Thanks Ms. Etten for your suggestions. By the way, the rough estimate you made of the possible purchase is close to what the seller is offering. Thanks for the advice. I plan to finalize the turnover of the business by next week. But prior to that I’m preparing a SWOT analysis of the business and will make changes/improvements in the next few weeks. As you rightly suggested, I need to increase the daily sales. My plan basically involves (a) repair of the machines to improve efficiency; (b) promotion to generate more exposure; (c) painting and carpentry works to improve the “clean” image factor; (d) strengthening financial management (especially record keeping); and (e) staff re-orientation. Once I find more time, I’ll check the cost side and review the sources of supply of the business inputs and see whether there is space for further cost reduction without sacrificing quality. I’ll keep you posted of further developments. Again, thanks. Ben
I was able to get more information on the business and found out that the 50kg/day is not only composed of basic wash and fold. It also includes wash and press and dry clean services so that the daily income could be higher. I checked the revenues and expenses for one month and if 80 percent of the accounts receivable (which was about 40 percent of gross proceeds) would be collected, there will actually be a net income. I’m getting more data for the past months to generate a spreadsheet of the actual cash flows over a 12-month period and hopefully I can determine the financial feasibility of the business.
Hi Ben,
You’re right, the 50 kg does not only cover wash and fold but also wash dry press, and also dry cleaning. It’s good that you’re learning the business early on, at least you won’t be guessing where the sales should be coming from. Wink
If I may share, this is what I do in my shop:
I set a daily quota for my staff. I tell them that we should set our goal of receivable to 2000/day (at least). In a day, we dont count on the number of kilos we receive, instead we keep track of the accounts receivable on a daily basis. I keep a book to which I require them to log each time somebody walks-in and every job order they receive.That way, we can easily monitor the cash flow of the shop.
Though they are more conscious on total kilos of wash and fold if it reaches 80 kg/day. Cheesy The others (dry clean and wash and press are just icing on the cake). The reason being, its not everyday that you receive dry clean of thousands in amount, except during christmas and valentines season. (that’s based on my experience)
Your ideas for improvement of the business are superb, I hope you find time implementing it.
Good Luck!
etten
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