Guildford Dry Cleaning Service is a sole trader, start-up enterprise, to be established in Guildford, Surrey. 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 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 sole trader. This is a small business and need not publicly disclose its finances. The business can immediately start without the complicated procedures associated with partnerships, limited liability companies, or co-operatives. The owner/founder will be the director and will initially handle the bookkeeping responsibilities.
2.2 Start-up Summary
Capital resource plan
Loan: Lending plan has to be completed and submitted to the bank six months before starting the business. Loan will be needed two months in advance.
Leasing equipment: Buying new machines costs approximately £30,000 as opposed to leasing which costs £10,000 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 maintenance and repair of machine breakdown, therefore the optimal solution is leasing machines. The following machines will be leased:
- 1 Washer - 17kg capacity, high spin, microprocessor control, electric heat
- 1 Tumble dryer - 18kg capacity, stainless steel drum and gas heated
- 1 Dry cleaning machine - 11kg
- 1 Roller Iron 1000 x 300 mm, variable speed and vacuum exhauster
- 1 Ironing table with steaming vacuum board, integral 7 litre boiler, iron, water pump and light
Capital plan: The owner will invest £32,000 in the business. Additional capital for the business will be borrowed from a bank.
- Buying a new van, and office/facilities equipment (computer, printer, fax, telephone instrument, tables, chairs, shelving, work tables, racks, etc…) and initial leasing of laundry machines: £19,500
- Buying another new van in April: £7,000
Annual interest of 6.48% has to be paid on the long-term loans secured with fixed assets.