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Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Company Ownership .................................................................................................................2
2.2 Start-up Summary ......................................................................................................................3
3.0 Services................................................................................................................................................6
4.0 Market Analysis Summary..................................................................................................................6
4.1 Market Segmentation ................................................................................................................7
4.2 Target Market Segment Strategy.............................................................................................8
4.3 Service Business Analysis........................................................................................................9
4.3.1 Competition and Buying Patterns .........................................................................................9
5.0 Strategy and Implementation Summary..........................................................................................10
5.1 Competitive Edge....................................................................................................................11
5.2 Marketing Strategy ..................................................................................................................11
5.3 Sales Forecast.........................................................................................................................12
6.0 Management Summary ....................................................................................................................13
6.1 Personnel Plan.........................................................................................................................14
7.0 Financial Plan ....................................................................................................................................15
7.1 Important Assumptions............................................................................................................15
7.2 Break-even Analysis................................................................................................................16
7.3 Projected Profit and Loss .......................................................................................................17
7.4 Projected Cash Flow...............................................................................................................22
7.5 Projected Balance Sheet ........................................................................................................24
7.6 Business Ratios .......................................................................................................................25

Page 1

Guildford Dry Cleaning Service
1.0 Executive Summary
Guildford Dry Cleaning Service is a sole trader, start-up enterprise, to be established in Guildford,
Surrey. The company will provide dry cleaning, laundry, and garment alterations, offered with
regular home pick-up and delivery services.
The company will have a production facility, but will not need a retail shop front because of our
pick-up and delivery service. However, we will need delivery vans, and customer service trained
drivers.
Customers can choose payment either at the time of each delivery, or by monthly credit card
billing. The Service will send statements to each contract customer, itemising 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
Guildford 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 Guildford Dry Cleaning Service
to their friends and coworkers. As more and more customers use this service, Guildford Dry
Cleaning Service's image is enhanced and we will gain more and more market share.
Sales forecast gradually increase over the year 2006 and comprise total sales of £324,700. We
project solid Net profits in the first year. Third year Sales and Net Profits increase significantly.

Highlights
£600,000

£500,000

£400,000

Sales
Gross Margin

£300,000

Net Profit
£200,000

£100,000

£0
2004

2005

2006

Page 1

Guildford Dry Cleaning Service
1.1 Objectives
In providing laundry and garment alteration services for customers in Guildford area, Guildford Dry
Cleaning Service aims to:
• Attain a 30% market share by the end of the first year
• Have first year total sales in excess of £324,000
• Producing net profits of over £75,000.

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
1. The business is entering the first year of operation therefore a comprehensive marketing
strategy will be the key to success of the business.
2. 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.
3. Furthermore, the hours of operation must be convenient and service completion must be
timely in order that customers are not harried after a long day working.

2.0 Company Summary
Guildford Dry Cleaning Service is a sole trader, start-up enterprise, to be established in Guildford,
Surrey. The company will provide dry cleaning, laundry, and garment alterations, offered with
regular home pick-up and delivery services.
The company will have a production facility, but will not need a retail shop front because of our
pick-up and delivery service. However, we will need delivery vans, and customer service trained
drivers.
Initially, the production facility will be rented. Cleaning equipment will be leased with
accompanying maintenance contracts.
Start-up financing will be through owner investment and bank loans, with a line of credit
established for operations eventualities.

2.1 Company Ownership
The proposed legal form of business is sole trader. This is a small business and need not publicly
disclose its finances. The business can immediately start without the complicated procedures
associated with partnerships, limited liability companies, or co-operatives. The owner/founder will
be the director and will initially handle the bookkeeping responsibilities.

Page 2

Guildford Dry Cleaning Service
2.2 Start-up Summary
Capital resource plan
Loan: Lending plan has to be completed and submitted to the bank six months before starting
the business. Loan will be needed two months in advance.
Leasing equipment: Buying new machines costs approximately £30,000 as opposed to leasing
which costs £10,000 per year including maintenance. Evaluating the leasing solution shows NPV
higher than that of buying machines. Moreover, the business is new and has less experience in
maintenance and repair of machine breakdown, therefore the optimal solution is leasing
machines. The following machines will be leased:




1
1
1
1
1

Washer - 17kg capacity, high spin, microprocessor control, electric heat
Tumble dryer - 18kg capacity, stainless steel drum and gas heated
Dry cleaning machine - 11kg
Roller Iron 1000 x 300 mm, variable speed and vacuum exhauster
Ironing table with steaming vacuum board, integral 7 litre boiler, iron, water pump and light

Capital plan: The owner will invest £32,000 in the business. Additional capital for the business
will be borrowed from a bank.
• Buying a new van, and office/facilities equipment (computer, printer, fax, telephone
instrument, tables, chairs, shelving, work tables, racks, etc)and initial leasing of laundry
machines: £19,500
• Buying another new van in April: £7,000
Annual interest of 6.48% has to be paid on the long-term loans secured with fixed assets.

Start-up
£32,000
£28,000
£24,000
£20,000
£16,000
£12,000
£8,000
£4,000
£0
Expenses

Assets

Investment

Loans

Page 3

Guildford Dry Cleaning Service
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.

£150
£1,200

Brochures
Recruitment and Training
Insurance

£2,250
£400
£570

Rent
Utilities
Leased Equipment
Research and Development
Expensed Equipment
Other

£600
£500
£834
£0
£5,000
£2,790

Total Start-up Expenses

£14,294

Start-up Assets
Cash Required
Start-up Stock
Other Current Assets
Fixed Assets
Total Assets

£10,000
£500
£0
£14,000
£24,500

Total Requirements

£38,794

Page 4

Guildford Dry Cleaning Service
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

£14,294
£24,500
£38,794

Assets
Non-cash Assets from Start-up

£14,500

Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date

£10,000
£12,706
£22,706

Total Assets

£37,206

Liabilities and Capital
Liabilities
Current Borrowing
Fixed Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

£0
£19,500
£0
£0
£19,500

Capital
Planned Investment
Investor 1
Investor 2
Other
Additional Investment Requirement
Total Planned Investment

£32,000
£0
£0
£0
£32,000

Loss at Start-up (Start-up Expenses)
Total Capital

(£14,294)
£17,706

Total Capital and Liabilities

£37,206

Total Funding

£51,500

Page 5

Guildford Dry Cleaning Service
3.0 Services
Guildford Dry Cleaning Service is going to provide the following services for customers with free
home pick-up and delivery in the Guildford 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 Guildford Dry Cleaning Service to get regularly scheduled service, or they can also order
over the telephone or e-mail to Guildford Dry Cleaning Service.
Customers can choose payment either at the time of each delivery, or by monthly credit card
billing. The Service will send statements to each contract customer, itemising 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
and cleaned products is needed. The operations facility will require about 200 square metres
divided into four main sections as follows:
1.
2.
3.
4.

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 will be controlled and monitored by a laundry expert employee, and
generally managed by the business owner.

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&).
• The demand for using service is increasing due to changing life styles, incomes, and the
increase in clothing expenditure.
Source: "10 Reasons Why The Dry Cleaning Business Continues To Grow",
http://www.mindspring.com/~jimgirone/cleanpage/howto.html

Page 6

Guildford Dry Cleaning Service
4.1 Market Segmentation
Table 1: Labour market
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

Table 2: Guildford economic change
Economic change
Change in GDP per head (1995

Percentage (%)
1998)

39.6

Change in average gross weekly earning (1999
2002)

21.2

Change in total employment (1991

36.9

2001)

Sources: Local knowledge, Local futures
http://www.guildford.gov.uk/NR/rdonlyres/1F571647-185A-4470-9D3F06B31BB5D10A/0/GuildfordAuditReportfinal.PDF

Page 7

Guildford Dry Cleaning Service
Market Analysis (Pie)

Full-time employees
Part-time employees
Other

Table: Market Analysis
Market Analysis
2004

2005

2006

2007

2008

Potential Customers
Full-time employees

Growth
5%

49,400

51,870

54,464

57,187

60,046

CAGR
5.00%

Part-time employees
Other
Total

10%
2%
6.12%

14,625
1,500
65,525

16,088
1,530
69,488

17,697
1,561
73,722

19,467
1,592
78,246

21,414
1,624
83,084

10.00%
2.01%
6.12%

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 Guildford. They are often tired 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.

Page 8

Guildford Dry Cleaning Service
4.3 Service Business Analysis
There are two competitors in dry cleaning, laundry and alteration services in Guildford: Trend
Cleaners and Woodbridge Hill Cleaners 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.
Hereunder are the strengths, weaknesses, opportunities and threats pertaining to this business:

4.3.1 Competition and Buying Patterns
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.
• Average income of Guildford citizens is 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 repeat business.
• 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.

Page 9

Guildford Dry Cleaning Service
5.0 Strategy and Implementation Summary
Evaluation
The following areas will be monitored to evaluate the business performance:



Monthly and annual sales
Monthly and annual profit
Repeat business
Customer satisfaction

The business success will depend on quality and convenience of the service, customer opinions,
and competitor response.
Optimism
The business provides a new door-to-door dry cleaning, laundry, and alteration service in
Guildford 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 Guildford Dry Cleaning Service to
their friends and coworkers. As more and more customers use this service, Guildford Dry 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.
Difficulties and Risks
Guildford 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.
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.

Page 10

Guildford Dry Cleaning Service
5.1 Competitive Edge
As the UK's 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 process when they come to collect their
items. Moreover, these shops are only open from 9am - 6pm, and closed on Sunday, which are
almost the same working hours of offices; most inconvenient for customers especially those with
full-time jobs.
By understanding and addressing this need, our new dry cleaning, laundry and alteration service
will be established, providing door-to-door service free of delivery charge. We make our
customers' lives simpler by saving them time, and eliminating waiting in queues, parking problems,
forgetting to collect clothes, missing meals, and going home late.

5.2 Marketing Strategy
Place: Trading directly with customers, conveniently in the customers' houses in Guildford. We
are choosing to not rent a shop in high street in the town centre, thereby reducing costs.
Guildford Dry Cleaning Service will receive clothes from and return them to customers' houses.
Requests for urgent situation pick ups and deliveries will be accommodated, and a nominal fee
charged.
Product: Free home pick up 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.
Price: Normally, new businesses set their initial prices lower than their competitors. In our
situation however, the business has higher costs for our delivery service and promotions to
increase customers' awareness and establish our brand name. We will set our prices to match
those of our competitors. The pricing scheme is based on a per-service price. Moreover, the
business targets working 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 and 35 percent of buyers are price sensitive. People with higher incomes are willing to pay
more for features, customer service, quality, and convenience.
Promotion:
• Advertise our new service in the Surrey Advertiser, the Internet, public areas such as buses
and train stations, shopping centres 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 with lower price for loyal customers.

Page 11

Guildford Dry Cleaning Service
5.3 Sales Forecast
Sales forecast gradually increase over the year 2006 and comprise total sales of £324,700.
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.
As forecasted, turnover of total market continues to rise and the price of dry cleaning and
laundry services also increases from 5-10% http://www.keynote.co.uk/GlobalFrame.htm.
However, to avoid being too optimistic, this sale estimation is calculated based on the turnover
of competitors in the year 2002.
(Source: http://www.startinbusiness.co.uk/listings/bi9zopps/sale/details/flz201_laundry.htm).

Turnover projections of £324,700 for the year were generated in the following areas:
Description

Forecast 2006

Percentage

Dry Cleaning
Other Laundry
Alteration Services
Total

£116,892
£185,079
£22,729
£324,700

36%
57%
7%
100%

Table: Sales Forecast
Sales Forecast
2004

2005

2006

Sales
Dry Cleaning

£116,892

£151,960

£197,548

Laundry
Alteration Service
Other

£185,079
£22,729
£0

£240,603
£29,547
£0

£312,784
£38,412
£0

Total Sales

£324,700

£422,110

£548,744

Direct Cost of Sales
Dry Cleaning
Laundry
Alteration Service
Other
Subtotal Direct Cost of Sales

2004

2005

2006

£14,027
£14,806
£6,819
£0
£35,652

£18,235
£19,248
£8,864
£0
£46,348

£23,706
£25,023
£11,524
£0
£60,252

Page 12

Guildford Dry Cleaning Service
Sales by Year
£600,000
£500,000

Dry Cleaning
£400,000

Laundry
Alteration Service

£300,000

Other

£200,000
£100,000
£0
2004

2005

2006

Sales Monthly
£40,000
£36,000
£32,000
£28,000

Dry Cleaning

£24,000

Laundry

£20,000

Alteration Service

£16,000

Other

£12,000
£8,000
£4,000

Dec

Nov

Oct

Sep

Aug

Jul

Jun

May

Apr

Mar

Feb

Jan

£0

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.
Page 13

Guildford Dry Cleaning Service
6.1 Personnel Plan
Through the consultation of British Cleaning Council, 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 such as spring and autumn.

Number of staff and salary in the period of January to March 2006:
Description

No of people

Salary per hour
(£)

Working
hours/week

Owner

Full-time

1

20

48

Laundry expert

Full-time

1

10

48

Workers

Part-time

2

7

48

Drivers

Part-time

2

5

24

6

42

168

Total

From April to December 2004, the business has more customers and becomes busier, thus new
staff (a worker and a driver) are employed.
The business prefers to hire extra part-time workers and drivers sharing the total needed working
hours. In case one of them becomes sick or busy, other staff can replace them; therefore, the
working process will not be effected.

Page 14

Guildford Dry Cleaning Service
Table: Personnel
Personnel Plan
Director/Accountant
Laundry expert

2004
£46,080
£23,040

2005
£47,462
£23,731

2006
£48,886
£24,443

Worker-1
Worker-2
Worker-3

£10,080
£10,080
£8,064

£10,382
£10,382
£8,306

£10,693
£10,693
£8,555

Driver-1
Driver-2
Driver-3

£3,360
£3,360
£2,880

£3,461
£3,461
£2,966

£3,565
£3,565
£3,055

Other
Total People

£0
8

£0
8

£0
8

Total Payroll

£106,944

£110,151

£113,455

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 12 months showing the positive trend of sales. Guildford Dry
Cleaning is steadily gaining market share.
Gross profit and net profit rise proportionately to sales revenue.
Return on capital employed: Pendlebury (2002) indicates this ratio is useful to measure the
efficiency which the long term capital has been employed. The business return on capital
employed (ROCE) increases over the 12 months showing the effect of using capital to grow
business, especially in the last months of the year.

Table: General Assumptions
General Assumptions
2004
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

1

2005
2

2006
3

10.00%

10.00%

10.00%

6.48%
30.00%
0

6.48%
30.00%
0

6.48%
30.00%
0

Page 15

Guildford Dry Cleaning Service
7.2 Break-even Analysis
The following table and chart show our Break-even Analysis.

Break-even Analysis
£15,000
£12,000
£9,000
£6,000
£3,000
£0
(£3,000)
(£6,000)
(£9,000)
(£12,000)
£0

£6,000
£3,000

£9,000

£12,000
£18,000
£24,000
£30,000
£15,000
£21,000
£27,000
£33,000

Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even

£16,281

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

11%
£14,493

Page 16

Guildford Dry Cleaning Service
7.3 Projected Profit and Loss
In general, the business might meet some difficulties in the beginning months but after that the
business grows as expected and produces a small profit at the end of the year. It is not
necessary for the business to gain high profit in the first year, breaking even is acceptable.
Here under are the estimated fixed costs and variable costs for the year 2006. These costs have
been divided into two periods:
• Jan
Mar
• Apr
Dec: One more van (£7,000) will be purchased and new staff recruited; therefore
interest, maintenance, petrol, salary and national insurance are increased
Fixed costs Per Month

Jan - Mar

Interest rate

Apr - Dec
1,264

1,604

Machine leasing

834

834

Building renting

600

600

50

100

150

300

7,584

9,408

421

620

10,903

13,466

Maintenance
Petrol
Salary per month
National Insurance
Total
Variable costs Per Month

Jan - Mar

Apr - Dec

Tea/Coffee break

100

100

Office cleaning

100

100

45

400

Advertisement

150

200

Telephone

300

500

Electricity

500

500

Miscellaneous

300

300

1,495

2,100

Recruitment cost

Total

Page 17

Guildford Dry Cleaning Service

Profit Monthly
£12,000
£10,000
£8,000
£6,000
£4,000
£2,000
£0

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Page 18

Guildford Dry Cleaning Service
Profit Yearly

£210,000
£180,000
£150,000
£120,000
£90,000
£60,000
£30,000
£0
2004

2005

2006

Gross Margin Monthly
£33,000
£30,000
£27,000
£24,000
£21,000
£18,000
£15,000
£12,000
£9,000
£6,000
£3,000
£0
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Page 19

Guildford Dry Cleaning Service
Gross Margin Yearly

£500,000
£450,000
£400,000
£350,000
£300,000
£250,000
£200,000
£150,000
£100,000
£50,000
£0
2004

2005

2006

Page 20

Guildford Dry Cleaning Service
Table: Profit and Loss
Pro Forma Profit and Loss
2004
£324,700
£35,652

2005
£422,110
£46,348

2006
£548,744
£60,252

£0
£35,652

£0
£46,348

£0
£60,252

Gross Margin
Gross Margin %

£289,048
89.02%

£375,762
89.02%

£488,492
89.02%

Expenses
Payroll

£106,944

£110,151

£113,455

£2,250
£4,236
£7,200

£2,700
£4,700
£7,200

£3,000
£4,700
£7,200

£11,400
£0
£3,150
£10,008
£1,050
£1,200
£6,840
£16,042
£3,600

£12,000
£0
£3,500
£12,000
£1,200
£1,500
£6,840
£16,523
£4,000

£13,000
£0
£4,000
£15,000
£1,500
£1,500
£6,840
£17,018
£4,000

Total Operating Expenses

£173,920

£182,314

£191,213

Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred

£115,128
£119,364
£1,469
£34,098

£193,449
£198,149
£1,297
£57,645

£297,279
£301,979
£976
£88,891

£79,562
24.50%

£134,506
31.87%

£207,412
37.80%

Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales

Sales and Marketing and Other Expenses
Depreciation
Rent
Utilities
Inserted Row
Petrol
Equipment Lease
Maintenance
Office Cleaning
Insurance
Payroll Taxes (National Insurance, etc.)
Other

Net Profit
Net Profit/Sales

Page 21

Guildford Dry Cleaning Service
7.4 Projected Cash Flow
Cash flow increases gradually over the year creating the positive net present value. To exist and
develop in the competitive market are getting more and more difficult. Obtaining loyal customers
and recruiting new customers in term of long run business are extremely difficult therefore the
service aims to achieve low profit create and enhance the service s image which are the
advantage competition in the market.

Table: Cash Flow
Pro Forma Cash Flow
2004

2005

2006

Cash from Operations
Cash Sales
Subtotal Cash from Operations

£324,700
£324,700

£422,110
£422,110

£548,744
£548,744

Additional Cash Received
VAT Received (Output Tax)
VAT Repayments
New Current Borrowing
New Other Liabilities (interest-free)
New Fixed Liabilities
Sales of Other Current Assets
Sales of Fixed Assets
New Investment Received
Subtotal Cash Received

£56,823
£0
£0
£0
£7,000
£0
£0
£0
£388,523

£73,869
£0
£0
£0
£0
£0
£0
£0
£495,979

£96,030
£0
£0
£0
£0
£0
£0
£0
£644,774

2004

2005

2006

Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations

£106,944
£123,286
£230,230

£110,151
£173,837
£283,988

£113,455
£220,566
£334,021

Additional Cash Spent
VAT Paid Out (Input Tax)
VAT Payments
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Fixed Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Fixed Assets
Dividends
Subtotal Cash Spent

£12,765
£28,310
£0
£0
£4,084
£0
£7,000
£0
£282,389

£13,244
£76,373
£0
£0
£4,792
£0
£0
£0
£378,397

£15,867
£80,163
£0
£0
£5,112
£0
£0
£0
£435,164

Net Cash Flow
Cash Balance

£106,134
£128,840

£117,582
£246,421

£209,611
£456,032

Cash Received

Expenditures

Page 22

Guildford Dry Cleaning Service
Cash
£120,000
£100,000
£80,000

Net Cash Flow
£60,000

Cash Balance

£40,000
£20,000
£0

Page 23

Guildford Dry Cleaning Service
7.5 Projected Balance Sheet
The table below shows the balance sheet annual figures for the first three years of operation.
First year monthly figures are presented in the appendix.

Table: Balance Sheet
Pro Forma Balance Sheet
2004

2005

2006

Current Assets
Cash
Stock
Other Current Assets
Total Current Assets

£128,840
£4,008
£0
£132,847

£246,421
£5,210
£0
£251,631

£456,032
£6,773
£0
£462,805

Fixed Assets
Fixed Assets
Accumulated Depreciation
Total Fixed Assets
Total Assets

£21,000
£4,236
£16,764
£149,611

£21,000
£8,936
£12,064
£263,695

£21,000
£13,636
£7,364
£470,169

2004

2005

2006

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

£14,180
£0
£44,058
£58,237

£14,298
£0
£104,683
£118,980

£18,472
£0
£184,846
£203,317

Fixed Liabilities
Total Liabilities

£22,416
£80,653

£17,624
£136,604

£12,512
£215,829

£32,000
(£14,294)
£79,562
£97,268
£177,921

£32,000
£65,268
£134,506
£231,774
£368,378

£32,000
£199,774
£207,412
£439,185
£655,015

£68,958

£127,091

£254,340

Assets

Liabilities and Capital

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 24

Guildford Dry Cleaning Service
7.6 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios for commercial
dry cleaning and laundry establishments are shown for comparison.

Page 25

Guildford Dry Cleaning Service
Table: Ratios
Ratio Analysis
Sales Growth

2004
0.00%

2005
30.00%

2006
30.00%

Industry Profile
0.41%

Percent of Total Assets
Stock
Other Current Assets

2.68%
0.00%

1.98%
0.00%

1.44%
0.00%

3.56%
39.13%

88.79%
11.21%
100.00%

95.43%
4.57%
100.00%

98.43%
1.57%
100.00%

57.85%
42.15%
100.00%

Current Liabilities
Fixed Liabilities

38.93%
14.98%

45.12%
6.68%

43.24%
2.66%

26.66%
20.51%

Total Liabilities
Net Worth

53.91%
46.09%

51.80%
48.20%

45.90%
54.10%

47.17%
52.83%

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

100.00%
89.02%
55.72%
0.00%
35.46%

100.00%
89.02%
51.42%
0.00%
45.83%

100.00%
89.02%
46.64%
0.00%
54.17%

100.00%
100.00%
78.43%
1.78%
3.01%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

2.28
2.21
53.91%
164.82%
75.97%

2.11
2.07
51.80%
151.19%
72.87%

2.28
2.24
45.90%
116.50%
63.02%

1.57
1.30
57.48%
5.38%
12.65%

Additional Ratios
Net Profit Margin
Return on Equity

2004
24.50%
115.38%

2005
31.87%
105.83%

2006
37.80%
81.55%

n.a
n.a

12.00
9.69
27
2.17

10.06
12.17
30
1.60

10.06
12.17
27
1.17

n.a
n.a
n.a
n.a

1.17
0.72

1.07
0.87

0.85
0.94

n.a
n.a

£74,610
78.38

£132,651
149.12

£259,488
304.46

n.a
n.a

0.46
39%
2.21
4.71
0.00

0.62
45%
2.07
3.32
0.00

0.86
43%
2.24
2.16
0.00

n.a
n.a
n.a
n.a
n.a

Total Current Assets
Fixed Assets
Total Assets

Activity Ratios
Stock Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 26

Appendix
Table: Sales Forecast
Sales Forecast
Sales

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

VAT Rate

Dry Cleaning

17.50%

£4,176

£5,364

£6,156

£8,280

£9,216

£9,720

£10,728

£11,520

£12,456

£12,924

£13,212

£13,140

Laundry

17.50%

£6,612

£8,493

£9,747

£13,110

£14,592

£15,390

£16,986

£18,240

£19,722

£20,463

£20,919

£20,805

Alteration Service
Other

17.50%
17.50%

£812
£0

£1,043
£0

£1,197
£0

£1,610
£0

£1,792
£0

£1,890
£0

£2,086
£0

£2,240
£0

£2,422
£0

£2,513
£0

£2,569
£0

£2,555
£0

£11,600

£14,900

£17,100

£23,000

£25,600

£27,000

£29,800

£32,000

£34,600

£35,900

£36,700

£36,500

Total Sales
Direct Cost of Sales
Dry Cleaning

VAT Rate

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

17.50%

£501

£644

£739

£994

£1,106

£1,166

£1,287

£1,382

£1,495

£1,551

£1,585

£1,577

Laundry

17.50%

£529

£679

£780

£1,049

£1,167

£1,231

£1,359

£1,459

£1,578

£1,637

£1,674

£1,664

Alteration Service
Other

17.50%
17.50%

£244
£0

£313
£0

£359
£0

£483
£0

£538
£0

£567
£0

£626
£0

£672
£0

£727
£0

£754
£0

£771
£0

£767
£0

£1,274

£1,636

£1,878

£2,525

£2,811

£2,965

£3,272

£3,514

£3,799

£3,942

£4,030

£4,008

Subtotal Direct Cost of Sales

Page 1

Appendix
Table: Personnel
Personnel Plan
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Director/Accountant

0%

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

£3,840

Laundry expert

0%

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

£1,920

Worker-1

0%

£672

£672

£672

£896

£896

£896

£896

£896

£896

£896

£896

£896

Worker-2
Worker-3

0%
0%

£672
£0

£672
£0

£672
£0

£896
£896

£896
£896

£896
£896

£896
£896

£896
£896

£896
£896

£896
£896

£896
£896

£896
£896

Driver-1

0%

£160

£160

£160

£320

£320

£320

£320

£320

£320

£320

£320

£320

Driver-2

0%

£160

£160

£160

£320

£320

£320

£320

£320

£320

£320

£320

£320

Driver-3

0%

£0

£0

£0

£320

£320

£320

£320

£320

£320

£320

£320

£320

Other

0%

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

Total People

6

6

6

8

8

8

8

8

8

8

8

8

Total Payroll

£7,424

£7,424

£7,424

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

Page 2

Appendix
Table: General Assumptions
General Assumptions
Jan
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

1

Feb
2

Apr

Mar
3

4

May
5

Jun
6

Jul
7

Aug
8

Sep
9

Oct
10

Nov
11

Dec
12

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

6.48%

6.48%

6.48%

6.48%

6.48%

6.48%

6.48%

6.48%

6.48%

6.48%

6.48%

10.00%
6.48%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

0

0

0

0

0

0

0

0

0

0

0

0

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

£11,600

£14,900

£17,100

£23,000

£25,600

£27,000

£29,800

£32,000

£34,600

£35,900

£36,700

£36,500

£1,274

£1,636

£1,878

£2,525

£2,811

£2,965

£3,272

£3,514

£3,799

£3,942

£4,030

£4,008

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£1,274

£1,636

£1,878

£2,525

£2,811

£2,965

£3,272

£3,514

£3,799

£3,942

£4,030

£4,008

Gross Margin

£10,326

£13,264

£15,222

£20,475

£22,789

£24,035

£26,528

£28,486

£30,801

£31,958

£32,670

£32,492

Gross Margin %

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

89.02%

Sales

VAT Rate

Direct Cost of Sales
Other Costs of Sales

17.50%

Total Cost of Sales

Expenses

VAT Rate

Payroll

£7,424

£7,424

£7,424

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

£9,408

17.50%

£150

£150

£150

£200

£200

£200

£200

£200

£200

£200

£200

£200

Depreciation
Rent

0.00%

£275
£600

£275
£600

£275
£600

£275
£600

£392
£600

£392
£600

£392
£600

£392
£600

£392
£600

£392
£600

£392
£600

£392
£600

Utilities

0.00%

£800

£800

£800

£1,000

£1,000

£1,000

£1,000

£1,000

£1,000

£1,000

£1,000

£1,000

Inserted Row

0.00%

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

Petrol

0.00%

£150

£150

£150

£300

£300

£300

£300

£300

£300

£300

£300

£300

Equipment Lease

0.00%

£834

£834

£834

£834

£834

£834

£834

£834

£834

£834

£834

£834

Maintenance

0.00%

£50

£50

£50

£100

£100

£100

£100

£100

£100

£100

£100

£100

Office Cleaning

5.00%

£100

£100

£100

£100

£100

£100

£100

£100

£100

£100

£100

£100

Insurance
Payroll Taxes (National Insurance, etc.)

17.50%
15.00%

£570
£1,114

£570
£1,114

£570
£1,114

£570
£1,411

£570
£1,411

£570
£1,411

£570
£1,411

£570
£1,411

£570
£1,411

£570
£1,411

£570
£1,411

£570
£1,411

Other

17.50%

£300

£300

£300

£300

£300

£300

£300

£300

£300

£300

£300

£300

VAT Rate

£12,367

£12,367

£12,367

£15,098

£15,215

£15,215

£15,215

£15,215

£15,215

£15,215

£15,215

£15,215

Sales and Marketing and Other Expenses

Total Operating Expenses
Profit Before Interest and Taxes

(£2,040)

£897

£2,856

£5,376

£7,574

£8,820

£11,313

£13,271

£15,586

£16,743

£17,455

£17,277

EBITDA

(£1,765)

£1,172

£3,131

£5,651

£7,966

£9,212

£11,705

£13,663

£15,978

£17,135

£17,847

£17,669

Interest Expense

£104

£102

£101

£137

£135

£133

£131

£129

£127

£125

£123

£121

Taxes Incurred

(£643)

£239

£827

£1,572

£2,232

£2,606

£3,354

£3,943

£4,638

£4,985

£5,200

£5,147

Net Profit

(£1,501)

£557

£1,929

£3,668

£5,207

£6,081

£7,827

£9,199

£10,821

£11,633

£12,132

£12,009

Net Profit/Sales

-12.94%

3.74%

11.28%

15.95%

20.34%

22.52%

26.27%

28.75%

31.27%

32.40%

33.06%

32.90%

Page 4

Appendix
Table: Cash Flow
Pro Forma Cash Flow
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

£11,600
£11,600

£14,900
£14,900

£17,100
£17,100

£23,000
£23,000

£25,600
£25,600

£27,000
£27,000

£29,800
£29,800

£32,000
£32,000

£34,600
£34,600

£35,900
£35,900

£36,700
£36,700

£36,500
£36,500

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received

VAT Rate

VAT Received (Output Tax)

£2,030

£2,608

£2,992

£4,025

£4,480

£4,725

£5,215

£5,600

£6,055

£6,282

£6,422

£6,388

VAT Repayments

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

New Current Borrowing

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

New Other Liabilities (interest-free)

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

New Fixed Liabilities
Sales of Other Current Assets
Sales of Fixed Assets

17.50%
17.50%

New Investment Received

£0

£0

£0

£7,000

£0

£0

£0

£0

£0

£0

£0

£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0
£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£13,630

£17,508

£20,093

£34,025

£30,080

£31,725

£35,015

£37,600

£40,655

£42,183

£43,123

£42,888

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cash Spending
Bill Payments

£7,424
£206

£7,424
£6,203

£7,424
£7,030

£9,408
£7,800

£9,408
£10,317

£9,408
£10,891

£9,408
£11,313

£9,408
£12,506

£9,408
£13,276

£9,408
£14,276

£9,408
£14,618

£9,408
£14,849

Subtotal Spent on Operations

£7,630

£13,627

£14,454

£17,208

£19,725

£20,299

£20,721

£21,914

£22,684

£23,684

£24,026

£24,257

£1,101

Subtotal Cash Received
Expenditures
Expenditures from Operations

Additional Cash Spent

VAT Rate

VAT Paid Out (Input Tax)

£709

£700

£721

£2,184

£946

£950

£1,030

£1,061

£1,119

£1,119

£1,124

VAT Payments

£0

£0

£0

£5,500

£0

£0

£9,150

£0

£0

£13,660

£0

£0

Principal Repayment of Current Borrowing

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

Other Liabilities Principal Repayment

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

Fixed Liabilities Principal Repayment
Purchase Other Current Assets

17.50%

£276
£0

£278
£0

£280
£0

£282
£0

£364
£0

£366
£0

£368
£0

£370
£0

£372
£0

£374
£0

£376
£0

£378
£0

Purchase Fixed Assets

17.50%

£0

£0

£0

£7,000

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£8,615

£14,606

£15,456

£32,174

£21,034

£21,615

£31,270

£23,345

£24,175

£38,837

£25,527

£25,737

£5,015
£27,721

£2,902
£30,623

£4,637
£35,260

£1,851
£37,111

£9,046
£46,157

£10,110
£56,267

£3,745
£60,012

£14,255
£74,267

£16,480
£90,747

£3,346
£94,093

£17,596
£111,689

£17,151
£128,840

Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 5

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Starting Balances

Current Assets
Cash

£22,706

£27,721

£30,623

£35,260

£37,111

£46,157

£56,267

£60,012

£74,267

£90,747

£94,093

£111,689

£128,840

Stock

£500

£1,274

£1,636

£1,878

£2,525

£2,811

£2,965

£3,272

£3,514

£3,799

£3,942

£4,030

£4,008

Other Current Assets

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

£0

Total Current Assets

£23,206

£28,995

£32,259

£37,138

£39,637

£48,968

£59,231

£63,284

£77,781

£94,546

£98,035

£115,718

£132,847

Fixed Assets
Fixed Assets

£14,000

£14,000

£14,000

£14,000

£21,000

£21,000

£21,000

£21,000

£21,000

£21,000

£21,000

£21,000

£21,000

£0

£275

£550

£825

£1,100

£1,492

£1,884

£2,276

£2,668

£3,060

£3,452

£3,844

£4,236

Total Fixed Assets

£14,000

£13,725

£13,450

£13,175

£19,900

£19,508

£19,116

£18,724

£18,332

£17,940

£17,548

£17,156

£16,764

Total Assets

£37,206

£42,720

£45,709

£50,313

£59,537

£68,476

£78,347

£82,008

£96,113

£112,486

£115,583

£132,874

£149,611

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

£6,773
£0

£7,457
£0

£9,954
£0

£10,516
£0

£10,897
£0

£12,064
£0

£12,801
£0

£13,789
£0

£14,123
£0

£14,360
£0

£14,180
£0

Accumulated Depreciation

Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing

£0
£0

£5,970
£0

Other Current Liabilities

£0

£1,321

£3,228

£5,500

£7,340

£10,874

£14,650

£18,835

£23,373

£28,310

£33,473

£38,771

£44,058

Subtotal Current Liabilities

£0

£7,291

£10,002

£12,956

£17,294

£21,390

£25,547

£30,899

£36,174

£42,099

£47,597

£53,132

£58,237

Fixed Liabilities

£19,500

£19,224

£18,946

£18,666

£25,384

£25,020

£24,654

£24,286

£23,916

£23,544

£23,170

£22,794

£22,416

Total Liabilities

£19,500

£26,515

£28,948

£31,622

£42,678

£46,410

£50,201

£55,185

£60,090

£65,643

£70,767

£75,926

£80,653

Paid-in Capital
Retained Earnings
Earnings

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

£32,000

(£14,294)
£0

(£14,294)
(£1,501)

(£14,294)
(£944)

(£14,294)
£984

(£14,294)
£4,652

(£14,294)
£9,859

(£14,294)
£15,940

(£14,294)
£23,767

(£14,294)
£32,966

(£14,294)
£43,787

(£14,294)
£55,420

(£14,294)
£67,552

(£14,294)
£79,562

Total Capital

£17,706

£16,205

£16,762

£18,690

£22,358

£27,565

£33,646

£41,473

£50,672

£61,493

£73,126

£85,258

£97,268

Total Liabilities and Capital

£37,206

£42,720

£45,709

£50,313

£65,036

£73,975

£83,847

£96,658

£110,763

£127,136

£143,893

£161,184

£177,921

Net Worth

£17,706

£16,205

£16,762

£18,690

£16,858

£22,065

£28,146

£26,823

£36,023

£46,844

£44,816

£56,949

£68,958

Page 6

Appendix
Table: Market Analysis
Market Analysis
2004

2005

2006

2007

2008

Potential Customers

Growth

Full-time employees

5%

49,400

51,870

54,464

57,187

60,046

5.00%

CAGR

Part-time employees

10.00%

10%

14,625

16,088

17,697

19,467

21,414

Other

2%

1,500

1,530

1,561

1,592

1,624

2.01%

Total

6.12%

65,525

69,488

73,722

78,246

83,084

6.12%

Page 7