Challenges and Growth of SMEs: A Case Study of Laundryheap

This report discusses the challenges faced by SMEs and the growth strategies used by Laundryheap, an online laundry and dry cleaning service. It covers the startup process, competitive environment, sustainability goals, and government support measures.

Project

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Nature of entrepreneur ...............................................................................................................3
Process of start up.......................................................................................................................4
Concept of business and competitive benefit ............................................................................4
Present level of demand and competitive environment..............................................................5
Growth and development of business till date............................................................................5
Challenges of managing and running business...........................................................................6
SMEs present growth and strategy of development....................................................................6
Government support measures which are available for helping the business for overcoming
the challenges..............................................................................................................................7
Social and sustainability goals considered by the business........................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Small and Mid-Sized Enterprises refers to the businesses which maintain the assets,
revenues and the employees number below the certain criteria. Every nation has its own meaning
of what makes the small and medium size firm. Criteria of certain size should be met and the
sector in which company function in account. SMEs plays the crucial role in economy,
employing to large number of individuals and aid for shaping the innovation. Governments offer
the SMEs regularly the incentives, consisting better taxation treatment and access to the loans
offering for aiding the in the businesses(Barinova and Zempsov, 2019). This report is made in
context of LAUNDRYHEAP which is a professional laundry and dry cleaning services
established in the year 2014 in LONDON. The firm offers their services to consumers at their
doorstep in less than 24 hours. This report will mention the understanding and learning of
challenges which the SMES face and development plan of the business and skills of planning
related to SMEs.
MAIN BODY
Nature of entrepreneur
Laundryheap is a company located in London which operates the online laundry service
delivering at the doorstep of consumers. Firm was established by Deyan Dimitrov as the private
company. He formed the firm as private firm as he wanted to keep the full control with himself
while enjoying all the benefits related to private company. The founder wanted to provide
consumers the fast laundry and dry cleaning services at their doorstep. He wanted that entire
process of picking up and delivering the clothes must be done using the technology. For this the
team of the firm developed an application which lets the consumers to book someone for picking
up the clothes and bring them to the processing partners for cleaning them before returning it to
consumers(Feinstein and Yadav, 2018). The founder of Laundryheap Dimitrov wanted to keep
some differentiation in service, so they launched 24-hour service at no extra cost. It was possible
as the firm is managing its own fleet and doing partnership with facilities which operate in the
night because of high volumes. Owner started this venture to challenge the washing machine by
making it easy for cleaning the clothes without any problem and wanted to make effective and
efficient use of technology for tapping in the vast change in behaviour of consumers(Yuan and
et, al., 2018).

Process of start up
For starting a SME tech start up in UK the entrepreneur has to follow many steps. Here are
the steps needed-
 Idea generation- For the successful business there must be a strong and unique
idea. Idea of the product which the consumers require desperately. Laundryheaps
owner was successful in catching the people’s problem of dry cleaning and offered
them a tech based solution.
 Planning and market research- Through research is needed for establishing the
business. By not performing the market research the businesses fail even before
they get established in the market. Laundaryheap has done extensive research for
knowing the needs of the consumers.
 Go to strategy of market- It is the process of marketing the offering even before
reaching to the marker fit good. Laundaryheap has used technology for optimizing
the offering.
 Building the technical team- For the making of the tech business the technical
team is very crucial and Laundaryheap has the best team for building the app.
 Building of Minimum Viable Product- It’s the process where the real working on
product is done by Laundaryheap for validating the consumers interest in the good.
 Naming the start-up and know legalities- It is the hardest task to name the firm
and clear the legal formalities(Papazov and Mihaylova, 2019).
 Branding and launch of website- Laundaryheap has done branding and launch the
website for establishing themselves in the competitive market.
 Marketing strategies- For the avoiding of the failure Laundaryheap has done
extensive marketing in the market.
Concept of business and competitive benefit
Laundaryheap is the London based business organization which is an online based dry
cleaning and on demand laundry start-up which has taken the different path to its competitors
like Rocket Internet & Zipjet, Laundrapp. The firm opted for raising the venture capital funding
and claims for already reached at the breakeven point and is operating at Birminhgam, London,
Manchester, Dublin, Dubai and is entirely based on bootstrapping for the past 3 years(Pettrey,
2019). As to its competitors Laundaryheap offers the services of dry cleaning and laundary. The

application of Laundaryheap allows the users for booking the person for the picking of clothes
and take them to the partners where they are cleaned very well for returning them to customers.
Main competitive benefit of the Laundaryheap is that they offer the dry cleaning and laundry
services all the 24h hours as the firm has maintained its own fleet and partnered with the various
facilities which work day night to manage the large volumes.
Present level of demand and competitive environment
Competitive environment is analysed by Porter Five Forces model-
 Competition in industry- This force is moderate for the firm as they are the technology
firm and they have used the acquisition strategy by buying the firms which are already
operational in the industry.
 Power of new entrants- This force is low for the firm as the technology which is
required for operating in industry as it need large investment and everyone cant afford it.
 Suppliers power- This power is low for Laundryheap as they have numerous suppliers
which operate in the market and firm can switch any time and there will be no impact on
the firm.
 Power of consumers- This force is high for firm as the consumers demand the firms
services and if they don't demand the service of the firm the company will not be able to
grow. Threat of substitutes- This force of substitutes is low as the other firms cant substitute
the firms technology as they are operating on the self build technology.
Growth and development of business till date
Laundryheap is the only laundry and cleaning service organization which works 24/7 in
UK and has showed the key growth statistics for the firm in 2021 which shows the success of
the firm after its formation in year 2014. Laundryheap showed projection of industry up to
111.93 billion in the year 2022 at the growth rate of 7.4%. Firm has the plan for expanding in
US, Asia and Middle East. Firm has got second investment from Sona VC after its establishment
in the last year. Laundryheap was the bootstrap and till year 2020 they have served million of
consumers and cleaned more than 10 million clothes . They have raised the 2.9 million funding
from the VC and angel investments. Since the incorporation of firm they have established in
more than 11 nations such as Netherlands, Bahrain, Singapore , Denmark(Malmsjö and Nilsson,
2022).

Challenges of managing and running business
Here are some challenges which the firm faces-
 Brexit- After the UK left EU it has greatly impacted the Laundryheap as the rules
and regulation have changed at lot. Additional customs check and shortage of
labour are the main issue which the firm is facing.
 Resourcing- There is reduction in the market as high skilled force have left UK for
EU. Even Laundryheap has the skilled employees they are facing shortage of
workforce.
 Protecting the investors- Laundryheap has got the funding of many VCs and they
evaluate its performance constantly and firm has to keep them satisfied to get more
funding.
 Cultural barriers- As the Laundryheap is operating in many places in London and
other areas they sometimes face the cultural issues as in many places the giving of
clothes to other people for washing is considered as bad.
SMEs present growth and strategy of development
Use of Ansoff Matrix is used for developing the business in the market-
 Market penetration- This strategy is used for aiming to sell the existing goods in the
market by extensive use of marketing strategies. It helps the firm to increase the share
in market.
 Product development- It is used for developing the new goods and services in the
existing market by doing research about the requirements of the firm. If Laundryheap
gets the consumers needs and wants then they will be easily get the share in the market.
 Market development- This strategy is used for the entering in new markets by firm with
the existing goods and services, this aids the firm in getting more consumers base by
selling existing services and goods.
 Diversification- It is the strategy used by firms for entering in new markets by
innovating new goods and services. It is the riskiest strategy used by the firms as there is
no guarantee of success.

Laundryheap can use the market development strategy as they will get new base of
consumers while selling and providing them existing services and it is the less riskiest strategy o
for growing the business.
Government support measures which are available for helping the business for overcoming the
challenges
Here are some ways by government is aiding the SMEs to overcome challenges-
 Giving access to the businesses- Government of UK is helping SMEs by
providing them access to the various funding options. Funding options like British
Business Banks Finance Hub for scaling the businesses.(Lozano, Valdez and
Feldman, 2022).
 Growing ideas- UK assists the businesses for developing and realizing potential
of new ideas by the funding and collaboration of research.
 Making the taxation system more straightforward- UK government has made
changes in the system of tax by launching the system online and aided the small
businesses.
Social and sustainability goals considered by the business
Firm has considered sustainability as the main goal of the firm by using various ways
for operating such as-
 Washing at 30- By switching to 30 degree wash the firm saves average individual
energy. In Laundryheap they always use the 30 degree wash unless specified by the client
which saves use of energy.
 Environment friendly detergent- As all the detergents are made by the synthetic
chemical which have harmful impact on environment. In Laundryheap they use the
alternatives which are made by the less harmful alternatives and use automatic dosing
pumps for minimizing the waste of detergents.
 Recycling- In Laundryheap they try to recycle as much and they have switch to cotton
Laundryheap which have lead to reuse of bags by the consumers on the average of five
times and recycle 40% of the hangers of wire(Igoe, Trevithick and Tippmann, 2022).

CONCLUSION
The above report concludes that SMEs are the vital part of the economic system and
their growth represents the growth of nation. In the report the startup process, business concept
with current demand and competitive environment is mentioned. Further the growth and
development of business and various challenges and their outcome is stated. Ansoff Matrix is
used for growing the business in new markets and in last the sustainability goals which are
considered by the firm were also mentioned.

REFERENCES
Books and Journals
Barinova, V.A. and Zempsov, S.P., 2019. International comparative analysis of the role of small
and medium-sized enterprises in the national economy: A statistical study. Voprosy
statistiki, 26(6), pp.55-71.
Feinstein, N. and Yadav, N., 2018. What's Up? What's Next? Identifying and Predicting Trends
in Digital Marketing Innovations for Small and Mid-Sized Enterprises. In ICSB World
Conference Proceedings (pp. 1-8). International Council for Small Business (ICSB).
Igoe, J., Trevithick, C. and Tippmann, E., 2022. Innovation in international mid-sized
corporations: understanding their R&D offshoring characteristics. In Research
Handbook on Innovation in International Business (pp. 99-113). Edward Elgar
Publishing.
Lozano, J.P.R., Valdez, K.R. and Feldman, P.M., 2022. Business school model of social
responsibility and sustainability and its impact on small-and mid-sized
enterprises. International Journal of Sustainability in Higher Education.
Malmsjö, G. and Nilsson, J., 2022. Discrete Event Simulation using DELMIA: Production
optimization for small and mid-sized enterprises using the DES software DELMIA.
Papazov, E.K. and Mihaylova, L.M., 2019. Strategic Groups: Identification Techniques for
Entrepreneurial Medium-Sized Enterprises. In Strategic Optimization of Medium-Sized
Enterprises in the Global Market (pp. 287-311). IGI Global.
Pettrey, C.S., 2019. Enterprise Resource Planning Software: Non-financial Considerations for
Small to Mid-sized Enterprises (Doctoral dissertation, Northcentral University).
Yuan, Z., and et, al., 2018. The Analysis Driving Factors And Model Exploration for Small and
Mid-Sized Enterprise Transformation and Upgrading. In Integrated Economy and
Society: Diversity, Creativity and Technology; Proceedings of the MakeLearn and TIIM
International Conference 2018 (pp. 109-109). ToKnowPress.