Outline of the Business Plan
XYZ Cleaning Company would target the property owners at the prime quality and luxurious building who are willing to let their furnished flats for student accommodation halls, and the company would take booking through their dynamic website from the students who need private accommodation out of their University. Due to free booking for the property rent, the owners would engage XYZ Cleaning Company for their cleaning service with a premium price. Although main business of XYZ is cleaning service, but free booking of the property owners, would lead the company to get elevated orders for cleaning service. The projected growth rate of XYZ Cleaning Company is extremely high in every year with decent profit margins of its sales revenue that the competitors may not ever touch. As a sole proprietorship small business company XYZ starts up with 25 full time employees, and any further needs of employees would be resolute through outsourcing, at the end of year one, XYZ would higher further 24 employees. This business plan of XYZ Cleaning Company would assist the owners to identify the right path to the start up of the company along with its succeeding management for quick implication; it estimates capital $13000 and profits $31790 in the first year.
XYZ Cleaning Company cleaning is a residential cleaning service provider in London East city at the privately owned student accommodation halls where most of the foreign students look for cost effective lodgings out of their University. With skilled and professional human capital investments, XYZ aimed to gain customer’s expectations by serving the customers from wealthy families who are willing to pay premium price for high quality cleaning service with elevated degree of professionalism as well as trustworthiness that the company offers.
Identification of the Aims and Objectives
The XYZ Cleaning Service has a number of objectives, which it aims to achieve after some years of establishment; for example, it wants to generate a service-based corporation whose first priority would be to go above clients’ anticipations, increase the number of clients served by twenty percent annually by better- quality service, and develop a sustainable and well- equipped business. However, the business also has aims to amplify loyal clients by seven percent in every quarter, diminish customer acquisition costs by eight percent annually, and enhance brand image so that the clients could easily recognise XYZ Cleaning Service because of the strong brand. In addition, some other aims of the company are to chase a high growth rate by the next two years, lessen the operating costs by five percent annually, and gain profitability by the first year of establishment so that the business could do some investments in advertising.
Vision, Mission, and Values of the Business
The mission of XYZ Cleaning Service is to provide the clients with every household cleaning services in an environmentally sound, wholly reliable, and specialized method; on the other hand, the business has a vision to maintain clients and it believes that if it sticks to this vision, success will eventually come chasing; however, it always wishes to exceed the customer-expectations. In addition, the core value of the company is to conduct business in an ethical way taking into account the demands of the customers and satisfying those in a smart, but decent way.
Description and the Purpose of the Business
XYZ Cleaning Company is a new cleaning service provider, which will be established at 04, ABCD Street, London by five entrepreneurs Hilary Smith, Cathy Jones, Kelvin, Edwin and Allen; however, the purpose of this business to target private landlords that own student accommodation to provide quality cleaning services with minimal costs.
The partners Hilary Smith, Cathy Jones, Kelvin Williams, Edwin Taylor, and Allen Brown decided that the corporate structure of XYZ Cleaning Service would be straightforward, as it would start up with limited space and limited resources at the initial stage. On the other hand, this Cleaning Service would have limited number of workers as well, even though it would offer a diverse range of cleaning services. Like other small or medium sized companies that uphold straightforward organisational chart, XYZ Cleaning Service would select a CEO who would be the head of this Cleaning Service and be responsible for the control and management the company. However, the following chart shows that CEO would have to control four major departments to serve four different functions, and these departments are production, marketing, administration along with finance and HR department. Moreover, each department has to control numerous sub departments with different duties, for instance, administration with finance department has two sub-units for maintaining financial affairs and selling services. However, the figure below demonstrates the company structure of XYZ Cleaning Service in more detail –
Hilary Smith, Cathy Jones, Kelvin Williams, Edwin Taylor, and Allen Brown would form the XYZ Cleaning Service under a partnership agreement; as a result, the memorandum and articles of association of the company have included some significant provisions and these are shown as follows
- Each partners would equally spend in the XYZ Cleaning Service and provide hundred percent of the total capital, therefore the distribution of capital would be –
- Partner 1 – Hilary Smith: $ 2600 (20% of total capital)
- Partner 2 – Cathy Jones: $ 2600 (20% of total capital)
- Partner 3 – Kelvin Williams: $ 2600 (20% of total capital)
- Partner 4 – Edwin Taylor: $ 2600 (20% of total capital)
- Partner 5 – Allen Brown: $ 2600 (20% of total capital)
- The most significant thing is that all the partners will equally share all profits and bear all losses equally
- The partners would strictly follow local laws and regulations to avoid conflict of interest among themselves
- All partners would keenly involve in the management team and take main decisions jointly (particularly in case of financial issues).
- The employees will provide regular updates to the managers for undertaking proper initiatives and they will use phone or e-mail regularly for ensuring flawless operations
- The partners will visit the place at least thrice a week
- Managers in every department will direct the team, cleaners, accountants and service designers
- To improve the relations with clients, it will check clients’ complaints and give feedbacks regularly
- Five partners will keenly take part in the functioning of the service
- The management team will survey the market for at least three times a year to find out any loopholes of the business.
It will follow the provisions of Companies Act 2006 in order register and get license as a small company in the UK; in addition, it will consider employees act to provide facilities for the employees and it will consider Cleaning Services Agreement to ensure Intellectual property rights, damages for loses and personal injury arising from negligence and so on.
Marketing Strategy for XYZ Cleaning Company
As the fund for the XYZ Cleaning Service to advertise itself is quite low, it is feasible for the company choose online advertising mediums to build the image of the product through the campaign and develop public awareness. This form of promotions may include web marketing, including Search Engine Optimization (SEO), company’s own website development, blogs, e-mails, and more essentially, advertisement through social networking sites (Keller, 2009). Social-networking websites are amazing for constructing clients-relationships; in addition, it is easy to communicate with clients at social websites; it comprises of creating accounts at popular sites, assembling clients, providing helpful information about service, and updating information frequently; conversely, clients enjoy joining the community as a place to share their experience and find information about what to buy (Sing, 2011). In order to do the promotional activities through social networking sites, it is feasible for the XYZ Cleaning Service to go for selecting the most renowned networking areas, for example, Google +, Foursquare, twitter, facebook, myspace, hi5, and so on. According to Sing (2011), social networks are universal – this means that whereas promoting through magazines, radios, newspapers, trade fairs, or billboards were able to target only a particular type of client groups, these networks can appeal to almost everyone (irrespective of geography, age, gender, martial status, education, or cultures), which in turn would mean enlarging market for the business.
- Price: The XYZ Cleaning Company will ask very competitive price to develop brand awareness to the private landlords in the UK and it will be derived from the predictable number of hours per project; however, the following table give more idea about it
3 hours minimum for regular student accommodation cleaning $12 per hour For end of tenancy cleaning Price will be fixed by negotiation with the landlords (usually start from $110) For Hard floor cleaning $3 per square feet House cleaner $9 per hour minimum price for window cleaning $50 + Vat Computer cleaning coats $5
Table 1: Price structure of the services of XYZ Cleaning Company. Source: self generated
- Place: At the primacy stage, it will rent a office in London, but it will provide services in London, Manchester, Bristol and Northumbria because there are too many universities and students in these areas;
The management team of XYZ Cleaning Company will carry on a research in order to know about the perception of private landlords on the cleaning service providers, position of the different cleaning service providers in the market, find out the way to attract price sensitive customers, observe political and legal position, scrutinise the economic position, diversity and cultural factors.
XYZ Cleaning Company will focus on private landlords that own student accommodation since they are committed to provide excellent and hygienic environment for the students; however, the owners of this company will expand its target market after reaching break-even points.
As per income statement, XYZ Cleaning Company can generate $178,970.0 sales revenue from the first year of operation, and the expenses would be $129,560.0 in 2013, which shows the net worth for the project is $31,790.0; at the same time, it will reach in the break-even point by 2013 and the profit will use for business expansion; however, the subsequent table gives more information in this regard –
|Pro-forma Profit and Loss for 2013 to 2015|
|Total Sales revenue||$178,970.0||$181,491.0||$186,598.0|
|Total Cost of Sales||$5,508.0||$5,903.0||$6,150.0|
|Total Operating Expenses||$129,560.0||$138,609.0||$148,970.0|
|Profit Before Interest and Taxes||$43,902.0||$36,979.0||$31,478.0|
Table 2: Profit and Loss account of XYZ Cleaning from 2013 to 2015. Source: Self generated
Cash Flow Forecasts
From the following cash flow statement, it observed that XYZ Cleaning Company would be able to make positive cash flow in the first year since it should require very few initial setup costs; however, the revenue overlaps the cost and the flow will amplify in a good pace, for example –
|Pro Forma Cash Flowfor 2013 to 2015|
|Subtotal Cash from Operations||$178,970.0||$181,491.0||$186,598.0|
|New Other Liabilities (interest free)||$5,000.0||–||–|
|Subtotal Cash Received||$183,970.0||$181,491.0||$186,598.0|
|Subtotal Spent on Operations||$143,475.0||$155,644.0||$160,765.0|
|Other Liabilities Principal Repayment||$5,000.0||–||–|
|Subtotal Cash Spent||$148,475.0||$155,644.0||$160,765.0|
|Net Cash Flow||$35,495.0||$25,847.0||$25,833.0|
Table 3: Pro Forma Cash Flow of XYZ Cleaning Company from 2013 to 2015. Source: Self generated
Projected Balance Sheet
According to the following balance sheet, the XYZ Cleaning Company will have $46,062.0 total liabilities and capital a profit of in the first year; on the other hand, this figure will be $71,491.0 in the second year; however, the next table demonstrates that both assets and liabilities are rising –
|Pro Forma Balance Sheet for 2013 to 2015|
|Total Liabilities and Capital||$46,062.0||$71,491.0||$97,338.0|
Table 2: Pro Forma Balance Sheet of XYZ Cleaning Company from 2013 to 2015. Source: Self generated
Risk in running the business
The XYZ Cleaning Company has to face many internal and external risks to operate business in the UK, such as
- The company will provide manual services by using traditional methods, which should take for a long time to provide services;
- there is a risk of customer dissatisfaction at the initial stage because it would not use harmful chemical to clean the place for which customers can misunderstand about its services in some extent;
- water system can be a potential risk for the cleaning service providers;
All owners will share risk equally in order to sustain in the competitive market, but conflicting interest among the entrepreneurs can lead serious problem; on the other hand; If any potential member of XYZ Cleaning Company makes a decision to leave the enterprise, the other shareholders of this company will be able to purchase that member’s share in accordance with the company’s article of association.
The XYZ Cleaning Company has to face many financial risks to sustain in the market, for instance
- It will be hard for new cleaning service provider to arrange sufficient capital to start the business though It requires small start up capital;
- Presence of numerous competitors could create problems for this company for instance the cleaning Service Group, Extreme Cleaning Service, Ideal Cleaning, Advance Cleaning Services and so on have strong set up in the market;
- Creating brand awareness will be difficult for lack of previous experience;
- The customers may not rely on the new company while most of the existing companies have ISO certificate;
- Legal costs may increase for the violation of terms and conditions
SWOT analysis of XYZ Cleaning Company
- Ability to meet market demand;
- The private landlords in the UK is one of the main strength of the XYZ Cleaning company as they really need this cleaning service;
- The management of the business will recruit efficient and industrious labours;
- Experience, education level, integrity and outstanding leadership quality of the leaders;
- This company will maintain rules and regulations in the UK;
- Location of the company another strong point for it;
- Finally, financial strength, human resources, and innovative ideas are also potential strengths of the company
- the key feature of the service based on manual system
- It should require a long-time to develop goodwill along with confidence
- There are many difficulties incurred with the business
- XYZ Cleaning Company has opportunity to expand operation all over the UK by targeting hospitals and private houses;
- Moreover, it can gain competitive advantage over the competitors using innovative ideas;
- Staff turnover rate is too high in this sector;
- One of the main threats is enormous competitors;
- Low cost service providers
- Increase accommodation coast of the students, education expenses and global financial crisis may create hindrance
The viability of the project
Brealey & Myers (2002) and Hill & Jones (2007) argued that Return on investment (ROI) is one of the most effective ways to analyze the viability of the project, for instance
Return on investment (ROI) of XYZ Cleaning Company
|ROI||Return on investment (%) = Net profit ($) / Investment ($) × 100|
|ROI||= ($31,790.00 / $13000) x 100 |
|= (603,000 / $13000) x 100 |
|= (1,319,458.0 / $13000) x 100 |
|Return on investment of the XYZ Cleaning Company is too high, which indicates the fact that it is prospective project|
Table 2: Return on Investment of XYZ Cleaning Company. Source: Self generated
From the above discussion, it can be said that XYZ Cleaning Company will be able to become successful within very short period because it needs low start up and overall operation costs but the demand of this service is acceptable to start business in the UK.
Brealey, A. R. & Myers, S. 2002, Principles of Corporate Finance. 7th edn, McGraw Hill, New York:.
Hill, C. & Jones, G. 2007, Strategic Management: An Integrated Approach. 8th edn, South-Western College, London.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. 2001. Strategic Management. 4th edn, South-Western Thomson Learning.
Keller, K. L. 2009 Strategic Brand Management- Building, Measuring and Managing Brand Equity, 3rd edn, Prentice Hall, New Delhi.
Sing, W. C. 2011. The advantage of advertising on Social Networking Sites. Web.