Dry Cleaning Home Delivery Business Plan
Columbia Cleaners is a start-up enterprise to be established in Hillsboro, Oregon as a limited liability company owned by J.C. Copperbeech. 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 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. At the end of each month we will send statements to each contract customer, itemizing service fees and the charge for the service to their credit cards for payment.
The business provides a new door-to-door dry cleaning, laundry, and alteration service in Hillsboro, OR and surrounding neighborhoods that will surely 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 Columbia Cleaners to their friends and coworkers. As more and more customers use this service, Columbia Cleaners’ image is enhanced and we will gain more and more market share.
In providing laundry and garment alteration services for customers in the Hillsboro area, Columbia Cleaners aims to:
- Establish sustainable business by the end of the first year
- Have first year total sales in excess of $324,000
- Producing net profits
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 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 day working.
Columbia Cleaners is a start-up enterprise to be established as a limited liability company in Hillsboro, OR. 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 store 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 a limited liability company, wholly owned by its founder J.C. Copperbeech. This is a small business and need not publicly disclose its finances. The registration procedures are quite simple and the business can start operations as soon as possible. The owner/founder will be the director and will initially handle the bookkeeping responsibilities.
2.2 Start-up Summary
Startup expenses, funded through a combination of owner’s equity capital and a commercial loan, are summarized in the table below.
Leasing equipment: Buying new machines costs approximately $50,000 as opposed to leasing which costs $20,000 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:
- Washer – 38 lb capacity, high spin, microprocessor control, electric heat
- Tumble dryer – 40 lb capacity, stainless steel drum and gas heated
- Dry cleaning machine – 25 lb
- Roller Iron 40 x 12 inch, variable speed and vacuum exhauster
- Ironing table with steaming vacuum board, integral 2 gallon boiler, iron, water pump and light
Columbia Cleaners is going to provide the following services for customers with free home pick-up and delivery in the Hillsboro area:
- Dry cleaning
- Laundry for personal clothes and large items such as blankets, duvets, curtains, etc.
- Alteration service
There are two ways for customers to take part in the service. Customers can sign contracts with Columbia Cleaners to get regularly scheduled service, or, if it is more convenient, they can order over the telephone or via e-mail.
Customers can choose payment either at the time of each delivery, or by monthly credit card billing. We will send 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 and cleaned garments and items is needed. The operations facility will require about 2,000 square feet divided into four main sections as following:
- 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.
Market Analysis Summary
It is necessary to establish the reasons for choosing the dry cleaning, laundry, and alteration service before doing the market research and marketing plan. “Laundries and Dry Cleaners rated in the top ten enterprises with the lowest failure rate.”
- Payment for the service is by cash, check, 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 a 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.
4.1 Market Segmentation
Columbia Cleaners will be primarily targeting customers in the Hillsboro-Beaverton area. We will start off by offering services to the Hillsboro residents but will also aim at extending our service offering to the residents of nearby towns west of Portland, OR, including Beaverton, Cedar Hills, Tigard, and Lake Oswego.
We will be targeting both full-time and part-time employed customers who would value the convenience of our service. Demographic research shows that the total population of the Hillsboro-Beaverton area is about 350,000, of which about 250,000 are in the labor force. Of the later, approx. 220,000 are employed full time, 20,000 are employed part time and the rest are unemployed.
4.2 Target Market Segment Strategy
The table in the previous topic shows estimated percentages of Hillsboro-Beaverton residents working full time in 2004, which is a lot higher than that of those working part-time. Employment, income, and GDP trends show an increase over the past several years as well. This results in increasing standard of living, which in turn leaves people having less time to do their housework (including laundry) in Hillsboro. They are often tired after the whole day of working 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 garments. With careful research, this business focuses on working and professional class customers as a target segment market.
4.2.1 Market Needs
Research shows that one of the key factors in choosing a personal service, such as laundry and dry cleaning, is not price but the convenience of the service. As stated above, with the growth of discretionary income people tend to choose services based on how much time and effort the service will save them. Although there are several conventional drop-off dry cleaning/laundry service providers in the area, Columbia Cleaners will primarily market its convenient pickup/delivery service to those busy individuals who are willing to appreciate such service, as it saves them time for other endeavors.
4.3 Service Business Analysis
The personal service industry is very fragmented overall. The Metropolitan Portland area is no exception to that, with numerous small providers servicing the community’s needs for laundry and dry cleaning. In the city of Hillsboro there are about half-dozen dry cleaners, some of which also provide laundry and garment alteration services. However, almost none of them, except Convenient Door-to-Door Dry Cleaning, provide the convenience of the door-to-door service.
4.3.1 Competition and Buying Patterns
Competition in the dry cleaning/laundry business in the Hillsboro area is not fierce. Research shows that there are seven dry cleaners in the city of Hillsboro, almost all of them offering the traditional drop-off service. The only competitor offering the convenience of the door-to-door service is Convenient Door-to-Door Dry Cleaning that provides dry cleaning and shoe repair services. We believe that initially this will be our major local competitor. We also believe that we will be able to win customers from our regular, drop-off competitors by enhancing the clients’ peace of mind though a new level of convenience and saving their time.