FIN220 Corporate Finance

 

We are planning to launch a moving laundry truck that would enable in picking up and delivering clothing instantly with the help of website and landline called “INSTAKLEENERS”. The laundry industry aims in picking up the laundry items and quickly delivers them within few minutes. The business will initial be started by targeting the families with children and the business people who do not have time to wash the clothes. This idea will facilitate faster delivery of the laundered items and allow people who are in need of instant cleaning and ironing of their clothes (McKenzie, 2017)). It is a unique concept as there has been no laundry facilities that is mobile and can travel from place to place washing clothes and making clean clothes available to the busy targeted customers. The benefit that would be provided is high speed and clean and ironed clothes.

The management of the business consist of active and energetic members focusing on quality service at high speed and delivering the same to the door steps of the customers.

The business will generate income through website and phone calls through landline. The service cost will be reasonable, but it will not be lower than the competitors propose. If we reduce prices, we will have to reduce the quality of the service. The service costs depend of the equipment and chemicals use (McKeever, 2016). Our main target customers are from 30 to 50 years old people who are business people or have families with children.  They are from high, upper middle and middle social class background. They often use specialized laundry. Some of them may not use the specialized laundry because they do not have time or it is not convenient for them to deliver the laundry to the service (Watson, McGowan & Cunningham, 2018). Consequently, we can motivate them to use the service if the laundry is picked –up and delivered to their doorstep.

The car and the package of the laundry will be decorated with the logo of the company (Gabler, et al., 2017). Our customers will be able to choose the fragrance for their clothes. Special care will be provided for white clothes and for clothes with buttons. The urgent service will take 10-30 minutes. Customers will not need to go to the laundry service, as everything will be done in the car.  Additional service will be available: floor care, curtain care, upholstery care, window care, and carpet maintenance.  

The service will be provided in the Mobile Car at any place of the city in the the UAE, Dubai region.

The managerial positions will consist of the following personnel:  Cleaner and the person who will iron the clothes, the person who will pack the items and person who will deliver from the car to the house. There would also be a person to supervise the who process

The following overhead costs will initially be required to establish the business:

Description of cost	Cost ($)	Composition of cost/Notes
1. Equipment costs	34880	Moving car - $20000, washing machines - $6000, Apple Laptop - $3,500, lightning - $4,000, battery charger/AC adapter - $400, microphone -$280 and iron and iron stand- $700.
2. Salaries and wages	10950	Cleaner -$5,000, ironing man - $2,250, Packer and helper - $2,500 and delivery man - $1200 (subject to 10% annual increase)
3. Daily costs	12,000	Water and electricity charges and rental of equipment, subjected to 2% annual increase as per regulation.
4. Advertising and marketing costs	60000	Posters, flyers, billboards, payment to social media influencers for marketing and website development costs.
5. Transport costs	3500	Travel to and from the place of laundry car, the petrol and repairs
6. Insurance costs	3000	This will consist of the insurance of the machinery equipments against theft, damages or any other losses.
7. Maintenance costs	600	Repairs of the machines and the iron.
8. Other costs	700	Miscellaneous expenses including stationary items.
Total overhead costs	125630

Since the business is starting from scratch the only available source of finance will be a bank loan. A loan of $300,000 will be taken from Dubai SME bank with an interest of 3% p.a. The excess of $174370 ($300,000 - $125630) will be re-invested in savings account with the same bank at an interest rate of 1.5% p.a. (Refer to the excel document for calculations).

References            

Gabler, C. B., Panagopoulos, N., Vlachos, P. A., & Rapp, A. (2017). Developing an environmentally sustainable business plan: An international B2B case study. Corporate Social Responsibility and Environmental Management, 24(4), 261-272.

McKeever, M. (2016). How to write a business plan. Nolo.

McKenzie, D. (2017). Identifying and spurring high-growth entrepreneurship: experimental evidence from a business plan competition. American Economic Review, 107(8), 2278-2307.

Watson, K., McGowan, P., & Cunningham, J. A. (2018). An exploration of the Business Plan Competition as a methodology for effective nascent entrepreneurial learning. International Journal of Entrepreneurial Behavior & Research, 24(1), 121-146.

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