What’s the Plan, Stan?
This owner is hoping for a plan to make a 150% return on his investment. Let’s see how these assumed numbers work for him:
The business plan for a laundromat should begin with a section explaining the goals and purpose for the company, which should also highlight its unique value proposition.
Goals – As a business, it’s likely you’ll have a Financial Goal.
Let’s work it out
If you have 20 machines
In use 20 times a day at $1 per wash
Your expected revenue will be $400 per day.
Capable of 4000 washes between Major Services – a major service costs $500 – at 20 washes per day = every 200 days (less than $1000 per year ie est $20 per week, an overestimate)
Full Machine replacement after 20000 washes = $40,000 – provision for replacement will be $40,000 every 1000 days or 2.74 years or $14958 per year or $287 per week
Capital outlay of $2000 per machine
Rent $200 per week
and utilities $40 per week
+ Insurance is $1700 per year
Buy 20 new machines to start – capital outlay $40,000 under finance for 1 year costs $860 per week at 11% interest (simple interest)
Revenue $2800 per week
Utilities – 40
Insurance – 33
Finance -860 (year 1 only)
Service Fee – 20
Provision for machine replacement – 287 per week
Maintenance $100 per week
Total Revenue $2800
Total Outlays $1540
Profit $1260 per week before tax
If your Financial Goal is a weekly ROI (return on investment) of 150%
What is your investment in this venture? Its $40,000
The figures above are paying off the machines in one year and providing for the purchase of new ones after 1000 washes ie 2.74 years.
After 1 year you have no Finance liability for your investment.
What is your business worth after 1 year?
What difference is there to your business if you choose a Sole Trader business structure vs a Company structure?
In 2.74 years you will have made 1260 per week before tax ie $65.520, fully paid off the machines and have recouped the $40,000 for use either in a new set of machines or a different venture. That’s IF you can sell 400 washes per week.
One way to calculate ROIC is:
65520 / 40000 = 1.64 or 164%
Using these figures you are getting a 165% ROI per year for the first year
Purpose / Unique Value Proposition – This is the aspect that sets the business apart from others
* 24-hour service
* Free wireless Internet access
Market Research – It may be necessary to conduct competitive research in order to choose a value proposition that fills a specific gap left by the other laundromats nearby.
Your competition isn’t your biggest problem as a business person – its consumer demand.
Always consider the 5P’s. Product, Place, Promotion, Price, and People
The competitive analysis also helps create realistic growth projections and expansion plans, which should also appear in the business plan. Its hard to know for sure what your competitor’s costs are but you can make assumptions and this is how everyone does it. We make assumptions with a basis in reality that we can rely on (to a certain degree)
The plan also needs to contain the startup costs of the operation, including renting the operation space, purchasing the washing machines and dryers, and obtaining the appropriate licenses and permits from the county
Business plans also need to include data about the monthly operating costs of the business in order to make revenue projections about obtaining profitability and paying back any pending business loans.
Another important section is the marketing plan, which includes specific actionable steps to promote the company, such as television commercials or special events.
Copyright 2017 Dianne Jewell All Rights Reserved