Entrepreneurship refers to as the process of launching, designing and running a business which is often initially a small business. The people who create the business are known as the entrepreneurs of the business (Drucker, 2014). Entrepreneurs are the one who generates the new business idea; the business idea is a concept that can be used for monetary gain that is generally centered on a product or services that can be offered for money. The aim of the report is to develop a business idea in the form of new product or business; it includes the product or service that can be commercialized. An entrepreneur group is to develop a product or services and the group is seeking the funding of $100,000 and also need the additional funds of $100,000.
The entrepreneur believes that business idea needs to be unique and innovative. The business idea is laundry business; the entrepreneurs are planning to open a laundry business in Sydney, Australia. This business idea is one of the unique ideas along with this to make the idea innovative the marketing team has designed the logo in which they have shared the characteristics of the service with the name of the laundry business. The name of the business is ‘Laundry Sphere’ and it offers door to door service to its customers.
The mission of the company is to become the leading laundry company across Australia by meeting their expectations of consumers.
Laundry sphere is a new business that will be offering its services in the local market of Sydney. The company will offer the different services which include: –
The company ensures that will provide the door to door service delivery to their customers in the local market along with this marketer will also provide an app or website through which they can check the status of their stuff and also can make use of pick-up services or many other services. The company will dry clean the stuff in the gentle manners and with the safety so that it will not damage the color, shine, and quality of the cloth.
A market analysis is referred to as the qualitative and quantitative assessment of the market. The analysis studies the attractiveness and the dynamics of the special market within the industry. Its analysis includes the analysis of the size of the market both in terms of value or volume along with various customers segments with the buying patterns. The market analysis includes industry analysis and competition analysis.
The commercial laundry industry has executed growth in the past few years due to which many companies are able to outsource their laundry and linen supply business operations. Currently, most of the companies are outsourcing their services across the borders (IBIS World, 2017). The need of the laundry services is increasing not only by the household but also by bachelors, restaurants staff, navy person, and many others in Australia. This results in, the rise in the industry revenue by 2.9% annually from last 5 years and it will reach $1.3 billion in the year 2017-2018 (IBIS World, 2017). This is possible due to improvement in the conditions for the accommodations and health care providers.
The competition in the industry is increasing rapidly in Australia. The company might face the strong competition from the companies include; Laundry Australia, AIsco, The laundry Express, Princes laundry services PTY Ltd. These companies are well-known companies in the laundry service industry. The major competitor of the company is going to be laundry Australia as the company has experience of 40 years in the laundry cleaning services. This company is specialist in washing processes and with the uniform laundry services. Hence, the company can give the strong competition to the Laundry sphere. The competition of the company is well-known because they are able to meet the expectations of the customers and have done promotion of the services in such a way that they can easily grab the attention of the customers.
Target market refers to as the group of consumers or end-users to whom the company has decided to aim for their product and services. In simple words, it is said that the target market is the group of people to whom the company is willing to sell its product and services. The target market is divided into primary target market and secondary target market.
The primary target market refers to as the segment of a marketplace that is best market or chance for business to sell its product or services (McDonald, and Wilson, 2016). The company mainly targets the youth with the age group of 18-25 years who are working male and female, bachelors are also included in this category. The company also targets the households belongs to the high-income group.
The main target market of the company is the local restaurants and the medical service providers who can avail the laundry services offered by the company. This target market can give the company an opportunity to earn more amounts in the local market because the company is going to get the work in bulk which is a positive aspect of the Laundry Sphere.
The marketing mix is the base model of the marketing and it includes the set of marketing tools that are used by the company to pursue its marketing objectives. The marketing mix includes mainly 4ps’ product, price, place, and promotion (Keller, and Kotler, 2016). The laundry sphere company should form the marketing mix strategies to achieve the objective of the company.
the customers and it can be tangible and intangible along with this the product can be in the form of the product or service. Over here, it is in the form the service the company provides the laundry services to its target market. The services that the company is willing to initiate are at the initial stage.
The company provide the services of dry-cleaning and washing to hotels, restaurants and to the medical homes. In Sydney, there is the ability of the latest technology so the company will make use of the laundry and washing machines that help the company to provide the proper cleaning without any damage. The company will make use of the sensor-driven lavatec dryers that helps the company to keep the stuff smooth and shine. Through, this service the company will be able to satisfy the customers.
The price of the product or services is the amount that the consumers pay to avail the product and services. It is one of the essential marketing components that are used by the companies to evaluate the profit or revenue of the company. The price of the Laundry sphere varies from service to service. The price range for the dry cleaning service is from $8.80 to $19.50 and the price range for the personal laundry services (wash, dry, fold) starts from $18.00 (up to 5 kg) and $28.00 (up to 12 kg).
The price range for the formals is different than the regular prices of the services of the company. Hand washing, ironing and drying at dry cleaning prices (for per item) is shared below; trousers/ jeans ($6.60/$6.70), pillowcases ($2.80) and the business shirts and blouses ($3.80). This helps the company to generate the high revenue.
Placement or distribution is another essential element of the marketing mix. Place refers to the position where the company provides its product or services to the customers. Every company is willing to select the place from where they can make their services accessible to the buyers or potential buyers. The company has its outlets in Sydney where the people can come for the laundry services and along with this; the company provides the door-to-door services to the customers. Laundry Sphere will provide the online app and website through which the consumer can look the services and can book the pick-up services. To make the product available at different stores company will make use of the distribution channel. There are three distribution channels which are discussed below: –
The business will make use of the one level channel at the initial stage and by doing so the company will provide the services at its outlets and later the company can form the connection with the other wholesalers and retailers who can give big dry-cleaning orders to the company. Later, the company can expand its services across the country with the use of the effective distribution channel.
Promotion is a process or activity through which the company can create the awareness about the product or service in the market. This is an activity through which the company can target a maximum number of audiences (Kotler, 2015). Promotion helps the company to establish a brand image and to enhance the sales of the product or service. Promotion includes different tools such as an advertisement, sales promotion, public relation, direct marketing and many others.
Laundry Sphere can promote the service through advertisement on television, hoardings, posters, pamphlets and many others. The advertisement is one of the effective and traditional methods along with this the company can involve the celebrity endorsers. Below given is the mock of the Laundry sphere and it includes the services provided by the company.
A profit and loss statement (commonly known as P&L) is a financial statement of the company that outlines of the number of costs, revenue, and expenses incurred by the company either in particular quarter or in a financial year (Fraser, Ormiston, and Fraser, 2010). The projected P&L statement of the Laundry sphere company is given below which shows that in the year 2018, the company might face the loss due to lack of sales and revenue but in the following year 2019 and 2020; the company will earn good profit.
|
Laundry Sphere |
|||
|
Profit & Loss Statement |
|||
|
|
Amount ($) |
||
|
2018 |
2019 |
2020 |
|
|
Sales |
$175,000 |
$250,000 |
$400,000 |
|
Miscellaneous income |
$0 |
$25,000 |
$35,000 |
|
A. Total |
$175,000 |
$275,000 |
$435,000 |
|
B. Cost of Sales |
$96,250 |
$137,500 |
$260,000 |
|
C. Gross Profit (A-B) |
$78,750 |
$137,500 |
$175,000 |
|
D. Operating Expenses |
|||
|
Salary |
$48,000 |
$50,400 |
$52,920 |
|
Rent |
$5,000 |
$5,250 |
$5,513 |
|
Utilities |
$1,000 |
$1,050 |
$1,103 |
|
Insurance |
$75 |
$79 |
$83 |
|
Depreciation |
$10,000 |
$10,500 |
$11,025 |
|
Marketing |
$5,000 |
$5,250 |
$5,513 |
|
Maintenance & Repairs |
$2,000 |
$2,100 |
$2,205 |
|
Other |
$0 |
$400 |
$420 |
|
Total |
$71,075 |
$75,029 |
$78,780 |
|
Operating profit |
$7,675 |
$62,471 |
$96,220 |
|
Less: Interest |
$10,000 |
$11,500 |
$10,000 |
|
Profit before tax |
-$2,325 |
$50,971 |
$86,220 |
|
Less: Tax @ 30% |
-$698 |
$15,291 |
$25,866 |
|
Net Profit AT |
-$1,628 |
$35,680 |
$60,354 |
In the financial accounting, the balance sheet shows the true picture of balances of the organisation. It is known as the statement of the assets, liabilities, capital of business for the particular quarter or for the financial year (Gibson, 2011). The balance sheet of Laundry sphere is given below: –
|
Laundry Sphere |
|||
|
Balance Sheet |
|||
|
|
Amount ($) |
||
|
Assets |
2018 |
2019 |
2020 |
|
Current |
$45,000 |
$63,000 |
$126,000 |
|
Fixed |
$150,000 |
$300,000 |
$325,000 |
|
Other assets |
$5,000 |
$50,000 |
$100,000 |
|
Total Assets |
$200,000 |
$413,000 |
$551,000 |
|
Liabilities |
|||
|
Non-Current (Borrowings) |
$100,000 |
$50,000 |
$75,000 |
|
Total Liabilities |
$100,000 |
$50,000 |
$75,000 |
|
Equity |
$100,000 |
$363,000 |
$476,000 |
|
Total Liabilities & Equity |
$200,000 |
$413,000 |
$551,000 |
The cash flow statement reflects the cash inflow (receipts) and cash outflow (payments) in the three activities of the business which include operating, investing and financing (Sinha, 2012). Laundry Sphere has to bear the expenses in the organization along with this the company will receipt the cash.
|
Laundry Sphere |
|||
|
Cash Flow Statement |
|||
|
|
Amount ($) |
||
|
2018 |
2019 |
2020 |
|
|
Cash Flow from Operating Activities |
|||
|
Cash sales |
52,500.00 |
75,000.00 |
120,000.00 |
|
Realization from Debtors |
61,250.00 |
87,500.00 |
140,000.00 |
|
Payment to Creditors |
– |
– |
– |
|
Expenses paid |
(72,747.50) |
(139,979.88) |
(249,353.87) |
|
Total |
41,002.50 |
22,520.13 |
10,646.13 |
|
Cash Flow from Investing Activities |
|||
|
Machinery Purchased |
(150,000.00) |
(300,000.00) |
(325,000.00) |
|
Equipment Purchased |
(50,000.00) |
(125,000.00) |
(175,000.00) |
|
Total |
(200,000.00) |
(425,000.00) |
(500,000.00) |
|
Cash Flow from Financing Activities |
|||
|
Equity capital |
$100,000 |
$363,000 |
$476,000 |
|
Borrowings |
$100,000 |
$50,000 |
$75,000 |
|
Total |
200,000.00 |
413,000.00 |
551,000.00 |
|
Cash surplus/ deficit |
41,002.50 |
10,520.13 |
61,646.13 |
|
Opening balance |
– |
41,002.50 |
51,522.63 |
|
Closing balance |
41,002.50 |
51,522.63 |
113,168.76 |
The company might have to face some of the critical risks while conducting the business operations in Australia. Some of the critical risks are discussed below:
One of the major risks is the entry of the business in the market of Australia. It is a challenge for the company to enter the market where other companies are operating their business and making the profit. These companies can give strong competition to the Laundry Sphere due to which the company will not be able to make the strong position in the market.
The company might face the risk of brand recognition as in the market of Australia there are many companies who provide laundry services and are well-known. These companies have good reputation or presence in the market. Brand recognition is important for the companies as this is the only way through which they will be able to grab the attention of maximum consumers.
Conclusion
Entrepreneurs are bringing the changes in the dynamic competitive world. The new business idea with the innovation gives the new identity to entrepreneurs. The report talks about the new business idea that is laundry business with the name Laundry Sphere. The report includes the market analysis of the laundry service industry. Market analysis is important for the entrepreneurs as the entrepreneurs can capture the details related to the growth of industry along with an analysis of competitors (Storey, 2016). Moreover, the report includes the analysis related to the target market, marketing mix and critical risks of the company ‘Laundry Sphere’. The projected financial plan is also discussed in the report and this financial plan includes profit and loss statement, balance sheet statement and cash flow statement of the company.
References
Drucker, P., 2014, Innovation and entrepreneurship, New York, USA: Routledge.
Fraser, L.M., Ormiston, A. and Fraser, L.M., 2010, Understanding financial statements, Pearson.
Gibson, C.H., 2011, Financial reporting and analysis. South-Western Cengage Learning.
IBIS World, 2017, Commercial Laundries – Australia Market Research Report, [online] Available at: <https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/consumer-goods-services/commercial-laundries.html> [Accessed 18 January 2018].
IBIS World, 2017, Laundry and Dry-Cleaning Services – Australia Market Research Report, [online] Available at: < https://www.ibisworld.com.au/industry-trends/market-research-reports/personal-services/laundry-dry-cleaning-services.html> [Accessed 18 January 2018].
Keller, K.L. and Kotler, P., 2016, Marketing management. 15th Global Edition, Pearson.
Kotler, P., 2015, Framework for marketing management. Pearson Education India.
Marketing Mix, 2018, The Marketing Mix 4P’s and 7P’s Explained, [online] Available at: <https://marketingmix.co.uk/> [Accessed 18 January 2018].
McDonald, M. and Wilson, H., 2016, Marketing Plans: How to prepare them, how to profit from them. Eighth edition, John Wiley & Sons.
Rushton, A., Croucher, P. and Baker, P., 2014, The handbook of logistics and distribution management: Understanding the supply chain, ed. 5th, USA: Kogan Page Publishers.
Sinha, G., 2012. Financial statement analysis. ed. Second, India: PHI Learning Pvt. Ltd.
Storey, D.J. ed., 2016, Entrepreneurship and new firm, New York: Routledge.
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