Laundry Liberators
Liberating college students from doing laundry so they can focus on what matters
Business Brief Prepared b
Table of Contents
Laundry Liberators Business Brief
Description of Product/Service……………………………………………………………………………….. 3
Competitor Analysis………………………………………………………………………………………………. 4
Target Market ………………………………………………………………………………………………………………. 5
Market Validation: Customer Interview Summaries…………………………………………………. 5
Business Model Canvas ………………………………………………………………………………………………….9
Financial Plan ……………………………………………………………………………………………………………….11
Financial Assumptions…………………………………………………………………………………………. 11
Overall Recommendation……………………………………………………………………………………. 12
Description of Product/Service
Description of Service: Laundry Liberators provides premium quality pickup and delivery laundry services to college students. Upfront fees cover a student for one pickup each week of a semester up to a specified limit of laundry. Amounts over this limit are billed per pound. Laundry is picked up in a large canvas bag (provided to each customer) separated into lights and darks, washed with top quality laundry detergent and fabric softeners, dried, folded, packaged in a clean laundry bag, and delivered with 24 hours of pickup. Special request for certain items such as air drying or low heat drying, or using hypoallergenic detergents are handled at the customer’s request. Emergency washing of individual items and ironing of clothes can also be requested for an additional fee.
Customer Problem and Value Propositions: Doing laundry is a chore that many people loath to do. This is especially true for college students who live in dorms or apartment buildings without a washer or dryer machine directly in their dwelling. For these students, doing laundry can take hours while they use public coin operated washer or dryer machines. This is time that could be better spent studying, earning money working, or socializing. There is also the threat of having one’s clothes stolen or misplaced especially if one steps away from the laundry facility. In light of this situation, Laundry Liberators provides value to students needing laundry services in the following ways
- Saves students time to focus on more meaningful pursuits.
- Easy contact: Our mobile app allows customers to contact us directly and easily to specify time of pickup and drop-off as well as make special requests.
- Speed and quality of service: We guarantee that clothes will be returned with 24 hours so that students are not without their favorite jeans for too long.
Service Differentiation: This service is unique from the many laundry services available because it focuses on one customer group: students. I understand their needs and offer them a high premium level of service that includes a quick response and turn around time that other competitors cannot match. I can do this because my office and laundry facilities will be located near campus and the dorms and apartments buildings where students live.
Competitive Analysis:
The grid below includes three direct competitors that provide wash and fold laundry services
| CSC Service Works | Lazy Bones* | In the Bag Cleaners | |
| Target Market | College Students | College Students | All Residential Customers |
| Markets served | WSU and 330 other campuses | Colleges in 6 cities. Closest is Boulder CO | Across Wichita |
| Price | High | High | LOW |
| Service | Primarily Self Service
Wash & Fold Delivery |
Wash & Fold
Delivery |
Dry Cleaning
Wash & Fold Delivery |
| Cost | Mid-priced for wash and fold | High | Mid-priced |
| Customer Satisfaction | Marginal | High | High |
| Service Speed | 48 hours | 24 hours | 24 hours |
*Not currently servicing Wichita State University but operates on many other campuses and could enter the Wichita State market in the future.
Competitor’s Strengths
Each of my competitors are established companies with strong relationships with customers and other stakeholders. CSC Service Works has a contract with Wichita State University to provide and service washing and drying machines and to offer other laundry services to students living in university dorms. Lazy Bones while not currently operating in Wichita is operating relatively close in Boulder Colorado on the Colorado University campus. They have been successfully operating and growing their business since 1993. In the bag Cleaners is primarily a dry cleaning laundry company but also does wash and fold laundry. They are a well know and well-respected laundry service in Wichita and has the higher market share in dry cleaning in the market.
Competitor’s Weaknesses
Despite their strengths each of my competitors have weaknesses that are outlined below. CSC Service Works’ primary business is to operate card operated machines and while they offer wash and fold services it is not their key business. As such, there are opportunities to improve upon their wash and fold service. Similarly, In the Bag Cleaners focuses on dry cleaning and not wash and fold. LazyBones is a premium laundry wash and fold laundry service targeted toward college students, but they are not located in Wichita currently. This provides an opportunity for Laundry Liberators to enter the market and compete in the high service laundry market space.
Laundry Liberators Differentiation
Laundry Liberators is different from its current direct competitors (CSC and in the Bag) because we focus on a fast, premium wash and fold service to college students. Laundry Liberatorswill be located near campus and deliver directly to students.
Target Market
Potential Market Segments and Market Size: Laundry Liberators aims to target college students first at Wichita State University then expand to other large universities in the mid-west such as Kansas State, Kansas University, Oklahoma State University, etc. My service will be targeted toward three groups of students who live in
- Dorms,
- Sororities or Fraternities.
- Apartments
From a US News and World Report report, the majority of WSU students live off campus (e.g., 91%) either in an apartment or at home while 9% of the students live on campus. Two percent of students at Wichita State live at a sorority or fraternity. Wichita State University enrollment fluctuates between 14,000 and 15,000 students. Assuming an average enrollment of 14,500 students, 1,300 students live in dorms, 290 live in a fraternity or sorority, and approximately 13,000 students live in an apartment or home.
Targeted segment: I will first target students who live in dorms and a sorority or fraternity at WSU.
Why target this customer segment? This segment is an attractive “beach head” or first segment because our service solves a compelling problem for these students. That is, these students experience the greatest pain with doing laundry among people we interviewed because they have to use a card/coin operated laundry facility either in the dorm or Greek house or in the community. A majority of these students also enroll in at least twelve credit hours of classes each semester and have a part time job leaving them little time to do other tasks such as laundry. Further, this segment (and their parents) tends to have more expendable income to purchase a premium laundry service. This is not to say that all students who live in the dorm or a Greek House have more disposable income to spend on premium services but based on our initial interviews with students who live in the dorms or a Greek House the majority of respondents (3 out of 4) revealed that their budget would be able to afford our price of $1.50 per pound of laundry which on average equates to $60 per month.
Market Validation: Customer Interviews
As part of our customer validation and business model process, I conducted four customer validation interviews testing the components of the initial business model. Below, I summarize my findings from these interviews.
Interview #1
Name: Colby, male, Freshman WSU student who lives in Shocker Hall
Why I interviewed Colby? Colby lives in the dorms and uses the laundry services provided in the dorms. Therefore, he has direct experience with the problems we are trying to solve and is a potential future customer for us.
Source of contact: I did not know Colby before the interview – I cold contacted Colby in the Shocker Hall Dining Hall and he agreed to talk to me.
What I learned from the interview: Colby confirmed that he hates doing laundry especially the time it takes to complete the task. I also learned that Colby usually uses the card operated laundry machines in Shocker Hall but has also paid a higher fee for a company (CSC Service Works) to do his laundry for him. He like the convenience of the service but did not like paying extra. When he used the service he thought his clothes were well cleaned but he did not like how some of his shirts were wrinkled and he had to iron them later.
Problem Validation: In all, my interview with Colby validated my assumption that doing laundry is a pain for college students. The fact that Colby is using an expensive laundry service suggests that this is an important problem for him.
Solution Validation: He did not see a lot of value in the pick-up/ drop-off aspects of our service because he can do the same thing in a laundry locker in his dorm room. CSC Services Works will pick up and delivery his laundry in the locker.
Key Learning: From this interview we learned that there is a need for this service if it is priced well but that there is already an established competitor who services this market. Because Colby has other laundry services that he values our value proposition was not validated through this interview. We did learn that Colby is dissatisfied with his laundry being wrinkled. We will interview others about this problem and if it is consistent with others’ experience we can pivot our value proposition to guarantee well pressed shirts.
Interview #2
Name: Keidra, female, 21 years old, junior who lives in an apartment two miles from campus.
Why I interviewed Keidra?: She is a college student and potential customers who lives in an apartment. To validate our idea it is important to talk to student apartment dwellers to understand their experience with laundry.
Source of Contact: I did not know Keidra before our interview. Keidra was referred to me by a mutual friend who gave me her contact information. I texted Keidra explaining that I was seeking college students living in apartments to learn more about their experiences doing laundry and she agreed to be interviewed.
What I learned from the interview: Keidra lives in an apartment with a washer and dryer. While this is a convenient for her to have it in her apartment, she shares the washer and dryer with her two other roommates and the washer and dryer is sometimes being used by a roommate when she wants/needs to use it. Keidra works full time and goes to school full time (14 credit hours) so she does not have a lot of time to do laundry. She said she is open to using a laundry service especially if she can have her clothes back fast.
Problem Validation: From my interview with Keidra, I validated that doing laundry is a difficult task for busy college students. This problem is compounded for apartment dwellers who share a washer and dryer with roommates because the washer and dryer is not always available when needed. This pain is not strong enough to “hire” an outside laundry service however.
Solution Validation: Keidra probably is not an early adopter of this service because she has a washer and dryer in her apartment but if the service is fast and convenience she would try it out. Value Proposition not directly Validated
Interview #3
Name: Kari, a 19-year-old sophomore who lived in Shocker Hall her freshman year and now lives in an off campus apartment.
Why I interviewed Kari? Kari lives in the dorms and uses the laundry services provided in the dorms. Therefore, he has direct experience with the problems we are trying to solve and is a potential future customer for us.
Source of contact: I did not know Kari before the interview – Kari was a referral from Colby the first person I interviewed.
What I learned from the interview: Kari confirmed that she is not a fan of doing Laundry but her parents live in McPherson, Kansas and during her freshman year she would travel home most weekends and do her own laundry at her parent’s house. The few times she did not travel home on the weekend she would use the coin operated laundry in the dorms. Now, Kari has a part time job and does not have time to travel home as regularly so she uses the coin operated laundry machines in her apartment complex.
Problem Validation: Kari confirmed the assumption that doing laundry is a pain for college students. However, the fact that Kari does not use a laundry service and appears satisfied with her current solution to doing laundry the pain of the task may not be high enough to pay someone to do it for her.
Solution Validation: Kari expressed interest in not having to do her own laundry and appear to have the resources to pay for this service. However, she expressed that she did not think she would pay extra for someone else to do her laundry. This may be because she took pride in living independently and taking care of her own needs. Hiring a service to do her laundry would feel like shirking her responsibility to take care of herself. The value proposition was not validated from this interview.
Interview #4
Name: Rob, a 20-year-old sophomore who lived at home his freshman and sophomore years but now lives at his fraternity.
Why I interviewed Rob? Rob lives in a fraternity and his perspective will be important to know to determine if students who live in a fraternity are attracted to the laundry liberators’ service.
Source of contact: I did not know Rob before the interview – another student I know referred me to Rob because she knew that her lived in a fraternity.
What I learned from the interview: Rob usually does his laundry in the machines located in the frat house. However, he often forgets to do his laundry and will sometimes wear unclean clothes. Despite having convenient access to laundry machines, he hates doing laundry. Part of the reasons he forgets to do his laundry is his works more than 25 hours a week, takes 12-15 credit hours per semester and is part of the leadership team at his fraternity. Rob is open to using an outside service to clean his clothes but has not used one because he did not want to take the effort to drive his dirty clothes to a cleaning business.
Problem Validation: My interview with Rob confirmed the problem that he hates doing his laundry. This seems to be a compelling problem for him because of his willingness to pay someone to do his laundry.
Solution Validation: Rob was very much interested in paying someone to do his laundry and the pick up and drop off and 24 hour turn around were especially attractive features to him. He said he would be willing to pay $50-75 per month to have someone do his laundry for him. Thus, the solution was validated.
Business Model
From doing a competitive analysis and receiving feedback from customer interview, I constructed a business model based on the following factors:
- At first, I targeted three customer groups of college students based upon where they live. Through my customer interviews, I discovered that college students who live in apartments have many suitable options to do laundry and did not express sufficient pain to expect that they would purchase the laundry liberator service. Accordingly, I eliminated student apartment dwellers from my target market.
- Second, I discovered from our interviews that students who live in the dorms were often dissatisfied with the level of service offered by competitors. In particular, ironing was not done properly and clean clothes were regularly stuffed in the storage locker or return bag which caused the clothes to wrinkle. This in turn created extra work for the students. As such, I plan to make quality ironing and folding a part of service. This is now a new value proposition where we guarantee your clothes will be folded properly to avoid future ironing and those items needing ironing will be ironed in a quality manner.
- Third, to ensure that we can deliver folded and ironed clothes we will now train employees on how to fold clothes effectively and efficiently and will partner will a wholesale cleaner who has ironing capability.
- Fourth, my mobile laundry express app will allow me to serve my customers in an easy and rapid manner.
Compared to my competitors, Laundry Liberator’s business model is unique in the following ways:
- Laundry Liberators is a locally operated laundry service targeting college students who live the dorms and in Greek houses.
- Laundry Liberators will have partnerships with local industrial wholesale laundries.
- Laundry Liberators can deliver both fast and high-quality folding and ironing laundry services.
Financial Plan
Financing: Starting a laundry/dry cleaning business is slightly more capital intensive than other service industries. As a result, I am expecting to need roughly $100,000 in seed capital. This should cover equipment, labor, advertising and a small contingency fund. Nearly half of all startup capital will be used in the acquisition of machinery and operating space. The rest of the funds (≈$50,000) will be used to purchase other items such as Point of Sale applications and commodities (detergent, canvas bags, etc). I would prefer to get funding from private investors in exchange for equity. However, if I cannot reach my goal or need additional financial support, I am not opposed to pursing a loan however because brand new ventures are often too risky for banks this may not be an option.
Financial Projections
Based upon the assumptions below I expect to earn the following amount the first three years of operation.
| Year 1 | Year 2 | Year 3 | |
| Number of customers | 90 | 200 | 350 |
| Price per pound of laundry | $1.75 | $1.75 | $1.75 |
| Average size of laundry per customer | 10 pounds | 10 pounds | 10 pounds |
| Average Frequency per month | 4 | 4 | 4 |
| Number of months in academic year | 8 | 8 | 8 |
| Average price of full year service | $560 | $560 | $560 |
| Total Estimated Sales | $50,400 | $112,000 | $196,000 |
| Cost of Goods Sold (COGS) (25% of Sales) | $12,600 | $28,000 | $49,000 |
| Gross Margin (Sales – COGS) | $37,800 | $84,000 | $147,000 |
| Operating Expenses (60% of Sales) | $30,240 | $67,200 | $117,600 |
| Net Profit (Gross margin – Operating Expenses | $7,560 | $16,800 | $29,400 |
Assumptions:
- First year sales are based upon the projection that I can sign up 90 students per semester that live in the dorms or live in a sorority or fraternity. 90 is 6% of the total market (approximately 1,500 students). Six percent is a connservative estimate when compare to a possible competitor Lazy Bones. Lazy Bones achieved 15% of targeted customers in college dorms during the first year of operations at the University of Wisconsin.
Further I estimate that an average size of a laundry load per customer will be 10 pound. Each student who signs up for the service will be able to wash once a week for an entire semester (16 weeks). Total price per semester per customer is $230. Two semesters will cost $560. My competitor Lazy Bones who has been in business for almost 25 years achieves over $600,000 in sales for two semesters. My conversative estimate seems reasonable especially since LazyBones is not currently in our market.
- Sales Growth between years 1 and 2 is expected to be over 120 %. This is based upon my strategy that I will expand our marketing efforts to students who live in apartments in year 2 and expect word of mouth effort through our referral program to bear fruit. This amount is very conservation when compared to the growth of our competitor LazyBones which experienced 300% growth its first year of operations. In year 3 I plan to open a new facility and operation in Manhattan, Kansas at Kansas State University and the number of users reflects a growth in our WSU market but also our first year of sales at KSU. The level of growth between year 2 and 3 is projected to be 75%.
- Cost of Good Sold is estimated to be 25% of sales. This will include the water, detergent, fabric softerner, electricity that I will use to wash and dry the clothes as well as the gas need to pick up and delivery the clothes to the customer. This figure is based upon our competitor Lazy Bones which has 22% COGS. I expect that since I am new that I will not be as efficient as mine competitors and will have higher costs.
- Operating Expenses is expected to be 60% of sales. This expenses for me will primarily be labor costs (salaries of our employees). I calculated this figure by looking at my competitor Lazy Bones which has operating expenses of 40% of sales and the industry average of dry cleaning businesses from the Risk Management Association (RMA) annual industry financial data. The average percentage of sales figures for dry cleaning business is 90%. This is due to expensive equipment, buildings, and chemcials. I will not have as high expensives due to not needing those assets, therefore, I estimate a 60% operating expense level.
Overall Recommendation
Based upon my research and interviews, I recommend not to launch this business. While I think there is a need for premium laundry services the fact that there already are viable competitors (CSC and In the Bag Cleaners) and relatively low projected income levels I have decided to not pursue this as a business going forward.