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 Table of Contents

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

Chart: Highlights ......................................................................................................................1
1.1 Objectives ...................................................................................................................................1
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 .........................................................................................................................4
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 ...................................................................................................................13
7.0 Financial Plan ....................................................................................................................................13
7.1 Start-up Funding ......................................................................................................................13
Table: Start-up Funding........................................................................................................14
7.2 Break-even Analysis................................................................................................................15
Table: Break-even Analysis .................................................................................................15
Chart: Break-even Analysis .................................................................................................15
7.3 Projected Cash Flow...............................................................................................................16
Table: Cash Flow..................................................................................................................16
Chart: Cash ...........................................................................................................................17
7.4 Projected Profit and Loss .......................................................................................................18
Chart: Gross Margin Monthly ...............................................................................................18
Chart: Gross Margin Yearly..................................................................................................19
Table: Profit and Loss ..........................................................................................................20
Chart: Profit Monthly .............................................................................................................21
Chart: Profit Yearly................................................................................................................21
7.5 Projected Balance Sheet ........................................................................................................22
Table: Balance Sheet ...........................................................................................................22
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 Table of Contents
7.6 Business Ratios .......................................................................................................................23
Table: Ratios .........................................................................................................................24
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: Profit and Loss ...............................................................................................................................3
Table: Cash Flow .......................................................................................................................................4
Table: Balance Sheet ................................................................................................................................5

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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 fac ility, but will not need a retail shop bec ause 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 eac h delivery, or by monthly credit card
billing. At the end of eac h month we will send statements to eac h c ontrac t 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 attrac t 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 bec ome repeat customers. When the
patronage happens continuously, they bec ome 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 expec ted to
grow substantially.

1.1 Objectives

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 Columbia Cleaners
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 fac ility, but
will not need a retail store front bec ause of our pick-up and delivery service. However, we will
need delivery vans and customer service trained drivers. Initially, the production fac ility will be
rented. Cleaning equipment will be leased with accompanying maintenance contrac ts.

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 disc lose its finances. The
registration proc edures 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

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 Columbia Cleaners
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 mac hines costs approximately $50,000 as opposed
to leasing which c osts $20,000 per year including maintenance. Evaluating the leasing solution
shows NPV higher than that of buying mac hines. Moreover, the business is new and has less
experience in maintenance and repair of mac hine breakdown, therefore the optimal solution is
leasing mac hines. The following mac hines will be leased:

· 1 Washer - 38 lb capacity, high spin, microproc essor control, electric heat

· 1 Tumble dryer - 40 lb capacity, stainless steel drum and gas heated
· 1 Dry cleaning mac hine - 25 lb
· 1 Roller Iron 40 x 12 inch, variable speed and vac uum exhauster
· 1 Ironing table with steaming vac uum 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/fac ilities equipment (c omputer, printer, fax, telephone
instrument, tables, chairs, shelving, work tables, rac ks, etc.) and initial leasing of
laundry mac hines: 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.

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 Columbia Cleaners

Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal $1,000
Stationery etc. $1,200
Brochures $3,000
Recruitment & training $1,000
Insurance $700
Rent $1,200
Utilities $700
Leased equipment $1,667
Expensed equipment $10,000
Other $2,533
Total Start-up Expenses $23,000

Start-up Assets
Cash Required $10,000
Start-up Inventory $2,000
Other Current Assets $0
Long-term Assets $15,000
Total Assets $27,000

Total Requirements $50,000

3.0 Services
Columbia Cleaners is going to provide the following services for customers with free home pick-up
and delivery in the Hillsboro area:

· Dry cleaning
· Laundry for personal clothes and large items such as blankets, duvets, curtains, etc.
· Alteration service

Operations plan

There are two ways for customers to take part in the service. Customers can sign contrac ts
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 eac h delivery, or by monthly credit card
billing. We will send statements to eac h c ontrac t customer, itemizing service fees and the
charge for the service to their credit cards for payment, at the end of eac h month.

No retail shop will be rented in order to reduce the operation cost. An operations fac ility for
installing mac hines and equipment, washing and cleaning ac tivities, and storing not yet cleaned
and cleaned garments and items is needed. The operations fac ility will require about 2,000
square feet divided into four main sections as following:

1. Machine installation and cleaning ac tivities

2. Sorting and storage of dirty garments received

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 Columbia Cleaners
3. Storing cleaned garments after finishing prior to delivery
4. Garment alteration workroom

The whole operation proc ess will be controlled and monitored by a laundry expert employee,
and generally managed by the business owner.

4.0 Market Analysis Summary

It is nec essary 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, chec k, 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 c lothing 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
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Full-time employees 2% 220,000 224,400 228,888 233,466 238,135 2.00%
Part-time employees 2% 20,000 20,400 20,808 21,224 21,649 2.00%
Other 0% 10,000 10,000 10,000 10,000 10,000 0.00%
Total 1.92% 250,000 254,800 259,696 264,690 269,784 1.92%

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 Columbia Cleaners

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, espec ially expensive clothes, makes them pay more
attention to the care and cleaning of those garments. With c areful research, this business
foc uses on working and professional class customers as a target segment market.

4.2.1 Market Needs

Research shows that one of the key fac tors in c hoosing 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 disc retionary 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

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 Columbia Cleaners
The personal service industry is very fragmented overall. The Metropolitan Portland area is no
exception to that, with numerous small providers servicing the community's needs for laundry
and dry cleaning. In the city of Hillsboro there are about half-dozen dry cleaners, some of
which also provide laundry and garment alteration services. However, almost none of them,
except Convenient Door-to-Door Dry Cleaning, provide the convenience of the door-to-door
service.

4.3.1 Competition and Buying Patterns

Competition in the dry cleaning/laundry business in the Hillsboro area is not fierce. Research
shows that there are seven dry cleaners in the city of Hillsboro, almost all of them offering the
traditional drop-off service. The only competitor offering the convenience of the door-to-door
service is Convenient Door-to-Door Dry Cleaning that provides dry cleaning and shoe repair
services. We believe that initially this will be our major loc al competitor. We also believe that
we will be able to win c ustomers 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 satisfac tion

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 attrac t 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 bec ome repeat customers. When the patronage happens continuously, they bec ome 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 satisfac torily ac hieved.

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 nec essary to gain a customer base. If
existing competitors see us as a major threat and they resort to overtly aggressive and
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 Columbia Cleaners
debilitating ac tions it will be very difficult for us to bec ome an established player in the
marketplac e. 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.

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
expec ted, making the business difficult in finance. Moreover, in c ase 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 ac tivities 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 plac es, 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 proc ess 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 customer’s time.

Weaknesses:

· Competition from already established competitors in Hillsboro.

· Starting at no market share at all.
· Less experience than c ompetitors.

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.

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 Columbia Cleaners
· People tend to spend more time on leisure ac tivities 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.
· The ability to dec rease 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 mac hines for dry cleaning.

5.2 Marketing Strategy

Place: Dealing directly with c ustomers, conveniently in the customers' houses in Hillsboro. We
are choosing to not rent a shop in the town c enter, thereby reducing costs. Columbia Cleaners
will receive clothes from and return them to customers' houses. Requests for urgent situation
pickups and deliveries will be ac commodated, 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 sc heme 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 loc al 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% disc ount as an incentive for customers who sign one- year contrac ts.
· Issue coupons with lower price for loyal customers.

5.3 Sales Strategy

We will start off my matching our main c ompetitor's prices and we will be closely monitoring our
financials to make sure that we develop a sustainable business without heavily disc ounting our
services to win c ustomers. All sales inquiries will be initially handled by the business owner. We
will also train all our employees, espec ially those fac ing the customers, in c ustomer service to
make sure that our customers are fully satisfied, as such c ustomers will not only stay longer with
us but will also refer other customers to us. We will offer limited disc ounts 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 fac tors. Yearly forecasts are summarized in the table below.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Dry Cleaning $116,892 $151,960 $197,548
Laundry $185,079 $240,603 $312,784
Alteration Services $22,729 $29,547 $38,412
Other $0 $0 $0
Total Sales $324,700 $422,110 $548,744

Direct Cost of Sales Year 1 Year 2 Year 3

Dry Cleaning $14,027 $18,235 $23,706
Laundry $14,806 $19,248 $25,023
Alteration Services $6,819 $8,864 $11,524
Other $0 $0 $0
Subtotal Direct Cost of Sales $35,652 $46,348 $60,252

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 Columbia Cleaners

6.0 Management Summary

The owner of the business will be director and ac countant, working full time. A laundry expert
will be employed and will be in c harge 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 loc al
newspapers. The laundry expert and two part-time workers who have experience in laundry work
will be employed.

The laundry expert will be in c harge 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 proc esses

· 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 Salary Working

people per hour hours/
($) week

Owner Full-time 1 23 40

Laundry Full-time 1 12 40
expert

Workers Part-time 2 9 48

Drivers Part-time 2 7 24

Total - 6 51 152
From April 2005, the business has more customers and bec omes 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 c ase one of them bec omes sick or busy, other staff
can replac e him therefore the working proc ess will not be effected.

An average 5% increase in all salaries is planned for the following two years of operations.

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Table: Personnel
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
Other $0 $0 $0
Total People 8 8 8

Total Payroll $115,860 $121,653 $127,736

7.0 Financial Plan

The following topics, the cash flow statement, profit and loss ac count, and balance sheet
have been built using forecasted information which is as ac curate 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 ac hieves expec ted 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.

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 Columbia Cleaners

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $23,000
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 $0
Long-term Liabilities $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 $40,000

Loss at Start-up (Start-up Expenses) ($23,000)

Total Capital $17,000

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 bec omes 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 11%
Estimated Monthly Fixed Cost $17,097

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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
ac commodate for the growing business volumes. Initially, we do not plan to sell on credit, with
all of our transac tions 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 Received

Cash from Operations

Cash Sales $324,700 $422,110 $548,744
Subtotal Cash from Operations $324,700 $422,110 $548,744

Additional Cash Received

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
Subtotal Cash Received $324,700 $422,110 $548,744

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $115,860 $121,653 $127,736
Bill Payments $133,714 $191,713 $244,959
Subtotal Spent on Operations $249,574 $313,366 $372,694

Additional Cash Spent

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
Long-term Liabilities Principal Repayment $334 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $10,000 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $259,908 $313,366 $372,694

Net Cash Flow $64,792 $108,744 $176,050

Cash Balance $84,792 $193,536 $369,586

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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 expec ted and produces a small profit at the end of the year. It is not
nec essary for the business to gain high profit in the first year. Nevertheless, we are expec ting to
make a small profit the first year. Our second and third year net profits are expec ted to grow
quite a bit, as shown below.

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Table: Profit and Loss

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $324,700 $422,110 $548,744
Direct Cost of Sales $35,652 $46,348 $60,252
Other Costs of Sales $0 $0 $0
Total Cost of Sales $35,652 $46,348 $60,252

Gross Margin $289,048 $375,762 $488,492

Gross Margin % 89.02% 89.02% 89.02%

Expenses
Payroll $115,860 $121,653 $127,736
Marketing/Promotion $2,250 $2,700 $3,000
Depreciation $4,500 $4,000 $5,000
Rent $14,400 $15,000 $16,000
Utilities $11,100 $12,000 $13,000
Telecommunications $4,800 $5,000 $5,500
Insurance $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
Equipment lease $20,000 $20,000 $20,000
Office cleaning $3,600 $4,000 $5,000
Other $12,000 $20,000 $30,000

Total Operating Expenses $205,160 $223,353 $246,736

Profit Before Interest and Taxes $83,888 $152,409 $241,756

EBITDA $88,388 $156,409 $246,756
Interest Expense $1,967 $1,967 $1,967
Taxes Incurred $24,576 $45,133 $71,937

Net Profit $57,345 $105,310 $167,853

Net Profit/Sales 17.66% 24.95% 30.59%

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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
Assets

Current Assets
Cash $84,792 $193,536 $369,586
Inventory $4,008 $5,085 $6,610
Other Current Assets $0 $0 $0
Total Current Assets $88,800 $198,621 $376,196

Long-term Assets
Long-term Assets $25,000 $25,000 $25,000
Accumulated Depreciation $4,500 $8,500 $13,500
Total Long-term Assets $20,500 $16,500 $11,500
Total Assets $109,300 $215,121 $387,696

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
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

Paid-in Capital $40,000 $40,000 $40,000

Retained Earnings ($23,000) $34,345 $139,655
Earnings $57,345 $105,310 $167,853
Total Capital $74,345 $179,655 $347,508
Total Liabilities and Capital $109,300 $215,121 $387,696

Net Worth $74,345 $179,655 $347,508

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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.

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Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 30.00% 30.00% 4.37%

Percent of Total Assets

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%
Total Assets 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%

Percent of Sales
Sales 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%
Advertising Expenses 0.00% 0.00% 0.00% 2.06%
Profit Before Interest and Taxes 25.84% 36.11% 44.06% 2.41%

Main Ratios
Current 5.81 12.57 18.33 1.70
Quick 5.55 12.25 18.01 1.28
Total Debt to Total Assets 31.98% 16.49% 10.37% 61.40%
Pre-tax Return on Net Worth 110.19% 83.74% 69.00% 4.39%
Pre-tax Return on Assets 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

Activity Ratios
Inventory Turnover 11.85 10.19 10.30 n.a
Accounts Payable Turnover 9.75 12.17 12.17 n.a
Payment Days 27 30 27 n.a
Total Asset Turnover 2.97 1.96 1.42 n.a

Debt Ratios
Debt to Net Worth 0.47 0.20 0.12 n.a
Current Liab. to Liab. 0.44 0.45 0.51 n.a

Liquidity Ratios
Net Working Capital $73,511 $182,821 $355,674 n.a
Interest Coverage 42.66 77.50 122.93 n.a

Additional Ratios
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

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 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
Dry Cleaning 12% $501 $644 $739 $994 $1,106 $1,166 $1,287 $1,382 $1,495 $1,551 $1,585 $1,577
Laundry 8% $529 $679 $780 $1,049 $1,167 $1,231 $1,359 $1,459 $1,578 $1,637 $1,674 $1,664
Alteration Services 30% $244 $313 $359 $483 $538 $567 $626 $672 $727 $754 $771 $767
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $1,274 $1,636 $1,878 $2,525 $2,811 $2,965 $3,272 $3,514 $3,799 $3,942 $4,030 $4,008

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 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
Total People 6 6 6 8 8 8 8 8 8 8 8 8

Total Payroll $8,680 $8,680 $8,680 $9,980 $9,980 $9,980 $9,980 $9,980 $9,980 $9,980 $9,980 $9,980

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 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
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 $1,274 $1,636 $1,878 $2,525 $2,811 $2,965 $3,272 $3,514 $3,799 $3,942 $4,030 $4,008
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $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%

Expenses
Payroll $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
Rent $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
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
Equipment lease $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667 $1,667
Office cleaning 15% $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Other $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
Interest Expense $164 $164 $164 $164 $164 $164 $164 $164 $164 $164 $164 $164
Taxes Incurred ($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%

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 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 Received

Cash from Operations

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

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $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

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
Bill Payments $202 $6,108 $7,526 $8,740 $11,419 $12,029 $12,452 $13,646 $14,418 $15,419 $15,763 $15,995
Subtotal Spent on Operations $8,882 $14,788 $16,206 $18,720 $21,399 $22,009 $22,432 $23,626 $24,398 $25,399 $25,743 $25,975

Additional Cash Spent

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
Long-term Liabilities Principal Repayment $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

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 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
Assets Starting Balances

Current Assets
Cash $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
Inventory $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
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $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

Long-term Assets
Long-term Assets $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
Accumulated Depreciation $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

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

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
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
Retained Earnings ($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)
Earnings $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

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