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“WASHATERIA: WASH YOUR PROBLEM” A FEASIBILITY STUDY ON ESTABLISHING A COIN-OPERATED LAUNDRY SHOP IN ATIMONAN, QUEZON A Feasibility Study Presented to the Faculty of Leon Guinto Memorial College, Inc. Atimonan, Quezon In Partial Fulfillment of the Requirements for the Degree of Bachelor Science in Ac...

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“WASHATERIA: WASH YOUR PROBLEM” A FEASIBILITY STUDY ON ESTABLISHING A COIN-OPERATED LAUNDRY SHOP IN ATIMONAN, QUEZON

A Feasibility Study Presented to the Faculty of Leon Guinto Memorial College, Inc. Atimonan, Quezon

In Partial Fulfillment of the Requirements for the Degree of Bachelor Science in Accountancy

KHRISTINE MAE S. DANIEL SHAMMEL S. SANTANDER

MARCH 2018

WASHATERIA: WASH YOUR PROBLEM Title of the Study:

WASHATERIA: WASH YOUR PROBLEM-A FEASIBILITY STUDY ON ESTABLISHING A COINOPERATED LAUNDRY SHOP I ATIMONAN, QUEZON

Authors:

KHRISTINE MAE S. DANIEL AND SHAMMEL S. SANTANDER

Degree:

Bachelor of Science in Accountancy

Date of Completion: April 2018

EXECUTIVE SUMMARY This feasibility study attempted to determine the financial viability of a coin-operated laundry shop in Atimonan, Quezon. The researchers sought to prove the feasibility of this business through the evaluation and presentation of the different aspects concerned in its establishment. Through this summary, the business concept will be explained and the feasibility of the business will be proved. Through modernization, the world itself created a lot of changes which lead us to an economic evolution. These changes can be attributed to the improvement of technologies such as innovations and inventions. These changes can also be an opportunity to commence a new business idea. Thus, the idea of transforming a typical laundry business into a coin-operated or self-service type one emerges as an enticing option. “Washateria: Wash Your Problem” is a coin-operated and self-service laundry shop which is located in Atimonan, Quezon. The target market in the study is the households residing in the proper town of Atimonan, Quezon divided

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WASHATERIA: WASH YOUR PROBLEM into four barangays namely Barangay Zone I, Zone II, Zone III, and Zone IV. Competitors existing in the current market are mostly traditional laundry shops. Compared to these traditional laundry shops, coin operated laundry shop is more convenient, time efficient, and affordable. Moreover, customers can supervise their laundry and use their own specifications. On the other hand, being new to the market might be one of its weaknesses; however, the researcher concluded that there is a high acceptability for the coin operated laundry shop. In addition, there is a current gap on the demand and supply analysis, which means there is a market share for new entrants. In a financial part, investing in a coin operated laundry shop is capital intensive. This can be attributed to the acquisition of the equipment to be used in the operation especially the laundry machines. However, despite of being capital intensive, payback period in this business can be expected in an acceptable period of time. In addition, due to its nature as a cash business, there will be no possible long term receivables and liabilities. Also, based from this study, profitability in this business can be expected in a great and satisfying result. Through evaluation and analysis conducted in this study, establishing “WASHATERIA: Wash Your Problem”, a coin operated and self-service laundry shop in Atimonan, Quezon is very feasible. Thus, proceeding with the location and market plan provided by the study is highly recommended.

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APPROVAL SHEET The business research entitled: “WASHATERIA: WASH YOUR PROBLEM – A Feasibility Study on Establishing a Coin-Operated Laundry Shop in Atimonan, Quezon”, prepared and submitted by Khristine Mae S. Daniel and Shammel S. Santander in partial fulfillment of the requirements for the degree of Bachelor of Science in Accountancy has been examined and is recommended for acceptance and approval for oral defense.

JORGE C. ANDANAR, CPA Adviser

FEASIBILITY STUDY REVIEW PANEL Approved by the Committee on Oral Examination with an average grade of ________________

ROYCE P. PARDO, CPA Member

MARIETTA A. VILLARAMA, MBA Member

EDNA Q. ALTAMIRA, MBA Chairperson Accepted and approved in partial fulfillment of the requirements for the degree of Bachelor of Science in Accountancy.

MYLENE P. LACUESTA Vice President for Academic Affairs

Date of Final Defense:

March 24, 2018

WASHATERIA: WASH YOUR PROBLEM ACKNOWLEDGEMENT The researchers would like to express their deepest gratitude and appreciation to the following persons who have contributed in making this study orderly done and successful. Mr. Jorge C. Andanar, research adviser, for his guidance, valuable comments, suggestions, and provisions while conducting the study which in turn, favored the researchers for having a satisfying outcome. Professors Marietta A. Villarama, Edna Q. Altamira, and Eduardo C. Ballester, Jr., the research panelists, for their assistance to a more logical construction of the study, and for their time and effort in examining the manuscript for any possible corrections; 4th year BSA, the researcher's classmates, for sharing their best suggestions and knowledge, and also for their support in making this study successful; And above all, to God Almighty, for giving the researchers the strength and courage needed for the completion of this study, and for His guidance all the time.

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WASHATERIA: WASH YOUR PROBLEM DEDICATION

We wholeheartedly dedicated this work to the most valuable people in our life. To our parents, siblings, special someone, friends, classmates and to those who have contributed in the completion of this study. Thank you.

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WASHATERIA: WASH YOUR PROBLEM TABLE OF CONTENTS Page TITLE PAGE EXECUTIVE SUMMARY APPROVAL SHEET ACKNOWLEDGEMENT DEDICATION TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES CHAPTERS 1 BUSINESS CONCEPT Introduction Overview of the Business Concept Business Name Business Offerings Business Structure Location Business Feasibility Study Objectives 2

3

4

5

1 2 4 5 6 7 9 10 11 12 13 14 15 15 16

SITUATION ANALYSIS Related Studies Industry Review Key Drivers and Key Barriers Target Market Competition SWOT Analysis

17 20 23 23 24 26

BUSINESS VIABILITY Marketing Aspect Management and Personnel Aspect Productions and Operations Aspect Legal Aspect Financial Aspect

29 34 38 44 45

BUSINESS SCHEDULE GANNT Chart of Business Activities Budget Summary

60 60

CONCLUSIONS AND RECOMMENDATIONS Conclusions Recommendations

61 62

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WASHATERIA: WASH YOUR PROBLEM REFERENCES APPENDICES A Letter of Request to the Municipal Mayor B Letter of Request to the Barangay C Letter to Respondents D Survey Questionnaire RESEARCHERS’ CURRICULUM VITAE

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WASHATERIA: WASH YOUR PROBLEM LIST OF TABLES Table 1: Key Drivers and Barriers Table 2: Target Market Table 3: Demand Analysis Table 4: Supply Analysis Table 5: Demand and Supply Gap Table 6: Market Share Table 7: Manpower Requirements Table 8: Legal Requirements Table 9: Sales Revenue Projection Table 10: Cost of Services Table 11: Utility Consumption Table 12: Laundry Supplies Consumption Table 13: Machine Capacity Table Table 14: Office Supplies Table 15: Cleaning Supplies Table 16: Payroll Schedule Table 17: Projected Five Year Statement of Cash Flows Table 18: Projected Five Year Statement of Financial Performance Table 19: Projected Five Year Statement of Changes in Equity Table 20: Projected Five Year Statement of Financial Position Table 21: Payback Period Table 22: Return on Investment Table 23: Capital Intensity Ratio Table 24: Net Operating Margin Table 25: Gross Profit Margin Table 26: Financial Performance Ratios Table 27: GANTT Chart Table 28: Budget Summary

23 30 30 30 31 31 35 44 46 47 48 48 49 50 50 51 53 54 55 56 57 57 58 58 58 59 60 60

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WASHATERIA: WASH YOUR PROBLEM LIST OF FIGURES Figure 1: Business Logo Figure 2: Sample Flier Figure 3: Sample Coupon Figure 4: Organizational Structure Figure 5: Floor Layout Figure 6: Floor Sketch Figure 7: Operational Procedure

14 32 33 36 41 42 42

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WASHATERIA: WASH YOUR PROBLEM Chapter I BUSINESS CONCEPT

Introduction Doing laundry is a part of every person’s life. Just like food and shelter, clothing is one of our most basic necessities. To have fresh clothes every day that we can readily wear, we allot some of our time and energy in washing and drying our clothes. There are two basic ways in doing this, i.e. hand washing and machine washing. However, some people either don’t have enough time or energy or both to do their own laundry. Thus, the birth of laundry shops. In the essence of modernization, there is a continuous improvement of technologies through invention and innovation. The diffusion of technological changes helps our economies evolve and this change affects the lifestyle of every individual. It is clearly evident in the evolution of laundry machines. In the older times, it usually takes two or more days before we can take back our clothes from the laundry shops. With the emergence of coin-operated laundry machines, we can now do a week-load of laundry in less than hour. The coin-operated washing and drying machines offer a self-service style of laundry wherein people may walk-in to the laundry shop, weigh their clothes, load it in the machine, add some detergent and fabric softener, insert the coin and press start. Because of this, the customers will be able to decide how long they want their clothes tumbling in the machine, maximize the amount of

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WASHATERIA: WASH YOUR PROBLEM detergent and fabric conditioner that they want to put plus the assurance that their clothes will not be lost. In a laundry market competition, it is advantageous to have a more convenient and efficient service. Therefore, the idea of transforming a typical laundry business into a coin-operated or self-service type one emerges as an enticing option. The coin-operated laundry industry has undergone a revolution. There is a trend toward coin laundries being more comfortable for the customer. And the fact that old-school laundry owners viewed this as a passive business has allowed the new era in laundry business to have an opportunity for this innovation. With this, there will be higher level of probability for the coin-operated laundry service feasibility. For the judgment of feasibility of establishing a coin-operated laundry shop, this study will provide a historical background of the business project, description of the service, market analysis, details in operation and management, research and policies and financial data. This study will be most beneficial to those who want to venture into the laundry industry.

Overview of the Business Concept The Business concept of Wash Your Problem is unlike any other existing traditional laundry shops in the municipality. The main factor that makes it different is the introduction of the coin-operated laundry machine which makes doing laundry self-service style. Aside from that, we will also be offering

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WASHATERIA: WASH YOUR PROBLEM complementary services that will make laundry day for every Atimonanin more fun and convenient. Self-Service Coin Laundry – Most people nowadays depend on highly mechanized machines to simplify household works and save time such as the coin-operated washing and drying machine which can finish a week-load of laundry in less than an hour. Our business’ goal is to allow customers to wash, dry and fold their clothes, garments and beddings for only a short period of time at our laundry shop. Moreover, all of the services offered is affordable.

Supplementary Services – The proposed laundry shop is a self-service type wherein customers can do their laundry themselves but, assistance will be offered to beginners. Our laundry shop will also have a designated folding area, waiting area, free detergent and fabric conditioner and free Wi-Fi connection and television.

Business Name The business name is the first component of communications to the customers as it will reflect the nature of the business. The proposed name of our business is “Washateria: Wash Your Problem”. Washateria is term used to refer to coin-operated laundry shops in the United States, especially in Texas while, the latter originated from the phrase, “What’s Your Problem?” to indicate that laundry is a problem to all and our business is here to solve it.

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WASHATERIA: WASH YOUR PROBLEM

Figure 1. Business Logo Business Offerings The business’ main offerings are Washing and Drying. It will be up to the customers’ judgements to choose the services they wish to avail since the laundry services are self-service. Washing – The customers shall weigh their laundry in the weighing scale to ensure that it is within the capacity of the machines. Then, they will load the clothes into the machine, put some detergent and fabric conditioner in the detergent chute and close the lid. Drying – There will be a coin-operated drying machine wherein customers can load their washed clothes. Folding – There is a free designated folding area for those who wish to fold their clothes.

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WASHATERIA: WASH YOUR PROBLEM Business Structure The business will be a partnership. A partnership is commonly formed when two or more people combine money, industry and property to form a business. It is generally easier to form, manage and run. They are less strictly regulated than companies in terms of the laws governing the formation and because only the partners have the say in the way the business is run, they are far more flexible in terms of management. Running a small business with a reasonably low turnover, a partnership is quite often a good choice of legal structure for a new business. Partners can share the responsibilities of running the business. Being a partnership, the business owners necessarily share the profits, the liabilities and the decision making. This is one of the advantages of partnership, especially where the partners gave different skills and can work together.

Location The proposed location is at the 1st floor A Building, Mabini St., Atimonan, Quezon. This location composes of schools such as the Leon Guinto Memorial College, Inc.; establishments; apartments and boarding houses.

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WASHATERIA: WASH YOUR PROBLEM Business Feasibility Study Objectives The primary objective of this study is to provide conclusive information and important insights for the feasibility of establishing Coin-operated Laundry Service in terms of the following information:  Nature and concept of the coin operated laundry service  Access of coin-operated laundry service in the market  Potential credibility of coin-operated laundry Service  Provide financial projection for potential funding, marketing and business development  Management Aspects of Coin Operated Laundry Service  Develop operational impacts and recommendations for facilities  Additional relevant information to support the formation of a feasibility study  Other Consideration for the business establishment  Inferences and findings of the study

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WASHATERIA: WASH YOUR PROBLEM CHAPTER II SITUATION ANALYSIS

Related Studies The term coin laundry is defined by the American Coin Laundry Association (CLA)—the only national trade association for the coin laundry industry—as commercial-grade, self-service laundry equipment placed into service in a retail space. Coin laundries are unique small business in that they have no inventory or receivables. Today’s coin laundry industry is a strong and vibrant one. Even more appealing is the fact that this dependable public service industry continues to grow and thrive.

History of Laundromats As long as humans have been wearing clothes, they have been washing them as well. Although our early ancestors lacked the stringent laundry technologies we enjoy today, they surely appreciated the scent, feel, and look of freshly laundered clothing and linens. The very first washing machine was invented in 1858 by Hamilton Smith. A little less than 20 years later, a man named William Blackstone invented a household washer as a gift for his wife. While these machines were incredibly convenient, they were expensive luxuries that most families were unable to afford. As a result, the Laundromat was born.

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WASHATERIA: WASH YOUR PROBLEM In 1934, the first Laundromat, which was known at the time as a “Wash-ateria,” opened in the Fort Worth, Texas. This laundry facility featured four washing machines that charged by the hour. Laundromats quickly gained popularity, and 15 years later, Bendix Home Appliances created the first coin operated washers. Over

the

past

few

decades,

laundry

technology has

improved

dramatically. Energy-efficient, low-water washers are gaining in popularity, and dryers are much faster than they were in decades past. Although many machines still rely on coin-operated mechanisms, digital card-operated payment systems are also available. Because Laundromats typically operate on a self-serve, automated system, their owners are able to step back and manage their stores from afar. Many Laundromats include amenities like free Wi-Fi, TVs, vending machines, and children’s play areas. In addition, it isn’t unusual for Laundromats to remain open 24/7, an extra convenience for customers with busy schedules. Despite the continued fluctuation and instability of the Philippine currency, there is one thing that remained certain: Everyone has to wash clothes! With companies downsizing and people looking to create new identities for themselves, the idea of opening or transforming a typical laundry business into a coin-operated one emerges as an enticing option.

Thesis: Customer’s Acceptability and Financial Viability of Coin-Operated Washing Machine Laundry Shop Business in Lucban, Quezon (Par, et al., 2015). The study was conducted at seven laundry shops in the municipality of

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WASHATERIA: WASH YOUR PROBLEM Lucban, Quezon. The primary customers are students, employees, household owners and other willing users. After careful analysis of the findings, the researchers concluded that (1) the respondents showed a high acceptability of the coin-operated washing machine and most of the customers preferred this over the traditional laundry shop, (2) the main concerns of the customers who chose to accept the coin-operated washing machine laundry shop were quality and credibility, (3) the initial cost of investment in starting the operation is approximately Php270,000 as the result in the return on investment shows that about 42.6% is the ROI (Return on Investment) using the annual earnings and for the payback period, it will be gained within 2.35 years of operation, and lastly (4) the existing laundry shops encountered almost the same problems which are loss and damages in the clothes of their customers. This may be brought by the wide operation of a laundry as a whole. Based on the finding and conclusions, the researchers’ presented their recommendations. In order for the laundry shop owners to earn back their investment in a shorter period of time, they may offer extra services such as sale of dry goods, food and beverages, load retailing and others. The model coinoperated laundry shops, especially in the U.S., usually have excess floor capacity and taking advantage of this will help the business earn more income. The researchers also recommended for further research on the same topic in other locali...