EPA/742/B-97/006
United-States        •   •  -
Environmental Protection Agency .
March 1997
             Making the Most of Your Cleaning Business:

                       Dry Cleaning / Wet Cleaning Case Studies
                      -  •_                 and   .   ;•'•'.-
                            Financial Analysis Worksheets
                 •-•,  .    Office of Pollution Prevention and Toxics


                            Design, for Environment Program

             This document-has not undergone review by the U.S. Environmental Protection Agency.

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Making the Most of Your Cleaning Business
                              ACKNOWLEDGEMENTS
This document was prepared by Angela Dierks, Thomas J. Votta. and Deborah Savage of the
Tellus Institute. We would like to acknowledge Ohad Jehas.si, the EPA rect manager for his
support and input throughout the development of this document. We are
to the following individuals for their input into and review of the ca
sections of the document: Mike Matfess, Whyte's Cleaners; Peter Mcutafi
Myeong Lowe,, Utopia Cleaners; • Brian Niven,  Smartlook Cleaners 5f^bert
Cleaning Spot; Fred Dudo, Freddie J .Cleaners; Bruce Mathias, DanielsB
John Canty,  Walnut Deluxe; -Arnie Leiboyitz, Royal Laundry; and Robert
.Dry Cleaners.                                  .
                                                                          ely grateful
                                                                         d wosWjeet

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                                                     Making the Most of Your Cleaning Business
                                 TABLE OF CONTENTS
1. INTRODUCTION.....	•	••••	•	



2. CONVERSION TO WET CLEANING 100% ON SITE  -CASE STUDY: UTOPIA

CLEANERS, ARLINGTON MA	••••-	 3


                                                                            	.„	1......3
   2.1. Background	.t	.«•	••••••••'	""•"	'	""


   2.2. Prior Dry4^Jeanirig Operations............	•	•	••••••'	•—•	•	.....*................	


  ^pja initial Experience with Wet Cleaning	•—••	•	•—•••—;	•	........."..	


   2.4. Current Utopia Operations - Wet Cleaning Only	•	••••••••	••	:-3



 * 2.5. Discussion of Costs	.-.	•'	•	•	•	•	',	   ——•—	•	—• _

     2.5.1. One Time Investment Costs...!	•	•	•	.••'••	""	'	„

     2.5.2. Annual Operating Costs	..	•	;	-••••	


                                                                            	„....	..;........9
   2.6. Conclusions..	••	•	;	•	'   '	*



 3. PARTIAL CONVERSION FROM PERC DRY-CLEANING TO HIGH TECHNOLOGY

 WET CLEANING - CASE STUDY.....	-..-•	.........—••••	......12


       .'     '         •   -  "    •   -  ' '•        .  .     ''   '     '    '.  •'	.....	12
   3.1. Background Information	•——	•	


      .'•-..                   "   •             '             - '  "      .".'•• ...12
   3.2."Tnitial Dry Cleaning Operation	—•—	—•	•••	••—	:	


   3.3. Adding Wet cleaning Technology to The Shop	—	••—••	•'-	'	•	•""	


   3.4. The Current Process - Combination of Wet Cleaning and Dry Cleaning......	 Is



   3.5. Discussion of Costs	«•—••	•	•	"""	"""""	'	"


                                                                         	;	18
   3.6. Conclusion	.'	•	r	:	'	"	   ,            .     '   .



 4. FINANCIAL ANALYSIS WORKSHEETS T INSTRUCTIONS  AND EXAMPLE......:.. 20


                            • • •        '-•..-•                 •            •••'••  •-•"•	21
    4.1. Step I - Cost Checklists	•••	'••	;	'	

                               :•'            ••'-'"        '  '        '           - '. •     "  2"1
  .  4.2. Step 2 - Estimate Your Up-Front Costs	.......;....	......:.......	•	——••	•	•	


                              ...•'-.'           .     •        ..                   '23
    4.3. Step 3 - Estimate Your Annual Savings	•	••	•	•	"	'	'"


    4.4, Step 4 - Estimate The Change in Your Cashflow	.•••»••	•	•••	•	•	-g

      4.4.1. Lease Worksheet Instructions	•	•	•	  "5

      4.4.2. Loan Worksheet Instructions.....	:	«••••	•	——	••••—.	•••"—




  5.  COPIES OF BLANK WORKSHEETS	.-	•••••••	•:	-	27

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                                                     Making the Most of Yoiir Cleaning Business
  1.     INTRODUCTION
                                                                   -''>•',

        The dry cleaning industry is currently going through a significant transition. Increasing
  regulatory and consumer pressure will change the face of the industry within the next five to ten
'  years. The .'driving force for this change' centers around the environmental and health effects of  •.
  perchioroethylene=(perc),.the most commonly, used solvent in-the industry.  The amount of perc
  used and emitted by dry cleaning shops, as waste is under increasing scrutiny.  Although there is
-  still debate as to the extent  of the environmental and human health impacts of perp, one thing is  .
  certain—efforts to reduce or eliminate the emissions of perc are required by law arid .are well
  underway. The two-factual case  studies-and financial analysis worksheets .contained  in  this
  document can assist U.S.  commercial .dry: cleaners in assessing their  options to minimize-or,
" eliminate perc waste and emissions.  •  ;        '-.:'•'....'       .     -          -  '

         Any -modification to your current cleaning process—either the purchase of more -efficient
  dry cleaning equipment or  changes* in housekeeping practices-rhas a financial impact  on your •
'•business. - You need to recognize this financial impact so. that you can manage, your business
•  wisely.  Often, pollution prevention (Pi)'investments and  process changes can save you money
  because -they'improve your"solvent mileage and reduce your legal  environmental liability. To
  assist dry'cleaners in' decision-making , around these  investment  and;-process  changes,  this
  document contains two  factual case studies that each-.explore an investment decision  and
  financial analysis worksheets that you can use in making your own investment decisions.

         The case studies in this document describe in detail real-world' investment decisions by
  perc dry cleaners who decided to  supplement and partially replace perc operations with wet
  cleaning technology.  Each contains a description of the technical considerations associated .with
  the particular investment as'well as a description of the  up-front investment costs and annual
  operating costs and savings associated with the investment.  You can use these case studies to
  inform your own investment decision-making process.        .                .   '  .

•'• '      Even though  the case studies  describe investments hi wet cleaning technology, the
  financial- analysis worksheets  in this document have been designed with both dry cleaning and
 ' wet cleaning equipment upgrades and purchases in mind.  In other words, the worksheets can be
 • used to assess both dry cleaning and.wet cleaning improvements to your current-operations.  The,'
  worksheets will assist you in identifying costs and savings, relevant to a purchase you have in
  mind and organizing the cost information itself.            •   '          .      •"''.'.

'  -•'••'  In some cases, a cleaner knows exactly what type of equipment he or she wants.  In other
.  eases  a cleaner may be  choosing between  different, types of equipment, :e.g.,' between perc
  •equipment and' high-tech wet, cleaning equipment.  These worksheets can be used to-assess the
  financial impact of either type of investment decision.  In addition, they can be used to, assess the.
  impact of operational decisions that do not require  an up-front "equipment purchase, e.g., a
  change in housekeeping practices such as frequency of machine maintenance.    •         '

   1 This document was developed in conjunction with EPA's Pollution Prevention and Have Minimization Manual for Dryde'aners. \ 997..For
 .  more information on technical P2 options for dry cleaners, please refer to this manual.             '

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Making the Most of Your deeming Business
       You may choose the level of detail you want for your analysis. For example, you can use
one part of the'worksheets as a simple checklist to identify those annual  operating costs that
might change with the purchase of a fourth generation dry cleaning machine. If you wish, you
can then go further by choosing to obtain dollar  estimates for those  cost you  identify,  by
gathering' data  from your shop and your equipment vendor.  The  second case study  in this
document illustrates use of the worksheets.

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                                                   Making the Most of Your Cleaning Business
.2.     CONVERSION TO WET CLEANING 100% ON SITE -. CASE STUDY: UTOPIA
       CLEANERS, ARLINGTON MA
                                        *       •   -          .              '

   • '  ' This case study describes a dry cleaner who completely removed perchloro'ethylene (perc)
from  one of his shops, Utopia Cleaners hi Arlington, Massachusetts. The cleaner still operates a
perc cleaning machine in a second  shop'in nearby Somerville, Massachusetts.  However, this
case study focuses on the transformation of Utopia to a 100% wet cleaning facility.              ,

2.1.   Background

  'in 1992, the owner opened Utopia Cleaners in Arlington, Massachusetts as a perc, dry
cleaning facility.  The .Utopia site had been a per-c cleaning shop prior to 1992/so  much of the •
equipment and necessary items for perc cleaning were already in place; Shortly after the. cleaner
began- operating the  shop,  however, he was'drawn  into a legal  liability'. suit  for  perc •
contamination at the site. Under the Comprehensive Environmental Response.' Compensation,
and Liability Act (CERCLA, also .known  as Superfund), all past and current owners  are: held
liable for contamination at a site no matter who was responsible  for  the contamination.. Even
though Utopia had just opened and the  contamination was most likely from the previous cnvners
of the perc cleaning shop. Utopia,was held as a legal-ly responsible party. Thus the cleaner was
faced with the  daunting reality  of learning the Superfund regulations and was/drawn into
expensive  legal battles because he was the current operator of the  shop. The cleaner was held
liable until the parties actually responsible for the contamination were found and the-case settled.
The legal battles over perc contamination at the Utopia site lasted for four years.

    •••   Despite this negative experience, the* owner wanted to continue operating'a-cleaning
business in the  area.  However, the  legal battle  and 'four; years" of frustration from  perc
contamination encouraged'him to find a way to minimize 'the potential impact of .future perc
regulations and liability on his business. The fear of-liability was the primary reason the cleaner
started to investigate wet cleaning  as an alternative to perc. In 1996, .Utopia moved to a new
building-(several blocks away-from, the contaminated site) and became a  100%  wet  cleaning
facility.        ••',',•'.                 '        .          .  -.     '   '          "

2.2.   Prior Dry Cleaning Operations

       From 1992 to 1996, the Utopia .shop consisted of a nine-year- old closed loop dry cleaning
 machine. Immediately after opening his shop, the cleaner started looking for/alternatives to perc.
 because of the-perc contamination  on the site. In 1994 he started'to wet .clean garments in, a
 machine'called the  Fashion Ace. 'This simple machine resembles a wash-basin in which garments
 are hand-washed using water and  enzymatic  agents to. remove stains. The  cleaner  became
 experienced with'wet  cleaning in the Fashion Ace while continuing to dry clean the majority of
 garments in the closed-loop perc machine.. The  wet cleaned  garments were air  dried, which
 resulted in many garments hanging throughout the shop.  •

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Making the .\fost of Your Cleaning Business
       In  addition to  Utopia,  the cleaner owns  a  second shop in  nearby  Soinerville
Massachusetts. The owner had a perc transfer machine in his second shop in Somerville but in
1993, he stopped operating the transfer-machine. After, this point, all professional cleaning was
done'at Utopia using perc and only laundering was done in Somerville.

       In summary, in 1995, Utopia did all the  professional cleaning for garments collected at
both Utopia and the Somerville shop. Roughly 200 to 400 garments per week were wet cleaned
using the Fashion Acer and the remaining 1,250 to 1,450  garments per week were cleaned in the
closed-loop perc machine. All laundering was done at the  shop in Somerville.

2.3.   Initial Experience with Wet Cleaning

       The cleaner was quick to note the advantages and  disadvantages of wet cleaning based on
his experience  with the  Fashion Ace machine.  He was pleased  with the performance .of wet
cleanina. noting that some garments came out cleaner, fresher, and brighter with more natural  .
tones. The cleaner also  noted a particular  advantage for items that are problematic in perc
cleaning such as wedding dresses, coats with leather trim, and garments with beads and buttons
(which sometimes melt in perc machines).

       The disadvantages  of wet cleaning with the Fashion Ace  machine were also quickly
noted First, cleanina was more labor intensive with the Fashion Ace machine than with the, perc
machine The Fashion Ace can only wash between one and four-garments at a time and each
batch of garments has to be physically hand placed into a tub containing the enzyme-water bath.
gently hmd  scrubbed and removed.  Second was the  difficulty in drying clothing, With  the
Fashion Ace  all oannenls were air dried, which required a significant amount of shop space.
Additionally  air "drying the' .garments often resulted  in more  wrinkles.  Thus, pressing  the
garments took'longer when compared to perc dry cleaning. A third problem involved shrinkage
of clothing. With time and experience, however, the cleaner was able to minimize shrinkage by
selecting garments to-wet clean that did not readily shrink.

        Throughout this time period, the cleaner was researching more automated machines that
 would allow him to wet clean much larger volumes of'clothing.  Due to the extremely negative
•experience-the cleaner had had with perc, and-his  increasing confidence in wet-cleaning with the
 Fashion Ace. he decided to convert the. Utopia shop to  wet cleaning operations only. He made
 this conversion to  100% wet cleaning at Utopia when he moved to a new, uncontaminated. shop
 location in 1996.

        In  addition to the performance benefits  the cleaner-witnessed with the Fashion Ace, the
 cleaner had  in mind the full  advantages associated with completely eliminating perc from his.
 shop by converting Utopia to a 100% wet cleaning facility. Eliminating perc would eliminate all
 hazardous waste at his shop and allow him to completely avoid all associated regulations. With a
 100% wet cleaning facility, he also would be  able to eliminate  all potential health effects and
 potential liability  from the use of perc. The cleaner would no longer  have to clean the perc
 distillation unit, which is  routinely required for normal  operation of his perc machine..His shop

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                                                    Making the Most of Your Cleaning Business
 did  not have  a good^ air ventilation system  and he would feel dizzy after cleaning  the  still
 sometimes for as long as an hour.  _               '                          •.   -

       The;choice to.go to all wet cleaning at the facility was made easier by the fact that the
 owner would  still  have  the • option to clean some clothing in perc at his  second shop in
-Someryille. Around the same time he converted Utopia to a 100% wet cleaning shop, the cleaner •
 upgraded his Somerville' shop with a, fourth generation perc machine.          '    -  -      .  '

     ;  There  were other incentives besides regulations, liability, and performance to have only
 wet cleaning at Utopia. The  cleaner ;also that felt wet cleaning was economically feasible. The
 rising costs for perc-and the rising cost for the disposal of filters added to the attraction of a shop
 where these costs would be completely eliminated. The potential for reduced electricity and
 water costs also was considered.                           .•    .   •

       In choosing wet cleaning equipment for  his new shop, the cleaner tried to minimize or
• eliminate the disadvantages he experienced with the Fashion Ace machine. .

 2.4.   Current Utopia Operations - Wet Cleaning Only

       Since  the cleaner was moving to a new location and was renting all the perc dry cleaning
 equipment at the former Utopia shop, he had to buy all the necessary equipment for  an entire
 shop. Major equipment for the new wet cleaning  facility included the following:    "    .
       •   Four 20 pound Dae Woo Air-Power Washers          .
      • •   One 50 pound industrial-sized dryer'with automatic air control     .  •
       ». Pressing equipment (pants presser, form finisher)  ,  .

      "•••   Spotting board                             '                        -•.''.
        •   Boiler system •         .„'•',     .     ..'•.•     , .   .
      •  •   .Compressor     . ' -          '        :    •      .              •

        The four Dae Woo machines  are much more automated' than  the  Fashion Ace.  The,
 capacity  of the DaeWoo machines also greatly increased wet cleaning capacity when compared :
• to the Fashion Ace. The four air-powered-washers are roughly equal in cleaning capacity to a 40
 pound perc machine. The cieaner particularly likes the flexibility of four separate machines. He
 is. able to sort similar fabrics together-into smaller loads. This flexibility allows for more uniform
 : cycle settings for similar clothing. It also, allows him to clean "rush orders" without significantly
 disrupting operations. A typical load in-one  of the four DaeWoo washers might include 12-silk
 blouses or 4 suits (total of eight pieces).    ;         •  .          .

        The cleaner accepts all types of garments over the counter at both his wet cleaning shop
 (Utopia) and his dry cleaning,shop in Somerville  and transports clothing between the shops for
 'the  appropriate cleaning, process. Utopia receives. roughly 100 garments per day across  the

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Making the Most of Your Cleaning Business
counter- 70% to 80% of them are wet cleaned there and the remaining garments are cleaned in
perc at the Somerville shop. The Somerville shop receives roughly ISO garments a day across the
counter; approximately 25% to 30% are wet cleaned at Utopia and the remaining garments are
dry cleaned on site. Combining the two shops, the owner estimates that 250 garments are cleaned
each day.  The split of.cleaning method on  average is roughly 50% wet cleaned and 50% dry
cleaned" None of these estimates includes standard laundering of garments.

       With the four wet clean machines, Utopia is currently wet cleaning at full capacity. The
cleaner estimates that the total amount of garments from both shops could easily increase to 80%
wet cleaning if there was more capacity. The cleaner-is already taking steps to wet clean more
garments.  As of January 1997, he has decided to purchase another wet cleaning machine for the
Somerville facility so that clothing can be wet cleaned ori-site. Thus, .the  Someryille facility will
be a mix .of wet cleaning and dry cleaning while Utopia will remairi 100% wet cleaning on-site
with some clothing being sent to Somerville  for perc cleaning.

       With the Fashion Ace and pressing equipment at the original Utopia, the cleaner was only
able to press rouahly 12 garments per hour. With the current equipment at the 100% wet cleaning
Utopia shop, the"cleaner has been able to improve his pressing time per garment to  17- garments
an hour. There are two contributing factors to the faster pressing time. First, the dryer has a large
drum that allows for tumbling and produces fewer wrinkles compared to the air-dried garments
in the oriainal -Utopia. Second, his new pressing equipment puts tension on the garment while
steam, is applied. The cleaner estimates that 90% of wrinkles are removed  from garments with
one pass  of steam. However,  wet cleaned  garments still require more pressing labor than dry
cleaned sarments. The same pressers can'press roughly 20 garments an hour for perc cleaned
garments'. The cleaner estimates that on average, an extra 45 minutes to an hour per 100 garments
Is required to press wet'cleaned garments compared to pressing dry cleaned garments.

       The cleaner also noted that training  employees to run his wet cleaning system is slightly
more  complex than training someone for perc cleaning. The person .running the washers must-
have knowledge of fabric types and wet cleaning equipment operation. Because the four washers
at Utopia are similar in size to conventional home washers, smaller loads have to be  separated by
 fabric type and color. Also, depending on the fabric load, different settings on the  washer must
be used. For example, if a silk load is washed at a setting for wool, the water will be extracted at
 a rate and speed  that may damage the  finer silks.'Thus. _ operator knowledge of fabrics and
 aitemiveness to machine cycle settings are very important.

       As a rough rule  of thumb, the cleaner does not wet clean heavy wool suits. There are two
 reasons for this. First, heavy wool suits take longer to dry. Since the cleaner is wet cleaning.at
 capacity  he can do more loads if the washers and dryer are not occupied for .longer cycle times
 with heavy wool suits. In the cleaner's opinion, it is more efficient to dry clean wool suits given
 the equipment in the two  shops. Second, wool suits put more "wear and tear" on the washers
 because they are so heavy when wet. Despite this-rule of thumb, the cleaner does note that many
 wool suits can be wet cleaned. In fact, some customers request to have their suits wet cleaned and

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                                                    Making the Most of Your Cleaning Business
 the cleaner is able to provide this service.2 Overall, the cleaner enjoys the added flexibility of
 having the choice to clean such garments with perc or/with water.

       The cleaner is very pleased with the choice to perform 1QO% wet cleaning at Utopia and
 is'now  an advocate of wet cleaning.  Although he wants to  maximize. wet. cleaning in his
 operation, he is quick to note that he still prefers perc for some garments and that he could hot;'
 wet clean all garments coming from his  two shops. However, having both water and perc as:
 cleaning agents, he is able to take full advantage of both their cleaning abilities.  .

 2.5.   " Discussion of Costs

       The discussion.-and accompanying table compare the one-time investment and annual •
 operating costs for the current  100% wet cleaning operations at  the new Utopia shop to the one-,
 time investment costs and annual operating costs relevant if the new shop had been a perc shop
 instead.  •  ;     •• •••      .-                 '                ':•'.".-•>'

       The  one-time  investment costs for the new wet  cleaning shop are based on .actual
 purchase prices  for the wet cleaning equipment, while the one-time investment  costs for an
 equivalent perc shop are estimates of what it would have cost to establish perc. operations at the
 new, facility instead. The annual operating costs for the new wet cleaning shop are  based on the
 actual operating costs of the hew'Utopia in 1:996. Annual operating costs for the1 equivalent perc
 facility are based on 1995 operating.cost data from the old Utopia perc  shop.

  "   , One major issue in using  1996 Operating cost data from the new shop and 1995 operating
 cost data from the old shop is the difference in the. volume of garments cleaned in the new versus
"the old  Utopia-shops.  The former dry cleaning shop dry  cleaned roughly 1.350 garments per '
 week while the current shop wet cleans roughly 750 garments  per week. The estimate of 1,350
 garments  dry cleaned m 1995  at the former Utopia is based,on wet cleaning  300 garments per.
 week:but of 1,650 garments received overall. The 750 garments per week currently wet.cleaned
 at the-100% Utopia is based on wet cleaning 50% of the combined total 1500 garments received
 at the current Utopia and Somerville  shops-. This difference in cleaning capacity between the old
' and new shops was resolved by calculating the operational costs as cost .per garment, as shown at
 the bottom of the cost data table 'and discussed in the'conclusions section.              .   -

 2,5.1. One Time Investment Costs

        The cost of the 4  Dae Woo wet cleaning machines was $950 each and the cost for the
 dryer was $3,000. Recall  that  the cleaner moved to a.new shop location that previously-did not
 .have any cleaning operations on site. Thus, new-pressing equipment as  well, as- plumbing,
 electrical and boiler systems .had-to .be'put in-place. Installation costs for this shop-were very high
 because of the  plumbing, boiler roorh and electrical' fwork. These costs were estimated  to  be
 $9,600 for plumbing, $8^00 for the boiler room, and $2,400 for electrical. An additional $ 1,700
  2 The cleaner presently does not charge an extra fee for Wet cleaned wool suits.

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Making (he Most of Your Cleaning Business
of installation costs also were incurred for the pressing equipment and other shop  items. Note
that this total of $21.000 in general installation costs would be the same for a perc machine, or tor
the current wet clean machines.      •                     .       .

       For the perc  dry cleaning column in the following table,  the price to buy a new perc
machine is listed at  S35,000 to $40,000. For the purposes of this case study the lower cost of
S35 000  is used The costs for the wet cleaning .pressing equipment were $12,000 tor the pants
presser and  $7 000 for the form  finisher. Both of these machines apply tension and  steam to
aarments. which reduced the cleaner's  pressing  time on wet cleaned  garments.  Equivalent
pressina equipment  for perc dry cleaning amounts to  $10,500 for a pants  topper and legger
pressesand $3,000 for a form finisher:3  The cost of the spotting  board was  assumed to be the
same for either wet cleaning or dry cleaning..

       The   remaining one "time investment costs  for  the  compressor, boiler  system  and'
installation  are identical whether wet cleaning or perc dry cleaning are used, since the cleaner
would need this equipment to run either type of shop. Note that the owner would not have been
faced with high installation costs  for a concrete slab if he chose a perc machine for the new shop
since it already had a concrete floor.                                  •.

2.5.2. Annual Operating Costs

        All the annual  operating costs for wet cleaning are  estimated by the cleaner and are based
 on 1996 operations at Utopia,The  annual'operating costs for perc dry  cleaning are based on
 operations of the former Utopia shop in 1995, when perc dry cleaning was performed with a third
 generation  closed loop machine. The two shops are in the same neighborhood so the operating
 costs for electricity and wastewater should be comparable. However, as previously noted, the
 number of  garments currently wet cleaned at the new Utopia is much lower than the number ot
 garments dry cleaned  at the old Utopia.

        Labor to run the shop is  the largest  operational cost. The  owner continues to work long
 hours, between 60 hours and 80 hours per week. He works this much at the current wet cleaning
 Utopia  and worked the same hours when he ran the perc dry cleaning machine at the  tprmer ,
 Utopia  shop. The counter* Utopia is presently run by the owner and his wife. His wile  works
 rouahlv ^0 hours per week and a rate of $7 per hour was used in the following table, even though
 she "does not currently receive a salary.  The owner works behind the counter for the-remaining
 time the shop is open and his time is included in the 60 to 80 hour per week estimate. At the
 former perc dry cleaning Utopia,  two counter people worked part time totaling ;0 hours .per
 week. The same $7 hourly rate was used.                      .  .               •

         The labor time per aarment  for pressing wet cleaned garments is higher than the pressing
 time required for dry cleaned garments. The owner estimates that it takes roughly an additional
 "hour for each  100 garments wet  cleaned than  dry cleaned. Based on current wet cleaning

  ' Quotes late,  from Forema and are based on the list price of their economy model pressing equipment. The higher end model of pant presser
  has a list price ofSl-4,500. For.the cost analysis, the economy style models were assumed.       ,

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                                                     Making the Most of Your Cleaning Business
 operations, total required pressing time is 45 hours per week-at a rate of $13 per hour. For the
 750 garments cleaned over a six day work week, this equates to approximately 16 or .17 garments
 •an hour4 For the dry cleaning comparison, which was pressing 1,350 garments per week, the.
•costs for pressing are based on a rate of 20 garments  per hour. This amounts to a required total.
 pressing time of 6,8" hours each week at the same $13 hourly rate.     .

        Water and  wastewater costs are currently paid on the same bill. Dry' cleaning required
.'higher water and wastewater costs because the-former Utopia shop did not have a water tower. '
 Water towers are used to recycle cooling water for solvent reclamation in the perc dry-cleaning .
 process. Without a water tower, operation of the closed-loop perc machine at the former Utopia
 required significant  quantities of water during the solvent reclamation process/The .DaeWoo
 machines  use between 0-8 and 3  gallons of water per pound of clothing.3 Thus, even though
 water is used as the primary solvent at Utopia, the cleaner paid higher water bills when he used a
 perc machine because he could not install a water tower oh his roof.           .     ,     •     .

        Electricity  costs are also lower for wet cleaning. The higher-electricity cost  for the perc
 machine is attributed to the use of a refrigerated condenser and the fact, that the former  Utopia
 was cleaning a laraer number of garments. The  difference in gas and  oil costs between wet .
 cleanina and dry cleaning are not directly comparable since the two shops have different boilers
 and run-on different fuel.  However,  the cleaner estimates that the  total costs to run the boiler
 whether doing  wet  cleaning or^dry cleaning would  be roughly equal with his equipment.,He
 noted  that wet cleaning uses more  steam but that a perc. machine requires more  heat  for the
 drying cycle compared to  the heat required- for the dryer  used in wet cleaning. In  his opinion..
 these heat requirements would roughly cancel each other out.   '   -,           ,  ;  .

        Switching  to all wet cleaning in this shop has completely eliminated the costs associated
 with the purchase of new filters and the disposal of spent filters as  hazardous waste. In addition.
 the cleaner does not have to spend time filling out the necessary paperwork associated with perc,
 regulations for this/shop.       •       ,                        -   •

 '       Filially, the  last costs in the table reflect  the costs for. soaps, detergents,  solvents and
 hazardous waste disposal associated with wet cleaning and dry cleaning. These costs, were based
 on estimates made by the cleaner.      .       :           '              '      '  ,       .  .

 2.6.    Conclusions

         The choice to use  100% wet cleaning at Utopia offered the cleaner significant sayings in
  one time investment-costs to  open  the shop. The  capital costs  of $82,700  for  dry  cleaning
 •equipment is 38% higher than the $60,000.needed to fully equip  a wet cleaning facility on the.
  same site. A large portion of this difference can be accounted for by the higher purchase  price of
  4 The cleaner stresses that his-old pressing equipment allowed for only 12 wet cleaned garments ah hour per presser. The new pressing
  equipment, u hich he bought specifically with Wet cleaning- in mind, increases the rate to between 16 and 1- / garments an hour.   .
  5 Larger wet cleaning machines can use between 4 to 6 gallons of water per pound of dothes. '

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Making the Most of Your Cleaning Business
a new perc machine  compared to the cost of the four Dae Woo washers and industrial dryer
needed for wet cleaning.                           .                                .

       From  an operating standpoint, the former perc dry  cleaning Utopia had higher total
annual  operating costs in  1995  than the present 100% .wet cleaning  Utopia had in 1996,
However, when you compare the  amount of clothing that each facility cleaned, the former perc
dry cleaning Utopia has slightly lower operating costs of $1.06 per garment compared to $1.18
per garment for the current 100% wet cleaning Utopia, This amounts to  an 11% increase in
annual operating costs per garment cleaned for the wet cleaning Utopia compared to the former
perc dry cleaning Utopia.                                         .       .

       It should be stressed that the annual operating cost per garment cleaned is highly sensitive
to the estimate of the number of garments cleaned.  The cleaner's' estimate of garments at the
100% wet cleaning Utopia in 1996 is.more accurate than his  estimate of the number cleaned in
1995 simply because data for this-case study were-gathered towards the end of ,1'996. The cleaner
was more confident in his estimate for 1996 clothing throughput in his current shop compared to
estimating his 1995 throughput. For the former perc dry cleaning Utopia.  11%  amounts to 2.3
garments a day and is within the margin of error of the  cleaner's estimate  of clothing received at
the former perc dry cleaning Utopia in 1995.

        For this cleaner, the operating cost  per garment cleaned for wet-cleaning is equivalent or'
slightly more than the operating cost per garment cleaned at the former perc  dry cleaning Utopia.
In establishing the new Utopia, however, the cleaner saved over $20,000 or 1/3 of his total  one
time investment by choosing to establish a  100% wet cleaning facility.
 4 In 1995 an estimated 250 to 300 total garments per day entered into the former perc dry cleaning Utopia facility. This volume came m 6 days
 per week' which totals to 1500 to 1800 sanhents per week. Of this total, between 200 to 400 per week were wet cleaned. Th.s study assumed
 dw midpoint of both ranges. Using the midrarige amounts to a total of 1650 garments coming into both shops each week (27j> garments per da>
 for 6 days a week) with 300 earments per week wet cleaned. Thus a total of 1350 per week were perc dry cleaned. Using the lower estimate of
 1500 laments total per week would mean 1,200 garments were perc dry cleaned each week (60.000 per year) and the cost per garment tor perc
 dry cleaned garments at the former Utopia would equaLS 1.19 compared to the $ 1.18 for the 1996 wet cleaning Utopia. .
                                               10

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                                                 Making the Most of Your Cleaning Business
UTOPIA CLEANERS: Comparison  of Costs  for the new Utopia wet cleaning  facility as
compared to an equivalent perc facility at the same site. -                   ,
LINE ITEM OF COSTS • • - -
• Total Garments Cleaned (per year)
ONE TIME INVESTMENT COSTS
Closed Loop Drv Clean Machine
Wet Clean Machines
Industrial-Sized Dryer
Pant Presser
Form Finisher (Suzi)
Spotting Board
Compressor
. . , " . Boiler System
Installation (plumbing, electrical and '
boiler room)
Sub Total One Time Costs
ANNUAL OPERATING COSTS
Labor -..-'.•
Counter People
", '• • Pressers
	 - • Owner
Utilities ' '.'
Water/Wastewater
• . Electricity
-.. ' Gas
	 '""' 	 	 ' Oil
Filters and Cleaning Aaents
" Purchase of New filters
Disposal of spent filters
Soaps/Detergents
Perc
• Spotting Agents
' Sub Total Annual Operating Costs
Annual Operating Cost per Garment
Wet Clean Only
(based on '96 data)
37,500
(based on actual costs
'at new shop)
NA
$3,800 . ,
$3,000
$12,000
$7,000
$1,500 ,
$1,000
, $10,000
$21,700
$60,000 •
(based on '96 data
•from new shop)

$7,000
$29,200 '
60-80 hrs/week

$1,000
$1,800
•".• $3,600,
NA

0
0 . • '
$700
NA
.-•• $1,000
. $44,300
• • $1.18,
Dry Clean
(based on '95/96 data)
67,500 • • •- •
. (based on vendor
. . estimates)
' $35,000
NA-
• NA
... $10,500
$3,000
'. $i,500
' . $1,000
$10,000
"'. '$21,700
$82,700
(based on '95 data from
old shop)

$10,500
;, $44,200
60-80 hrs/week
•' • .
$3,000
$4,800
NA
$4,200

. , $400
$1 ,800
.- .$300
.$1,400 •
$1,000 -.-••••
$71,600
$1'.06: •'. '..
. ' . • i ! •• • •"
                                          11

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Making the A/as/ of Tour Cleaning Business
3      PARTIAL  CONVERSION   FROM  PERC   DRY-CLEANING   TO   HIGH
       TECHNOLOGY WET CLEANING - CASE STUDY


       This case study describes a dry cleaner that converted its cleaning operations from mostly
perchloroethylene Cperc) dry cleaning to a mixture  of high-tech wet'cleaning  and perc dry-
cleaning. It compares  the operations and costs to run a shop with one dry cleaning machine to
running the same shop with, the same/dry cleaning machine and a new wet clean machine. The
single dry cleaning machine could not handle the volume of garments qoming through the shop,
forcing the owner~to work long hours..The limitation in capacity also caused significant."down
time" for the pressers as they waited for cleaned clothing to press. A second machine was needed
to maintain business operations by allowing the same amount of clothing to.be  cleaned much
faster. Please note that."dry cleaning" refers to perc dry cleaning machines in this case study.

3.1.   Background Information

       The owners of the dry cleaning shop, a married couple, are relatively new to the fabricate
industrj  In early 1Q94. they'purchased a drop-off site. The  husband kept his'job in another held
while the wife ran the drop-off site. Initially, clothing collected -at the drop-off site was sent to  a
local wholesale dry cleaner, which charged a fee for each garment received from the drop-of site.
After one year however, the owners decided it would be more profitable to clean the garments
themselves. The owners'subsequently purchased a fully operational facility that provided them
with the equipment to dry clean garments in perc. In addition to  clothing from the drop-off site.
the new facility also collected clothing over the counter. Combining the drop-site and the shop.
the facility received approximately 500 to  700 shirts/week and 2500 to 3500 pounds of other
garments 'The new shop-was operated by hired employees until August 199o. At that time, the
husband took the final plunae into dry cleaning, quit his previous job,  and started running the
shop full time. Although the owners had little knowledge about dry cleaning, the head presser at
the shop had extensive experience'.          •                                             •

3.2.    Initial Dry Cleaning Operation

       ' The purchased shop came fully equipped with a third generation,  35 pound-closed loop •
 dry to dry machine,  a  uni-wash shirt washer,  a conventional household washer and dryer, and
 nnis.hiog equipment i2 utiiity'presses. a pants topper. 2 form finishers (suzisi, .a legger and three.
 shirt pressing machines). All dress shirts and cotton comforters -were washed m the shirt washer.
 Of the remaining clothing. 85% to 90% was dry cleaned while  10% to  15% was cleaned in the
 conventional  washer  and dryer. This  smaller portion,, consisting of cotton  sweaters  and
 extensively soiled washable-garments, required careful monitoring of the drying cycle  .to avoid.
 shrinkage'and resulted in damp  garments  hanging-throughout the shop to  air dry. The  owner
 chose to clean these  items in the conventional washer and dryer because, in his opinion, water
 would clean them better than perc.                    ,                          .
                                            12

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                                                    Making the Most of Your Cleaning Business
       The cycle time of the 35 pound dry cleaning.machine is approximately 45 minutes per
 load. Given the 'amount of clothing coming over the two counters (the cleaning shop and the
 droprofTsite), the machine could not keep pace with the two full-time pressers who finished the
 garments.  Consequently, the owner had to work until 7 or .8 p.m. each evening to clean the
 required amount of garments and to ensure that a back-load of garments were ready for his
 pressers when.they arrived the next morning.  Even with this back-load, the,pressers, who start
 work at 6:30 in the morning, would catch up to the perc machine by noon. Thus; for the last two
 and a half hours of their work-day, the pressers were frequently le'ft idle while waiting for freshly
 cleaned-garments to press. If the owner was-unable to stay late at night, the pressers would catch
 ur> to the machine at 10:30 a:m., leaving five hours of their work-day with frequent down-time.
  *     '..      '    • ''   i •  ' r        • .        '    • •   '         ,;  -    •

       In  order to meet customer needs under this system, two full tune garment pressers worked
 40 hours per week, an additional shirt presser worked 40 hours per week, three counter people
 each worked 3 5 hours per week and the owner worked 10 to 12 hour days, six days per week.

        It became clear that an additional cleaning machine was needed,'both to increase  labor
 efficiency 'and to relieve the burden of long work days on the owner. The owners initially decided'
 to purchase a fourth generation, 45 .pound dry to. dry pere  machine:   After the machine was
 selected, the equipment dealer quoted the  cost of .installation-to be roughly $15,000. This cost
 included:  1) the installation of a concrete slab to  support the new dry clean machine; 2) the
 removal and subsequent replacement of large  glass windows to bring the machine into, the shop
 (its size prohibited it  from coming through any doorways); 3)  the .removal and subsequent
 replacement of overhead clothing racks to allow transport of the large machine to the back of the
 shop; and 4) the raising of the. steam header pipes that ran across the ceiling, to accommodate the
 tall machine. The $15,000 cost was roughly broken down to include $8,000 for the concrete floor
 and $7,000 for the  other three installation activities.        •

        As an alternative  to the fourth generation dry to dry machine, the equipment  dealer
 suggested a wet cleaning machine that was comparable in purchase, price but small enough to fit
 through the door and would not require a concrete slab. Seeking, to avoid .the high installation
' costs associated with the dry cleaning machine, the owners decided to  investigate wet cleaning
 further.        /             '      ' '  •       .                   •        ''....

 3.3.   Adding Wet cleaning Technology to The Shop
                      '      .•"'".      I •      .  -  - -   •  ..  -  ^  ,.•-..

         In addition to low installation costs* other potential advantages of wet cleaning appealed
 to the  owners. First,, there would, be potential operational cost savings.  By  wet cleaning" a
  significant portion of garments that were  currently dry cleaned, the owners-would use their dry
  cleaning  machine less often. Decreasing  the use of the dry cleaning  machine would result in
  decreased use of the materials needed to operate'it, including perc, new filters, and the disposal
  of spent  filters. A second potential advantage would be  partial alleviation of current or  future
  regulatory requirements. According to regulations, a perc cleaner may  change his or her shop's
  regulated category status from a higher  category (tougher requirements) to a lower category
  (easier requirements) by using .less perc. .Finally, .the addition of wet cleaning to the shop offered
                                             -13

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Making the Most of Your Cleaning Business
greater operational flexibility, by allowing heavily soiled clothing to be wet cleaned without
extensive spotting while wool and other delicate fabrics could still be dry cleaned.

       Concerns with wet cleaning centered  around potential shrinkage  of clothing and the
greater amount  of effort required to identify' and separate  garments for the  two cleaning
processes.  In  addition, there was  a perceptual  barrier associated with  the  adoption  of an
unfamiliar technology to clean a larger portion of the shops throughput. Several of the owner's
colleagues, who have been hi the fabricare industry for 20 or more years, discouraged the use of
wet cleaning technology. In the owner's words, "most people I knew in the industry thought we
were  absolutely crazy to consider  expanding capacity with wet cleaning over dry' cleaning".
However, the potential advantages of wet cleaning led the owners to continue looking .into wet
cleaning as an option for their shop.

       The owners did their homework by speaking with wet cleaning equipment suppliers and
visiting the Greener Cleaner demonstration shop in Chicago to see first hand how the  technology
works.  Since the Greener Cleaner performs 100 percent wet'cleaning, the owners were able to
witness all types of garments, including wool and rayon, being cleaned  by the wet cleaning
process and the appearance of these garments after wet cleaning.

       Based on the potential advantages of wet cleaning and the knowledge acquired  during
their  research, the owners ultimately canceled the order for  the fourth generation, 45  pound
closed loop perc machine. Instead, they chose to expand their capacity with a  50  pound wet
cleaning system, consisting of a fully automated wet cleaning washer and dryer. The owners
made this decision with the following intentions:
       •   Wet  cleaning  would  compliment  the perc cleaning, not replace it. One hundred
           percent wet cleaning was never the goal.
       •   In general, all cottons and silks would be processed in the,  wet cleaning equipment
           while wool and rayon would be dry cleaned. Having -such control over the operations
           would reduce potential shrinkage.
       •  The existing finishing equipment would be used for both dry cleaned and wet cleaned
           clothing.                    '                    •                         •

       The owners believe that their status as beginners in the industry may have made it easier
 for them to adopt wet cleaning technology. They were not experienced spotters so water based
 stains on garments cleaned in a perc machine were labor intensive and the garments often needed
 multiple cleanings.  Wet cleaning would be able to handle many of these stains with minimal
 spotting. They also did not have many of the cleaning habits formed through many years of using
 perc  machines nor did they have  any  perception that one technology is inherently superior to the
 other. In short, they witnessed a technology that worked, met their needs, provided operational
 flexibility, and appeared economically attractive. With these advantages and the knowledge that
 ' The Greener Cleaner is a pilot project sponsored by the U.S. Environmental Protection Agency that has committed to 100 % wet-cleaning.


                                             14

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                                                   Making the Most of Your Cleaning Business
 they would still have perc cleaning capacity, the decision to switch some of their operations to
 wet cleaning was a comfortable one.                '

 3.4.   The. Current Process-Combination of Wet Cleaning and Dry Cleaning

       'The wet cleaning washer and dryer have been in place since September,  1995. Forty to
 fifty percent of the shop's clothing is now wet cleaned with the remainder being dry cleaned.
 Shirts/continue to be laundered in the Uni-washer. The  rule, of thumb at this^shop is that cotton
 and'silks are wet cleaned while wool and rayon garments are dry.cleaned. As with any rule there
 are exceptions; wool and rayon are sometimes wet cleaned. For instance, five pairs of wool pants ^
 from a flooded home basement were wet cleaned and  came, out clean with no shrinkage.-The
 customer had previously taken them to several other shops and none.of the dry cleaners would
 touch them^ The owners noted that instances such as these raised their comfort level with the
 types of clothing that can be wet cleaned.      .   •                         •  '            •

        Separation of clothing to be dry cleaned remains the same -(garments are separated at die
 machine by color) while separation of clothing for wet cleaning requires an additional step - they
 are first separated by fabric type and then by color.

        The wet cleaning washer and steam-heated dryer are completely automated. The owners
 have created their own processing programs in addition to the ones supplied by the manufacturer.
 The major benefit to automation  is that, the dryer monitors air moisture content to prevent
 shrinkage that could be .caused by over-drying.  The amount, of tune for washing varies with the
 type and amount of clothing placed hi the machine. In general, the owner will clean up to 45
 pounds ,pf cotton sweaters'and casual men's slacks (such as Dockers), which take approximately
 40 to. 45 minutes to wash. For delicate fabrics, only 20 to 30 pounds are placed in the machine,
 "for a wash time of approximately 30 minutes. The drying times also vary from 20 to 30 minutes
• for .the heavy cottons and 10 to  15 minutes on silks and sweaters. Depending on what is •coming
 over the counter, the shop.does six to ten wet cleaning loads and five to seven dry cleaning loads
 , per day.              :     ...                   _'.,   ..'..,.       .-

         In the first six months of operation, there was only one customer claim on a wet cleaned
 garment that shrunk. According to the shop owner, the reason' for the garment damage was a mis-
 labeled garment  (it was an angora mix). Since then, the owners inspect the fabric directly, in.
 addition to checking the manufacturers', labels to determine if a garment will be wet cleaned or
 dry cleaned. Also, any suspect garment, typically 5 to.7 per week, is measured prior to being wet
 cleaned. The low number of claims and  the low number of garments that the owners measure
. reflect  the operational' flexibility  of dry.cleaning  when there  is doubt to a garments' fabric
 content. For instance,  if the fabric content is  unknown or the garment appears susceptible to
 shrinkage, the owner will dry clean. The dry cleaners also noted their increased experience, both
 with  wet cleaning and dry cleaning, as a major contributor to their low claims. On dry cleaned
  items, the. cleaner averages about two to three items per quarter.          .
                                             15

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Making the Most of Your Cleaning Business
       The same finishing equipment is used for both wet cleaned and dry cleaned clothing.
Occasionally, the owner will need to stretch wet cleaned garments by  applying steam from the
utility press. This is only needed on one or two garments each month.  The owner did comment  •
that better finishing equipment would  probably be required if he went  to  100 percent wet.
cleaning, or if he started wet cleaning high-end clothing, such as men's suits.

       The ease of running the shop has noticeably unproved since the wet cleaning machine has
been installed. Spotting time has decreased because the owner  is able to wet clean garments with
heavy dirt and other water-based stains while dry cleaning garments with oil-based stains. In fact,
some garments such as construction jackets with grass, dirt,  and grease", are both wet .and dry
cleaned. It is important to note that decreased spotting time and greater operational flexibility is
attributed to the fact that the owner has-both wet and dry cleaning technology. The choice  of
cleaning depends on the stain and the garment.

       Because the owner uses the perc machine less, he does, not need to distill solvent  or
change the filters as often. Also, the probability of garments  bleeding in perc has been greatly
reduced. Clothing that bleeds in perc is especially problematic  for dry cleaning machines because
the  bleeding can contaminate the perc if it is not discovered hi time. The owner now throws
clothing suspected of bleeding into the wet cleaning machine by themselves or with similar color
clothing so that if it bleeds, colored water simply goes into the sewer  rather-than contaminating
the  perc supply. Another noted improvement concerns garments with plastic beads  or buttons,
which are less likely to melt onto the fabric when wet cleaned than when dry cleaned. Wedding
dresses are particularly well suited for wet cleaning. In addition to  delicate beads'and buttons,
wet cleaning works extremely well on the  dirt ring that usually accumulates on the  train  of the
dress. Spotting wedding dresses  for dry cleaning  was quite difficult and dresses sometimes
required several dry cleaning cycles.

        The owners have significantly reduced their perc usage from  200 to 250 gallons a year to
roughly 100 to 120 gallons a year. The economic benefits  from this reduction, both in perc
purchasing and waste management, are detailed in the next section. Perc use reduction has also  .
 allowed the dry cleaner to drop from being regulated under federal air regulations as a Large
 Area Dry, Cleaner to a Small Area Dry Cleaner. Although the  cleaner.was in compliance with the -
 Large Area air control requirements, he sees benefits in going down to-the-Small Area category.
 By using less perc he believes he will be viewed in a more  favorable  light by the  federal
 Environmental Protection Agency and state and local environmental  agencies.

        Overall, the owners are •confident they made the right choice in selecting wet cleaning
• technology to expand their operations.-They are satisfied  with the quality,  enjoy the flexibility,
 and feel  it was a cost-effective solution (see below).  The owners were quick to note that one
 reason it works so well for them is because the mix of clothing coming over the counter lends
 itself to wet cleaning. In this case, there-is a, mixture, of soiled blue collar work clothes, casual
 dress clothes, and suits or high end dress clothes. The owner has noticed an  increasing volume of
 casual clothing such  as Dockers men's pants  and'cotton sweaters  that are well suited for wet
 cleaning. The garment mix at this cleaning shop is roughly 1/3 high  end clothing such as suits,
 and 2/3 casual dress clothes most suitable for wet cleaning.


                                 .   '      .   16

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                                                    Making the Most of Your Cleaning Business
       To date, the owners have not specifically marketed the wet clean technology to customers
who walk in'their shop but if someone  inquires, they will explain the process. The owners
currently  do not charge different prices  for clothing-that is  wet cleaned or double cleaned.
Several customers have mentioned that then- clothing smells fresher, particularly cotton sweaters.

3^5.   Discussion of Costs

       The table on the following page gives, line item costs for the three options the cleaner in
this study investigated:                 •

Option 1  - Do nothing^  Under this  option the cleaner continues to operate one machine; but
incurs higher operating costs and works overtime. All costs are based on actual operation before.
the cleaner purchased a second machine.                               . .. :  ^  ••
Option'2'--Increase Capacity with a Wet Cleaning Machine. This is the current situation. Costs
are based on actual investment and operating costs for the shop as it is now set up. •
Option 3  - Increase Capacity with a Second Perc Machine  This scenario estimates what the costs
would have been if the cleaner bought a; second perc machine instead of a wet cleaning machine.
The one time investment costs are based on actual quotes the cleaner received.  The operating
 costs for .the owners shop with two perc machines are best estimates based on current costs from
 the middle column (option 2) and past costs from the first column (option 1).

        Annual operating costs .under the three options can vary significantly. For labor, the
 addition of a second machine of either kind offered savings for garment presser labor and for the
 hours worked each week by the cleaner. When only one machine was in the shop, two pressers
 worked 40 hours a week. As mentioned earlier, the pressers were frequently waiting for garments
 to be cleaned. With two cleaning machines, the pressers, are kept busy for their entire shift but
 their total shift 'hours have been reduced to 35  hours per week. Note that the same number  of
 garments are pressed - the reduction, in hours is due to the fact that the pressers have no  down
 time when they are, waiting for garments/These savings 'in presser  labor hours apply to the
 current wet Cleaning machine and it assumed, they would also apply if a perc dry cleaning
 machine had been purchased.                        .                 .        ,

        The addition of a second machine alsoallows  theowner to. clean twoloads of garments at
 'the same time and has reduced his total time by  10 and 20 hours each week.  Since the owner
 does not take a salary, actual hour estimates were  used for.the analysis. The, savings in the
' owner's  labor would also occur if  the-second machine was a perc machine. The other two
 categories of labor costs, counter people and shirt pressers, remained constant. Neither cost is
 affected by the addition of a second cleaning machine.
  * The cleaner received quotes in the range of S30.000 to $35,000. As shown in the table, the lower value was used for the cost analysis.

   •'  .    -'   "; -   '   •"..-.-.'..    '•'.-'  ,' :  ,17,  -.;.   • "•' V -•

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Making the Most of Your Cleaning Business
       Utility costs also have changed with the addition of a wet clean machine. Water costs
have risen due to  washing with the wet cleaning machine.' The $900 under Options 1 and 3
represent water used for laundering shirts and general shop operations. Electricity at the shop is
used predominantly for the boiler, which is used during, the drying'cycle for the perc machine.
When only one machine was used, the owner estimated the yearly cost to be between $5,400 and
$5,700. A value of $5,500 was used in the analysis. By cleaning roughly half of the garments
corning into his shop with wet cleaning, the owner has reduced his electricity costs to $4,800 per
year. It takes less electricity to run the steam dryer than it does to dry perc in a perc machine. For
Option 3, the electricity costs were assumed to be the same as  those for Option 1 since the
volume of clothing has not changed.

       Natural gas at the owner's shop is used for general shop operations such as building heat.
Because the owner can'now close .down the shop earlier, he has seen a reduction in his gas bill  •
from $5,000 to $4,200. The primary reason the shop was operating much longer under Option 1
was because one machine had'to clean  all the garments coming into, his shop.' Note that the
savings in gas-are realized whether a second perc machine or a wet cleaning machine is added to
the shop.                              '

       The final group of costs relate to the cost of perc. By reducing the amount of perc used in
the shop, the owner has noticed a reduction in the amount he spends on purchasing perc and on
the costs' for disposal of perc filters. For Option 3 (where two perc machines are assumed), the
costs would be identical to Option 1 since the'same volume of garments are cleaned.

3.6.    Conclusion                                                .
                                            i                      ,   •            •

        As the costs on the following table show, the addition of either a wet cleaning machine or
 a second perc machine offers reduced operating costs to the.cleaner and reduces his  tune by ten
 to twenty hours each week/ Option 2, the addition of wet cleaning, has slightly less expensive
 annual operating  costs compared" to the annual operating costs associated with a second perc
 machine. The difference in annual operating costs is roughly 2%, or $2,000. The real savings for
 this cleaner is hi  the reduced'one-time investment1 costs. The cost for a wet cleaning machine
 with installation is $12,000 less than a second perc machine, thus, the cleaner would have paid
 36% more in one-time investment costs if he chose a second perc machine.

        In addition to  the reduced hours the cleaner now spends in the shop, the wet-cleaning
 option offers several other distinct advantages over the purchase of-a second perc machine. First
 is the operational flexibility that having both perc dry cleaning and wet cleaning offer. Second is
 the comfort-level the cleaner has in meeting current and future regulatory requirements. Finally,
 the cleaner does not have to drain his machine and replace the filters as often since less clothing
 is dry cleaned. Previously, he had to come in for five hours on Sunday two time a month to clean
 the machine because he could not afford any down time 'during the week. Now he has  his
 Sunday's free to  spend with his family. Although these items  are not quantified, in the dollar
 figures in the table, they were quick to be noted by the cleaner.
                                             18

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                 Making the Most of Your Cleaning Business
COMPARISON OF COSTS
. 	 	 . — —
LINE ITEM OF COSTS
One-time investment costs
•Wet Clean Machine
. g^ clean Machine
• ••-•• . Installation
	 ."' 	 : 	 "'"" 	 ' 	 '.""' Start-up/Training
""" 	 """"""" Sub-fotaiOne time costs
Annual Operating Costs
Labor •
	 Counter staff
	 "" Garment pressers
, Shirt pressers
Owner
Utilities . • •
Water/Wastewater
	 "'""'"""' Electricity.
' Gas
Filters '.•'•• .
Piirchase of .New filters
	 '" 	 " Disposal of spent filters
Cleaning Agents - '.••.-•:
Aqua-clean (detergents
P'erc
. ..... . . .
Sub-fotai Annual Operating Costs
Option 1
One Machine •
Existing Dry
Cleaning
Machine

NA
..... .................
NA - ,
_„..............,..
=»an»^^ic==i^B=
$34,125
$33,280"":"""
$16,640
70 hrs/week
•
$900
..,,„.__..........
$5,000

$2',376
$4"200 	
NA
$1,100

I $"163,121
Two Machines
Existing Dry
Cleaning plus
Wet Cleaning

$33,000 .
............. N_.
negligible
""""$33^666"'""""

$34,125
$29,T20""""'"
$16,640
50-60
hrs/week

$1,200
$4,200 .

$1,188
- . $2,400
• $550

$96,323
Two Machines
.Two Dry
Cleaning
Machines
• .
NA .
""•"""^soTooo""'1"""""
" negligible
"""'"'"$'45",066"""""""
- 	 »•••• 	 •••••
. . $34,125
" 	 $29,"12"6""" 	
$16,640
50-60 hrs/week
•••
$900 •
	 """""$5,"500
$4,200

$2,376
	 : 	 $47260 	 ';"'
• NA
$1,100
•ittmf 	 ........i.. 	 	 	 • 	
$98,161
            19

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Making the Most of Your Cleaning Business
4.     FINANCIAL ANALYSIS WORKSHEETS - INSTRUCTIONS AND EXAMPLE

       Any modification to your current cleaning process-neither the purchase of more efficient
dry cleaning equipment or changes in housekeeping practices—has a financial impact on your
business.  You need to recognize this financial impact so that you can manage your business
wisely. Often, pollution prevention (P2) investments and process changes can save you money
because they improve your solvent mileage _and reduce your legal environmental liability.

       In some cases, a cleaner knows exactly what type of equipment he or she wants.  In other
cases,  a cleaner may be choosing between different types of equipment, e.g., between pert
equipment and high-tech wet cleaning equipment.  These worksheets can be used to assess the
financial impact of either type of investment decision. In addition, they can be used to assess the
impact of operational decisions  that do not require an up-front  equipment purchase, e.g., a
change hi housekeeping practices such as frequency of machine maintenance.  .  .

       You can use the financial analysis worksheets hi  this document .to assess  both' dry
cleaning and wet cleaning improvements to your current operations. These worksheets-will assist
you in identifying costs and  savings relevant to a purchase you have in mind and  in organizing
the cost information itself. The worksheets contain several sections that allow you to decide how
much time you want to spend evaluating your investment:

        •  Step 1 - Cost Checklists
        •  Step 2 - Estimate  Your Up-Front Costs
       • •  Step 3 - Estimate  Your Annual Costs and Savings
      • •  Step 4 - Estimate  the Change hi Your Cash Flow

        For example, if you. have very limited time you can use the  Cost Checklists alone, i.e., as
 simple checklists to identify the up-front costs of your investment  and the potential  annual
 operating costs that might changes as a result .of your investment.  If you-want a more accurate
 analysis, you'can collect actual  cost information-from your shop records and your equipment
 vendor to fill out the" dollar estimates on the Cost Checklists.    .

        If you do decide to make actual dollar estimates for the Cost Checklists, you then can use
 Steps  2 - 4 of the worksheets. These quantitative steps walk you through a financial analysis, of
 your investment, building from  the information entered hi the Cost Checklists. In Step 2, you
 summarize the upfront costs for the investment. In Step 3,  you summarize how the investment
 wiU change your annual operating costs and revenues. In Step 4, you combine the upfront costs
 with the changes hi annual operating costs and revenues to calculate the approximate impact of
 the investment on the taxes you pay and the cash flow of your shop.

        If you wish, you can complete only Step 2 and Step 3 and make your decision base'd on
 your upfront costs  and expected annual savings, without spending the time  to complete Step 4.
 Whatever level of analysis you choose, the worksheets will  help you rationalize your investment
 decision-making, making your shop moire profitable in the long-run.
                                           20

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                                                   Making the Most of Your Cleaning Business
       If you are fairly comfortable with the basic concepts of financial analysis and with the use
of computer spreadsheets, you could consider using the P2/FINANCE Software System, a
spreadsheet computer program that will perform the financial analysis calculations for you. This
software is currently available from EPA at no charge and can be obtained from the Pollution
Prevention Information Clearinghouse by calling 202-260-1023.

       When you are ready to use the worksheets, begin your analysis by making a copy of the
blank worksheets attached at the end of this document, keeping the original blank worksheets for
making more copies in the future, for yourself or for other cleaners.you know.  Write the name of
your investment project and the date at the top of each page.

4.1.   Step 1 - Cost Checklists                         .

       The worksheets contain two checklists: one  for Up-Front Investment Costs and one for
Annual  Operating Costs.  Up-front investment costs are the  costs necessary to make your
equipment upgrade or purchase new equipment.  Up-front costs also  include  items such as
equipment installation, permitting* equipment start-up, and employees training. Annual operating
costs are any continuing costs necessary to keep your shop  running, and include many items such
as cleaning supplies, clothes  handling supplies, labor and supervision, utilities, maintenance  and
waste management, waste storage, hauling, and disposal, liability and insurance, advertising
materials, off-site services such as laundering, and claims.      .

        The Cost Checklists contain detailed lists of potential up-front costs and annual operating
 costs for a perc or wet cleaning •operation.  You can use these checklists in several different ways.
 First of all, you could use them simply to make sure that you think about and identify all of the
 up-front investment costs relevant to -the investment you are considering. This can help  you
 prevent the discovery of any "surprise" up-front costs at the last minute, for example, during the
 installation or start-up of your new equipment.  If you" want to use the. checklists hi this simple
 way, just put 'chec'k marks in. the far left column of the Up-Front Investment Cost Checklist; this
 is  illustrated on, the-example  worksheets forthe Smart  .Look  case study,  which are entitled
 "Partial Conversion to Wet Cleaning." If you are assessing the potential impact of a change in
' operational ^practices such as housekeeping rather than the purchase of actual  equipment,  you
 may not have to use the Up-Front Investment Cost Checklist at all....                         •   .

        It is also very-important to know what effect your potential  investment will have on the
. annual operating costs of your shop. Will your utility costs increase? Will your perc purchase and
 disposal costs decrease?!What will be".the overall effect-on your shop's cash flows?'Use the
 Annual Operating Cost Checklist to help identify the  various annual costs that might decrease or
 increase as a result of your investment. Instead of using check marks to the left of those costs that
 might change,', use up and down arrows to show whether you expect that cost to, increase or
 decrease.  This will give you a qualitative feel for how your shop's cash flows might be affected
 by your investment.           •                                          ,         ,
                                             21

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Making the Most of Your Cleaning Business
       The detailed lists of potential costs and savings in the checklists will help to make sure
that you do not forget to consider  important items that can  affect the profitability of your
business.  However, although these costs .lists are fairly comprehensive, you will likely want to
add new items specific to your shop or the particular investment; there is space for you to add
such items'onto the checklists:

       An even better way to use the Up-Front  Investment  Cost  Checklist and the Annual
Operating Cost Checklist is to record actual dollar estimates for the various  cost items. The cost
information you need could come your shop records, your own memory, your equipment vendor,
or your lender or lease agent. The use of cost data on the checklists is discussed in more detail in  .
the following sections.

4.2.   Step 2 - Estimate Your Up-Front Costs

       The best way to understand the potential impact of an investment on your shop is to
estimate the actual dollar costs and savings due to the investment. For example, you might want
to  shop around for  the best price  and financing  deal ori a piece of equipment you want to
purchase. Step 2 of the financial analysis worksheets helps you to record the up-front costs of
your investment, information that you collect from your.equipment vendor and your lender or
 lease agent.

        In Step 1, you used the Up-Front Investment Cost Checklist to identify the potential up-
 front investments costs of your investment. Your equipment vendor also should be able to help
 you include all of the relevant items. Once you identify the relevant equipment items, you can
 ask your vendor or lender- or lease agent for a purchase financing quote. Begin by noting  which
• equipment  items are included  in  the financing  quote(s) on the  Up-Front Investment Cost
 Checklist, as illustrated in the Smart Look  example.  You should NOT record the actual loan or
 lease cost quote on the Up-Front Investment-Cost Checklist, as it will be  included later  on the
 Step 2 worksheet.                                     .

     •   If there are up-front costs that are NOT covered by your financing package (e.g., the cost
 to obtain a permit for-a new perc machine), record.these extra up-front costs on the Up-Front
 Investment Cost Checklist.  For each  investment cost category, you can add up. these extra, up-
 front costs and  enter the sum  in  the  shaded subtotal box at the  bottom right corner  of the
 category'.               '             ,                                   '    •

        Now you are ready to summarize your up-front cost information on the Step 2 worksheet.
 Based'on the type(s) of financing that you are considering, complete either the Loan Worksheet
 box or the Lease Worksheet box. If you expect to  take out a bank loan to pay for the equipment.
 rec'ord the duration of the loan, the  interest rate, and the annual loan payment (including principal
 and interest).  If you expect to lease the equipment, record the duration of the lease, the buy-out
 price at the end of the lease (if applicable), and your annual lease payment.  In either, case, your
 financing quote should provide this information.
                                             22

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                                                    Making the Most of Your Cleaning Business
 Note: If your, loan or lease covers general expenses as well as the purchase of.new equipment,  .
 only include the portion of the financing related to  the investment under consideration.  For
 example,  if the loan covers the purchase of a 4th generation dry cleaning machine and provides
 the business with general operating funds to tide the shop over during a slow spell, estimate the
 amount of the loan related to the new equipment and only include that amount, in Step 2.       '

        In addition to information on the financing parameters for the investment, include other •
 up-front investment costs relevant to. the investment that are not included in your lease or  loan
 payment  on the Step 2 worksheet.  You have already recorded estimates for these extra up-front
 costs on the Up-Front Investment Cost Checklist.  Simply sum up the shaded subtotals and enter
 the total amount on:the Step 2 worksheet.              '   .       ,        "

 4.3.    Step 3 - Estimate Youjr Annual Savings

        The Step 3 worksheet allows you to record the changes in annual  operating, costs that
 occur .as the result of your investment.  Ideally, you should choose equipment or equipment.
 upgrades that lower your annual operating costs, if possible. At a minimum, you should be aware
 of the impact of your equipment purchase or upgrade choice on your annual" operating costs. Will
 there be an overall increase hi costs to run your shop, or some overall annual savings?

        In Step 1, you used the Annual Operating Cost Checklist to identify those annual costs
• that might change as a result of your investment.  Once you have identified the relevant cost
 increases and decreases-by adding up and  down arrows to the far left column on the Annual
 Operating Cost Checklist, you can begin to estimate the dollar value of those cost increases and
 decreases.

        ' Begin by estimating the annual costs for your current-shop operations and compare those
 costs to  estimates of the annual costs after the equipment purchase or upgrade.  Include cost
 estimates ONLY for those costs that you expect to change as a result of the- investment, not all of
• your shop's annual costs! If a particular cost will NOT change because of your investment(e.g.,
 your annual purchasing cost for clothes handling supplies), then you do NOT need to consider it.

        Obtain annual operating costs for your, shop's current operations by reviewing'your shop
  records  such as utility bills,  purchasing records, and waste disposal bills. .You may be able to
  estimate many labor costs from  your,own experience running the business. Your  equipment
  vendor can probably assist you rn-identifying  and making dollar estimates for operating costs for
  the new system you are considering.  In many cases, making an exact estimate will.be difficult,
  so you and your vendor should make the best guess that you can based.on your experience. -You
  should try to prioritize the cost items you are estimating, i.e., spend the most time estimating
  those cost items likely to have the most significant impact on your shop.

         For each item identified on the Annual Operating- Cost Checklist, enter the business-as-
  usual annual operating costs related to.your  Current System and the expected annual operating
. costs for  the  -New System  you  are considering. Within each cost category  (e.g., Cleaning
                                             23

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Making the Most of Your Cleaning Business
Supplies),- sum the costs for both the Current System column and the New System column and
enter each sum as a Subtotal at the bottom of the cost category.  You can then subtract the annual
operating  costs associated with-the new system from your current annual operating  costs to
calculate" the expected annual savings for your  proposed investment.   Enter that value in the
shaded box at the bottom right comer of the cost category. - The Smart Look example illustrates
how to record and sum these cost estimates.

       Now you are ready to  summarize your annual cost and savings information oh the Step 3
worksheet  For each cost category on the Annual Operating Cost Checklist, simply copy the
Subtotals  from the shaded box at the bottom right of each category onto the appropriate.line of
the Step 3 worksheet.  Some  of the subtotals you copy may be positive numbers (indicating an
annual  savings in that cost category) and some may be negative  (indicating  an annual cost
increase in that cost category).  On the Step 3 worksheet, add the Operating Cost Category
Subtotals  together to get the Total annual change in operating costs due to the investment.

        In some cases, an' investmerit you consider also will affect your shop's annual revenues.
For example, addition of a new machine to your shop may allow you to clean more clothing man
before, increasing your annual revenues. Estimate any change in annual revenues expected for
the investment and enter that value in the Operating Revenues box on the Step 3 worksheet.

        You may wish to stop your analysis here at the end of the Step 3 worksheet. You can use
the results of Step 2 (Up-Front Costs) and Step'3 (Annual Operating Savings) to assess the
investment under consideration without going on to the Step 4 worksheet. If you are comparing
two different potential investments, complete Steps 1-3 for each option, and compare the results
to help in your  final  decision.   However, if you are  interested in, more details such as the
approximate effect of your investment(s) on your-tax payments and shop cash flows, proceed to
the Step 4 worksheet.   .  .

4.4.    Step 4 - Estimate The Change in Your  Cashflow

        The Step 4 worksheet walks you,through a financial analysis calculation to estimate the
 impact of the investment on your taxes'and the bottom line cash flow of your shop.  Depending •
 on your financing package for the potential investment, choose either the Step 4 'Loan Worksheet
 or the Step 4 Lease Worksheet.  Each version of the worksheet requires information on the shop's
 effective  tax rate and the  financing of the investment,  which you .can gather  from your
 accountant, lender, or lease agent.                             .                        .

        Each worksheet  is divided into two sections: the. Tax Calculation and the  Cash Flow
 Calculation. Instructions on  how to calculate the value for each row appear in parentheses. The
 Step 4 worksheet allows you to enter .cost data for eight years but you should enter data only for
 those years during which the data are relevant. For example; if the equipment lifetime is six
 years, "then enter cost data for years one through 'six.  Separate instructions for both the Loan
 Worksheet and the Lease Worksheet appear below.
                                            24

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                                                  Making the'Most of Your Cleaning Business
Note: In order to simplify the calculations, the Step 4 worksheet does not account for the time
value of money through the application of a discount rate. Instead, it directly incorporates the
financing parameters into the calculation. • Also, the Step 4 worksheet is designed solely to help
you make better investment decisions. The financial analysis calculations have been simplified to
make the worksheet more user-friendly. Thus, you should NOT use any-section of the worksheet
to estimate your  taxable income or depreciation for tax purposes.  Consult an accountant to
assist-you in calculating your shop's taxes. _

4.4.1.  Lease Worksheet Instructions

       In order to use the Lease Worksheet, copy ilnancing.and cost information-from the Step 2
and Step 3 worksheets.. In addition, you will need your shop's effective tax rate, which you can  .
obtain from your accountant.                            '

       For the Tax Calculation,'enter  the Total Increase in Revenues (from Step 3) on Line 1,
followed by the Annual-XDperating Cost Savings (from Step 3) on Line 2; Copy these values for
each year of the project's lifetime/For Line 3, add Lines 1 and 2 to calculate the Incremental
Operating Savings, for the project in each year. Across Line 4, enter the Annual' Lease Payment •
(from Step 2} for the duration of the lease. To calculate the Taxable Income for Line 5^ subtract
Line 4 from Line 3. To calculate the Change in Income Taxes associated with the project for
Line 7, multiply the results hi Line'5 by the Effective Tax Rate in Line-6.

        For the Cash Flow Calculation, copy the Incremental Operating Savings from Line 3, the
Change in Income Taxes from Line 7, and the Annual Lease Payment  from Line 4 in the Tax
 Calculation to Lines 8, 9,'and 10 respectively!  For Line 11, enter the Buy-out Price  for the
 equipment ONLY in the buy-out year (from Step.. 2). For Line  12, enter the Additional One-Time
 Investment Costs NOT Included in Lease (from Step 2). To calculate the After-Tax Cash Flow,
 subtract the Additional One-Time Investment Costs NOT Included in Lease (Line 12), the Buy-
 out Price (Line 11), the Annual Equipment  Lease Payment (Line 10) and the Change in Income
• Taxes (Line 9) from.the Incremental Operating Savings (Line 8) and.enter the. value-in Line  13.
 To •calculate the Cumulative Cash Flow  for the project, simply add the  After-Tax Cash Flow to
 the Cumulative Cash Flow for the previous year.     \    .         "        .

        The year in which  the Cumulative  Cash Flow becomes;positive can be viewed as  the
 financial break-even-year for your investment. You "also can use the Cumulative Cash Flow as a
 point of comparison when you are .considering  multiple investments. By looking at how the
 Cumulative- Cash Flow changes over time, you can make a more informed decision about
 whether to implement the proposed project.   '     .                    ,                   '

 4.4.2.  Loan Worksheet Instructions

        In order to  use this worksheet, copy financing and cost information from the Step-2. and
 Step 3 worksheets.  In addition, you will.need three additional pieces of information:
                                            25.

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Making the Most of Your Cleaning Business
       •  Your shop's effective tax rate, which you can obtain from your accountant
       •  The portion of your annual loan payment that relates to .interest, which you can obtain
          from your lender                 '    .        "                                ..
       •  The  total equipment cost (not including interest from the loan), which you can obtain .
          from your equipment vendor or your lender

       Begin by using the Depreciation  Worksheet box at the bottom of the page. This
worksheet box  applies straight line depreciation with a half-year convention over a period of
seven years, a common'depreciation method for dry cleaners. Enter.the Total Equipment Cost,
including installation and site preparation costs, on Line 1. Then  multiply that cost by the
Depreciation Percentages  entered on Line  2 to calculate the depreciation, hi  each year. For
example, if your Total Equipment Cost equals $10,000, your depreciation in year 5  equals
$1,430 (i.e., $10,000 * 14.3%).

Note: The Depreciation Worksheet uses the straight line method with  a half-year convention and
a depreciation  period of seven years for investment analysis purposes only.  Do NOT use this
Depreciation Worksheet to assist in calculating your shop's taxes; instead consult an accountant
to calculate your depreciation for tax purposes.

       For the Tax Calculation, enter the Total Increase in Revenues (from Step 3) on Line 1,
followed by the Annual Operating Cost Savings (from Step. 3) on Line 2. Copy these values for
each year of the project's lifetime. For Line 3, add Lines 1  and 2 to calculate the Incremental
Operating Savings for the project in each year. Across Line-4, enter the Equipment Depreciation
from the Depreciation  Worksheet below. For Line 5, enter  the Loan Interest Payment  for the
duration of the loan  (you can obtain this  value from your  lender).  To calculate the Taxable
Income  for Line 6, subtract Line 4 and Line 5 from Line 3.  To calculate the Change in Income
Taxes associated with the project for Line 8, multiply the results hi Line 6 by the Effective Tax,
Rate hi Line 7.              .       '

        For the Cash Flow Calculation, copy the Incremental  Operating Savings from Line 3 and ,
 the Change in  Income Taxes from Line 8 hi the Tax Calculation to Lines 9 and 10 respectively.
 For Line 11, enter the Annual Loan Payment (from Step 2).  For Line 12, enter the Additional
 One-Tune Investment Costs NOT Included In Lease (from- Step 2). To calculate the After-Tax
 Cash Flow, subtract the Additional One-Tune Investment Costs NOT Included in Lease (Line
 12), the Annual Loan Payment (Line 11)- and the Change hi Income Taxes (Line 10) from the
 Incremental Operating Savings (Line  9)  and enter the value in Line 13.   To calculate the
 Cumulative Cash Flow for the-project, simply add the After-Tax Cash Flow to the Cumulative
 Cash Flow for the previous year.     .                     .

        The year in which the Cumulative Cash Flow becomes positive can be viewed as the
 financial break-even year for your investment. You also can use the  Cumulative Cash Plow as a-
 point of comparison when you are  considering multiple investments. By looking at-how the
 Cumulative Cash  Flow  changes over time,  you 'can make a more informed decision about
 whether to implement the proposed project.                                   '
                                            26

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                                 UP-FRONT INVESTMENT COST CHECKLIST
           Project
                                                       *3-
           Date:
           Checklis
   A. Purchased Equipment (NOT included in loan/lease)
  	     (Purchase, Tax, Delivery}
  Investment Costs NOT
  included in loan/lease
                              Equipment, e.g., eyewash station
                             lak Detector
                               hylene Storage & Handling Materials
                           ntainment System
                                • System
                           Cabinets for Steam Stripping Cartridge Filters
                          ngfor Draining/Drying Cartridge Filters
                               ig Unit (Chiller)'
                                 ondenser
                     Thermometer for-Condenser Coil Temperature Measurements
                     Water Separator  •
                    Solvent Filtration/Distillation Unit/Muck Cooker
                    Azeotropic Control Devices
                              ' Carbon Adsorber
                              • Evaporator
                                reatment/Recycle System
                                 Adsorbers
         Checklist
B. Construction/Installation (NOT included in loan/lease)
              (Labor, Supervision,'Matertals)
                   Shop Labor & Supervision
Investment posts NOT
included in loan/lease
                    Sontractor/Vendor Fees
                    Construction Equipment Rental
                   Demolition
                   Old Equipment/Rubbish Hauling 4 Disposal
                   Plumbing/Piping
                   Electrical Systems '
                   Ventilation/Exhaust Systems
                   SUBTOTAL.
Making the Most of Your Cleaning Business
                                                                                      Financial Analysis Worksheets •

-------
                     UP-FRONT INVESTMENT COST CHECKLIST
   Project Title:
   Date:
Checklist


-



,

•

C. Permitting (NOT included in loan/lease)
(City, County, State, Federal)
Shop Labor & Supervision
Contractor/Vendor Fees
City, County, or State Business License
City or County Health Department Permit
Perchloroethylene Use. Permit
Wastewater Evaporator Permit
.


SUBTOTAL . .
Investment Costs NOT
included in loan/lease
$
$
S
s . • . . •
s •
s • • . .
s
$
s
s . '\t^M^
Checklist


s







D. Start-up/Training (NOT included in loan/lease)
(Labor, Supervision, Materials)
Training in Equipment Operation
Training in Equipment Maintenance
Training in Dry/Wet Cleaning Techniques
Environmental and Safety Training
Cleaning Test Runs
Start-up Supplies



SUBTOTAL
Investment Costs NOT
included in loan/lease
$
S
$ >Jen\i>;Me_
s y y»^
s
$ ; •
s •
$
$
$ . ~TZL-£$g&i- +sfhi£?"
Maxing the Most of Your Cleaning Business
Financial Analysis Worksneets

-------
                          ANNUAL OPERATING COST CHECKLIST
   Project Title:
. ft \
                                         4o -
   Date:
            •  s/i
Checklist
*

J,













A. Cleaning Supplies
(Purchase, Delivery, Storage)
Perchloroethylene (including any taxes)
Detergent for Dry Cleaning Charge
Solvent Filters
Solvent Filter Additives
Detergent/Soap for Wet Cleaning ,-
Finisher/Sizer •
Starch .
Water Repellent
Odor Neutralizer " •
Fabric Softener
Spotting Chemicals
Spotting Brushes/Bone Scrapers



SUBTOTAL
COST./YR
Current System
* 1,100.
$
* 2,23-t*
s - -, '-. -
$ O
$
s
s
S . • ::
$ • . •
S
$<
s
s
s ....
s 2> m-tc

New System
s SSO
s
s. i. aft
s
5 2^ yoo
S . .-." .
s
$
S - • - : •
$ •
$
S
$..'•-.
$
S • • :
s M.i^S 1
SAVINGS /YR
Current -New
S - . . .
S
s
s
s
$ • ..
$
s •. • •
s . •
$
s
s
s
s
t,
5
.»• -^2_.H
Checklist













B. Clothes Handling Supplies
(Purchase, Delivery, Storage) . •

Garment Tags ., • :
Staples ••..-.
Durable Bags/Baskets -
Nets . • ' '
Hangers / - - •
Drapery Tubes and Bands . . •
Safety Pins and Other Clips
Plastic Garment Bags



SUBTOTAL -
COST/YR
Current System
S
S
s
s
$
s
s
s .
s
s
$
$
$ •

s
s - .
s
$
$ .
$
s
s -
s
S ' ,
$
s
i
======
' SAVINGS / YR .
Current - New
S
S
$
S
s.- . . -
s
$ • - •-. '
$.-•••••- •
s
s
>
i
$dgs*^=i«?§s*r:
Making the Most of Your Cleaning Business
                                                                        Financial Analysis Wcrxsneers

-------
                           ANNUAL OPERATING COST CHECKLIST
   Project Title: ^ y, ft \
                                                             AC
                                                             -1-^-
   Date:
Checklist
taMMM*


si,
11 	







C. Labor and Supervision
(Wage or Salary, Fringe Benefits)
Management
Cleaning
Spotting
Pressing Ae».ryv\«tvts }
Counter *->
Training-
Advertising
*FV«iS\A«. £.<>WrVs)



SUBTOTAL
COST/YR
Current System
S
$
$
« 33,280
5 3H.I2.5
s
s . •
s IU-.(*Wo
s
s
$
s 94,o^B
New System
$
S
S
$ 23.IZO '
« 34,12.^
$ J
$
s llff,UU£
$
$
$
^ yj.ees
SAVINGS / YR
Current - New
S
$
$
$
S





- •
*^«S£5^
Checklist
f


^

vV











O. Utilities

(for cleaning, steam generation, cooling)

Electricity

*»' CAAA^ ,
•
Sewer

Refrigerant






SUBTOTAL
~— —— ^— ^— ^-^— 	 ,
COST/YR
Current System
5 900
S
$
s S.5CO
s
*' 5.OOO
s
s
s
i
1
I
1
1
(
i
s tt.HOO

s I, ZOO
$
$
5 4, BOO
s
5 ^,2.00
$
S
6- •'
E






s »O,100
SAVINGS / YR
Current - New
S
S .
S
5
S
S
;
5 •
i
i
J
j
i




Making tne Most of Your Cleaning Business
                                                                         Financial Analysis Worksheets

-------
                                  ANNUAL OPERATING COST CHECKLIST
                       Maintenance & Waste Management
                              (Labor & Materials)
SAVINGS /YR
                                                                 Current System
               Monitoring. Perehloroethylene Mileage
               Monitoring Pressure Gauges
               Perchloroethylenc Vapor & Liquid Leak Repair
               Cleaning Solvent Storage Tanktei
                hanging Cartridge
               Changing Polishing Filters
               Preeoating Tubular-Solvent Filters
               Regeneration of Tubular/Disc Solvent Filters
               Water Cooling Unit (Chiller) Maintenance
               Condenser Maintenance
              Water Separator Maintenance
              Solvent Still Draining and Cleaning
              Muck Cooker Draining and Cleaning
              Replacing Wastewater Carbon Adsorber Filters
              Wastewater Evaporator Maintenance
              Wastewater Treatment/Recycle Unit Maintenance
              Replacing Vapor Carbon Adsorbers Filters
              Cleaning Button Trap
              Cleaning Lint Trap
              Other Cleaning Machine Maintenance
Making the Most of Your Cleaning Business
                                                                                     -' Financial Analysis Worksheets

-------
                                 ANNUAL OPERATING COST CHECKLIST
     Project TOe:
                                    .gr &- j
                                                                  o »
     Datt:
Checklist

	 xi 	














(Labor, Supervision, Materials)
Perchloroethylene -
Used Solvent Filters & Prefilters ,
Spent Carbon from Vapor/Wastewater Adsorbers
Filter Muck
Muck Cooker Residue
Solvent Still Sludge
Water Separator Wastewater
Water Treatment/Recycle Unit Sludge
Refrigerant
Lint & Rags
Solvent Containers
Spotting Chemicals/Containers




COST/YR
Current System
$
« H/2.0O
$
$
$
s
$
$
$
s
1
1
»
t

s H,10£>

$
$. 2,100
$
s
$
s
$
$
$
$
>
•


s
s -2,|Q<0
SAVINGS / YR
Current • New
$
$
$
$
$
$
•
i
»

i
i
,


*2&§K5iegr-\
Checklist

1 G. Regulatory Compliance
i (Labor, Supervision, Materials) '
Training
Monitonng.Testing . • ,
Inspections/Audits
Labeling
Recordkeeping & Reporting
Spill Containment/Clean-up
SUBTOTAL *

COS
S
s
s
- . _
s
s
s
$
)
1
1 II
T/YR
S '• .
s • ^j
s
$
$
$
$
$
:
$ j
>
SAVINGS / YR
Current • New
$
5
$
»
»
i
&5E5^^^^^HZE9^^^5
^•••^•i^BM^^piiat
Making the Most of Your Cleaning Business
                                                                                    Financial Analysis Worksheets

-------
                              ANNUAL OPERATING COST CHECKLIST
                     H. Liability and Insurance
               ite Cleanup & Monitoring
              Personal Injury
               roperty/Natural Resource Damage
              General Business Insurance
              Ppllution Liability Insurance
                     I.  Advertising Materials
                     . J. Off-Site Services
            Cost for Damaged Clothing
Making the Most of Your Cleaning Business-
                                                                             Financial Analysis Worksheets

-------
                           J..  Jbi lHV1ATE YOUR UP-FRONT COSTS
  Project Title: par4.;ft\
  Date:
 STEP 2:  Enter information on your annual loan/lease payment
 Basic Instructions:                                                             ^

 In Step 2, you estimate your up-front costs in two different ways: 1) Gather information on your
 financing package from your bank, lease agent, or vendor and 2) Use the Up-Front Investment Cost
 Checklist to make sure that you include all relevant up-front costs (even those not included in. your.
 loan or lease package).              .        '                      •    '         .
 LOAN WORKSHEET (Use this box if you plan to finance the investment with a loan.)

 Loan payments will end after                                               J  _ years
 Interest rate                               ,                         ..	•_
 Annual loan payment (including principal arid interest)                       S  "3-/
 Additional one-time investment costs not included in loan                    S	C
 (See the  Up-Front Investment Cost Checklist fora list of equipment and other items
 that are not covered by your loan.)	•
 LEASE WORKSHEET (Use this box if you plan to finance the investment with a lease.)
 Lease payments will end after
 Buy-out price at end of lease  .
 Annual lease payment (including principal and interest)
 Additional one-time investment costs not included in lease
   S_
   $
 (See the Up-Front Investment Cost Checklist for a list of equipment and other items
 that are not covered by your lease.)     	.	
          .years
Making the Most of Your Cleaning Business
Financial Analysis Worksheets

-------
                    STEP 3. ESTIMATE YOUR ANNUAL SAVINGS
    Project
    Date:
   STEP 3:  Estimate the change in annual operating costs and revenues due
   to the investment.,            ,
   Basic instructions:                        ,                        ^^   ~            •
   In Step 3 of the analysis, you summarize the annual savings due:to the investment using information-from
   the Annual Operating-Cost Checklist. You can use the Annual Operating Cost Checklist in two ways: 1) You
   can use it to identify costs that may change as a  result of the investment, using up and down arrows,to
   indicate whether you estimate the costs will increase or  decrease; and  2) You can enter actual dollar
   estimates of your annual operating costs on the Annual Operating Cost Checklist.. You should copy the
   dollar estimates  from the shaded Subtotals- on the  •Annual Operating Cost Checklist into the following box.
   Some'Of the numbers you copy may be positive (indicating savings) and others negative (indicating cost
   increases).  Sum the numbers you copy into the box to show the TOTAL at the 'bottom. Y.ou should also
   estimate and record any increase-in Operating Revenues due to your investment.
Operating Cost Category Subtotals
From the Annual Operating Cost Checklist
A. Cleaning Supplies -
B. Clothes Handling Supplies
C. Labor and Supervision
D, Utilities '
E. Maintenance & Waste Management
~F. Waste Storage, Hauling, & Disposal • ; -
G, Regulatory Compliance
H. Liability and Insurance
1. Advertising Materials. .
J. Off-Site Services
K. Claims
TOTAL
SAVINGS /YR
Current - New
5 ~~(o(s> Z.
s •
$
$
u| , | kO .

$ - '.-" ' • •
S".
2,\O'O
S ; ' . '. -.
$ • •' :
s
5 , . ' -
$
$/ ^ ^1_ ^^ ^^J
v n t ^f^ ^^- ^^^
Increase in Operating Revenues
Resulting from Your Investment
Total Increase in Revenues
INCREASE /YR
New - Current
$ 0 .
Making the Most of Your Cleaning Business
' Financial Analysis Worksheets

-------
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                                                 Making the Most of Your Cleaning Business
5.      COPIES OF BLANK WORKSHEETS
                                                                                    i

       Copies of the blank financial analysis worksheets follow. . When you are ready to use
them for analysis of an investment, make an extra copy to work on, keeping the originals for the
future analyses, for yourself or for other cleaners you know.  Write the name of your investment
project and the date at the top of each page of the working copy.                            •
                                           27

-------
                              LT-FRONT INVESTMENT COST CHECKLIST
          Project Title:
          Date:
Checklist




























.A. Purchased Equipment (NOT included in loan/lease)
(Purchase, Tax, Delivery)
Protective Equipment, e.g., eyewash station
Solvent Leak Detector • • -
Perchloroethylene Storage &. Handling Materials
Spill Containment System. . . - •
Solvent Filter System
Steam Cabinets for Steam Stripping Cartridge Filters
Housing for Draining/Drying Cartridge Filters
Water Softening Unit . '. • •
Water Coofing Unit (Chiller)
Refrigerated Condenser :
Thermometer for Condenser Coil Temperature Measurements •
Water Separator . ' " ' •"'.•'.
Solvent Filtration/Distillation Unit/Muck Cooker
Azeotropic Control Devices • •
'Wastewater Carbon Adsorber . .•.--.-
Wastewater Evaporator .
Other Water Treatment/Recycle System
Vapor Carbon Adsorbers
Dry Cleaning Machine
Wet Cleaning System
Domestic Washer and/or Dryer --••• •
Pressing Equipment •

• • • '. • ' .
, - . • .



Investment Costs NOT.
included in loan/lease
$ .-. ' . "
S
.$•
5
$
$ :* '•
$ -.•.-.-
$ ,
$ '
$
s . ,
$
s
s
$
5
$'•.>'•
•
••
t ,
i -
» , •
s •. •-
s , . •
&
s
s
«jMj"a£^Bg**gMtf(aHtef

Checklist












(Labor, Supervision, Materials)
Shop Labor & Supervision '
-Contractor/Vendor Fees- . . . ,
Construction Equipment Rental
Demolition . : . • ' . ,
Old Equipment/Rubbish Hauling & Disposal •
Plumbing/Piping • . •
Electrical Systems , - - . t
Ventilation/Exhaust Systems-

. - - - " .-.--• .• - .

SUBTOTAL . . • •

Investment Costs NOT .
included in loan/lease
S

$ . - •••'.•
S
S
5 •••'•'-
3
S
S '
$
$
$

Making the Most of Your Cleaning, Business
                                                                                 Financial Analysis Worksneets

-------
                   UP-FRONT INVESTMENT COST CHECKLIST
   Project Title:
   Date:
Checklist








•,

C. Permitting (NOT included in loan/lease)
(City, County, State, Federal) ,
Shop Labor & Supervision
Contractor/Vendor Fees
City, County, or State Business License
City or County Health Department Permit
Perchloroethylene Use Permit ,
Wastewater Evaporator Permit . .



SUBTOTAL " • .- .
Investment Costs NOT
included in loan/lease
$ .
$
$ ',
$ .. ' •
$
$
$
$ .
$

Checklist


,







D. Start-up/Training (NOT included in loan/lease)
(Labor, Supervision, Materials)
Training in Equipment Operation
Training in Equipment Maintenance
Training in Dry/Wet Cleaning Techniques
Environmental and Safety Training
Cleaning Test Runs
Start-up Supplies •

•

"SUBTOTAL ' . •
Investment Costs NOT
included in loan/lease
$
$
S
S
$
$
$ - . •'
$ '
$ -
S

Making the Most of Your Cleaning Business.
.Financial Analysis Worksheets

-------
                             ANNUAL. OPERATING COST CHECKLIST
    Project Title:
    Date:
Checklist





.










A. Cleaning Supplies
(Purchase, Delivery, Storage)
Perchloroethylene (including any taxes)
Detergent for Dry Cleaning Charge
Solvent Filters . - • • . -
Solvent Filter Additives'
Detergent/Soap for Wet Cleaning •. . •
Finisher/Sizer .
Starch
Water Repellent "~
Odor Neutralizer • .. • ' .
Fabric Softener
Spotting Chemicals
Spotting Brushes/Bone Scrapers
- - •• . • '
, - • - . •• - ,

SUBTO'TAL - • . ' . ' - .
COST/YR
Current System
S •
$
% . • • -
5 .
$
S
$ • ' • •
S" •
s •
$
$
> • , .•
)
) ' ^
) ' - '
$ ,. • I

New System
$
$
$
$
$
$
1
$
S ' •
S
s
> •
»'
1

$ .
=====^=====
SAVINGS / YR
Current - New
S
$
s • • •
$
$
$
$ • . •
s •
>
>
t
;
;


. ......
. ' ',
















B. Clothes Handling Supplies
(Purchase, Delivery, Storage)

Garment Tags • . •
Staples
Durable Bags/Baskets . • • .
Nets •••.;• ''.-.'.'.
Hangers '
Drapery.Tube's and Bands
Safety Pins and Other Clips '
Plastic Garment Bags -



SUBTOTAL • ' '

COS

s
$•-
$
$
$
$
s
$
»
i
>

I

T/YR

$
S
S
s
$ y -
s ,-
$••
s
$ • • - 1
\ • ,- • -


\

.1
SAVINGS / YR
Current - New
$
S
$
$
$
$
» •
! " ,
>
J.
j
i
;-.-:.^T^--'-:'r?5?

Making the Most of Your Cleaning Business
                                                                           . Financial.Analysis Worksheets'

-------
                            ANNUAL OPERATING COST CHECKLIST
   Project Title:
   Date:
Checklist












C. Labor and Supervision
(Wage or Salary, Fringe Benefits)
Management
Cleaning • •
Spotting
Pressing
Counter
Training
.Advertising
.



SUBTOTAL
COST / YR
Current System
$
$
$
$
$
S
S
$
$
S
$
$
New System
S
$
$
$ '
$
$ .
S
S
$
S
$
$
SAVINGS / YR
Current- New
$
S
$
$
$
S
$
S
$
S
$
samamass
- Checklist


















Water
(for cleaning, steam generation, cooling)

Electricity

Fuel

Sewer

Refrigerant


•

•
•
SUBTOTAL
COST/YR
Current System
S
$
S
S
$
S
S
S
S
S
S
>
>
»
»
1
$
New System
$
S
$
S
$
S
S
S
$
S
$
8
i
>
»
•
i.
SAVINGS / YR
Current - New
$
S
S
S
$
$
$
S
$
•
>
» ^
1 •

'•
$

Waning tne Most of Your Cleaning Business
                                                                           Financial Analysis Woixsheets

-------
                          ANNUAL OPERATING COST CHECKLIST
   Project Title:
   Date:
Checklist

























E. Maintenance & Waste Management
(Labor & Materials)
Monitoring Perchloroethylene Mileage
Monitoring Pressure Gauges •
Perchloroethylene Vapor & Liquid Leak Repair
Cleaning Solvent Storage Tank(s)
Changing Cartridge Solvent Filters
Changing Polishing Filters
• Precoating Tubular Solvent Filters
.Regeneration of tubular/Disc Solvent Filters
Water Cooling Unit (Chiller) Maintenances
Condenser Maintenance ' .
Water Separator Maintenance * . ' .
Solvent Still Draining and Cleaning
Muck Cooker Draining and Cleaning
Replacing Wastewater Carbon Adsorber Filters
Wastewater Evaporator Maintenance .
Wastewater Treatment/Recycle Unit Maintenance
Replacing Vapor Carbon Adsorbers Filters
Cleaning Button Trap • •
Cleaning Lint Trap
Other Cleaning Machine Maintenance




SUBTOTAL . .
COST/YR
Current System
$
$
$ ' ' . •
$
$ '• • . '
$
$
$ ; ..-•--.






s
$
$••...
>
1
1
1 .
1
(
;„
$
New System -
$
$


-




*
$ , • •
$
$
$
$
$
S . •
f. . ' ;
>
>
*
1
i
»

SAVINGS/YR
Current -New
$
$
$
$
$
$
$ ' ' • -
S
$'
$
$
$
$'
t
> . '- .-' - '
t
i
»
i
i
$
5 - .-


VdPtt^MMtftt^fiHdC&^^K1
Making the Most of Your. Cleaning Business; ,
                                                                      Financial Analysis Worksheets

-------
                           ANNUAL OPERATING COST CHECKLIST
Project Title:
Date:
Checklist
.















F. Waste Storage, Hauling & Disposal
(Labor, Supervision, Materials)
Perchjoroethylene
Used Solvent Filters & Prefilters
Spent Carbon from Vapor/Wastewater Adsorbers
Filter Muck
Muck Cooker Residue
Solvent Still Sludge
Water Separator Wastewater
Water Treatment/Recycle Unit Sludge
Refrigerant , •
Lint & Rags
Solvent Containers
Spotting Chemicals/Containers



SUBTOTAL
COST / YR
Current System
$
S
$
$
$
$
$
$
S
$
$
$
$
$
$
New System
$
$
$
S
$
$
S
$ •
S
&
$
$
$
$ . . : •
$
* '. . Is '
SAVINGS / YR
Current -. New
$
$
$
$
$
S
$
$
S
$
$ .
$
$
$
5 •
('••.-vs^R^r^ai- • r,-
Checklist











G. Regulatory Compliance
(Labor. Supervision, Materials)
Permitting
Training
Monitoring/Testing
Inspections/Audits
Labeling
Manifesting
Recordkeeping,& Reporting
Spill Containment/Clean-up



j SUBTOTAL
COST / YR
Current System
$
S
$
$
$
$
S
$
$
S
$
$
New System
S
$
$
$
$
$
$
5
$
S
s '•
5
SAVINGS / YR
Current- New
S
S
$
$
$
!
i

>
;.
i

   the Most of Your Cleaning Business
Financial Analysis Worksheets

-------
                             ANNUAL OPERATING COST CHECKLIST
   Project Title:
   Date:
Checklist











. H. Liability and Insurance.'
Legal Fees , . • -
Fines/Penalities •
Site Cleanup & Monitoring • •
Personal Injury
Property/Natural Resource Damage

General Business Insurance
Pollution Liability Insurance


SUBTOTAL . ,
COST / YR
Current System
$
S
$
r
s.
$ • . ' .
s
$
$
$
$
New System
S
$
$
$
s • ' • ' ..
$
$
s
s
s
$
SAVINGS / YR
Current -New
$
S
S
$
s. . • •
$ , .. • •
s
s • • • :• •
$
s
maupeni
Checklist








1. Advertising Materials
Signs ' •
Business Cards
Flyers •
, Postage .
Advertising Fees '


SUBTOTAL ' . -
. COST/YR.
Current System
$ •
$
$ , .
$
$ • . - •••: •
$
s
s
New System
S
S
S
$
s
s
$
s
SAVINGS / YR
Current - New
S . '
$
$
S
s. . • -
s • '
s
y^&u&ms^
Checklist





, J. Off-Site Services
Shirt laundering - .
Leathers . ,
Tailoring . -'•...

SUBTOTAL .
COST/YR " ,
Current System
$
S
$
$• , , \
$
New System
S
S
$
$
S
SAVINGS / YR
Current - New
$
$ .
$
S
s5sassaeBH**»*
Checklist


, K. Claims
Cost for Damaged Clothing

.| SUBTOTAL
COST/YR
Current System
$ •'.
$
s
• New System -
s .-••..
S
S
SAVINGS / YR
Current - New
S
S
9-yviua^S^^FfS.
' Making the Most of Your Cleaning Business
Financial Analysis Worksheets

-------
  Project Title:
  Date:
 STEP 2: Enter information on your annual loan/lease payment.
 fBasic Instructions:

  In Step 2. you estimate your up-front costs in two different ways:  1) Gather information on your
  financing package from your, bank, lease agent, or vendor; and 2) Use the Up-Front Investment Cost
  Checklist to make sure that you include all relevant up-front .costs (even those not included in your
  loan or lease package).                                              '              •'
 LOAN WORKSHEET (Use this box if you plan to finance the investment with a loan.)

 Loan payments will end after                                     '	years
 Interest rate                    .                                     .	%
 Annual loan payment (including principal and interest)                       $	
 Additional one-time investment costs not included in loan                    S	
 (See the Up-Front investment Cost Checklist for a list of equipment and other ite.ms
 that are not covered by your loan.)  	
LEASE WORKSHEET (Use this box if you plan to finance the investment with a lease.)

Lease payments will end after  .   .
Buy-out price at end of lease                                              $  .
Annual lease payment (including principal and interest)                      $
Additional one-time investment costs not included in lease                   $_
(See the Up-Front Investment Cost Checklist for a list of equipment and other items
that are not covered  by your lease.)
                                                                               years
Making the Most of Your Cleaning Business
                                                                    Financial Analysis Worksheets

-------
                    STEP 3.  ESTIMATE YOUR ANNUAL SAVINGS
    Project Title:
    Date:
   STEP 3: Estimate the change in annual operating costs and revenues due
   to the investment.
   fBasic Instructions:               •     ' •  ; .                              .  •           _ ^
    In Step 3 of.the analysis, you summarize the annual savings due. to the investment using information from
    the Annual Operating Cost Checklist You can use the Annual Operating Cost Checklist in two ways: \1). You
    can use it to identify costs that may change as a result of the investment, using up and down arrows to
    indicate whether you  e'stimate the 'costs will increase or decrease;  and 2) You can enter actual dollar
    estimates  of your annual operating costs on the Annual Operating Cost Checklist. You should copy  the
    dollar estimates from the shaded Subtotals on the Annual Operating Cost Checklist into the following box.
    Some of the numbers you copy may be positive (indicating savings)  and others negative (indicating cost
    increases). Sum the numbers you copy into the box to show the TOTAL at the 'bottom. You should also
    estimate and record any increase in Operating Revenues due to your investment. .  ,        .       .
Operating Cost Category Subtotals
From the Annual Operating Cost Checklist
A. Cleaning Supplies •
B. Clothes Handling Supplies .
C. Labor and Supervision
D; Utilities '.
E. Maintenance & Waste Management
F. Waste Storage, Hauling & Disposal
G. Regulatory Compliance .
H. Liability and Insurance ' • :
I. Advertising Materials
J, Off-Site Services .„•••..
K. Claims . -
TOTAL ,
SAVINGS /YR
Current - New
$ . -
$
$ ' -;• ,
S
$
$
$ '• •••-••
s .
$ ..'•••••
$
$
$••••.
Increase in Operating Revenues
Resulting from Your Investment
Total Increase in Revenues ; „
INCREASE / YR
New - Current
S .
Making the Most of Your Cleaning Business
Financial Analysis Worksheets

-------
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