Stinky Laundry Business Analysis Essay Example for Free

Stinky Laundry Business Analysis Essay Table of Contents Table of Contents2 1. Background4 The general nature of this business activity4 Benefits to society in terms of need satisfaction4 Why we chose this business venture5 2. Idea description6 The nature of our products and services6 Reasons why consumers will buy our products/services7 Our special services7 3. Idea feasibility8 4. Location11 7 important site selection factors11 Location of business12 How location factors apply to our business12 5. Enterprise Forms13 Type of enterprise13 Factors of selection of enterprise13 Legal name of business13 6. The Environment14 Internal environment14 Market Environment15 Macro environment of South Africa17 ? 1. Background The general nature of this business activity The cleaning of garments and other fabrics, that get dirty from everyday use, has always been a difficult task. Machines have reduced the labour but not much has changed in the three basic functions of laundering: cleaning, drying and finishing. The commercial laundry business offers laundry services to customers and is a very reliable and profitable investment. It requires minimum supervision and low operating costs. It has a typical return on investment of about 20-30% and classified as one of the safest investments with numerous benefits. It is a great part-time venture that requires a small amount of or no prior experience and can be located almost anywhere. It is highly profitable especially when located in minority communities and low-income neighbourhoods. It is also one of the most recession-proof investments. Many households use Laundromats on a daily basis with the key customer representing the fastest growing segment in the nation. Benefits to society in terms of need satisfaction The predominant benefit of the services offered by a Laundromat is convenience. People make use of this service because getting their clothes and other garments cleaned is a basic need satisfied by services on offer by Laundromats. People whom lack the time or money to do the washing at home prefer a quicker and easier way to getting it done. Students and other individuals staying in non-permanent residences like hostels or apartments mostly make use of this service. Other examples include organisations that make use of uniforms that is dirtied on a daily basis e. g. Mechanics and butchers. Another benefit is people who struggle to get their garments dry due to bad weather conditions (in winter) can dry-clean it at Laundromats. Lastly, it saves money that would otherwise have been spent on detergents and appliances. ? Why we chose this business venture We chose this business because there is always a need for Laundromats. It is cheap and easy to start and it is very sustainable because people need to use this service throughout the year regardless of the change of season. Innovative ideas can easily keep you ahead of your competitors like having specials. It is a very profitable venture and is very stable. Students would always want to make use of this service because it is quick and easy and removes the hassle of having to deal with your laundry. The laundry business is very stable, and unfailingly profitable. Families need clean towels and sheets regardless of other economic factors. People need clean clothing in summer and winter, on vacation or working, whether they are newborns, teenagers or retired ? 2. Idea description The nature of our products and services Our coin operated, self-service, washing and drying machines will serve as the base of services. Each load off washing ash will cost our clients R8 and for every load dried, we will charge R9. 50. Customers have the convenience of coming into our shops doing their laundry, enjoying the benefits of our other services. Our other services include: †¢Ironing or pressing of clothes. On request, our customers can get their clothes ironed or pressed by our attending staff at a fee of R10/kg. †¢Selling laundry products. We will be a retailer of washing powder, fabric softener and bleach to our clients if they wish to buy. †¢Selling laundry equipment. Our business will act as an intermediary between companies selling washing machines, tumble dryers, etc and clients wanting to buy laundry equipment. We will display a catalogue showing the equipment available and if bought through us we will make a commission on the sales. †¢Executive dry cleaning. We will offer extra care dry for clothing that are extra delicate or just needs a bit of extra care. Our executive dry cleaning will be at an extra cost to customers but we will call in our trained staff specialising in delicate clothing care to handle the items. This service will also come with a guarantee for immaculate attention to detail. †¢Pick up service. Our store will run a pick up and drop off service to UWC and CPUT Wednesdays and Saturdays. We will have one pick up and drop off point at each campus for students to get there laundry done with ease at an extra charge off 10%. †¢Arcade section. If our clients do bring their children along our arcade game section will keep their children busy while they wait for their laundry, create more convenience for our clients and creating wealth for our business through charging R1 per arcade game token. ? Reasons why consumers will buy our products/services Stinky laundry offers convenience to our customers our floor layout, products and extra services are for their convenience. In addition, a conventional home washing machine holds around a maximum weight of 120kg taking an hour to complete the load. At Stinky, our industrial sized washing and drying machines take four times the load and does it in half the time. Our innovative products and services will quickly gain an outstanding reputation for exceptional quality while our arcade friendly staff free reading material and free washing powder will do the rest. Our special services †¢Innovative ‘laundry package’ contracts. Our clients can buy washes, drying and ironing services before hand in bulk saving themselves money and time †¢Pick up service. Our pickup and delivery service to students will take a time consuming chore away from students at affordable prices ? 3. Idea feasibility Technical Where sustainability is concerned the equipment should be of good quality so that the business does not have to deal with unforeseen circumstances such as the equipment malfunctioning. The development of a business venture of this nature has is minimal. The materials the business will make use of include detergents and equipment such as washing machines and tumble-dryers. This is reasonably easy to get access to and if there is liaison with suppliers, you could possibly get these products at a cheaper rate than the competitors could. Labour would be cheap and easy to control as there is not much the employers have to do in a Laundromat business. Transportation can be easily provided to clients when they need their garments delivered i. e. clients with huge contracts who need their huge quantities of garments to be delivered. A technical feasibility study is an excellent tool for trouble-shooting and long-term planning. In some regards it Legal There are many legal implications that this specific type of business has to deal with. Some of the many different laws that would affect such a business venture are as follows: The labour relations act Consumer act (sales and service) These laws affect the business in such a manner that all your actions within the internal functions of the business have to comply by treating the employees and customers correctly. ? Financial This specific business venture is very sustainable as there will always be a need for it. If all the proper financial procedures are followed, there should be no future problems. The area where your business is situated plays a major ole on the financial credibility of your business. Long-term contracts would provide sustainable income and you would have a guaranteed return on investment Market There is a huge market for this type of business, as everyone needs to wash his or her clothes e. g. the hospitality industries, health industries. The specific industry described in the type of business is a service industry. A Laundromat provides a service to the public. After doing a thorough market analysis you can determine what target market is the most lucrative. The competition in such a business is very feisty as this a very successful business venture. Prices should be as cheap as possible but still maintaining a good profit. Organisational When it comes to the organisational part of this type of business, it is important to look at the management function. There should be someone overseeing the basic activities involved in the daily running of the business. This will be possible if all duties that are assigned to the employees involved in the different functions of the Laundromat. Making certain the form of the business model follows desired outcomes and functions. An effective governance structure should be in place and the right constituencies should be represented. All the people involved should be in the right people. ? Physical and environmental feasibility Site considerations, architecture, engineering, and community and neighbourhood planning have to be looked at thoroughly. There are not many challenges, but many opportunities regarding site and physical infrastructure considerations. There will be no impacts to the quality of water, air, and soil during the course of the running of the business. With regard to other ecological considerations, the business has to take into consideration factors that could harm the environment. Once this is done correctly, no future problems will arise. Competitive A Laundromat business has a very competitive market, as it is a common business and is reasonably easy to start. Competitors in this market will raise and drop prices easily and have many specials to prove to consumers that there Laundromat is the better of the two. ? 4. Location 7 important site selection factors †¢Accessibility of human resources. Where will employees come and how much will be paid in terms of the quantity and quality of the education they received. Owners can’t run the business alone employees need to be accessible to help with the daily running of the business †¢Distance of competitors and market share. How close companies delivering the same services or selling the same products. Of what degree of quality are the products or services of the surrounding competitors and will this influence the consumer market. If there is too much competition for the business and the market share of the business is too low business will never thrive †¢The frequency and price of transport. By what means will products, external services and employees reach the business, road, rail, air or water. How often do those services run to the business. Transport to the business is crucial, if customers, employees or external services, like repairs, cannot reach the business frequently business will not exist at all. Availability of buildings and the costs involved. Buildings need to fit a required size and must be appealing to customers as well as be placed in the right area for business. If the business is too far from resources needed to run the business cost of getting them will exceed what they need to be and if customers don’t get a good feel for their surroundings i. e. in the building, they will always feel uncomfortable doing business there. †¢Adequacy of electricity, water, and the costs thereof. Enough electricity and water must flow to the business. Utilities are needed in order to satisfy customers without business will come to an idle. †¢Building and health regulations and the behaviour of those enforcing them. What are the cost of renovating, what are the laws regulating building in an area, like building regulations and property rates, and what are the costs abiding to them. Costs of certain areas may be higher than others and that cost may be hard to catch up with in terms o gain on investment †¢The state of surrounding business. Will surrounding business aid in growth. For example is there repairs and health care near the business location. Location of business Bellville Mall, corner of Strand Road and Bill Bezuidenhout Avenue, Bellville How location factors apply to our business †¢Accessibility of human resources. Bellville is rich in human resources, there is a high demand for labour and the best suitable for the job can be hand picked †¢Distance of competitors and market share. There aren’t too many Laundromats in Bellville, the majority of the laundromats those in the surrounding areas are of low quality and the business that have the ability to compete with Stinky Laundry don’t have the proper infrastructure or proper don’t have better innovations to compare. The frequency and price of transport. There are a number of ways to get to Bellville, those are train bus taxi. All three services run frequently throughout the day, but the most efficient way to travel to the laundry would be by car as there is enough infrastructure and better for carrying the load. †¢Availability of buildings and the costs inv olved. Buildings in Bellville are sufficient in the cases of expansion or move. Costs of the buildings may run a little high for the quality of the buildings but with the big influx of people it won’t be a bad investment †¢Adequacy of electricity and water and the costs thereof. Being the busy place that it is electricity and water won’t be a problem because of the already available networks, the cost of electricity in SA is on the rising but its an expenses any business must deal with. †¢Building and health regulations and the behaviour of those enforcing them. Being a constantly developing area Bellville is regulated with a strong hand but the city is eager for new development so developments will not be a problem. †¢The state of surrounding business. Bellville has enough of everything in the area gaining nothing in Bellville will be a problem. 5. Enterprise Forms Type of enterprise Close Corporation Factors of selection of enterprise †¢With 1-10 members of the C. C. , start up capital will be easier to raise. †¢More than one member will provide a wider range of knowledge. Different members might have different areas of expertise. †¢Close corporations are relatively easy and inexpensive to start. Compared to other forms of ownerships C. C. are easy to start all they need is an opening statement and they are ready to start. †¢Members of the C. C have limited liability, meaning the members can only lose what they invested in the business not their personal belongings. †¢The C. C. as unlimited continuity. The ownership of the business can be transferred easily and if a member dies the business goes on Legal name of business Dirty Laundry C. C. ? 6. The Environment Internal environment Stinky laundry will be managed by its owners and will employ several workers to help with the daily running of the business. Open seven days a week from 7am t ill 7pm business. Some of the main aspects affecting our business are: Staff tasks. Staff will have the tasks of dry cleaning, ironing, maintenance, repairs, cleaning Equipment. The equipment of our business will be bought in bulk to save us money. The main sort of equipment required are washing machines, tumble dryers, irons, clothes pressers and washing baskets. Perishables. Our perishables, namely washing powder, fabric softener, etc, will be supplied by Surf on condition that we advertise and sell their products exclusively. Vision and mission statement Vision of Stinky Laundry: Stinky laundry wishes to become a profitable Laundromat, offering a reliable service to all customers and expanding the business by opening more Stinky Laundry branches across South Africa and revolutionise the way South Africans do laundry. Mission Statement: Stinky laundry is a local Laundromat that strives to achieve the status of the most recognised Laundromat in South Africa by offering cleaner, softer and a more affordable laundry service than any other Laundromat. Our ambition is to expand Stinky Laundromat and transform the business into a franchise that will be recognised all throughout South Africa. SWOT analysis of stinky laundry: Strengths- The cost of service of stinky laundry is cheaper than the average Laundromat, our staff is friendly and competent and we are situated in a fairly busy location in Bellville. Weaknesses- Technical difficulties arise occasionally regarding the washing machines, the repair costs tend to be costly and when a machine is out of order we are making less money. Stinky laundry is also under exposed. Opportunities- We can increase the exposure of Stinky laundry by means of advertising, take opportunity of all the lazy students who need their washing to be cleaned. Threats- Stinky laundries main threat would be other older Laundromats, because of their experience and loyal customers. Strategic objectives of Stinky laundry: †¢Create relationships with customers which will create more loyal customers †¢Make sure all customers are satisfied †¢Advertise at university residence Market Environment The target market for our particular service would be that of students, who have no time to do their own laundry. We try to keep our prices to a minimum so that it is affordable to the students, because they don’t have a particularly strong buying power due to the fact that majority of students don’t have income. Need satisfaction. We will satisfy consumer needs by providing a service to students and the general public who find doing laundry a waste of time. Being a retailer of cleaning products we satisfy needs of consumers specifically looking for laundry products Buying power and market share. Offering an all round service to the community we expect a larger market share because of the wide range of needs we satisfy. This intern brings us a large turnover and greater buying power to save on purchasing of new equipment. In order to maintain our low prices we have searched for the most cost effective suppliers, Stinky Laundry is also very much about quality, so it was difficult to locate a supplier that offered good quality washing powder at a low price. Suppliers. Our main supplier cleaning products would be Surf. We advertise their name and in return we save on the purchasing of their product. Since Stinky laundry offers a service we don’t really have intermediaries, because they is no need for a bridge between manufacturer and consumers. We will however need a bank, Bellville has a Absa branch in the area which we could deal with. Cleaning products could be bought from the nearby retailers in Bellville. Competitors are pulling out all the stops to compete with our business by trying to lower their prices and offering specials, but Stinky Laundry strives to be the best Laundromat, so that means we have to be a step ahead of our competitors, we do that by allot of advertising making sure that all residence in our area know who we are and are familiar with what the Stinky brand offers. Threats are rife in all of South Africa but Bellville is a busy place and police are aware of that. A security gate will be installed at the entrants to the building. The security gate can only be opened from the inside. ? Macro environment of South Africa South Africa, like many other countries, have lots of issues influencing the outcome of the growth of the country. Some of the main areas affecting us today are: Technological environment: †¢In South Africa we have experienced an rapid increase in technology and it is impacting business greatly. What these technological advances do is they help improve productivity of a business and can also even help improve the quality of your product/service. The negatives of technological advances are that if a competitor obtains more superior technology than you, you are then put at a disadvantage. If the buying power of your company is not big enough it is at risk. On the other hand technology aids businesses exponentially by decreasing production time and increasing profits †¢ The most important technological advances in South A frica would be water technology, Mineral technology, marine technology, agricultural technology, medical technology, transport technology and electrical technology. Economic environment: †¢Rates govern earning and profits made by individuals and businesses alike. Inflation rates of SA is now at 7. 5% which is good recovery after the world economic debacle. †¢ Unsteady growth of our economy is due to the high employment rate in SA. Inactive communities are only a burden on tax payers and do not contribute to economic growth but hinder it. †¢The exchange rate in SA is at an low to the dollar proving a good game for imports to our country. This saves us money and brightens our economy. ? Social environment: Demographics are even spread in employment. Previously disadvantaged are now being given a chance to prove themselves and women are showing that they are great assets to our country. †¢Distribution of wealth is still a huge factor in SA. The rich tend to make more money off their assets while those struggling get left behind †¢Values of South Africans are changing. They expect better for their lives and want better livin g conditions. This intern brings about new entrepreneurs wanting to better their lives and thus bringing new innovations to our country. Physical environment: †¢In some parts of South Africa we do see new infrastructure being built to help South Africans. Like the new buses and trains. The amount of South Africans using the new forms of transportation is rising. †¢The environments around us do need changing but more and more we do see businesses and individuals changing their life styles to help fight climate changes. Environmentalists often speak to us about trying to preserve the earth and people are starting to catch on.