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Table of Contents

1.0 Executive Summary.....................................................................................................................1

Chart: Highlights...........................................................................................................................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....................................................................................................................2
Chart: Start-up..............................................................................................................................3
Table: Start-up...............................................................................................................................3
3.0 Services.............................................................................................................................................4
4.0 Market Analysis Summary.........................................................................................................5
4.1 Market Segmentation..............................................................................................................5
Table: Market Analysis................................................................................................................5
Chart: Market Analysis (Pie).....................................................................................................6
4.2 Target Market Segment Strategy........................................................................................6
4.2.1 Market Needs......................................................................................................................6
4.3 Service Business Analysis......................................................................................................6
4.3.1 Competition and Buying Patterns...............................................................................7
5.0 Strategy and Implementation Summary.............................................................................7
5.1 Competitive Edge......................................................................................................................8
5.2 Marketing Strategy...................................................................................................................9
5.3 Sales Strategy............................................................................................................................9
5.3.1 Sales Forecast..................................................................................................................10
Table: Sales Forecast.............................................................................................................10
Chart: Sales Monthly.............................................................................................................10
Chart: Sales by Year..............................................................................................................11
6.0 Management Summary.............................................................................................................11
6.1 Personnel Plan..........................................................................................................................12
Table: Personnel..........................................................................................................................12
7.0 Financial Plan................................................................................................................................13
7.1 Start-up Funding.....................................................................................................................13
Table: Start-up Funding............................................................................................................13
7.2 Break-even Analysis...............................................................................................................16
7.2 Break-even Analysis...............................................................................................................16
Table: Break-even Analysis.....................................................................................................16
Chart: Break-even Analysis....................................................................................................16
7.3 Projected Cash Flow...............................................................................................................17
Table: Cash Flow.........................................................................................................................17
Chart: Cash...................................................................................................................................18
7.4 Projected Profit and Loss.....................................................................................................19
Chart: Gross Margin Monthly.................................................................................................19
Chart: Gross Margin Yearly.....................................................................................................20
Table: Profit and Loss................................................................................................................20
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Table of Contents

Chart: Profit Monthly.................................................................................................................22

Chart: Profit Yearly.....................................................................................................................22
7.5 Projected Balance Sheet......................................................................................................23
Table: Balance Sheet.................................................................................................................23
7.6 Business Ratios........................................................................................................................25
7.6 Business Ratios........................................................................................................................25
Table: Ratios.................................................................................................................................25
Table: Sales Forecast...........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: Profit and Loss..........................................................................................................................3
Table: Profit and Loss..........................................................................................................................3
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................7
Table: Balance Sheet...........................................................................................................................7

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Columbia Cleaners

1.0 Executive Summary

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.
Sales forecast gradually increase over the first year and comprise total sales of $324,700. We
project modest net profits the first year. Our second and third year net profits are expected to
grow substantially.

Chart: Highlights

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Columbia Cleaners

1.1 Objectives
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

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
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
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

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Columbia Cleaners

maintenance and repair of machine breakdown, therefore the optimal solution is leasing
machines. The following machines will be leased:

1 Washer - 38 lb capacity, high spin, microprocessor control, electric heat

1 Tumble dryer - 40 lb capacity, stainless steel drum and gas heated
1 Dry cleaning machine - 25 lb
1 Roller Iron 40 x 12 inch, variable speed and vacuum exhauster
1 Ironing table with steaming vacuum board, integral 2 gallon boiler, iron, water pump and
light

Capital plan: The owner will invest $40,000 in the business. Additional capital for the business
in the amount of $20,000 will be borrowed from a bank.

Buying a van, and office/facilities equipment (computer, printer, fax, telephone instrument,
tables, chairs, shelving, work tables, racks, etc.) and initial leasing of laundry machines:
approx. $27,000
Buying another van in April: $10,000 (see the Cash Flow Table later in the document)

Loan: Lending plan has to be completed and submitted to the bank 6 months before starting
the business. Loan will be needed two months in advance. Annual interest of 10% has to be
paid on the long-term loans secured with fixed assets.

Chart: Start-up

Table: Start-up

Start-up

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Columbia Cleaners

Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Recruitment & training
Insurance
Rent
Utilities
Leased equipment
Expensed equipment
Other
Total Start-up Expenses

$1,000
$1,200
$3,000
$1,000
$700
$1,200
$700
$1,667
$10,000
$2,533
$23,000

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$10,000
$2,000
$0
$15,000
$27,000

Total Requirements

$50,000

3.0 Services
Columbia Cleaners is going to provide the following services for customers with free home pickup and delivery in the Hillsboro 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
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:
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.

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Columbia Cleaners

4.0 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."
http://www.mindspring.com/~jimgirone/cleanpage/desire.html

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, as summarized in the table below.
Table: Market Analysis

Market Analysis
Potential Customers

Growth

Full-time employees
Part-time employees
Other
Total

2%
2%
0%
1.92%

Year 1

Year 2

Year 3

Year 4

Year 5

220,000
20,000
10,000
250,000

224,400
20,400
10,000
254,800

228,888
20,808
10,000
259,696

233,466
21,224
10,000
264,690

238,135
21,649
10,000
269,784

CAGR
2.00%
2.00%
0.00%
1.92%

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Columbia Cleaners

Chart: Market Analysis (Pie)

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

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Columbia Cleaners

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.
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
Hillsboro 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.
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
Columbia Cleaners 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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Columbia Cleaners

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 in 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 U.S. economy recovers and quality of life is increases, 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. Hillsboro has a population of 70,000 served by seven 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 wait to be served. Then
they must repeat this boring process when they come to collect their items. Moreover, these
shops are only open from 9am - 6pm, and close 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.
The following is the SWOT analysis for Columbia Cleaners:
Strengths:

We offer a relatively new, door-to-door service for dry cleaning, and laundry,
providing another choice for customers.
We provide quick and convenient service in order to save customers time.

Weaknesses:

Competition from already established competitors in Hillsboro.

Starting at no market share at all.
Less experience than competitors.

Opportunities:

Expenditures on clothing is increasing, including expensive clothes; therefore the demand

for taking care of clothes also increases.
There are more and more women who traditionally have done 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, both men and women.
Average income of Hillsboro 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.

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Columbia Cleaners

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.

5.2 Marketing Strategy

Place: Dealing directly with customers, conveniently in the customers' houses in Hillsboro. We
are choosing to not rent a shop in the town center, thereby reducing costs. Columbia Cleaners
will receive clothes from and return them to customers' houses. Requests for urgent situation
pickups and deliveries will be accommodated, and a nominal fee charged.
Product: Free home pickup and delivery service, coming to customers' houses between 6 pm 9 pm three times 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 local press, 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 with lower price for loyal customers.

5.3 Sales Strategy

We will start off my matching our main competitor's prices and we will be closely monitoring our
financials to make sure that we develop a sustainable business without heavily discounting our
services to win customers. All sales inquiries will be initially handled by the business owner. We
will also train all our employees, especially those facing the customers, in customer service to
make sure that our customers are fully satisfied, as such customers will not only stay longer
with us but will also refer other customers to us. We will offer limited discounts to our
customers with large recurring orders and also provide incentives for new customer referrals.

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Columbia Cleaners

5.3.1 Sales Forecast

The sales forecast gradually increases over the year 2005 and comprises total sales of
$324,700. However, in the last three months, October, November and December the sales
remain almost level due to possible seasonal factors. Yearly forecasts are summarized in the
table below.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$116,892
$185,079
$22,729
$0
$324,700

$151,960
$240,603
$29,547
$0
$422,110

$197,548
$312,784
$38,412
$0
$548,744

Year 1
$14,027
$14,806
$6,819
$0
$35,652

Year 2
$18,235
$19,248
$8,864
$0
$46,348

Year 3
$23,706
$25,023
$11,524
$0
$60,252

Sales
Dry Cleaning
Laundry
Alteration Services
Other
Total Sales
Direct Cost of Sales
Dry Cleaning
Laundry
Alteration Services
Other
Subtotal Direct Cost of Sales

Chart: Sales Monthly

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Columbia Cleaners

Chart: Sales by Year

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 the laundry expert who reports to the owner.

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Columbia Cleaners

6.1 Personnel Plan

Through consultations with a dry cleaning consultant, the term of reference of a laundry expert
and workers are prepared. Employment information will be advertised in local newspapers. 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 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 5:30 pm - 9:30 pm three
times a week.
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 2005:

Description

No of
people

Salary per
hour ($)

Working
hours/week

Owner

Fulltime

23

40

Laundry
expert

Fulltime

12

40

Workers

Parttime

48

Drivers

Parttime

24

Total

51

152

From April 2005, 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 him therefore the working process will not be effected.
An average 5% increase in all salaries is planned for the following two years of operations.
Table: Personnel

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Columbia Cleaners

Personnel Plan
Year 1

Year 2

Year 3

Director/Accountant

$48,000

$50,400

$52,920

Laundry expert

$24,960

$26,208

$27,518

Worker-1

$11,232

$11,794

$12,383

Worker-2

$11,232

$11,794

$12,383

Worker-3

$8,424

$8,845

$9,287

Driver-1

$4,368

$4,586

$4,816

Driver-2

$4,368

$4,586

$4,816

Driver-3

$3,276

$3,440

$3,612

$0

$0

$0

$115,860

$121,653

$127,736

Other
Total People

Total Payroll

7.0 Financial Plan

The following topics, 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. Sales
increase gradually over the 12 months showing the positive trend of sales. Columbia Cleaners is
steadily gaining market share. Gross profit and net profit rise proportionately to sales revenue.
The financial statements show that the business runs quite well and achieves expected results.
7.1 Start-up Funding
Startup expenses will be funded through a combination of owner's equity capital and a
commercial loan, as summarized in the table below.
The owner will invest $40,000 in the business. Additional capital for the business in the amount
of $20,000 will be borrowed from a bank.
The lending plan has to be completed and submitted to the bank 6 months before starting the
business. The loan will be needed two months in advance. Annual interest of 10% has to be
paid on the long-term loans secured with fixed assets.
Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund

$23,000

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Columbia Cleaners

Start-up Assets to Fund

$27,000

Total Funding Required

$50,000

Assets
Non-cash Assets from Start-up

$17,000

Cash Requirements from Start-up

$10,000

Additional Cash Raised

$10,000

Cash Balance on Starting Date

$20,000

Total Assets

$37,000

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities

$0
$20,000

Accounts Payable (Outstanding Bills)

$0

Other Current Liabilities (interest-free)

$0

Total Liabilities

$20,000

Capital

Planned Investment
J.C. Copperbeech

$40,000

Other investors

$0

Additional Investment Requirement

$0

Total Planned Investment

Loss at Start-up (Start-up Expenses)

Total Capital

$40,000

($23,000)
$17,000

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Columbia Cleaners

Total Capital and Liabilities

$37,000

Total Funding

$60,000

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Columbia Cleaners

7.2 Break-even Analysis

The monthly break-even point of the business is calculated below. As revenue becomes higher
than break-even point, the business starts to harvest the profit. As forecasted, the total
demand on dry cleaning and laundry service continues to rise in the following years; therefore,
if the service satisfies its customers, increases new customers and retains customer loyalty, the
profit will continue to go up.
Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even

$19,205

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

11%
$17,097

Chart: Break-even Analysis

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Columbia Cleaners

7.3 Projected Cash Flow

Cash flow increases gradually over the year creating the positive net worth. The first several
months of operation will be of critical importance to the survival of the business, and we will be
paying special attention to our cash flows. We plan to purchase one more van in April 2005 to
accommodate for the growing business volumes. Initially, we do not plan to sell on credit, with
all of our transactions being cash- or credit card based. We anticipate generating a sufficient
customer base that will allow us to maintain healthy cash balances starting from the middle of
the first year of operations, as summarized in the table below.
Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Sales

$324,700

$422,110

$548,744

Subtotal Cash from Operations

$324,700

$422,110

$548,744

Sales Tax, VAT, HST/GST Received

$0

$0

$0

New Current Borrowing

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

New Investment Received

$0

$0

$0

$324,700

$422,110

$548,744

Year 1

Year 2

Year 3

Cash Spending

$115,860

$121,653

$127,736

Bill Payments

$133,714

$191,713

$244,959

Cash Received

Cash from Operations

Additional Cash Received

Subtotal Cash Received

Expenditures

Expenditures from Operations

Page 17

Columbia Cleaners

Subtotal Spent on Operations

$249,574

$313,366

$372,694

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$334

$0

$0

$0

$0

$0

$10,000

$0

$0

$0

$0

$0

$259,908

$313,366

$372,694

Net Cash Flow

$64,792

$108,744

$176,050

Cash Balance

$84,792

$193,536

$369,586

Additional Cash Spent

Long-term Liabilities Principal Repayment

Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

Chart: Cash

Page 18

Columbia Cleaners

7.4 Projected Profit and Loss

The table below outlines our projected profit and loss statements for the first three years of
operation. 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. Nevertheless, we are
expecting to make a small profit the first year. Our second and third year net profits are
expected to grow quite a bit, as shown below.

Chart: Gross Margin Monthly

Page 19

Columbia Cleaners

Chart: Gross Margin Yearly

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

$324,700

$422,110

$548,744

$35,652

$46,348

$60,252

$0

$0

$0

$35,652

$46,348

$60,252

$289,048

$375,762

$488,492

89.02%

89.02%

89.02%

$115,860

$121,653

$127,736

Marketing/Promotion

$2,250

$2,700

$3,000

Depreciation

$4,500

$4,000

$5,000

$14,400

$15,000

$16,000

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

Gross Margin
Gross Margin %

Expenses
Payroll

Rent

Page 20

Columbia Cleaners

Utilities

$11,100

$12,000

$13,000

$4,800

$5,000

$5,500

$10,200

$11,000

$12,000

Payroll Taxes

$0

$0

$0

Maintenance

$1,200

$1,500

$2,000

Gas

$5,250

$6,500

$7,500

$20,000

$20,000

$20,000

$3,600

$4,000

$5,000

$12,000

$20,000

$30,000

$205,160

$223,353

$246,736

Profit Before Interest and Taxes

$83,888

$152,409

$241,756

EBITDA

$88,388

$156,409

$246,756

$1,967

$1,967

$1,967

$24,576

$45,133

$71,937

Net Profit

$57,345

$105,310

$167,853

Net Profit/Sales

17.66%

24.95%

30.59%

Telecommunications
Insurance

Equipment lease
Office cleaning
Other

Total Operating Expenses

Interest Expense
Taxes Incurred

Page 21

Columbia Cleaners

Chart: Profit Monthly

Chart: Profit Yearly

Page 22

Columbia Cleaners

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

Year 1

Year 2

Year 3

$84,792

$193,536

$369,586

$4,008

$5,085

$6,610

$0

$0

$0

$88,800

$198,621

$376,196

$25,000

$25,000

$25,000

$4,500

$8,500

$13,500

$20,500

$16,500

$11,500

$109,300

$215,121

$387,696

Year 1

Year 2

Year 3

Accounts Payable

$15,289

$15,799

$20,522

Current Borrowing

$0

$0

$0

Other Current Liabilities

$0

$0

$0

Subtotal Current Liabilities

$15,289

$15,799

$20,522

Long-term Liabilities

$19,666

$19,666

$19,666

Total Liabilities

$34,955

$35,465

$40,188

Assets

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

Liabilities and Capital

Current Liabilities

Page 23

Columbia Cleaners

Paid-in Capital

$40,000

$40,000

$40,000

($23,000)

$34,345

$139,655

Earnings

$57,345

$105,310

$167,853

Total Capital

$74,345

$179,655

$347,508

$109,300

$215,121

$387,696

$74,345

$179,655

$347,508

Retained Earnings

Total Liabilities and Capital

Net Worth

Page 24

Columbia Cleaners

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios for
Commercial Drycleaning and Laundry Collection and Distribution Establishments, based on the
Standard Industrial Classification code 7216.9903, are shown for comparison.
Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

30.00%

30.00%

4.37%

Inventory

3.67%

2.36%

1.70%

4.37%

Other Current Assets

0.00%

0.00%

0.00%

38.35%

Total Current Assets

81.24%

92.33%

97.03%

55.47%

Long-term Assets

18.76%

7.67%

2.97%

44.53%

100.00%

100.00%

100.00%

100.00%

Current Liabilities

13.99%

7.34%

5.29%

22.38%

Long-term Liabilities

17.99%

9.14%

5.07%

24.56%

Total Liabilities

31.98%

16.49%

10.37%

46.94%

Net Worth

68.02%

83.51%

89.63%

53.06%

100.00%

100.00%

100.00%

100.00%

Gross Margin

89.02%

89.02%

89.02%

100.00%

Selling, General & Administrative Expenses

71.36%

64.07%

58.43%

77.90%

0.00%

0.00%

0.00%

2.06%

25.84%

36.11%

44.06%

2.41%

5.81

12.57

18.33

1.70

Sales Growth

Percent of Total Assets

Total Assets

Percent of Sales
Sales

Advertising Expenses
Profit Before Interest and Taxes

Main Ratios
Current

Page 25

Columbia Cleaners

Quick

5.55

12.25

18.01

1.28

31.98%

16.49%

10.37%

61.40%

110.19%

83.74%

69.00%

4.39%

74.95%

69.93%

61.85%

11.38%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

17.66%

24.95%

30.59%

n.a

Return on Equity

77.13%

58.62%

48.30%

n.a

11.85

10.19

10.30

n.a

9.75

12.17

12.17

n.a

27

30

27

n.a

2.97

1.96

1.42

n.a

Debt to Net Worth

0.47

0.20

0.12

n.a

Current Liab. to Liab.

0.44

0.45

0.51

n.a

$73,511

$182,821

$355,674

n.a

42.66

77.50

122.93

n.a

Assets to Sales

0.34

0.51

0.71

n.a

Current Debt/Total Assets

14%

7%

5%

n.a

Acid Test

5.55

12.25

18.01

n.a

Sales/Net Worth

4.37

2.35

1.58

n.a

Dividend Payout

0.00

0.00

0.00

n.a

Total Debt to Total Assets

Pre-tax Return on Net Worth
Pre-tax Return on Assets

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover

Debt Ratios

Liquidity Ratios
Net Working Capital
Interest Coverage

Additional Ratios

Page 26

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales
Dry Cleaning

0%

$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

0%

$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 Services

0%

$812

$1,043

$1,197

$1,610

$1,792

$1,890

$2,086

$2,240

$2,422

$2,513

$2,569

$2,555

Other

0%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Sales

$11,600

$14,900

$17,100

$23,000

$25,600

$27,000

$29,800

$32,000

$34,600

$35,900

$36,700

$36,500

Direct Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

12%

$501

$644

$739

$994

$1,106

$1,166

$1,287

$1,382

$1,495

$1,551

$1,585

$1,577

8%

$529

$679

$780

$1,049

$1,167

$1,231

$1,359

$1,459

$1,578

$1,637

$1,674

$1,664

30%

$244

$313

$359

$483

$538

$567

$626

$672

$727

$754

$771

$767

$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

Dry Cleaning
Laundry
Alteration Services
Other
Subtotal Direct Cost of Sales

Page 1

Appendix
Table: Personnel

Personnel Plan
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Director/Accountant

0%

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

Laundry expert

0%

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

$2,080

Worker-1

0%

$936

$936

$936

$936

$936

$936

$936

$936

$936

$936

$936

$936

Worker-2

0%

$936

$936

$936

$936

$936

$936

$936

$936

$936

$936

$936

$936

Worker-3

0%

$0

$0

$0

$936

$936

$936

$936

$936

$936

$936

$936

$936

Driver-1

0%

$364

$364

$364

$364

$364

$364

$364

$364

$364

$364

$364

$364

Driver-2

0%

$364

$364

$364

$364

$364

$364

$364

$364

$364

$364

$364

$364

Driver-3

0%

$0

$0

$0

$364

$364

$364

$364

$364

$364

$364

$364

$364

Other

0%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$8,680

$8,680

$8,680

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

Total People

Total Payroll

Page 2

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$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%

$8,680

$8,680

$8,680

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

Marketing/Promotion

$150

$150

$150

$200

$200

$200

$200

$200

$200

$200

$200

$200

Depreciation

$250

$250

$250

$417

$417

$417

$417

$417

$417

$417

$417

$417

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

Utilities

$700

$700

$700

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

Telecommunications

$400

$400

$400

$400

$400

$400

$400

$400

$400

$400

$400

$400

Insurance

$700

$700

$700

$900

$900

$900

$900

$900

$900

$900

$900

$900

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

Expenses
Payroll

Rent

Page 3

Appendix
Payroll Taxes

15%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Maintenance

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

Gas

$250

$250

$250

$500

$500

$500

$500

$500

$500

$500

$500

$500

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$1,667

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

Total Operating Expenses

$15,397

$15,397

$15,397

$17,663

$17,663

$17,663

$17,663

$17,663

$17,663

$17,663

$17,663

$17,663

Profit Before Interest and Taxes

($5,070)

($2,133)

($174)

$2,811

$5,126

$6,372

$8,865

$10,823

$13,138

$14,295

$15,007

$14,829

EBITDA

($4,820)

($1,883)

$76

$3,228

$5,542

$6,789

$9,281

$11,240

$13,554

$14,712

$15,424

$15,246

$164

$164

$164

$164

$164

$164

$164

$164

$164

$164

$164

$164

($1,570)

($689)

($101)

$794

$1,489

$1,862

$2,610

$3,198

$3,892

$4,239

$4,453

$4,400

Net Profit

($3,664)

($1,608)

($237)

$1,853

$3,473

$4,346

$6,091

$7,461

$9,082

$9,892

$10,390

$10,266

Net Profit/Sales

-31.59%

-10.79%

-1.38%

8.06%

13.57%

16.10%

20.44%

23.32%

26.25%

27.55%

28.31%

28.12%

Equipment lease
Office cleaning
Other

Interest Expense
Taxes Incurred

15%

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Sales

$11,600

$14,900

$17,100

$23,000

$25,600

$27,000

$29,800

$32,000

$34,600

$35,900

$36,700

$36,500

Subtotal Cash from Operations

$11,600

$14,900

$17,100

$23,000

$25,600

$27,000

$29,800

$32,000

$34,600

$35,900

$36,700

$36,500

$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 Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$11,600

$14,900

$17,100

$23,000

$25,600

$27,000

$29,800

$32,000

$34,600

$35,900

$36,700

$36,500

Expenditures

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received

Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received

0.00%

Page 5

Appendix

Expenditures from Operations

Cash Spending

$8,680

$8,680

$8,680

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$9,980

$202

$6,108

$7,526

$8,740

$11,419

$12,029

$12,452

$13,646

$14,418

$15,419

$15,763

$15,995

$8,882

$14,788

$16,206

$18,720

$21,399

$22,009

$22,432

$23,626

$24,398

$25,399

$25,743

$25,975

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$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

$334

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$10,000

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Spent

$9,216

$14,788

$16,206

$28,720

$21,399

$22,009

$22,432

$23,626

$24,398

$25,399

$25,743

$25,975

Net Cash Flow

$2,384

$112

$894

($5,720)

$4,201

$4,991

$7,368

$8,374

$10,202

$10,501

$10,957

$10,525

Cash Balance

$22,384

$22,496

$23,390

$17,671

$21,872

$26,863

$34,232

$42,606

$52,808

$63,310

$74,267

$84,792

Bill Payments
Subtotal Spent on Operations

Additional Cash Spent

Long-term Liabilities Principal Repayment

Page 6

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$20,000

$22,384

$22,496

$23,390

$17,671

$21,872

$26,863

$34,232

$42,606

$52,808

$63,310

$74,267

$84,792

$2,000

$1,726

$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

$0

$22,000

$24,111

$24,132

$25,268

$20,196

$24,683

$29,828

$37,504

$46,120

$56,607

$67,251

$78,297

$88,800

$15,000

$15,000

$15,000

$15,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$0

$250

$500

$750

$1,167

$1,583

$2,000

$2,417

$2,833

$3,250

$3,667

$4,083

$4,500

Total Long-term Assets

$15,000

$14,750

$14,500

$14,250

$23,833

$23,417

$23,000

$22,583

$22,167

$21,750

$21,333

$20,917

$20,500

Total Assets

$37,000

$38,861

$38,632

$39,518

$44,029

$48,100

$52,828

$60,087

$68,286

$78,357

$88,585

$99,213

$109,300

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Assets

Starting Balances

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

Long-term Assets
Long-term Assets
Accumulated Depreciation

Liabilities and Capital

Current Liabilities
Accounts Payable

$0

$5,858

$7,238

$8,360

$11,018

$11,615

$11,998

$13,166

$13,904

$14,894

$15,229

$15,468

$15,289

Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Page 7

Appendix
Other Current Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Current Liabilities

$0

$5,858

$7,238

$8,360

$11,018

$11,615

$11,998

$13,166

$13,904

$14,894

$15,229

$15,468

$15,289

Long-term Liabilities

$20,000

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

$19,666

Total Liabilities

$20,000

$25,524

$26,904

$28,026

$30,684

$31,281

$31,664

$32,832

$33,570

$34,560

$34,895

$35,134

$34,955

Paid-in Capital

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

$40,000

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

($23,000)

$0

($3,664)

($5,272)

($5,508)

($3,655)

($182)

$4,164

$10,254

$17,716

$26,798

$36,689

$47,079

$57,345

Total Capital

$17,000

$13,336

$11,729

$11,492

$13,345

$16,819

$21,164

$27,255

$34,716

$43,798

$53,690

$64,080

$74,345

Total Liabilities and Capital

$37,000

$38,861

$38,632

$39,518

$44,029

$48,100

$52,828

$60,087

$68,286

$78,357

$88,585

$99,213

$109,300

Net Worth

$17,000

$13,336

$11,729

$11,492

$13,345

$16,819

$21,164

$27,255

$34,716

$43,798

$53,690

$64,080

$74,345

Retained Earnings
Earnings

Page 8