Universal Laundromat
Executive Summary
Opportunity
Problem
Many urban residents lack access to in-home laundry facilities, and existing laundromats may not provide a pleasant, efficient environment for customers. Additionally, environmentally conscious customers are seeking sustainable laundry options that minimize water and energy waste.
Solution
Universal Laundromat provides a clean, modern, and comfortable space equipped with energy-efficient washing machines and dryers. We strive to create a welcoming atmosphere with customer-focused amenities, while also promoting environmentally friendly practices.
Market
It’s been shown that the best method of advertising is through word-of-mouth. No major newspaper ad campaign is planned. However, we shall run weekly specials. In addition, we shall have an incentive program for referrals. Those customers who refer someone else to the store will be rewarded with two free washes, and the referee will receive an introductory gift of a free wash. In addition, we will ensure a clean environment, reliable machines, and friendly, prompt services.
Competition
Universal Laundromat would like to set itself apart from other laundromats that may offer only one or two services. Although the focus of Universal Laundromat is a washing and drying service, we do wish to offer our clients the convenience of these other services in one location. Those services include folding and potentially pick-up/delivery service, as well as online reservation and membership for pick-up and delivery. Most importantly, it’s our convenience that sets us apart from the competition.
Why Us?
Universal Laundromat is a full-service coin-op laundry (washing, drying, and optional folding) service dedicated to consistently providing high customer satisfaction by rendering reliable machines and furnishing a clean, enjoyable atmosphere at a competitive price/value relationship.
Expectations
Forecast
It is very important to note that the minimum monthly amount of loan payback should decrease as principal decreases. Furthermore, the profit projected in the table is after all expenses and monthly loan payback have been subtracted. All net profit will then be paid as an additional sum to greatly shorten the term of the loan.
Financial Highlights by Year
Financing Needed
Currently, Mr. Mihn Doung owns a small permanent shop in 7th Berryessa Flea Market selling power tools every weekend. That store brings in approximately $4,500/month on average in revenue. The profit averages out to approximately $2,500/month. Considering the potentiality in the coin-op laundromat industry, he’d like to take on further challenges by starting another venture.
To achieve this objective, Universal Laundromat is seeking $150,000 in additional loan financing. This loan will be paid by the cash flow from both the shop at the Flea Market and the laundry business, and will be collateralized by the assets of the business and steady income it brings along with an initial $75,000 down payment, and backed by the character, experience, and personal guarantees of the owner.
Opportunity
Problem & Solution
Problem Worth Solving
Every person needs clean clothes. Not every family can afford a washer and dryer or laundry soap.
Our Solution
Universal Laundromat is a full-service coin-op laundry (washing, drying, and optional folding) service dedicated to consistently providing high customer satisfaction by rendering reliable machines and furnishing a clean, enjoyable atmosphere at a competitive price/value relationship.
Our Mission: To provide convenient, clean, and friendly laundry service.
Our Motto: "Professional, convenient, friendly service and competitive pricing"
Target Market
Market Size & Segments
Universal Laundromat’s target market is every household that needs laundromat services within the immediate area of east San Jose. There is no market segmentation strategy associated with this potential market. The Market Analysis table indicates the estimated number of potential customers and their growth rate.
Competition
Current Alternatives
It’s been shown that the best method of advertising is through word-of-mouth. No major newspaper ad campaign is planned. However, we shall run weekly specials. In addition, we shall have an incentive program for referrals. Those customers who refer someone else to the store will be rewarded with two free washes, and the referee will receive an introductory gift of a free wash. In addition, we will ensure a clean environment, reliable machines, and friendly, prompt services.
Our Advantages
Universal Laundromat would like to set itself apart from other laundromats that may offer only one or two services. Although the focus of Universal Laundromat is a washing and drying service, we do wish to offer our clients the convenience of these other services in one location. Those services include folding and potentially pick-up/delivery service, as well as online reservation and membership for pick-up and delivery. Most importantly, it’s our convenience that sets us apart from the competition.
Keys to Success
Keys to Success
The keys to success in our business are:
- Location: the potential business is to be located in a nice small shopping center of a poor to lower-middle class, ethnically Mexican neighborhood, where it’s the closest and most convenient place to get services. In addition, there are two apartment complexes located nearby. In addition to being the sole laundromat in this neighborhood and surrounded by residences, there is no potential for a competitor.
- Convenience: offering clients services ranging from full-service washing and drying to optional folding, and extended business hours.
- Environment: providing an environment conducive to giving clean, friendly, and professional service.
- Reputation: long-term reputation resulting from friendly, professional service will encourage customers to return.
Execution
Marketing & Sales
Marketing Plan
It’s been shown that the best method of advertising is through word-of-mouth. No major newspaper ad campaign is planned. However, we shall run weekly specials. In addition, we shall have an incentive program for referrals. Those customers who refer someone else to the store will be rewarded with two free washes, and the referee will receive an introductory gift of a free wash. In addition, we will ensure a clean environment, reliable machines, and friendly, prompt services.
Operations
Locations & Facilities
The laundromat is located in San Jose, California. It will utilize 1,500 square feet. The location is strategically situated on one of the busiest streets in East San Jose. More specifically, it’s located in a small attractive shopping center next to the poor to lower-middle class homes; therefore, there is NO possible competitor (after very careful examining). In addition, there are two apartment complexes located nearby. Surrounding it, there is a Mexican neighborhood whose residents get most of their services and needed goods in this plaza where the laundromat is located.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Review Q1
|
Mar 09, 2020 | |
|
Review Q2
|
June 05, 2020 | |
|
Review Q3
|
Sept 06, 2020 | |
|
Review Q4
|
Dec 05, 2020 |
Key Metrics
Our key metrics are:
- # of reviews we receive, we shall especially pay attention to the locals
- # of people who walk in verse make a point of calling to see if we are in
- the cost of running the machines
Company
Overview
Ownership & Structure
The business is managed by the owner, who has extensive leadership and management skills as well as an innovative and creative character. Unlike most laundromat businesses, Universal Laundromat will have an on-site staff person(Maintenance/Cashier) dedicated not only to store and machine maintenance but who also acts as a cashier to the retail business within the laundromat. As part of the management philosophy, this Maintenance/Cashier person will be carefully evaluated for friendliness, professionalism, efficiency, and honesty. The salaries are shown in the personnel plan table. As Mr. Mihn Duong already has a steady income from his power tool shop, his salary will be less than what would be expected if this was his sole source of income.
Team
Management Team
Minh Duong is an ambitious, hardworking, philosophical leader and businessman. He has extensive business experience, and knowledge in various fields including retail sales, service and the Internet industry. Over the years, he has started various small businesses ranging from offline retail sales of a wide variety of products and services to online hosting services. He has extensive leadership skills as he had been elected to be President of five different clubs in High School. In college, Minh had founded two organizations at the University of California, Berkeley. In addition, he had also been elected to various leadership roles such as President and Vice-president of three different large organizations with membership over 500 members. School-wide, Minh had been fortunate to be elected by the student body of the university to be a Senator in the student government. During his term of office, he headed the Finance Committee that dealt with over $500,000 in student fund allocation. Moreover, he also headed the Student Affairs Committee as well as the Computing Facilities of the student government. Realizing his service and efficiency, fellow senators elected him to the board of directors of the Berkeley Student Foundation, the largest scholarship foundation for minority students sponsored by the Associated Students of the University of California. There, Minh dealt with the decision process of fund allocations to top high school minority students throughout the country. In the business world, Minh currently owns a permanent Flea Market Power Tools Shop at the Berryessa Flea Market in San Jose, CA. He is also the President/CEO of a small start-up Internet company providing business solutions to other businesses. He is currently working with five other colleagues at his college on that business. In academia, he is currently working with Professor Bradford Delong, a former Bill Clinton’s Foreign Policy Advisor Committee member, as a Research Assistant on a book titled,
A Time Series of Changes Due to Globalization
. Independently, he is currently working on a research paper titled, "Is Chinese Reform Sustainable? Is It Different?"
Minh is currently a fifth year Pre-med, Pre-MBA student with a triple major in Economics, Mathematics, and Statistics. He is currently 22 years old. He came to the U.S. on Nov. 7, 1990 from Viet Nam. After finishing his college education, he plans to achieve an MBA from Harvard Business School and an MD from John Hopkins Medical School.
Personnel Table
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Owner | $60,000 | $61,200 | $62,424 |
| Cashier | $42,000 | $42,840 | $43,697 |
| Totals | $102,000 | $104,040 | $106,121 |
Financial Plan
Forecast
Key Assumptions
Key Assumptions:
- People need and appreciate clean clothes
- People will be willing to pay 20 dollars to have someone help with the wash and fold
- Not everyone can afford a washer and dryer
- Those who can’t afford them still need somewhere to do clothes.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
We estimate $30K in startup expenses, which are mainly location fix-up, some signage, some legal.
We estimate $40,000 in purchasing assets including the appliances, some furniture and fixtures.
Sources of Funds
Mr. Duong will invest $80,000 of savings. He will also have $8,000 in accounts payable, left over from some assets purchased. The plan includes a 10-year SBA guaranteed loan for $75,000.
If all goes according to plan, he will be able to pay off the SBA loan early, in the third year. However, that detail is not included in the plan.
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $298,200 | $384,000 | $442,000 |
| Direct Costs | $119,310 | $154,488 | $178,268 |
| Gross Margin | $178,890 | $229,512 | $263,732 |
| Gross Margin % | 60% | 60% | 60% |
| Operating Expenses | |||
| Salaries & Wages | $102,000 | $104,040 | $106,121 |
| Employee Related Expenses | $20,400 | $20,808 | $21,224 |
| Rent | $30,000 | $30,000 | $30,000 |
| Gas / Electric | $8,946 | $11,520 | $13,260 |
| Marketing expenses | $1,139 | $700 | $900 |
| Insurance | $5,964 | $7,680 | $8,840 |
| Maintenance | $5,964 | $7,680 | $8,840 |
| Amortization of Other Current Assets | $0 | $0 | $0 |
| Total Operating Expenses | $174,413 | $182,428 | $189,185 |
| Operating Income | $4,477 | $47,084 | $74,547 |
| Interest Incurred | $2,887 | $2,633 | $2,370 |
| Depreciation and Amortization | $5,714 | $5,715 | $5,714 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $5,192 | $9,969 |
| Total Expenses | $302,324 | $350,456 | $385,506 |
| Net Profit | ($4,124) | $33,544 | $56,494 |
| Net Profit/Sales | (1%) | 9% | 13% |
Projected Balance Sheet
| Starting Balances | 2020 | 2021 | 2022 | |
|---|---|---|---|---|
| Cash | $15,000 | $32,593 | $67,558 | $128,064 |
| Accounts Receivable | $0 | $0 | $0 | |
| Inventory | $12,874 | $14,856 | $14,856 | |
| Other Current Assets | $2,000 | $2,000 | $2,000 | $2,000 |
| Total Current Assets | $17,000 | $47,467 | $84,414 | $144,920 |
| Long-Term Assets | $40,000 | $40,000 | $40,000 | $40,000 |
| Accumulated Depreciation | ($5,714) | ($11,429) | ($17,143) | |
| Total Long-Term Assets | $40,000 | $34,286 | $28,571 | $22,857 |
| Total Assets | $57,000 | $81,753 | $112,985 | $167,777 |
| Accounts Payable | $8,000 | $35,016 | $37,327 | $40,018 |
| Income Taxes Payable | $0 | $1,456 | $2,496 | |
| Sales Taxes Payable | $8,082 | $8,478 | $9,783 | |
| Short-Term Debt | $6,221 | $6,475 | $6,738 | $7,013 |
| Prepaid Revenue | ||||
| Total Current Liabilities | $14,221 | $49,573 | $53,999 | $59,310 |
| Long-Term Debt | $68,779 | $62,304 | $55,566 | $48,553 |
| Long-Term Liabilities | $68,779 | $62,304 | $55,566 | $48,553 |
| Total Liabilities | $83,000 | $111,877 | $109,565 | $107,862 |
| Paid-In Capital | $80,000 | $80,000 | $80,000 | $80,000 |
| Retained Earnings | ($106,000) | ($106,000) | ($110,124) | ($76,580) |
| Earnings | ($4,124) | $33,544 | $56,494 | |
| Total Owner’s Equity | ($26,000) | ($30,124) | $3,420 | $59,914 |
| Total Liabilities & Equity | $57,000 | $81,753 | $112,985 | $167,777 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | ($4,124) | $33,544 | $56,494 |
| Depreciation & Amortization | $5,714 | $5,714 | $5,714 |
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | ($12,874) | ($1,982) | $0 |
| Change in Accounts Payable | $27,016 | $2,311 | $2,691 |
| Change in Income Tax Payable | $0 | $1,456 | $1,040 |
| Change in Sales Tax Payable | $8,082 | $396 | $1,305 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $23,814 | $41,440 | $67,245 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | $253 | $264 | $275 |
| Change in Long-Term Debt | ($6,475) | ($6,738) | ($7,013) |
| Net Cash from Financing | ($6,221) | ($6,475) | ($6,738) |
| Cash at Beginning of Period | $15,000 | $32,593 | $67,558 |
| Net Change in Cash | $17,593 | $34,965 | $60,506 |
| Cash at End of Period | $32,593 | $67,558 | $128,064 |
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