Due to growing number of working parents, changing life styles of urbanized population and busy schedules of daily life in metropolitan cities, families prefer to utilize outsourced dry cleaning and laundry services. Additionally, most of the winter clothes cannot be washed or cleaned inside home due to their stuff. Therefore, people prefer to get such clothes washed from dry cleaners. Beside households, commercial businesses also need the services of laundry & dry cleaning. Businesses like hotel industry, restaurants and other offices require laundry services on day-today basis. These factors have attributed significantly towards the growth of laundry and dry cleaning businesses in the country.
This article focuses on establishing a laundry and dry cleaning unit in any metropolis of Pakistan. The proposed unit will provide a wide range of washing, dry cleaning and pressing services for fabric wears to complex and more professional services like cleaning sensitive stuff, blankets, curtains, shirwanis and other home accessories. Target customers of these services will comprise of both households and commercial consumers (i.e. hotels, restaurants, banquet halls, caterers, hostels, hospitals and others). Commercial customers will be playing a significant role in the success of proposed business.
The proposed “Laundry and Dry Cleaning” unit will have an installed capacity of washing and dry cleaning of 81,180 units per annum. However, initial operational capacity is assumed to be 70% during first year with a gradual increase of 10% in the subsequent years up to maximum capacity utilization of 90%. It is suggested to open the shop in a populated and developed area or nearby to newly developing housing societies. Laundry and dry cleaning is not a capital-intensive business.
The laundry shop & dry cleaning business in Pakistan requires an investment of about Rs. 3.55 million. This includes a capital investment of Rs. 2.67 million and a sum of Rs. 0.88 million as working capital. The project is financed through 50% debt and 50% equity. The project NPV is around Rs. 3.93 million, with an IRR of 35% and payback period of 3.67 years. The legal business status of this project is proposed as Sole Proprietorship.
How a Laundry Shop Works in Pakistan
Liquid solvent and small amount of water are added to the machine. The machine then stirs clothes in a manner similar to a domestic washing machine to remove dirt, oil, and stains. Once clean, the clothes are then manually transferred to a dryer (laundry procedure), then pressed and shaped.
Tagging: The clothes are firstly tagged with a specific number, mentioned in the invoice given to customers. This procedure is used for identification of clothes for particular customers.
Sorting: After tagging the clothes are arranged in different sets. Some people sort by color, others sort by fabric type.
Washing: The clothes are washed in a washing machine using detergents, washing powders, soaps and etc. This procedure is only applied for laundry services.
Dry Cleaning: In this process, the sensitive, expensive and only dry clean recommended clothes are cleaned. For this purpose, a chemical is used to clean the clothes, which is known as Perclon.
Drying: The clothes washed in a laundry procedure are dried using dryers.
Steam Pressing: In this process, both the clothes either washed or dry-cleaned are pressed and shaped using steam press equipment.
Packing: Once pressed, the clothes are properly hanged and covered in the plastic wrap and then tagged so that they can be easily identified.
Operational Capacity of Laundry Shop
The proposed dry cleaning shop will have an installed capacity of processing around 248 kg (62 kg per bath) of clothes per day. Accordingly, the unit will have an overall installed capacity processing 81,180 units per annum. Maximum utilization of the unit is assumed to be 90%, whereas, capacity utilization during first year of operation is worked out at 70% with gradual increase of 10% annually up to 90% in 3rd year of operation.
The recommended location for setting up the proposed laundry and dry cleaning shop will be a commercial market of developed or developing housing societies having a considerable population concentration. Considering that, major cities for instance Karachi, Lahore, Peshawar, Quetta, Rawalpindi, Islamabad, Multan, Sialkot, Faisalabad, Hyderabad and etc., with large urban base would be the potential investment areas for the proposed business.
The major target market for the dry cleaning services will depend on the location where dry cleaning business is situated. The target customers for proposed business will not only be general public but also the commercial sector i.e. hostels, catering companies, film industry and hospitals.
Factors for Success of a Laundry Shop in Pakistan
Following are the factors critical for the success of this business venture:
- Warranty of clothes from damages and any type of color fading.
- Prime business location for proposed dry cleaning shop.
- Reasonable and competitive charges, positioned against competitors.
- On time delivery of clothes can leave good impression on the customers.
- Technical and efficient labor.
- Right product mix, proper inventory management, emphasis on customer services.
- Employing and retaining skilled labor.
- Advertisement on local cable and banners. Existing dry cleaners are not advertising for their services.
Investment Required for Starting a Laundry Business in Pakistan
A detailed financial model has been developed to analyze the commercial viability of laundry and dry cleaning workshop and retailing. Various costs and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Balance Sheet and Cash Flow Statement can be studies in the pre-feasibility study of laundry business in Pakistan by SMEDA.