Express Dry Cleaner Service Analysis - Essay Example

(First 24 April Business Plan Executive Summary Express Dry Cleaner Service will venture out business in dry cleaning. The enterprise will utilize state-of-art dry cleaning machines to ensure quality of the service offered to various clients. Since population is growing fast on the Deerfield Estate (London City), this urban community will be in need of express dry cleaning services. People are expected to be rushing on deadlines, business meetings and the like. We will start this dry cleaning service on June 1, 2013. It will be registered on the Business Bureau as a partnership business. I and my partner will be both managing partners. We will hire few employees that will be assigned to deliver forecasted volume of orders. Our express dry cleaning service will cater customers on various services related to dry cleaning such as laundry and garment alteration that will be delivered door-to-door using a business van. Door-to-door delivery can attract more clients to use our service because it is more convenient to them. In the long run, we can attract more customers and get higher volume of orders. Competitors on the business location are currently providing one-stop services, so we have seen a great potential. Employees are our number one targeted customers for this express dry cleaning service. As per observation, employees are always in a hurry – unfinished paper works or urgent meetings. Next to our list are employers and self-employed individuals like working Mom and Dad on the comfort of their living room. This people might have too much on their plates that they cannot able to dry clean their clothes and garments all by themselves – hence, they need us who can deliver a quality service in an express way. In addition, our customers have two options for payments – cash on delivery or monthly billing. If they choose the latter, we will send Statement of Accounts (SOA) after the end of each month and the amount will be debited either on one of the following: bank account, credit or debit card. This payment mode is applicable for customers who want us to be their regular service provider. This option can also yield a higher conversion rate because customers will find it easy to get billed monthly than to get cash from their pockets per transactions. Instead of just using our services once, they most likely will consider making us their regular express dry cleaning service provider because of the payment convenience. Quality is king. We believe on that, and we will never compromise quality with quantity. As an express dry cleaning service provider, we will ensure that our delivery will be always on the time frame. We also plan to provide extra services for our customers who exceed a certain amount of kilos per dry cleaning. We will also offer discounts to customers who can refer their family, friends, office mates or neighbors to our dry cleaning establishment. Providing a quality services together with exciting freebies like the referral program can attract more customers to use our service. Our top rated service will yield repeat orders in higher volume, more referral, and customer patronage in the long run! We will stand strong with our goal to over deliver and give a guarantee to customer satisfaction. More so, our sales forecast over the first year is ? 40,680 and we believe that it will increase in the next business years. Our projection of the net profit for the first year is good enough to continue operation, and we expect the same and much better projection in the coming years to come. The Reason to Open the Business in London As stated above, working individuals are in a hurry every single business day. Urban dwellers are working to thrive. People come and go from their homes to their respective offices or work places to perform various job assignments and 24/7 has become too short for them to do household chores like dry cleaning. There is a huge market potential for our express dry cleaning service, and our feasibility study have shown that it is 80 to 99 percent lucrative! Office workers will run out of time running their washing machine and do the laundry and ironing. Skilled workers will find time as their major constraint to perform dry cleaning, as well. Even home base workers might find our dry cleaning service more convenient for them. United Kingdom has been busy throughout the year, and we believed on our feasibility study that our dry cleaning service would yield desirable results as presented in the next headings. Digging further, according to the government statistics, there is a significant increase in consumer spending on cleaning and acquiring of clothing. The amount has fallen in 2010 and 2011 due to the economic downturn, however, with the economic improvement in the most recent year, people are expected to spend more on clothing – to go for the hottest fashion, and proportionate to that is the increase of people's expenditure on dry cleaning and laundry services in the UK. On the other hand, another reason why I choose to open our express dry cleaning service in London is competition. Competition in the dry cleaning/laundry business in the Deerfield Estate is not tough. There are about seven other dry cleaners with the major competition coming from the supermarkets offering dry cleaning services, more people prefer door-to-door outlet services as opposed to one stop outlet. Our edge to our competitors is the express delivery of dry cleaned garments and clothing right at our clients’ doorsteps (Lovelock & Wirtz 38). Our specific target location is Deerfield Estate residents who are working in London. The business will be located at the edge of the London city as you start to enter Deerfield in the junction between Gainsborough Road to the north and Medway road to the west (Lovelock & Wirtz 49). The location has a close proximity to the University of Western Ontario, which provides the potential to expand the market to staff and students from the university. Market Segmentation Express Dry Cleaner Service will primarily target employed customers living on the Deerfied Estate. Most of the residents in this location are employed individuals. Specifically, we will segment our market into two in the long term – employed people and students in the University of Western Ontario which is situated one kilometer from our business premise. More or less 70% of the total population of 350,000 are employed which is estimated 86% of them have a full time employment. Households with regular day job will find it convenient to use our service, and they can cut off their bills on electricity. They don't have to dry clean anymore. Goodbye to ironing. They don't have to drive on the nearby corner to pick up their clothing and garments – we will expressly deliver all the dry cleaned stuff like newsletters on their doorsteps. Full time employed people are always rushing on deadlines – unfinished tasks like paper work, assignments and various types of reports to their superiors. This door-to-door express dry cleaning service can give them much comfort and help. Students on dormitories may find our dry cleaning service very helpful so they can concentrate on their studies instead of dry cleaning during the weekends. Students need some recreation, more time in scanning their notes and assignments, lab reports might be too complicated and so they need to sit extra hours in the weekend to refine their works and hypothesis – our express dry cleaning service would provide them convenience and they soon be referring us to their classmates and dorm mates to hire us to be their dry cleaning service provider. Sales Strategy We will penetrate the market by offering them a reasonable low price of our express dry cleaning service, but we would not set it lower than the average market price. In other words, we will not follow the traditional market penetration pricing. We will closely monitor our competitors’ price and make sure that we can make our offer a more attractive service to our customers by giving incentives and freebies as partially outlined above. Although our prices are not lower than the existing dry cleaning services, we believe that customers will positively respond to our discounts and referral programs. Door-to-door delivery with discounts and referral program can convert more volume of orders. Customers are responsive with discounts and xx.99 or xx.50 pricing styles. Customers who will exceed 10 kilos are entitled with 10 to 20 percent discounts. If they can refer more people to use our service, they are also entitled with credits. This credit can be used to pay their bill which is a very favorable offer to them. This credit can be redeemed monthly; however this is not convertible to cash. In addition, we will also utilize very affordable advertising services by buying gigs on Fiverr.com. This site offers various types of advertising programs and we choose leaflet distributions to the Deerfield Estate to promote our service to our targeted market on the specified area. Sales Forecast We expect to receive good numbers of customers to use our service. Our sales forecast says that our sales would increase gradually. The sales forecast will gradually increase from the first month of the business start up and because the business will start in June the business statements for the business will be compiled in the year ending June 2014. However, valuarterly profit and loss accounts will be compiled. The table below summarizes the sales forecast for the first year of our business operations. SALES FORCAST Sales Year 1 Year 2 Year 3 Dry Cleaning ?11,892 ?15,960 ?19,548 Laundry ?18,079 ?24,603 ?31,784 Alteration Services ?10,729 ?9,547 ?8,412 TOTAL SALES ?40,680 ?48,033 ?59,342 Direct Cost of Sales Year 1 Year 2 Year 3 Dry Cleaning ?8,235 ?4,027 ?8,706 Laundry ?9,248 ?4,806 ?5,023 Alteration Services ?2,864 ?2,819 ?1,524 TOTAL DIRECT COST OF SALES ?20,348 ?11,652 ?15,252 Financing of the Enterprise During the pre-start up, the entrepreneurs will seek financing from friends and relatives, whose contribution will be combined with personal savings to cater for the legal procedures required, acquiring relevant skills and finding a suitable location. At start-up, the entrepreneurs will contribute capital from their personal savings. The company will also secure a loan of 2000 pounds payable in a normal payday loan will supplement our capital. The calculation results for the payday loan appear below where interest is calculated on a monthly basis: Initial deposit: ?5.00 Loan payments: ?2,530.76 Balloon payment at the end: ?0.00 Total payable: ?2,531.76 48 monthly payments of: ?52.20 Total interest: ?528.76 Loan amount: ?2000.00 Extra fees: ?25.00 Interest Rate: 12% Effective Annual Rate: 12.68% Potential finish date: April 20, 2017  Break-even Analysis We have calculated the break-even point for our express dry cleaning service and the result is favorable to us. As our revenue will become higher than the break-even point, the enterprise will start generating revenue. Our quality, reliable and express dry cleaning service will attract more customers. Our goal is to give customers’ satisfaction, proportionate to that is a significant increase in the volume of orders. We believe that customer is always right. To know what they want is imperative for success. One of the best way to know what our customers want from us is asking them few questions – in a chit-chat way or a more personal conversation. We believe that making this a personal talk to our clients can give them chance to tell us their genuine feelings about our services. In addition, we are confident that the behavior of the market does not change – they respond to incentive – discounts and referral credits (as pointed in the previous heading). In the long run, we will established a strong relationship to our customers, and they will become the most effective promotional medium we can use to expand our express dry cleaning service in the future – the so called word of mouth promotion. The graph shows that sales will increase by stages over the 12 months, screening a positive tendency of sales. Express Dry Cleaner Service is constantly gaining market share. Gross profit and net profit will also be expected to increase rateably to sales revenue which shows that the business is viable and manages expected results. Projected Balance Sheet The balance sheet of our business has been developed based on accurate and realistic forecasted information of the sales forecast. The table below shows the balance sheet annual figures for the first three years of operation based on “Dry Cleaning Home Delivery Business Plan”: Work Cited Lovelock, Christopher, and Jochen Wirtz. Services Marketing: People, Technology, Strategy (7th Ed). Boston, M: Prentice-Hall/Pearson. 2011. Print. “Dry Cleaning Home Delivery Business Plan.” Bplans.co.uk. Palo Alto Software, LTD, n.d. Web. 24 Apr. 2013 Read More