Page 38 - Business Plans that Work A Guide for Small Business

Before You Start Planning, Ask the Right Questions • 29

Exercise 1.1 Quick Screen: Lazybones

I. Market- and Margin-Related Issues

Higher Lower
Criterion Potential Potential Comments
Need/want/ Identified Unfocused Lazybones has proven that college
problem students at more expensive
colleges are willing to pay for a
laundry service.
Customers Reachable and Unreachable/ Reaching the students is easier if the
receptive loyal university endorses the concept
(as is the case at Syracuse and
Wisconsin) because they include
advertisements in the university
initiation packets sent to students
before they enroll. It is more dif-
ficult if the university doesn’t en-
dorse the service.
Payback to users <One year >Three years Immediate. Students have one less
chore to worry about and Mom
and Dad are happy their kids are in
clean clothes.
Value added or IRR 40% + IRR<20% Depends on how likely the university
created is to endorse the service. If Lazy-
bones is endorsed, it acquires new
customers rapidly. This should lead
to a higher IRR.
Market size $50–$100 million <$10 million Estimate that the university service
or >1bil. market is $1billion
Market growth +20% <20%, Flat. Revenues actually declined in the
rate contracting industry for 2009, although much
of the decline is attributable to the
recession. As the economy recov-
ers, people are likely to increase
their use of services.
Gross margin 40%+ and durable <20% and fragile Gross margins have proven to be
robust, but the key is to get a unit
up to capacity quickly.
Overall Potential:
1. Market Higher _____XXX avg ____ lower Has strong promise as long as
franchisees are located near the
2. Margins Higher _____XXX avg ____ lower right type of universities.
(continued)