Nadmar dry cleaners edited 2

Business Plan

Prepared by Fred M’mbololo

BUSINESS PLAN

FOR

NADMAR DRY CLEANERS

(NAKURU, KENYA)

Business Plan


TABLE CONTENTS

1.0 Executive Summary .............................................................. 4

1.1 Objectives……………………………………………………….5

1.2 Mission .................................................................................. 6

1.3 Keys to Success ................................................................... 6

Company Description: ................................................................ 7

Form of Ownership: .................................................................... 8

3.0 Services ................................................................................ 8

Operations plan .......................................................................... 8

4.0 Market Analysis Summary .................................................. 10

4.1 Market Segmentation .......................................................... 11

4.2 Target Market Segment Strategy........................................ 11

4.3 Service Business Analysis .................................................. 12

4.3.1 Competition and Buying Patterns .................................... 13

5.0 Strategy and Implementation Summary ............................. 18

5.1 Competitive Edge ............................................................... 20

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5.2 Marketing Strategy .............................................................. 21

5.3 Sales Forecast .................................................................... 23

6.0 Management Summary ...................................................... 24

6.1 Personnel Plan ................................................................... 25

7.0 Financial Plan ..................................................................... 27

Balance sheet ........................................................................... 31

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1.0 Executive Summary

Nadmar drycleaners has been in business since 2002 and has

several branches across Nakuru & its environs. The sole purpose

of the business at that time was to operate a full-service dry

cleaning plant, with quality and customer service playing key roles

in the plan of success. This proved to be a successful formula as

within two years the business grew into the best expert cleaning

franchise located in Nakuru & its environs. In 2003, a second full-

service plant was opened. Expansion continued in 2003

Customers can choose payment either at the time of each

delivery, or by monthly credit card billing. Nadmar drycleaners

sends statements to each contract customer, itemizing service

fees and the charge for the service to their credit cards for

payment, at the end of each month.

The business provides a new door-to-door dry cleaning, laundry,

and alteration service in Nakuru & Nyahururu that surely will

attract customer attention. Working customers may find this

service is convenient for them and want to try it. If they are

satisfied with the service quality they are likely to become repeat

customers.

When the patronage happens continuously, they become loyal

customers of the service. These customers will recommend

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Nadmar drycleaners to their friends and co-workers. As more and

more customers use this service, Nadmar drycleaners Service's

image is enhanced and it will gain more and more market share.

Sales forecast gradually increase over the year 2006 and

comprise total sales of Kshs 3,247,000 per annum. We projected

positive net profits in the first year of operations and also that in

the subsequent years that the Turnover, Gross Profits and Net

Profits will increase significantly.

1.1 Objectives

In providing laundry and garment alteration services for

customers in Nakuru & Nyahururu area, Nadmar Dry Cleaning

Service aims to:

Attain a 30 percent market share by the end of the first year

Have first year total sales in excess of 3,240,000

Producing net profits of over 750,000 per year

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1.2 Mission

We will offer dry cleaning, laundry, and clothing alteration services

with free home pickup and delivery. Our high quality and

convenience will save time for working customers.

1.3 Keys to Success

The business is entering the first year of operation therefore a

comprehensive marketing strategy will be the key to success of

the business.

It is important to remember that the target customers have

money and want to be provided with a high quality service;

therefore they will only use this service if they are entirely

satisfied.

Furthermore, the hours of operation must be convenient and

service completion must be timely in order that customers are

not harried after a long working day.

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2.0 COMPANY SUMMARY

COMPANY DESCRIPTION:

1. Name: Nadmar dry cleaners

2. Address: Nakuru town; MEA building, Govt road, next to

KPLC Nyahururu town; Mbaria complex building, opposite

Nyahururu municipal council

3. Contact Number: 0722-234-709, 0721-818-123

4. Web site: www.nadmardrycleaners.kbo.co.ke

5. E-mail: [email protected]

PRIMARY CONTACT PERSON

Asman Bulalo (General Manager)

Director

Nadmar dry cleaners

P.O Box 3751 Nakuru, and 2043 Nyahururu, Kenya

Phone: 0722-234-709

Website: www.nadmardrycleaners.kbo.co.ke

http://website-www.nadmardrycleaners.kbo.co.ke/

http://website-www.nadmardrycleaners.kbo.co.ke/

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Form of Ownership:

The business ownership form is a Private Ltd company. The

inflows of funds are from the initial capital contribution from the

two directors and as well as from business partners

3.0 Services

Nadmar Dry Cleaning Service provides the following services for

customers with free home pick-up and delivery in the Nakuru &

Nyahururu area:

Dry cleaning

Laundry for personal clothes and large items such as blankets,

duvets, curtains, etc.

Alteration service

Operations plan

There are two ways for customers to take part in the service.

Customers can sign contracts with Nadmar Dry Cleaning Service

to get regularly scheduled service, or they can also order over the

telephone or e-mail to Nadmar Dry Cleaning Service.

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Customers choose payment either at the time of each delivery, or

by monthly credit card billing. The Service sends statements to

each contract customer, itemizing service fees and the charge for

the service to their credit cards for payment, at the end of each

month.

No retail shop will be rented in order to reduce the operation cost.

An operations facility for installing machines and equipment,

washing and cleaning activities, and storing not yet cleaned items

and cleaned products is needed.

The operations facility requires about 200 square meters divided

into four main sections as follows:

Machine installation and cleaning activities

Sorting and storage of dirty garments received

Storing cleaned garments after finishing prior to delivery

Garment alteration workroom

The whole operation process is controlled and monitored by a

laundry expert employee, and generally managed by the business

owner.

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4.0 Market Analysis Summary

There are a number of reasons for choosing the dry cleaning,

laundry, and alteration service industry:

Payment for the service is by cash, cheque, or credit card.

No capital stagnancy, receive payment every month, easy to

get instant profit.

Capital requirement for purchasing commercial laundry

equipment is minimal; therefore the risk of this business is low.

This service only requires a few staff.

Supplies needed service for customers_ frequent demand

(laundry - clean clothes).

Customers use this service as there are few or no alternatives

(dry cleaning, carpet

cleaning and curtain washing).

The demand for using service is increasing due to changing life

styles, increased disposable incomes, and the increase in

clothing expenditure.

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4.1 Market Segmentation

Labour market Analysis

Labour market Percentage (%)

Proportion of males employed full-time

2001/2002 92.8%

Proportion of males employed part-time

2001/2002 7.2%

Proportion of females employed full-time

2001/2002 61.3%

Proportion of females employed part-time

2001/2002 38.7%

4.2 Target Market Segment Strategy

Table 1 in the previous topic shows the percentages of males and

females working full time from the period 2001 _ 2002 which are a

lot higher than that of those working part time.

Employment, income, and GDP trends show an increase over the

past several years.

These tables show that more and more people have money

(standard of living increased) but have less time to do their

housework (laundry) in Nakuru & Nyahururu . They are often tired

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after working all day and tend to spend money to hire someone

else to do the housework for them. Moreover, the demand on

clothes of these working people (particularly professionals)

usually increases proportionately with their income. Buying more

clothes, especially expensive clothes, makes them pay more

attention to the care and cleaning of those clothes. With careful

research, this business focuses on working and professional class

customers as a target segment market.

4.3 Service Business Analysis

There are two competitors in dry cleaning, laundry and alteration

services in Nakuru & Nyahururu: Nakuru Steam Laundry and

White rose drycleaners and Launderers. They are both small-

scale services but have quite a lot of customers (this information

is collected by self research and observation).

However, these shops do not provide door-to-door service free of

charge for customers.

Below-mentioned are the strengths, weaknesses, opportunities

and threats pertaining to this business?

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4.3.1 Swot Analysis: Internal and External Environment

Swot Analysis

A useful framework to analyze the company is the SWOT

analysis, which stands for S-Strength, W-Weakness, O-

Opportunity, T-Threats. Ideally, the company wants to align its

strength with the opportunities in the market, whilst making sure

that its weaknesses are not exposed to any potential threat. The

outcome of the SWOT analysis which was carried out by Nadmar

Dry Cleaner’s management is depicted in below two drawn tables.

The first table represents the Internal Environment in which the

company operates while second table represents the External

Environment.

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Table 1- INTERNAL ENVIRONMENT

Strengths Weaknesses

We offer a new service for dry

cleaning and laundry, providing

another choice for customers.

We provide quick and convenient

service in order to save

customer’s time

High quality for the laundry

services especially for leather,

suede and silk

Good policies and operational

procedures like the textile

maintenance technology and

garment rejuvenation

Garment protection and

rejuvenation systems.

Textile maintenance technology.

Garment rejuvenation.

Revitalization of limp garments.

Add garment life.

Carpets upholstery.

Strong competition from already

established competitors in Guildford.

Starting at no market share at all.

Less experience than competitors.

Limited capital base

A new entry in the market hence not

established a strong clientele and

market

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Table 2 - EXTERNAL ENVIRONMENT

Opportunities Threats

Expenditure in clothing is increasing,

including expensive clothes; therefore

the demand of taking care of clothes

also increases.

There are more and more women _ who

traditionally do the laundry and cleaning

work in the family _ going to work

outside the home. The target market of

this business is working-class and

professional-class customers.

Average disposable incomes of Nakuru

& Nyahururu residents are increasing.

People tend to spend more time on

leisure activities rather than doing the

house work.

Participation within a steadily growing

service. The forecast of the dry cleaning

and laundry service goes steadily up

through 2010.

There is a high likelihood of getting high

volumes of business through repeat

customers and orders.

The ability to decrease the fixed costs

as the sales volume increases.

If the business is successful, there will

be new competitors who supply the

same kind of service.

New technology changes may bring out

new family washing machines for dry

cleaning.

High cost of maintenance of the laundry

equipment ,garment protection and

rejuvenation systems

Unreliable power electricity power

supply due prevent power cuts and

black-outs

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Strengths:

We offer a new service for dry cleaning, and laundry, providing

another choice for customers.

We provide quick and convenient service in order to save

customer’s time.

Weaknesses:

Strong competition from already established competitors in

Guildford.

Starting at no market share at all.

Less experience than competitors.

Opportunities:

Expenditure in clothing is increasing, including expensive

clothes; therefore the demand of taking care of clothes also

increases.

There are more and more women _ who traditionally do the

laundry and cleaning work in the family _ going to work outside

the home. The target market of this business is working-class

and professional-class customers.

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Average disposable incomes of Nakuru & Nyahururu residents

are increasing.

People tend to spend more time on leisure activities rather than

doing the house work.

Participation within a steadily growing service. The forecast of

the dry cleaning and laundry service goes steadily up through

2010.

There is a high likelihood of getting high volumes of business

through repeat customers and orders.

The ability to decrease the fixed costs as the sales volume

increases.

Threats:

If the business is successful, there will be new competitors who

supply the same kind of service.

New technology changes may bring out new family washing

machines for dry cleaning.

High cost of maintenance of the laundry equipment ,garment

protection and rejuvenation systems

Unreliable power electricity power supply due prevent power

cuts and black-outs

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5.0 Strategy and Implementation Summary

5.01 Evaluation

The following areas will be monitored to evaluate the business

performance:

Monthly and annual sales

Monthly and annual profit

Repeat customers and orders

Customer satisfaction

The business success will depend on quality and convenience of

the service, customer opinions, and competitor response.

5.02 Optimism

The business provides a new door-to-door dry cleaning,

laundry, and alteration service in Nakuru & Nyahururu that

surely will attract customer attention.

Working customers may find this service is convenient for them

and want to try it. If they are satisfied with the service quality

they will likely become repeat customers.

When the patronage happens continuously, they become loyal

customers of the service. These customers will recommend

Nadmar Dry Cleaning Service to their friends and coworkers.

As more and more customers use this service, Guildford Dry

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Cleaning Service's image is enhanced and we will gain more

and more market share.

If we attain monthly and annual sales at least as forecasted,

total costs and expenses, including any unanticipated

charges, will not exceed our estimates and therefore the

monthly and annual profit will be satisfactorily achieved.

5.03 Difficulties and Risks

Nadmar Dry Cleaning is a start-up and as such has less

experience and begins with no market share at all. Assertive,

effective initial marketing efforts will be necessary to gain a

customer base.

If existing competitors see us as a major threat and they resort

to overtly aggressive and debilitating actions it will be very

difficult for us to become an established player in the

marketplace.

Risks caused by competitors are possible, therefore the

business has to monitor and evaluate its performance

frequently, and collect customer evaluations and suggestions in

order to continually improve.

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5.04 Worst Case Risks

The worst case scenario would be that the business cannot

support itself on an ongoing basis.

The costs of doing business may be under-estimated or sales

and profit may be less than expected, making the business

difficult to finance.

Moreover, in case of social economic recession, political

changes, or inflation, the business may perform even worse

than has been forecasted.

5.1 Competitive Edge

As the Kenyan economy grows rapidly and quality of life is

increased, people tend to spend more time and money in

leisure activities rather than doing their house work. They

prefer that someone else does the cleaning work for them.

Guildford has a population of 129,701 served by three dry

cleaning and laundry shops. These existing shops wait for

customers to bring their garments in and pick them up later.

Customers have to drive cars to town, find parking places,

carry their clothes or large items such as curtains, blankets,

etc. to the shop, and to queue for being serviced. Then they

must repeat this boring exercise whenever they come to

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collect their washed items. Moreover, these shops are only

open from 9am - 6pm, and closed on Sunday, which are

almost the same working hours like the other offices;

therefore it very inconvenient for customers especially those

doing full-time jobs.

By understanding and addressing this need, our new dry

cleaning, laundry and alteration service is established,

providing door-to-door service free of delivery charge.

We make our customers' lives simpler by saving them time and

money, and eliminating waiting time, long queues, parking

problems, forgetting to collect washed clothes, missing meals,

and going home late.

5.2 Marketing Strategy

5.2.1 Place:

Trading directly with customers like picking the unwashed

laundry items from the customers' houses in Nakuru &

Nyahururu and dropping these items after being washed this

will be convenient in times of cost and time to our customers

We are opting not to rent a shop in high street in the town

centre, thereby reducing operational costs.

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Nadmar Dry Cleaning Service receives clothes from and

returns them to customers' houses without any excess charges

or just minimum transport charges.

Requests for some urgent situations pick-ups and deliveries

are accommodated, and a nominal fee charged for express

delivery services.

5.2.2 Product:

Free home pickup and delivery service, coming to customers'

house between 6 - 9 pm twice per week.

We provide convenience and high quality dry cleaning, laundry,

and alteration services.

5.2.3 Price:

Moreover, the business targets the working class and

professional customers who often pay less attention to price

than the quality and convenience of service.

Kelvin Clancy (in Kotler, 2003) shows that only between 15

percent and 35 percent of buyers are price sensitive. People

with higher incomes are willing to pay more for features,

customer service, quality, and convenience.

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5.2.4 Promotion:

Advertise our new service in the newspapers, the Internet,

public areas such as buses and train stations, shopping

centers and supermarkets etc., and drop advertising material

into families' mailboxes.

Offer 10% discount as an incentive for customers who sign

one-year contracts.

Issue coupons and introduce loyalty cards for loyal customers

and charge them much lower laundry washing price than the

normal customers.

Offer seasonal incentives like for three suits washed, one will

be done free of charge

5.3 Sales Forecast

Sales forecast gradually increase over the year 2013 and

comprise total sales of 3,247,000 per annum

However, in the last three months, October, November and

December the sales almost remains the same due to the demand

of this service at the end of years doesn’t increase, and even has

a minor decrease.

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As forecasted, turnover of total market continues to rise and the

price of dry cleaning and laundry services also increases.

However, to avoid being too optimistic, this sale estimation is

calculated based on the turnover of competitors in the year 2002.

Turnover projections of 3,247,000 for the year were generated in

the following areas:

Description Forecast 2013 Percentage

Dry Cleaning 36%

Other Laundry 57%

Alteration Services 7%

Total 100%

6.0 Management Summary

The owner of the business will be director and accountant

working full time.

A laundry expert will be employed and will be in charge of the

operation and the quality of garment cleaning.

Workers will report to the laundry expert who reports to the

owner.

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6.1 Personnel Plan

Through the consultation of the Federation of Kenyan Employers,

the term of reference of a laundry expert and workers are

prepared. Employment information will be advertised in the

newspaper. The laundry expert and two part-time workers who

have experience in laundry work will be employed.

The laundry expert will be in charge of the operation and the

quality of garment cleaning.

Workers will be responsible for cleaning and classifying work and

have the duty to report daily work to the laundry expert. The

expert has to report their working results and problems to the

director.

Two part-time drivers for picking up and delivering clothes work

from 17.30 to 21.30, Monday through Saturday.

The staff should be able to carry out working conditions and

requirements:

Understand and apply dry cleaning and washing processes

Meet set standards by following instructions

Work in hot, humid surroundings

Perform the same work continuously

Overtime may be required during peak seasons.

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Number of staff and salary in the period of January to March 2013:

Description No of people Working hours/week

Owner Full-time 48

Laundry expert Full-time 48

Workers Part-time 48

Drivers Part-time 24

Total 168

From April to December 2004, when the business expands and gets more

customers and becomes busier, thus new staff (a worker and a driver) will

be employed.

The business prefers to hire extra part-time workers and drivers to share

out the total working hours. In case one of them becomes sick or busy,

other staff can replace them; therefore, the working process will not be

affected

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7.0 Financial Plan

The following topics describe the cash flow statement, profit and

loss account, and balance sheet have been built using forecasted

information which is as accurate and realistic as possible.

These financial statements show that the business runs quite well

and achieves expected results.

7.1 Important Assumptions

Sales increase gradually over the coming months showing the positive

trend of sales. Nadmar Dry Cleaning will steadily gain market share.

The company’s receipts from debtors will increase at a monthly growth

rate of 2%.

The Kenyan economy growth rate will remain constant that is,

approximately 5% per annum or increase for the next five years.

The Kenyan government will remain politically stable and that there will

be no worldwide disasters like war, floods or climate change with any

new legislations being introduced internationally that may affect this

business plan.

The inflation rate will have negligible variance on the cash forecast for

the next five years.

The Bank interest rates for borrowings will be consistent over the next

five years.

The tax rates will be consistent over the next five years.

The company will pay tax installments in the year there are attributed to.

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The current management will continue running the business for at least

the next five year with no major changes to the company top

management policies, capital structure and the working staff.

The company will continue to maintain its market share in the industry,

exploiting new markets and implementing current strategic plans and

corporate governance to increase its market share.

Gross profit and net profit rise proportionately to sales revenue.

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TABLE 3-INCOME STATEMENT

Income statement

YEARS 2002 2003 2004

A. Total revenue: 557,886.00 3,083,530.00 3,145,893.00

Sales of products

and services

170,000.00 1,110,894 1,635,000

Sales of materials 163,757.00 430,871.00 800,000.00

Change in inventory 0.00 0.00 0.00

Extraordinary

incomes

0.00 0.00 0.00

Other revenues 224,129.00 1,541,765.00 710,893.00

B. Total costs: 982,442.00 1,162,110.00 1,426,403.00

Depreciation 30,000.00 400,000 100,000.00

Materials and

energy

70,000.00 65,000 45,000.00

Sales salaries 465,483.00 409,110 600,000.00

Cost of services 248,959.00 110,000 493,403.00

Financial expenses 168,000.00 178,000.00 188,000.00

Costs of goods for

resale

0.00 0.00 0.00

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Taxes 0.00 175,000.00 205,000.00

Other costs 0.00 0.00 0.00

Extraordinary

losses

0.00 0.00 0.00

C. Profit (loss) gross

value: A-B (424,556.00) 1,921,420.00 1,719,490.00

D. Income tax (0.00) (175,000.00) (205,000.00)

E. Net income (424,556.00) 1,746,420.00 1,514,490.00

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Table 4- Balance sheet

FIXED ASSETS

Land & Buildings

Equipment

Fixture & fittings

Total fixed assets

281,400.00

1,000,000.00

7,500,000.00

CURRENT ASSETS

Accounts receivable

Cash

Total current assets

15,000.00

347,036.00

45,000.00

EQUITY

Share holders equity 100,000.00

NON-CURRENT LIABILITIES

Long term loans 9,030,436.00

CURRENT LIABILITIES

Accounts payable

Accrued payroll

Taxes payable

8,000.00

20,000.00

30,000.00

Total current liabilities 58,000.00

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