Happy Care Laundry Shop

Tutorial Group : DEM 4

Executive Summary
 The business is running a coin-operated laundry
service
 The founder believe is satisfying the customer is the
way for a successful business
 The industry analysis use is the PEST force and
Michael Porter’s five competitive forces model
 For market analysis, we use demographic and
psychographic segment
Executive Summary
 For the 4P’s
 Product: self-service laundry
 Price: going rate pricing
 Place: condominium
 Promotion: offer promotion for festive season
Company Description
 Happy Care Laundry is a coin operated washing
machine which include dryer and ironing
 The business aim is to provide convenience to
customer
 The founder of the business believe that a stable career
is not enough to meet his goals, so his went to further
his studies
 There he meet his companion which turns up to be
team to form the business
Company Description
 After completing his studies, he went to be on a sale
team for an electrical company to gain knowledge and
experience
 He quickly got promoted and work as the manager for
the sales department for a few year before deciding to
start his own business
 After careful analyst he started Happy Care Laundry
 He see the market gap for convenient way to wash
laundry
 Industry Analysis
Coin-operated laundry business is emerging. Size of
industry is based on demographic of population density in
urban area. Clean and convenient is critical success factor.
PEST
i. Economic forces
 Determine suitable location for new startup
 Weak economy will not cause much effects – using this
service already become part of life
 State of economy is strong – many investors would invest
 Industry Analysis
ii. Social forces
 Alter how people and businesses should behave
 Many people busy in working and students continue tertiary studies
 Save more time – to spend on other things
 Rainy day – tend to use coin-operated laundry and dryer service, to dry
their shirts faster

iii. Technological Advances

 Social media – deliver information
 Google map and Waze – search for nearby self-service laundry shop
 Coin-operated laundry machine – quality getting better and better
 Bring convenience for business owner – lesser man power
 Industry Analysis
iv. Political action and regulatory changes
 Created and Enhanced of law about protecting environment
 Business owner provides machine to sell eco-friendly detergent powder
 Big signboard that indicates the payment that need to be pay

Michael Porter’s 5 competitive forces model

i. Threat of substitute
 Competitors provide similar products or services
 Price, location – make decision whether to shift or not
 Industry Analysis
ii. Threat of new entrants
 Industry is highly profitable – competition increase, average of
industry profitability decline
 Nearly 50% of ROI and low risk – attract new entrants
Barrier to entry
 Capital requirement – machine, largest amount of initial capital
required
 Cost advantage – area with concentration of population, price to rent
or buy will higher than before

iii. Rivalry among existing firm

 Businesses doing the same things like you do
 Not necessary to compete on price – safety and machines in good
condition
 Industry Analysis
iv. Bargaining power of suppliers
 Few suppliers supply eco-friendly detergent and selling
laundry and dryer machines
 Bargaining power is low – negotiating prices is allowed /
switching to other supplier

v. Bargaining power of buyers

 Relatively low – not so many competitors compete in a
specific area
 Buyers tend to accept price offered – feel the price is
reasonable, without bargaining
Market Analysis
Market Segmentation
 Demographic Segmentation
 Age
 To identify group of customers to use the coin-operated
laundry
 Different age group will have different prospective about coin-
operated laundry

 Social Class
 Reflects the consumers income level
 Price point will directly affects the consumers
Market Analysis
 Psychographic Segmentation
 Lifestyles of consumers
 Lifestyles of consumers will bring effect to the business
 The consumers with different lifestyle will tends to use the
coin-operated laundry or not

Target Market
 Age Group
 17 to 40 years old
 New generations & Emerging consumers
 No washing machine facility in place rented
Market Analysis
 Social Class
 Middle class & Upper Middle class consumers
 The price is affordable for both classes (RM 6 per wash &
RM 5 per dryer)
 Business class Eg. Budget hotels use to wash curtain,
bed sheet & so on.

 Lifestyle of consumers
 Busy with work & no time for laundry
 Customers that frequent travel – stay in budget hotels
Market Analysis
Customers needs & wants
 Ease to use and clean facilities
 Use new technology which is time efficient and clean
when wash

 Customers emphasize on safety

 Coverage of CCTV in the shop to monitor the situation
Market Analysis
Position Strategy (Product Attribute Map)
Market Analysis
Competitive Advantage
 Facility
 Washer has 12% bigger in drum volume
 Help consumers to save time and cost
 The use of new technology that make sure the laundry is fully
clean and dry

 Location of business
 Strategy point location which near house, condominium as
well as budget hotels
 Attract many customers at that location
 The location have less laundry shop – less competitive in that
area
 Marketing Plan
Product
 Is the goods or services provided to the target market
 Wonder Wash provides self-service laundry to the target
market
 Electrolux coin commercial washer
 Front load washing machine
 14kg per unit
 Quality of the washing machine is guarantee
 Function necessary is all included
 Marketing Plan
 Electrolux coin commercial dryer machine
 16kg per unit
 crease-free, delicate drying, and reverse tumbling technology are
provided
 Regular check by specialist
 to avoid any malfunction or any unexpected incident
 Marketing Plan
Price
 Is the amount of money consumers pay to buy a product or
service
 Going rate pricing strategy
 is setting the price of the product or services based on the current
market price
 assist us to decide a reasonable price for our customers
 Marketing Plan
 Washer machine for 14KG
 RM6.00 for cold water
 RM7.00 for warm water
 RM8.00 for hot water
 Dryer machines for 16KG
 RM4.00 for 24minutes
 RM1.00 for additional time 6minutes
 Marketing Plan
Place
 Is a location or distribution to provide product or services
to the consumers
 Types of distribution we provide our service is directly from
business to final consumers
 Located at Jalan Metro Wangsa, which is nearby Metroview
Condominium
 many people living at Metroview for their education and work
 do not have a washing machine can go to the nearby laundry shop
to wash their dirty clothes
 Marketing Plan
 The location of competitor is more far away from the
Metroview and our shop location
 Gives the consumers convenience to go to the most nearby laundry
shop to wash their laundry
 We will have a competitive advantage in the target market.
 Marketing Plan
Promotion
 Is the activity used to attract consumer’s awareness, increase
sales, and improve impression of the target market
 Use banner to inform the resident the existence of the new self-
service laundry shop
 Use modern promotional tools such as Facebook apps
 to transfer the message to the users
 indirectly transferring the message to the consumers
 reach a wide amount of consumers
 Offers during festival and anniversary
 Offers can attract consumers to come to consume and left an
impression in their mind.
Financial Projections (I)
Sources of Funds
Amount
Sources Amount (RM)
(RM)
Owner

- Saving 100,000.00

- Parent 100,000.00 200,000.00

Partner (Shareholder) 50,000.00

Bank Loan From Bank Rakyat 50,000.00

Total Fund 300,000.00

Financial Projections (I)
Uses of Funds
Machinery

Unit Price
Item Unit Total (RM)
(RM)
Electrolux Coin Commercial Washer 4 20,000.00 80,000.00
14kg
Electrolux Coin Commercial Dryer 2 31,000.00 62,000.00
Stack 16kg
Coin Changer 10k Coin Capacity 2 8,000.00 16,000.00
Total Machine Price 158,000.00
GST 6% 9,480.00
Net Total Machinery 167,480.00
 Financial Projections (I)
Rental, Overhead
Item Duration Total (RM)
Location: 1 month 4,500.00
- Jalan Metro Wangsa, Wangsa Maju, 53300 Kuala
Lumpur, Wilayah Persekutuan Kuala Lumpur

Water & Electricity 1 month 2,000.00

Net Total Rental, Overhead 6,500.00
 Financial Projections (I)
Renovation, Decoration, Setup Machine
Item Unit Unit Price (RM) Total (RM)
Package include: 1 85,000.00 85,000.00
- Supply and install piping, fitting and valve for washer outlet and inlet
- Supply and install UPVC pipe c/w fitting for water and dryer exhaust
- Supply and install water filter
- Construct double later netting concrete platform
- Supply and install 2 units water tank
- Supply and install 32mm sch 40 pressure piping and fitting for dryer gas line
- Supply and install Water Pump
- Supply and install partition wall c/w machines opening (500s q ft)
- Supply and install painting work (800s q ft)
- Final connection for washer and dryer
- Supply and install partition door without glasses
- Electrical work on 3 phase work
- 20 Nos 13A socker points
- 20 Nos of lighting points
- 2 Nos of 15A socker points
- Fans, Lightings
- Supply and install Tables & Chairs
- Interior Design and Painting Artwork
- Supply & Install 4 CCTV channels

Total Renovation, Decoration, Setup Machine 85,000.00

GST 6% 5,100.00
Net Total Renovation, Decoration, Setup Machine 90,100.00
Financial Projections (I)
Total Use of Fund

Description Amount (RM)

Net Total Machinery 167,480.00

Rental, Overhead 6,000.00

Net Total Renovation, Decoration, Setup Machine 90,100.00

Total Use of Fund 263,580.00

 Financial Projections (I)
Assumptions of Costs and Revenues
Electrolux Coin Commercial
Washer 14kg
Assumption
• Machine Utilization Rate: 30%
• Charge customer RM 6 per wash
• Income in 1 hour per washer that
run 2 washing cycle = RM12
INCOME PER 1 WASHER
PER DAY
RM12/hour x 24hour x 30%
utilization rate = RM86.40/day
MONTHLY INCOME PER 4
WASHERS
RM86.40/day x 30days x 4 units =
RM10,368/ month
Electrolux Coin Commercial
Profit Calculation (Per Month)
Dryer 16kg
Assumption Gross Profit For 4 Washers & 4 Dryers
• Machine Utilization Rate: 30% RM10,368 + RM8,640 = RM19,008/month
•Charge customer: RM 5 per dry
ESTIMATE Fix Cost Deduction:
•Income in 1 hour run 2 drying
1. Rental – RM4,500
cycle = RM10 2. Water, Electricity – RM1,500
3. Bank Repayment – RM1,645
INCOME PER 1 DRYER RM4,500 + RM1,500 + RM1,645 = RM7,645
PER DAY
RM10/hour x 24hour x 30% ESTIMATE NET PROFIT
RM11,363/month
utilization rate = RM72.00/day
If total investment is
RM264k, then based on ROI above is estimate 23 months.
MONTHLY INCOME PER 4 Typically ROI is about 2 years
DRYER
RM72.00/day x 30days x 4 units
= RM8,640/ month
Financial Projections (II)
Happy Care Laundry Pro Formal Income Statement
2018 2019 2020
RM RM RM
Sales 228,096.00 228,096.00 228,096.00
Less: Cost os goods sold 1,500.00 1,500.00 1,500.00
Gross Profit 229,596.00 229,596.00 229,596.00

Less: Expenses
Company Register Fees 150.00 - -

- 400.00 -
Advertising
Stationary 50.00 50.00 50.00
Business Insurance - 1,800.00 1,800.00
Rental 54,000.00 54,000.00 54,000.00
Water & Electricity 24,000.00 24,000.00 24,000.00
Salary 6,000.00 13,200.00 14,400.00
Upkeep Machinery - 5,000.00 5,000.00
Loan Repayment 10,512.00 10,512.00 10,512.00
Interest payable 9,240.00 9,240.00 9,240.00
Renovation, Decoration, Setup Machine 85,000.00 - -
Good & Service Tax Incurred 14,580.00 - -
Depreciation Washer 4,000.00 4,000.00 4,000.00
Depreciation Dryer 3,100.00 3,100.00 3,100.00

800.00 800.00 800.00

Depreciation Coin Changer
Income Before Tax 18,164.00 103,494.00 102,694.00
Less: Income Tax 19% 3,451.16 19,663.86 19,511.86
Income After Tax 14,712.84 83,830.14 83,182.14
 Happy Care Laundry Pro Formal Balance Sheet
2018 2019 2020
RM RM RM
Non-Current Asset
Machinery - Washer 80,000.00 76,000.00 72,000.00
(-) Accumulate Depreciation (4,000.00) (4,000.00) (4,000.00)
76,000.00 72,000.00 68,000.00

Machinery - Dryer 62,000.00 58,900.00 55,800.00

(-) Accumulate Depreciation (3,100.00) (3,100.00) (3,100.00)
58,900.00 55,800.00 52,700.00

Machinery - Coin Changer 16,000.00 15,200.00 14,400.00

(-) Accumulate Depreciation (800.00) (800.00) (800.00)
15,200.00 14,400.00 13,600.00
Current Asset
Inventories 1,000.00 1,000.00 1,000.00
Cash in bank 214,112.84 270,406.14 254,018.14
365,212.84 413,606.14 389,318.14
Equity
Common Stock (300,000 shares) 300,000.00 300,000.00 300,000.00
Add: Retain Earning 14,712.84 82,858.14 78,322.14

Current Liability
Trade Payable 500.00 500.00 500.00

Non-Current Liability
Bank Loan 50,000.00 30,248.00 10,496.00
365,212.84 413,606.14 389,318.14
 Happy Care Laundry Pro Forma Cash Flow
2018 2019 2020
RM RM RM
Cash Flows From Operating Activities
Income Before Tax 14,712.84 83,830.14 83,182.14

Adjustment for:
Depreciation 7,900.00 7,900.00 7,900.00

Increase (Decrease) in Inventory 1,000.00 - -

Increase (Decrease) in Trade Payable 500.00 - -

Total Adjustment 9,400.00 7,900.00 7,900.00

Net Cash Provided by Operating Activities 27,564.00 91,730.14 91,082.14

Cash Flow From Investing Activities

Purchase of machinery (158,000.00) - -

Cash Flow From Financing Activities

Bank loan 50,000.00 - -

Loan Repayment (10,512.00) (10,512.00) (10,512.00)

Loan Interest (9,240.00) (9,240.00) (9,240.00)

Net Cash Flow Provided by Financing Activities

Cash at the beginning of the year - (103,639.16) (31,661.02)

Increase In Cash (103,639.16) 71,978.14 71,330.14

Cash at the End of the year (103,639.16) (31,661.02) 39,669.12

 Ratio Analysis on Pro Forma Financial Statement
Ratio Gross Profit Margin:
Evaluates how much gross profit is generated from
Analysis sales.

2018 2019 2020 Net Profit Margin:

Measures the percentage of income gain from sales.
Profitability
Ratios Return on Assets:
Measure of the return on investment.
Gross Profit Margin = Gross Profit / Net Sales 99% 99% 99% It is used in evaluating management's efficiency in
5% 36% 35% using assets to generate income.
Net Profit Margin = Net Income / Net Sales
Return on Assets = Net Income / Average Total Assets 3% 20% 21% Current Ratio:
Evaluates the ability of a company to pay short-term
obligations using current assets.
Example: Cash, current receivables, inventory.
Liquidity Ratios
Acid Test Ratio:
Measures the ability of a company to pay short-term
Current Ratio = Current Assets / Current Liabilities 425 540 515 Times obligations using the more liquid types of current
assets.
Example: Cash, current receivables
Acid Test Ratio = (Current Assets - Inventory)/
423 538 513 Times
Asset Turnover:
Current Liabilities Measures overall efficiency of a company in
Efficiency Ratios generating sales using its assets.
= Sales / (Total Assets - Current Debt Ratio:
63% 55% 58%
Asset Turnover Liability) It is concerned with whether the company has
sufficient assets to meet all its liabilities.

Leverage Ratios
Debt Ratio = Total Liabilities / Total Assets 14% 7% 3%