to
commencing operation of the business: Renovation of the vicinity, apply for the
licensing of the business, install security systems and purchase of equipment.
The required equipment are: Drying machines, washing machines, seats/sofas and
tables. These are all required for the business to be successful as they are
necessities. The coin laundromat service will apply a variety of sustainability
devices in order to cut down the operation cost as well as preserve the
environment. Energy consumption and water usage will be a large sum of the
operation cost hence, the machines purchased will need to be within the
required consumption level.

 

 

 

 

 

 

 

 

 

 

 

 

Budgets

In terms of capital, four elements will make up the capital cost:
plumbing, license, renovation and equipment. After settling down with the
venue, the first step is to renovate the vicinity into a modern atmosphere in
hopes to draw the attention of the young individuals as they are the primary
customer base. During that process, the plumbing system will also be installed
in hopes to maximize the area of the venue. Once the interior of the building
is completed, the license required to operate the business will then be applied
for. Given that the license has been successfully applied and the business is
ready to begin operating, the equipment will then be bought and fitted in.

The ideal load weight for the washing machine and drying machine are
eight kilograms, currently there is a bundle deal at Harvey Norman with the
bundle costing $1313 (Harvey Norman Online, 24th January 2018) for
both the dryer and washing machine. No negotiations have been made regarding
the machines, it is believed that since a large number of machines are required
the price of the bundle can be further discounted. However, for the purpose of
budgeting the price will remain constant with the information given. For the
purpose of calculation, the figure of the machine bundle will be $1350. The
plan for purchase of equipment is eight of each machine. Therefore, the sum of
the machines will be $10,800. Two tables will then be purchased from IKEA for
$129 (IKEA Online, 24th January 2018). Lastly, two sofas will be
required and purchased from Kogan for $79 (Kogan.com, 24th January
2018). The total cost for equipment will be $11,216, which will be rounded up
to $11,250.

The pricing of the service will be determined by the time used. Upon
investigating the average pricing of the services, the final set price for the
washing machine is settled at $1 for five minutes, the dryer will be $1 for
four minutes. A difference between the proposed laundromat will be the
incorporation of credit cards. All coin laundromats only accept coins for their
services however, as the target customer base are younger individuals the
incorporation of credit cards will make the transactions easier. No monthly
inventory purchases are required for the selected business however, there will
be monthly costing services such as electricity, water and gas bills. These are
all under utilities, the other costing service will be repairs of machine.
However, there is no schedule for maintenance hence, the sum will be averaged
out 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 the
advertisement and equipment. As the advertisement is mainly through the use of
social media (Facebook, Instagram and Twitter) the ranging cost will be from
$1,000 to $20,000 per month (Content Factory, Retrieved 24th January
2018). However, this is through the use of sponsorship services. As the company
is of smaller scale, the sponsorship services will not be used on Instagram and
Twitter as it is not cost efficient. The only sponsorship used will be from
Facebook hence, the expected monthly cost will be $600 per month. The direct
cost 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 by
comparing similar properties in the area. The maintenance cost is difficult to
predict as there are different variables, on average the maintenance cost is
expected to be $500 per month. Lastly, the Insurance is expected to be 10% of
the equipment cost as that is what the owners chose to insure. Hence, the cost
of insurance will be $1125

Funding
Needs

Before the commencement of the company, a rough estimate for the capital
is 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 $375,000
will be required for the initial cost for the business.  

 

As the prediction over the course of the year will vary from month
to month, the estimate of $120,228 will be needed for the year. The cost is
split into multiple sections: first being Utilities –  $2,300 per month, second being Machine
maintenance – $300 per month, third being Insurance – $300 per month liability
cost of $500,000 which includes both the property as well as machines. Lastly
being Loan repayments – $8,595 which is a fixed cost. As the costs above are
all running costs meaning it will be needed every month, the business is
hopeful to use the profit earned from the month prior to fund the running cost
of the following month.

As the business proposed offers only services and not goods, the
labor requirement will differ greatly from other businesses. As a self-operated
laundromat, it requires little to no attendance throughout the day. As a
business owner, they must be able to check in daily for at least an hour to
clean up for the day as well as collect the coins from the machines. The main
service provider in this business are the machines, in order for the business
to operate accordingly the machines must be functional. Hence, it is the owners
responsibility 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 as
possible.

Prior to opening a business, the owners must evaluate their
financial situation. The amount of money to operate a business is quite high
and in usual cases, most owners must loan money from the bank. In the proposed
business, the owners will need to loan money from the bank in order to
successfully open the laundromat. Each owner will contribute a total of $50,000
each (two person partnership). The first half of the money will be used for the
capital, the second half will be used for the running costs. As the estimated
capital is $350,000 an additional $250,000 will need to be loaned from the
bank. 

 

 

 

 

 

 Implementation
Timetable

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, by
having the implementation timetable it clearly indicates to loaners or others
viewing the business plan the timeframe in which the funds are needed. The loan
provided in the timeline represents the security residential property which
does not include the money needed to repay the loan. It is evident through the
table that all funds will be needed in the first month therefore, the total sum
needed in the first month or prior to opening the business is where majority of
the money will be inputted. Afterwards, the monthly payments are all fixed
hence the owners will have a good indication on when and how much fund is
needed. Machine maintenance fee will occur irregularly hence, the proposed fees
throughout the year will be averaged out monthly.

Conclusion

As the laundromat market is relatively
small, the risk of entering this industry is low however the profit made is
also low. In order to manage the business appropriately, knowing the local
demographic is important. As Oakleigh East is a safe area, the business will be
much easier to manage. As the laundromat is self-service, the labor needed to
manage the business is extremely low. The business must be inspected daily for
an hour to clean up the business as well as collecting of the money. As the
labor is little to none it is still possible for the owner to have a day job
due to the laundromat not needing attention for the whole day. The proposed
business is a low risk low reward business, the attention required to operate
the business is minimal therefore the profit earned is low.

 

 

 

 

 

Bibliography

Entrepreneur, 2018 Starting a Business, Retrieved on 24/1/18

Small Business, 2018 Laundromat, Retrieved on 24/1/18

Huebsch, Investor’s guide 2018, Retrieved on 24/1/18

Content Factory, 2018, Retrieved on 24/1/18

https://www.contentfac.com/how-much-does-social-media-marketing-cost/Retrieved
on 2/5/17

Harvey Norman, Australia, Retrieved on 24/1/18

https://www.harveynorman.com.au/haier-8kg-washing-machine-condenser-dryer.html

IKEA, Australia, 2018, Retrieved on 24/1/18

http://www.ikea.com/au/en/catalog/products/S69047156/Retrieved
on 1/5/17

Kogan, Australia, 2018, Retrieved on 24/1/18

https://www.kogan.com/au/buy/surefit-pearson-sofa-cover-3-seater-slate-surefit/?utm_source=google=product_listing_ads=EAIaIQobChMIvd_6zaL12AIVE5O9Ch0zeATiEAYYBCABEgJhwfD_BwE