Connect with us

Professional Services

Business Development Sample Business Plan

Using this sample business plan will allow you to successfully take the first steps in starting a business development company.

Entrepreneur

Published

on

Click here to view this full business plan

Business Development Business Plan

Executive Summary

We are currently in a highly lucrative market in a rapidly growing economy. The current trend towards an increase in the number of entrepreneurs and competition amongst existing companies presents an opportunity for an increased demand for market information and services that will enable companies to stay ahead of the pack.

Our services will be positioned very carefully: they will be of extremely high quality, relevant, timely and accurate, tailored to the clients’ needs so as to enable them to make the right decisions, in turn leading towards growth of their companies, benefiting the overall economy.

Palms and Bonds offers the expertise that a proactive-oriented and market-opportunity seeking company needs to develop and enter new product distribution and new market segments in new markets. We intend to provide a number of necessary services to the business community and to the public. These can be summed up in two main divisions — Business and Training Services. Our business services can be taken as marketing research, market research reports, project-based consulting, business and marketing plans, plan consulting and writing, high-level retainer consulting and company registration. Our training services include workshops and seminars on such topics as sales and marketing, as well as in-house training of receptionists, secretaries, and sales and marketing personnel.

Our marketing strategy will be based mainly on ensuring that customers know what needs the services are able to fulfill, and making the right information available to the right target customer. We intend to implement a market penetration strategy that will ensure that we are well known and respected in our respective industry. We will ensure that our services’ prices take into consideration people’s budgets, and that these people appreciate the services, know that it exists, and where to find it. The marketing will convey the sense of quality in every picture, every promotion, and every publication. Our promotional strategy will involve integrating advertising, events, personal selling, public relations, direct marketing and Internet marketing, details of which are provided in the marketing section of this plan.

Our target markets will range from persons in the corporate towers, small or medium businesses, to home institutions needing information on their particular area of concern. The common bond will be the appreciation of the importance of quality information that will enable correct decisions to be made, holding all things equal. Palms and Bonds prides itself on its analytical ability, its value-added service, competitive fees, its high standards of quality and its adaptability to changes in the market and in the method of its practice.

Palms and Bonds intends to provide the client with more than just information and planning tools. We intend to provide quality information that is customized to the client’s needs, in the process assisting them on how best to use the available information. By employing our services, our clients are assured of consultants dedicated to finding the right answers for their business and enabling them to benefit long after we have finished our work. We are in this line of work because we like efficiency and because we understand and believe in problem solving and market/marketing research.

As we grow we want to grow right. For example we recognize that we have to be in constant touch with our stakeholders to ensure market knowledge at all times. This is the nature of the channels we deal with. Also, we intend to build our management team correctly. We need the right people in the right place at the right time if we are to ensure optimum growth. We intend to develop our team so that our people can grow as the company grows — a mutually beneficial relationship.

In a nutshell, we don’t just intend to market and sell our service, but to market and sell customized information, solutions and a total-quality environment. This will ensure we establish a reputable corporate image.

1.1 Objectives

Our business strategy will revolve around the need to provide quality information to our various target clients/customers, in the process fully satisfying their needs. This shall be undertaken through recruitment of a professional marketing research and business consultancy team and the production of good quality reports designed to cater to the client’s needs. These reports/proposals shall be professionally done so as to be reflective of our intended image and reputation. We shall position ourselves as a quality service provider that strives to provide accuracy, relevancy and specific information. We intend to establish a good rapport with all the relevant government agencies and private institutions that may in turn refer us to aspiring entrepreneurs.

With time our presence on the World Wide Web will increase the knowledge of our services to the various market segments we shall be targeting. This is particularly so with foreign firms looking at establishing themselves in Botswana, hence providing them easy access to local information. In such a case Web presence is a natural objective in reaching the appropriate potential customers. We also intend to have brochures that will enable clients to have an understanding of the types of services we offer and advantages of doing so. In addition to well-done brochures, company profiles and business cards often have a triggering effect on clients contemplating investing in Botswana. These will undoubtedly generate increased sales of our products.

1.2 Keys to Success

The keys to Palms and Bonds success will undoubtedly be effective market segmentation through identification of several niche markets and implementation strategies. Along these lines the company intends to implement personal selling and direct marketing strategies to the target markets. Our personal selling marketing strategies will rotate around keeping in touch with investment and finance bodies for major clients and word-of-mouth for more individual investors. our key success factors will include the following:

  • Excellence in fulfilling the promise: completely confidential, reliable, trustworthy expertise and information. This dictates that we have the latest technology and software.
  • Uncompromising commitment to the quality of the work: that is, quality data, information and solutions.
  • Developing visibility to generate new business leads.
  • Leveraging from a single pool of expertise into multiple revenue generation opportunities: retainer consulting, project consulting, market research, and market research published reports.
  • Successful niche marketing: we intend to find and target the quality-conscious customer in the right channels, making sure that the customer will find us through aggressive marketing.
  • Timeous response to clients orders: we cannot afford to delay the client’s order for whatever reason as this will have a negative bearing on our image and reputation, including future business. We need to be continually communicating with the client.
  • Marketing know-how: in an increasingly competitive market there is need to aggressively market our business and the services we provide so as to be continuously at the top of our prospective and current clients minds.
  • Entrepreneurial Flair: market volatility and increasing duplication of business ideas advocates that we continuously keep abreast of new trends and our competitors.

1.3 Mission

Palms and Bonds offers clients reliable, quality information and proposals for business development, market development, and channel development that will maximize business development. A true alternative to in-house resources we offer a very high level of practical experience, know-how, contacts, and confidentiality. At Palms and Bonds we are able to provide comprehensive solutions to our clients’ problems that will foster business development. Clients must know that working with Palms and Bonds is a more professional, less risky way to develop new areas even than working completely in-house with their own people. Palms and Bonds must also be able to maintain financial balance, charging a competitive and realistic value for its services, and delivering an even higher value to its clients. Initial focus will be development of the local market clientele.

Our mission statement is:
“We endeavor to understand our customers’ business so well as to be able to offer comprehensive solutions to their problems.”

Company Summary

Palms and Bonds is a relatively new company providing high-level expertise in local business development, market identification and development, channel development, distribution strategies, and marketing strategies for all types of products and services. It will focus initially on providing and satisfying two kinds of markets:

  1. Providing market research to local clients looking at developing their businesses for the increasingly competitive markets, be they new or established.
  2. Providing market research services to foreign investors looking at investing in the local markets.

As it grows it will take on people and consulting work in related markets. It will also look for additional leverage by establishing relationships and representations with international market research organizations.

2.1 Company Ownership

Palms and Bonds is a Private Limited company. Its fiscal year is the calendar year. Messrs. TTT. and SSS. equally own the company.

2.2 Start-up Summary

Total start-up capital and expenses covered (including legal costs, logo design, stationery and related expenses) came to approximately P49,600. Start-up assets required and utilized included personal computers, vehicles, office furniture, and other office equipment.

Services

Palms and Bonds offers expertise in market research, channel distribution, channel development, and market development that allow clients to choose their preferred relationship: these include retainer consulting relationships, project-based consulting, sales representation and market representation, project-based market research, published market research, information forum events, business plans, and marketing plans.

Palms and Bonds offers the expertise a proactive-oriented and market-opportunity seeking company needs to develop and enter new product distribution and new market segments in new markets. We intend to provide a number of necessary services to the business community and to the public. These can be summed up in two areas — Business and Training Services. Our business services can be taken as high-level retainer consulting, market research reports, project-based consulting, business and marketing plans, plan consulting and writing, and company registration. Our training services include workshops and seminars on such topics as sales and marketing, as well as in-house training of receptionists, secretaries, and sales and marketing personnel.

3.1 Service Description

Our business planning services include: assisting companies with the research and structuring of comprehensive, written business and marketing plans; providing a written business plan package, which delivers a complete, detailed business plan to the client, specifically designed to meet their needs, that is, FAP applications, bank loans, NDB loans, restructuring, new product development, market expansion, etc.

In many cases, small businesses often consider next year’s budget an acceptable business plan. Any investor or banker will disagree and insist on much more information prior to making a financial decision regarding funding a business. We want to provide the opportunity for businesses, which have potential to receive the funding that would help them become solid employers.

Market research:  (Discussion omitted in this sample business plan)
Retainer consulting: (Discussion omitted)
Cash Flow Analysis: (Discussion omitted)
Project consulting: (Discussion omitted)

3.2 Sales Literature

The business will begin with a general corporate brochure establishing the positioning. This brochure was developed as part of the start-up expenses including the business cards and Company Profile, mainly for the large organizations that often recommend services to potential investors. Compliment slips are also on the cards so as to raise awareness of the company and its services.

Literature and mailings for the initial market forums will be very important.

3.3 Technology

Palms and Bonds will maintain the latest market research software and Windows capabilities including:

  • Complete email facilities on the Internet for working with clients directly through email delivery of drafts and information.
  • Complete presentation facilities for preparation and delivery of multimedia presentations on Windows machines, in formats including on-disk presentation, live presentation, or video presentation.
  • Complete desktop publishing facilities for delivery of regular retainer reports, project output reports, marketing materials, and market research reports.

3.4 Future Services

In putting the company together we have attempted to offer enough services to allow us to always be in demand by our clients. However, economics has provided us with a new era of opportunities for the small business in which we can only guess at the needs. The most important factor in developing future services is market need. Our understanding of the needs of our target market segments is one of our competitive advantages. It is critical to our effort to develop the right new services. We also have what we call a “core service engine” (market research) that will be the foundation of future products. In the future, Palms and Bonds will broaden its coverage by expanding into additional markets (e.g., the whole of southern Africa) and additional product areas. However in doing so we will strive to ensure that it is compatible with the existing services.

Now we have the possibility of new money being loosened for entrepreneurs and that means there will be a substantial increase in the number of feasibility studies and business plans. This provides additional business for virtually every area of business service we provide.

We are also studying the possibility of newsletter or electronic newsletter services (for the international market), or perhaps special on-topic reports, pending further research on client needs.

Market Analysis Summary

We are today experiencing a rapid growth in the economy of unsurpassed nature. This has been brought about by amongst other things, the relaxation of foreign exchange policies and macro economic policies geared towards attracting foreign investors into the country. The fiscal and monetary policies of the government geared towards maintaining growth with social justice have largely contributed towards this, evidenced by our economy averaging a growth rate of 7% since 1990 — very high by international standards.

The current drive and emphasis by the government on diversification of the industrial base away from the minerals sector presents an opportunity for Palms and Bonds to make a valuable contribution towards achieving this goal. This will result in implementation of modern market research techniques and transfer of knowledge. Having undertaken a thorough and comprehensive research of the market we realized that there was a need for a specialized market research firm that focuses on producing market research reports that are tailored to the clients needs. Though there are business consultancy firms currently on the market, some of whom have been in existence for a relatively long period of time, we believe that there is a market need for one (ourselves in this instance) that particularly focuses on market research. We intend to provide services of extremely high quality — something that cannot be over-emphasized in the international arena with the current drive towards globalization.

We appreciate that entering such a market is not a bed of roses and intend to implement an aggressive marketing strategy, well supported by the other business functions. The above prognosis influenced our decision to enter the business consultancy industry.

4.1 Market Segmentation

Palms and Bonds will be focusing on local businesses and foreign investors looking at investing in the country. These will be small, medium, and large-sized companies looking for a total service and quality work.

Our most important group of potential customers are foreign investors. These are potential investors who want to have a feel and understanding of the local markets and the opportunities, and constraints they present to them. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their company’s name and reputation.

Large corporations: one of our most important market segment is the large organization looking at penetrating new or existing markets. These companies will be calling on Palms and Bonds for development functions that are better spun off than managed in-house, for market research, and feasibility studies.

Medium-sized growth companies: particularly in rapidly expanding markets, Palms and Bonds will offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments.

Small-sized companies: in an increasingly competitive environment entrepreneurs are becoming more cautious in the markets they seek to enter and on establishing new market opportunities. They are often seeking for prior research to be done to identify possible markets that are suited to their resources and capabilities.

Hence the most likely types of businesses to require our services would include:

  • New businesses seeking investment or start-up capital
  • New firms looking at investing in the country
  • Existing companies which are expanding or introducing a new product/ service.

4.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making the right information available to the right target customer. We will ensure that our services’ prices take into consideration people’s budgets, and that these people appreciate the service and know that it exists, including where to find it. The marketing will convey the sense of quality in every picture, every promotion, and every publication. There is already a sense of segment strategy in the way we define our target market. We are choosing to compete in areas that lend themselves to local competition, service and channel areas that match our strengths, and avoid our weaknesses.

Our strategy calls for the development of relationships with investment bodies, attorneys, accountants and financial institutions to support our business with referrals. Interviews with commercial loan officers have indicated that there is a serious need for a professional firm like ours to help their clients in market/marketing research, and development of comprehensive and concise business and marketing plans.

4.2.1 Market Needs

Palms and Bonds intends to provide the client with more than general market information. We intend to provide accurate, relevant, specific and timely information that will enable our clients to make more accurate decisions. This information we intend to be available to our clients at competitive rates.

We understand that our target markets need more than just information but information that will enable them to make more informed decisions. Our target client wants information that is relevant to their needs and easily understandable so as to make the right decisions. We don’t just intend to provide a service, but to provide one of unparalleled nature relative to the market.

4.2.2 Market Trends

Our intended markets are increasingly growing towards recognizing the difference between poor quality business consultancy service and that of high quality. This development is an important trend for us as it represents our target market, and hence opportunity. We now are having an increasing number of people who appreciate quality information and the importance of having comprehensive and concise market and business plans undertaken.

Another trend is the one toward greater use of specialized and focused consultants, instead of in-house resources. Companies are looking for out-sourcing (but unfortunately few offer such a service) and, in general, a preference for variable costs instead of fixed costs.

4.3 Positioning Statement

Although there are a number of attorneys and accountants who write or assist in writing a business plan, the reality is that these professionals provide invaluable services in the areas in which they specialize, but lack the imagination to write a comprehensive and effective business plan. The attorneys tend to dwell on the legal aspects and contractual arrangements while accountants sweat over the balance sheets, cash flow statements, product costs and income statements. Additionally, these vitally necessary professionals cannot afford to spend the many hours necessary to work on a business plan when they could be earning much more per hour concentrating on their particular field of expertise.

Our expertise lies in the ability to listen to a business owner and perceive their vision for their company over the next few years. We can envision what the business person is looking for in the future, then put it in writing and at a cost they can live with.

4.4 Service Business Analysis

The consulting “industry” is pulverized and disorganized, with many smaller consulting organizations and individual consultants for every one of the few dozen well-known companies. These other organizations often offer a service, which is not to the client’s satisfaction. In addition they often claim to offer a service, which they are not fully capable of providing satisfactorily.

Consulting participants range from major international name-brand consultants to hundreds of individuals. One of Palms and Bonds’ challenges will be establishing itself as a real consulting company, specializing in market research, positioned as a relatively risk-free corporate purchase. The business consulting industry may be segmented by economics and needs patterns. This incorporates some of the service type differences, but in a more practical sense:

Mainline Services: these include marketing/market research undertaken through advertising, direct mail, referrals and sales literature. Essentially these will be customized to the client’s needs.

Ancillary Services: these include services such as trading licenses and company formation, which tend to be similar with not much to differentiate amongst providers except speed of execution. We intend to have an extremely efficient and ‘state-of-the-art’ business centre that will cater to our clients’ needs. Service provider decisions don’t tend to be major decisions/events covering relatively insignificant amounts.

4.4.1 Distributing a Service

Consulting is sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important factor.

The major name-brand houses have locations in the main mall, and executive-level managers or partners develop new business through industry associations, business associations, chambers of commerce and industry, etc., and in some cases social associations such as country clubs.

The medium-level houses tend to be general in terms of services and specific in terms of target market — targeting FAP seeking clients/individuals. They are not easily able to leverage their business through distribution, which we intend to be one of our competitive advantages.

4.4.2 Competition and Buying Patterns

The key element in purchase decisions made at the Palms and Bonds client level is trust in the professional reputation and reliability of the consulting firm. The most important factor in this market is the quality of the service. The majority of the investment referrals said they were not satisfied with the current plans often submitted for their approval as they were of poor quality.

4.4.3 Main Competitors

There are numerous companies operating in Gaborone who classify themselves as “business consultants”. However, upon contacting these, it appears that the vast majority of these companies are bookkeeping and secretarial services companies. There are some companies that provide services similar to those offered by us and that is good, but none of them specialize in market/marketing research. The following are some of our main competitors:

The high-level prestige management consulting firms

Strengths: Prime locations managed by owner-partners with a high level of presentation and understanding of general business. Enviable reputations, which make purchase of consulting an easy decision for a manager, despite the very high prices.

Weaknesses: General business knowledge doesn’t substitute for the specific market, channel, and distribution expertise of Palms and Bonds, focusing on local markets and products/services. Also, fees are extremely expensive, and work is generally done by very junior-level consultants, even though sold by high-level partners.

General Business Consultancy firms

Strengths: Expertise in certain functional areas particularly bookkeeping. Palms and Bonds intends not to compete with general business consultancy firms in these  markets.

Weaknesses: The inability to spread beyond a specific focus, or to rise above a specific focus, to provide actual marketing and market research expertise, experience, and wisdom beyond the specifics.

The most significant competition is no consulting at all, companies choosing to do market research, business development and channel development in-house.

Strengths: No incremental cost except travel; also, the general work is done by the people who are entirely responsible, the planning is done by those who will implement it.

Weaknesses: Most managers are terribly overburdened already, unable to find incremental resources in time and people to apply to incremental opportunities. Also, there is a lot of additional risk in market and channel development done in-house from the ground up. Finally, retainer-based antenna consultants can greatly enhance a company’s reach and extend its position into conversations that might otherwise never have taken place.

Attorneys and Accounting firms

Strengths: Able to provide sound accounting or legal advice and services with the plans being done by the partners.

Weaknesses: They often lack the imagination to write a comprehensive and effective business plan. The attorneys tend to dwell on the legal aspects and contractual arrangements while accountants sweat over the balance sheets, cash flow statements, product costs and income statements. Very little market research, if any, is often undertaken, and often ineffectively.

4.4.4 Business Participants

At the highest level are the few well-established major names in management consulting. Most of these are organized as partnerships established in major markets around the world, linked together by interconnecting directors and sharing the name and corporate wisdom. Some evolved from accounting companies and some from management consulting. These companies charge very high rates for consulting, and maintain relatively high overhead structures and fulfillment structures based on partners selling and junior associates fulfilling.

4.4.5 Competitive Comparison

We have sought to identify competition in terms of companies that satisfy the same client needs that we intend to. Our competitors are few in our main service, and, including Government agencies, numerous in our ancillary services. There will be a need to strongly differentiate ourselves from these other businesses. However on a broader scale our competition comes in several forms:

The most significant competition is no market research consulting at all, companies choosing to do market research, business development and channel development in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities, they don’t have time for additional responsibilities in new market development or new channel development. Also, Palms and Bonds can approach alliances, investment bodies, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers can’t.
The high-level prestige management consulting: XXX and international firms. These are essentially generalists who take their name-brand management consulting into specialty areas. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work.

The third general kind of competitors are the various trading and Investment bodies. These companies are formidable competitors for published market research and market forums, but cannot provide the kind of high-level customized consulting that Palms and Bonds will provide.
The fourth kind of competition are the business consultancy firms, which undertake business plans for various organizations. For example: LLL, MMM, NNN, and OOO Consultancy.
The fifth kind of competition are the numerous “fly-by-night” business consultants that claim to offer the same services as we do. Often they offer a below par service with no qualified personnel.

Click here to view this full business plan

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Professional Services

Security Guard Business Plan Sample

Protect your community by starting a security business using a security guard business plan similar to this one.

Entrepreneur

Published

on

83-security-guard-business-plan

Protect your community by starting a security business using a security guard business plan similar to this one to compile your own.

1. Executive Summary

Batten-Hatchez Security is a start-up security company founded by Chindit Batten, an experienced former police sergeant and security company manager.

Located in Coastalburg at its launch, the business will provide security guards, security audits, and referrals to equipment providers to commercial buildings, retail businesses, and, eventually special event venues and other clients.

The business seeks to acquire capital from an angel investor and will expand to additional cities in our state and beyond if successful.

Related: Free Business Plan Template Download

In the current political climate, with increasing fears of terrorist activity, and the current economic climate, which promises an upswing in general and in outsourced services especially, this business is launching at the right time.

The business will target large retail stores and building management companies first in order to establish a strong base of clients in Coastalburg.

Batten-Hatchez will grow its employee base of security guards carefully, based on client contracts, and use both full-time and part-time guards. The business expects respectable sales of in the first year, almost doubling by the end of the third year. Gross margins will be similar to the industry average, based on guard labor costs vs. billings.

Related: How To Start A Business With (Almost) No Money

After the initial investment and launch, a lean first year, and the establishment of an office and training space in the second year, the business will be poised to expand through its own financing after three years. After the business is proved replicable in additional cities, the business may be sold to provide an exit for the initial investor and founders.

Objectives

Batten-Hatchez Security will base its success on meeting the following objectives:

  • Employ 25 full-time equivalent security guards by the end of the third year of operation
  • Supply security guards to 15 buildings on a full-time basis by the end of the third year of operation
  • Earn $2 million in revenue with net profit over $300,000 in its third year of operation

Mission

Batten-Hatchez Security will remove worries for clients who require security guards for their buildings, facilities, and events by providing excellent customer service for clients and in-depth training for their employees.

Keys to Success

Batten-Hatchez Security believes the keys to success in its industry include:

  • Listening carefully to client concerns and objectives to create customized security guard packages
  • Knowing what the client does not know (bringing deep security expertise as well as knowledge of legal regulations and liability to the table)
  • Training security guards carefully and maintaining their training and certifications (e.g. to carry firearms)
  • Monitoring the quality of security guard service to offer quality assurance

6 SAB Entreprenurship Programmes That Provide Business Management And Support

The creation of SAB KickStart, SAB Foundation, SAB Accelerator and SAB Thrive, provides the opportunity for a tangible and sustainable future for South Africans by providing invaluable guidance and support to new business.


2. Company Summary

security-company-summary

Batten-Hatchez Security is a startup security company founded by Chindit Batten, a former police sergeant and security company manager with fifteen years in law enforcement and ten years in security work.

Related: 21 Steps To Start-Up

The business will provide security guards to commercial buildings, retail businesses, and special events. The business will launch in Coastalburg but will expand to additional cities if successful.

Company Ownership

Chindit Batten is CEO and founder of Batten-Hatchez Security.

He currently owns 60% of the business and the remaining 40% of shares are owned by his partner and co-founder, Viipuri Hatchez, COO. The business is incorporated as an S Corporation to enable additional investment for its launch.

The founders shares will be diluted as up to 40% of shares will be given to investors.

Start-up Summary

Batten-Hatchez Security will launch as a home-based business out of the home office of Chindit Batten. Initially, this will reduce the cost of rent and equipment.

Related: Conducting a Business Plan Market Analysis

Training for security guards will be provided in temporarily rented office space as needed.

Other start-up costs include the costs of incorporation and permits, such as concealed weapons permits, business license, and police clearances (legal fees), the initial website and brochure design and printing, and the first insurance premium for the business, including liability insurance for the guard’s work and carrying of firearms.

Long-term assets include mobile phones and headsets for all guards and employees, as well as two-way radios for guards working as teams.


3. Services

security-company-camera

Batten-Hatchez Security will provide well trained guards for one or more of the following purposes:

  • To guard entrances and screen guests/employees
  • To monitor clients’ premises with video surveillance equipment
  • To protect clients’ assets, employees and guests
  • To deter crime with visual presence
  • To organize response in the case of fire, evacuation, or other emergency
  • To respond to customer and employee health emergencies and accidents
  • To eject unwanted customers or trespassers
  • To liaison with police and city emergency responders

In addition, the principals of the firm will offer the following:

  1. Security audits and recommendations for security plans
  2. Referrals to providers of security technology (camera systems, etc.)

Batten-Hatchez will be a licensed, insured, and bonded business and will offer both armed and unarmed guards, based on client needs and budgets.

Related: Are You Building A Business Or Creating A Job For Yourself?

All guards will be certified for security work and to carry firearms. Whenever possible, the same guards will be sent consistently to the same clients. However, substitutes will be necessary from time to time and the business will ensure that detailed data about the job is transmitted to substitute guards on those occasions.

Batten-Hatchez Security will build trust with clients as a partner, rather than simply in the specific guard or guards they grow comfortable with. Guards will keep in constant communication with their team via portable two-way radios and with the Batten-Hatchez office, as necessary through mobile phones.

The Batten-Hatchez office will be not be staffed full-time at launch, but the CEO and COO will be within reach by phone wherever they work. Guards who encounter criminal activity will alert the authorities immediately rather than going through a communications centre.

Once the Batten-Hatchez office is established outside of the home of Chindit Batten, it will be staffed full-time with a rotation of three call centre personnel who will cover the dispatches. Guards will either be stationed at desks or patrol on foot at all facilities.

Clients must provide vehicles if their jobs require vehicle patrol (i.e., a facility with several buildings), but this will not be a focus of Batten-Hatchez Security.


How to Write a Funding Proposal

Knowing how to write a funding proposal properly can make or break your business idea before it even gets off the ground.


4. Market Analysis Summary

security-market-analysis-summary

The market for security guard services includes building management companies, retail businesses, event venues, and other businesses. IBISworld.com reports that the security services industry as a whole was $29.7 billion in 2008.

While this number includes investigative services and armoured car services, it is estimated that security guards accounted for $22.3 billion. This represents approximately 540,000 employees in the security guard industry.

While market revenue has dropped 2% in 2008 due to the recession, it is expected that the market will rise again due to increasing outsourcing of security services by companies who will delay hiring their own full-time employees as the recession ends.

The continuing and growing concerns about security brought on by international terrorism are also expected to contribute to growth in the industry.

Of the potential targets available in Coastalburg Batten-Hatchez Security will focus on building management companies and retail businesses at the outset.

Related: 3 Key Law Areas To Know When You Launch That Start-up

These businesses require steady security needs and serving them is simpler than serving special events.

Market Segmentation

The market analysis table shows the market segmentation for Coastalburg among the major market segments for security guard services. Growth is slow among these markets as new development is not prevalent in Coastalburg currently.

Building management companies generally install surveillance equipment and employ security guards to monitor that equipment, to staff front desks/security checks, and sometimes for general patrol.

These companies often work with a number of commercial or residential buildings and look to establish a relationship with one reliable vendor for all of their security guard needs. While some buildings require night-shift guards, others require only day coverage.

Large retail businesses use security guards to deter theft and to provide safety. These include department stores and other retail stores over 4,000 square feet, although some smaller stores may use security guards if they sell high-priced items (designer fashion, jewelry, technology, etc.).

Retailers require more guards during the day. Some simply lock the store at night while some larger department stores use night patrols as well.

Related: How Do You Hit The Right Target Market For Your Business?

Event venues use security guards to monitor guest lists and fire capacities and to organize emergency response. Nightclubs and bars may be included in this category. However, most nightclubs and bars employ their own security personnel (or “bouncers”) directly and do not use vendors.

Event security has the same risks as other security, but there is limited time for security audits and situations change fast, making this a higher stress business that requires better trained guards. Events tend to happen in the evenings with weekday nights for corporate events and weekend nights for private events.

Educational institutions, such as primary and secondary schools and colleges, generally employ security officers to guard and patrol their buildings and campuses. Often these institutions employ their own in-house security staff, but they will sometimes use outsources security vendors. These institutions require night and day patrols.


How Do I Start A Security Company?

There are two kinds of security companies, one that sells products and one that sells services or you can combine both.


Target Market Segment Strategy

Batten-Hatchez Security will target the first two of these target markets initially, building management companies and retail businesses. Both segments require ongoing security vendors and are eager to establish long-term relationships.

Once relationships are established, good customer service, quality assurance, and competitive pricing can ensure that the relationships are retained and that the security provider is considered a true partner in the protection of the building or businesses’ assets and people.

Furthermore, the other two target markets listed will be taken on at a later date, if at all. Event venues require more specialised services and may be a slower market to tackle.

Related: Target Market Worksheet

Educational institutions are often eager to establish their own security staffs, making this a difficult market to establish a strong foothold in as well.

Service Business Analysis

According to IBISWorld, there were 41,000 security services firms in the U.S. in 2008 running 56,000 establishments. The average size of a firm was $700,000 revenue per year based on these numbers, meaning that the industry includes both small and larger companies.

There are few barriers to entry, as long as basic legal requirements are met, as the capital investment in the business is very low. The industry depends on a supply of labor, often using retired police officers as security guards.

As security guard services are sold business-to-business, marketing and advertisement is generally targeted on the markets and industries the security companies seek to serve. Businesses generally search for security guard providers on the Internet or through referrals from other companies they trust.

Competition and Buying Patterns

Top players in the industry include Securitas AB, Allied Security LLC, The Brink’s Company, and G4S plc.

Huge players provide services for a huge range of markets, including governments, chemical and petrochemical, colleges and universities, commercial real estate, financial institutions, health care facilities, manufacturing and industrial, residential communities, shopping centers, and temporary security services.

Smaller security companies achieve success based on the expertise and reputation of their founding managers and the growth of a team with a similar track record. The continued success of a company depends on client satisfaction, leading to referrals.

Larger institutions and governments may receive several bids for security contracts, while smaller businesses (such as many that Batten-Hatchez Security will target) often prefer to try out security companies and move on if they do not meet expectations.

The smaller the amount of assets being protected, the more willing a company will be to risk their security on educated hunches about a security company without feeling the need to do due diligence on a number of options.

IBISworld reports the following about the security industry:

  • While the public’s perception of the rising crime rate assists revenue, the most significant factor which increases the demand for this industry’s services is a breach of an existing security system, a break-in or a near break in. The economic crisis has hurt demand over the past two years but things will soon begin to improve.
  • In Coastalburg, security guard service competitors include securityguard.com, Top Guard Security, US Security Guard Services, and Trend Security Corporation.

Click here to view this full business plan


Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

Continue Reading

Professional Services

Painting Contractors Sample Business Plan

Offering your services as a painting contractor means having the right business plan in place at the start.

Entrepreneur

Published

on

Click here to view this full business plan

Painting Contractors Business Plan

Executive Summary

Barnum Painters will provide top-quality interior and exterior residential and commercial painting services. The principal officers of Barnum Painters believe that most companies in this industry suffer two major problems. These are poor scheduling of job projects and poor retention of quality employees. Both lead to lower customer satisfaction, lack of repeat business and a low word-of-mouth referral rate. Barnum Painters believes that by implementing this contractor business plan, it can improve upon and exploit these weaknesses to gain local market share.

The objectives for Barnum Painters over the next three years are:

  • To achieve sales revenues of approximately $620,000 by year three.
  • To achieve a customer mix of 30% commercial/60% residential building contracts per year.
  • To expand operations to include all the Greater Seattle area including Kirkland, Renton and the Kitsap Peninsula.

The company will seek to provide its painting services in the most timely manner and with an ongoing comprehensive quality-control program to provide 100% customer satisfaction. The company’s principal officers see each contract as an agreement not between a business and its customers, but between partners that wish to create a close and mutually-beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.

Barnum Painters will institute the following key procedures to reach its goals:

  • Create a position of inventory coordinator, and have at least one expediter assigned to each project.
  • Have a dedicated project manager for each project who can handle quality-control issues.
  • Institute a program of profit sharing among all employees.

Barnum Painters is a start-up limited liability company consisting of three principal officers with combined industry experience of 40 years. Barnum Painters will be a partnership between Mr. William Barnum, Mr. Anthony Barnum and Mr. Michael Kruger. The principals will be investing significant amounts of their own capital into the company and will also be seeking a loan of $7,000 to cover start-up costs and future growth. Finally, the company has procured a $10,000 line of credit (not shown on financial statements) that will be used if necessary to cover unforeseen expenses or opportunities.

Barnum Painters will be located in a rented suite in the Rucker Industrial Park on 710 Snoquamie Route, Suite 250 in Edmonds, WA. The facilities will include a reception area, offices for the principals, storage area for inventory, and employee lounge. Barnum Painters offers a wide variety of services primarily focused on interior and exterior residential and commercial painting. The firm also provides such services as drywall plastering, acoustical ceilings, pressure washing, and others. The idea is to provide clients with a broad range of related services that will minimize their need to employ a variety of contractors.  Barnum Painters will engage in a low-cost leadership strategy while maintaining a suitable level of quality.

Initially the company will focus on residential and commercial customers in the Everett, Washington area. However, by the end of the three-year projections, the company expects to be serving the entire Puget Sound area. The company has rigorously examined its financial projections and concluded that they are both conservative in profits and generous in expenditures. This was done deliberately to provide for unforeseeable events. The company’s principals believe that cash flow projections are realistic.

Keys to Success

The principal officers of Barnum Painters have had many years of experience in the contracting business. They believe that most companies in this industry, which includes painting contractors, suffer from two major problems that Barnum Painters can improve upon and exploit.

The first problem comes from scheduling of jobs. Many painting contractors find it difficult to maintain established schedules with their customers that lead to a decrease in customer satisfaction and retention. This is caused by poor management, less than reliable employees, and delays in inventory procurement and distribution. The second problem is in retaining reliable and motivated personnel. Many painting companies rely on temporary or transient employees that lead to high turnover rates and decreased service quality.

Barnum Painters will institute the following key procedures:

  • Creation of a position of inventory coordinator and have at least one expediter assigned to each project.
  • Have a dedicated project manager for each project who can handle quality control issues.
  • Institute a program of profit sharing among all employees.

Mission

The mission of Barnum Painters is to provide top-quality interior and exterior residential and commercial painting services. The company will seek to provide these services in the most timely manner and with an ongoing comprehensive quality control program to provide 100% customer satisfaction. The company’s principal officers see each contract as an agreement not between a business and its customers, but between partners that wish to create a close and mutually beneficial long-term relationship. This will help to provide greater long-term profits through referrals and repeat business.

Objectives

The objectives for Barnum Painters over the next three years is to:

  • Achieve sales revenues of approximately $450,000 by year three.
  • Achieve a customer mix of 30% commercial/60% residential building contracts per year.
  • Expand operations to include all the Greater Seattle area including Kirkland, Renton and the Kitsap Peninsula.

Company Summary

Barnum Painters is a start-up limited liability company consisting of three principle officers with combined industry experience of 40 years. The company was formed to take advantage of the perceived weakness and inadequacies of other regional companies in terms of quality and customer satisfaction. Barnum Painters will be a partnership between Mr. William Barnum, Mr. Anthony Barnum and Mr. Michael Kruger. The principles in the company will be investing significant amounts of their own capital into the company and will also be seeking a loan to cover start-up costs and future growth.

Barnum Painters will be located in a rented suite in the Rucker Industrial Park on 710 Snoquamie Route, Suite 250 in Edmonds, WA. The facilities will include a reception area, offices for the principals, storage area for inventory, and employee lounge.

The company plans to use its existing contacts and the combined customer base of Mr.’s Barnum and Kruger to generate short-term residential contracts. Its long-term profitability will rely on focusing on commercial contracts that will be obtained through strategic alliances and a comprehensive marketing program.

Company Ownership

Barnum Painters is a privately owned limited liability partnership with each of the principal officers holding an equal share in the company.

Company Locations and Facilities

Barnum Painters will be located in a rented suite in the Rucker Industrial Park on 710 Snoquamie Route, Suite 250 in Edmonds, WA. The facilities will include a reception area, offices for the principals, storage area for inventory, a painting booth, tool area and employee lounge.

Services

Barnum Painters offers comprehensive interior and exterior painting services for both the residential and commercial markets.

Service Description

Barnum Painters services include:

  • Full prep work.
  • Dry wall contouring.
  • Fine detailing.
  • Small carpentry work.
  • Specialty wall coatings.
  • Refinishings.
  • Acoustical ceilings.
  • Pressure washing/roof cleaning.

Each project is customized to the wants and needs of the client. Prices are determined by the scope of the project, materials needed, wear and tear on equipment and required profit margin.

Competitive Comparison

The contracting and painting market is very competitive. The barriers to entry and exit in this market are very low making this an industry with a large number of rival firms with high turnover rates. Buyers have a significant amount of power since they have a large number of companies to choose from. Moreover, services are undifferentiated, which means that customer loyalty is usually low. Painting companies must compete on quality and timeliness of service, customer relations, and price.

Barnum Painters believes that it can improve on the quality and timeliness of services in this industry by instituting procedures that will avoid many of the mistakes that other firms make. This includes delayed schedules and high employee turnover which leads to lower service quality. The company will be equally competitive in price and will maintain close ties with its clients throughout the entire project since each project is a customized job. Through these steps, Barnum Painters will be able to build up a reputation of better quality service at competitive prices than its competitors.

Market Analysis Summary

Barnum Painters will focus on two markets within the industry, the residential segment (including apartment buildings) and the commercial segment (including buildings used for professional purposes).

The commercial market requires the shortest amount of time to completion of projects and usually the least amount of customization. Since our projects impinge upon a business’ profitability, it is absolutely crucial for our project foremen to maintain schedule and keep the stakeholders apprised of the project’s progress.

Although the above is also true for the residental owner, time is not as critical, quality and meeting the needs/wants of the client come first in the residential segment. The client is often willing to wait a little longer to have the project done to his/her specifications. The project foremen must be willing to be more flexible and willing to listen to the client.

Over the past decade a number of new trends have been observed in this industry. This includes the tremendous growth of the economy, the high technology boom, and the growth of substitute services such as Home Depot.
Market Segmentation

Barnum Painters will focus on two markets within the industry, the residential segment (including apartment buildings) and the commercial segment which includes buildings used for professional purposes. The company can handle any size building that needs its services. It is the goal of the company to eventually have approximately one-third of all business coming from the commercial segment, since this generates the greatest cash flow. Furthermore, this segment has the lowest percentage of variable costs. The residential segment is considered to be the company’s cash cow. Even during the slow winter months, the company can expect to have a small number of residential contracts.

Initially the company will focus on the two segments in just the Everett, Washington area. However, by the end of the three year projections, the company expects to be serving the entire Puget Sound area.

Target Market Segment Strategy

Each of the two market segments has differing needs and trends. The following sections go into detail about how the company will fact them.

Market Trends

Over the past decade a number of new trends have been observed in this industry. The tremendous growth of the economy has fueled the painting contractors industry as well, as people have progressively spent more and saved less. The high technology boom has created great opportunities in the Pacific Northwest which the industry has also benefited from. However,  the growth of firms such as Home Depot, which encourages do-it-yourself painting and construction, has lead to a serious decline in sales for the residential segment. The growth of this trend poses a significant threat to the industry. Barnum Painters plans to increasingly focus on the commercial segment as the company grows in order to promote greater revenue and income.

Service Business Analysis

Most of the industry analysis is contained in the Competitive Comparison section to give the reader the idea of the competitive nature of the industry, its opportunities and threats, and the company’s flexibility in pricing. Barnum Painters exists in a purely competitive market that faces virtually unlimited competition and high demand. The ability of the company to differentiate its services or enter into a niche market is limited. The company will engage in a low-cost leadership strategy while maintaining a suitable level of quality.

In the painting contracting industry, there are a limited number of large firms that compete for the largest projects, and a vast number of smaller companies that fight for all the rest. Within the largest company section, market consolidation is always a threat.

Competition and Buying Patterns

This industry is highly seasonal. The busiest times are during the summer months where it is easy for a company to become so engaged that it must turn down contracts. During the winter months businesses must focus on marketing to get any contracts at all.

Main Competitors

The main competitors for Barnum Painters include Kolby and Wilson, DMB Enterprises, Sun Painting, and Milbrant Commercial Painters.

Each of these competitors is able to achieve a high degree of profitability through marketing, volume or high-end contracts. They pose a significant threat to Barnum Painters because of their deep pockets and their desire to acquire other painting competitors. Barnum Painters will compete with these rivals through the use of greater marketing and better service.

Click here to view this full business plan

Continue Reading

Professional Services

Plastics Recycling Sample Business Plan

Using this sample plan will provide you with guidance when drawing up your own plastics recycling business plan.

Entrepreneur

Published

on

Click here to view this full business plan

Plastics Recycling Business Plan

Executive Summary

The growing utilization of plastics in industrial and consumer applications, combined with increased consumer awareness surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. One of the fastest growing types of collected plastic materials for recycling is polyethylene terephthalate (“PET”) from post-consumer beverage and water bottles. Replay Plastics will capitalize on the opportunities in the recycled resin and packaging markets through two main divisions: a Recycling Division and a Packaging Division.

The Company will create a PET cleaning and refining plant located in the western United States (all 16 major North American PET recycling plants are currently located in the eastern United States or Canada). Its initial capacity will be 46 million pounds, and it will utilize post-consumer bottle feed stock presently collected in California, Oregon and Washington States, which collect over 200 million pounds per year. The Company will be vertically integrated, and use almost all of its recycled material in its Packaging Division. Any surplus materials (clean flake) produced will be sold to outside companies. The extruded sheet may then be sold to manufacturers, who will thermoform it into high-visibility packaging or use it in other high value added manufacturing operations. The strapping will be sold to companies who ship large packages or pallets, such as the lumber milling industry. The Company currently has commitments available from customers to purchase all of the product produced.

MANAGEMENT

Ben Braddock, President, has a 30-year history of experience encompassing all aspects of Polymer Raw Material, Plastic Conversion Methods, and Venture Development. He has founded successful ventures in the plastic converting industry, and assisted in the launch of five plastic converting manufacturing plants. Sam McGuire, Executive VP and COO, is a graduate Engineer with over 20 years experience in the post-consumer plastics recycling industry and is the inventor of the primary cleaning & refining technology used in the process for this project. He has received a patent for his technology and has been directly involved in over twenty-five major post consumer plastics recycling projects. Carl R. Smith, CFO, has over 30 years investment and merchant banking and management experience. He has assisted in raising over $500 million and served as board member and/or officer in over 40 public and private companies.

1.1 Objectives

  • Sales passing $15 million in first year, $31 million in year 2, growing to $43 million.
  • Gross margin of 35% or more in first year, 45% in second year then 50% or more.
  • Net profit of 13% in year one, then exceeding 20% annually starting in year two.

1.2 Mission

Replay Plastics is a manufacturing company dedicated to converting waste plastic materials into commercially viable products, utilizing environmentally friendly recycling and manufacturing methods. We intend to make enough profit to generate a significant return for our investors and to finance continued growth and continued development in quality products. We will also maintain a friendly, fair, and creative work environment, which respects diversity, new ideas and hard work.

1.3 Keys to Success

The main keys to the success of the Company are:

  1. Secure Supply- Contract for supply of post-consumer bottles and post-industrial manufacturing waste for PET raw material feed stock.
  2. Marketing –  Contractual arrangements for the sale of virtually all initial production.
  3. Management – Strong senior management with extensive, broad-based, industry-specific experience.

1.4 Potential Risks

Unavailable or scarce raw material feed stock for production

  • Replay is confident that it has secured good availability of low cost post-consumer PET bottles (feed stock) derived from post-consumer beverage bottles from California based recycling collectors, and has back up sources identified.

Technology employed may be unreliable or unprovenReplay will use a proven, patented technology that was developed by one of its principals for the cleaning and recycling phase. The extrusion division will employ commercially proven technology – the industry is employing unique recycled PET technology which is used by prominent eastern U.S. manufacturers of PET extrusions.

  • There may not be a market for the Company’s products

The Industry-wide experience of the Management Team has allowed them to identify markets for the Company’s products. Their expertise and reputations have allowed them to obtain commitments for virtually all of the planned initial production.

  • The location may not be near enough to markets

The markets that have been identified are primarily in the western U.S., which will provide a distinct advantage to the Company because of freight costs and delivery timing.

  • The Company may not be able to attract top management

The Company has assembled a world class management team with proven ability and direct experience in the Company’s market segments.

  • Company may not meet environmental standards

This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines.

  • The Company may not be able to sell all of its production capability

Through the Senior Management’s industry-wide contacts, the Company has identified potential customers and received commitments for all of the production potential of the initial facility.

Company Summary

The Company will capitalize on the opportunities in the recycled resin and packaging markets through two main divisions: a Recycling Division and a Packaging Division.

Recycling Division

Using a patented process, the Company will create a PET cleaning and refining plant located in the western United States; we have chosen this region because all 16 major North American PET recycling plants are currently located in the eastern United States or Canada, despite western states’ favorable recycling attitudes among consumers. Its initial annual capacity will be 46 million pounds and it will utilize bottle feed stock from California, Oregon and Washington States, which collect over 200,000,000 pounds per year. The Company will become totally vertically integrated, and use all or almost all of its recycled material in its Packaging Division.  Any surplus material produced will be sold to outside companies.

Packaging Division

We will create a plant (actual facilities to be shared with the Recycling Division) to manufacture extruded plastic roll stock sheet or high-strength strapping, employing state-of-the-art technology developed to utilize recycled PET resin. The extruded sheet will be primarily sold to thermoformers who will convert it into high visibility packaging, as well as laminators and fabricators. The strapping will be sold to commercial users for use as package or pallet strapping. The Company currently has commitments from customers to purchase all of the initial production capacity.  Excess flake will be sold to outside customers.

2.1 Company Ownership

Replay Plastics is owned by the initial founders, B. Braddock, S. McGuire and C. Smith, who are the proposed three executives of the operating entity. The plan was conceived and developed by these individuals, with the intent to apply their extensive experience and contacts in the industry to building a successful profitable corporation.

2.1.1 Potential Conflict

Our COO, Mr. Sam McGuire, the inventor and patent holder of the recycling process to be used by the Company, is a principal in Company A of Chicago, IL. For many years, Company has designed, manufactured and assembled plastic recycling equipment, and has given us quotes on meeting our needs in this area.

After a thorough investigation, Replay has found that Company A is able to source or supply the required equipment at considerably lower cost than any other company from which a quote was available. Mr. McGuire has disclosed that Company A has included a smaller than normal margin in their quote on goods they will manufacture, to cover overhead, contingency and profit which might result in a small benefit to him. They have agreed to source all of the equipment possible with no added margin.

Replay has concluded that the savings available outweigh any other consideration and that we will purchase the cleaning and refining equipment from Company A.

2.2 Start-up Summary

Our start-up expenses are budgeted at $210,000, which is mostly for on-site contractor services during facility preparation. $50,000 has been set aside for legal and accounting, $25,000 for special consulting that may be required during start up and $50,000 each for local engineering and lab equipment and supplies. $30,000 has been set aside as a contingency for the start up period.

Our largest Start-up Requirement is the building of the recycling and extrusion facility. Its final value at completion is listed below as a long-term asset of $3,620,000 (excluding expensed items like consultants and engineering listed above). Aside from the building itself, we need $25,000 in machinery and fixtures, $500,000 of inventory (plastic bottle feed stock) and cash to cover us through the initial year.

Products

Replay Plastics will utilize two processes in the same facility to produce:

  • Cleaned and recycled plastic PET flake (RPET), recovered from post-consumer beverage bottles and manufacturing waste produced by its sheet customers
  • Extruded roll stock sheet PET.
  • Extruded PET high-strength strapping for securing large packages or pallet loads; each using 100% RPET produced in-house

3.1 Product Description

Roll stock sheet will be sold to custom thermoformers primarily to be used to produce high-visibility packaging. It will also be sold to manufacturers of laminates and fabricated plastic products.

High strength PET packaging strapping is used to secure packages or pallets in such industries as lumber milling and corrugated and other paper production.

Both products will be extruded from post-consumer polyethylene terephthalate (PET) bottles. The recycling programs in California, Washington and Oregon collect in excess of 200,000,000 pounds of PET bottles per annum. Replay’ initial capacity will be 46,000,000 pounds.

Using a patented process, Replay will clean and refine the PET material from the post-consumer bottle stock and post-industrial manufacturing waste. The PET flake resin produced will be extruded into roll stock sheet or high-strength strapping.

Although the Company expects to convert all of its bottle feed stock into extruded products, any surplus flake will be sold to outside manufacturers.

3.2 Competitive Comparison

While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging products manufactured from recycled (less expensive) resins, as close as practical to the end customer’s operations, will be most competitive and achieve a significant market share. These factors have helped to determine the business parameters of Replay Plastics.

3.3 Sourcing

In excess of 200,000,000 pounds of post-consumer PET beverage bottles are collected and available as feed stock for manufacturers who can re-process this material into commercial products. The Company has excellent relations with the firms and associations that collect and distribute these materials and has been assured that its requirements will be available for the foreseeable future.

The Company has entered negotiations with a California based source of post-consumer bottles and is confident that sufficient volumes are available on a contract basis from this source to satisfy its requirements. In addition, the Company intends to purchase production waste from its sheet customers and blend it into its feed stock.

Currently, the majority of the post-consumer PET bottles collected in California, Oregon and Washington are exported to China. The Chinese have absorbed the amounts surplus to the use in North America. Their interest has kept the industry in the position of being able to maintain a steady price range for this bottle stock. A significant percentage of all sales of such bottle stock are managed by Plastics Recycling Corporation of California (PRCC), an industry funded marketing agency which operates similarly to a co-operative. They accept bids from potential buyers on behalf of the firms which act as “consolidators,” which accumulate stocks from the smaller, individual bottle-recycling depots. Some amount of the available stocks are regularly bought by recyclers in eastern North America who focus on the carpet manufacturers who use RPET resin in their process, but the high cost of transport from the western U.S. makes eastern sources more desirable.

Replay has a good relationship with Company B, one of the larger consolidators in California. Company B has indicated a desire to contract to supply Replay with all of its raw material needs. They prefer to deal with a local consumer such as Replay, rather than the uncertainty and extra preparation requirements of the export market.

There are other sources of post-consumer feed stock known to Replay, and we are confident that we will have sufficient materials available for our production needs.

3.4 Technology

Sam McGuire, a key member of our Management team, is one of the original innovators of cleaning and refining technology for post-consumer PET, and we will be utilizing his patented process in our recycling facility. Sam has worked in the establishment and operation of facilities employing similar technologies over the last several years.

On the manufacturing side, Management has been an integral part of the advancement of industry practices over the last twenty years or so, and includes in their knowledge base most, if not all, of the state-of-the-art available equipment and manufacturing techniques.

Market Analysis Summary

Strong demand for recycled plastics is working in the industry’s favor.  Major users of plastic packaging, apparently responding to consumer desires, have begun incorporating at least some recycled plastic content in their products as part of the growing interest in recycling.  Recycled resin demand is on the rise as prices for the two major recycled resins, PET and HDPE, continue to hold value or appreciate against their virgin counterparts.

In volume, PET is currently the number one recycled resin. Supply of recycled PET is in excess of 800 million pounds per year. This figure is expected to grow, reaching over 1 billion pounds during the next few years. The plastics industry has developed new markets and applications for recycled resins from both post-consumer and post-industrial sources.

PET leads the recycled recovered resins as the most visible and valuable, and its use is increasing. Of the total 3.7 billion pounds of PET consumed in 1997, just 16% was from recycled sources. Of the more than 90 billion pounds of plastics produced annually in the United States, less than 5% is from recycled sources. Plastics, after aluminium, represent the second highest value material in the waste stream and have the highest projected growth rate.

Markets and uses for recycled plastics are rapidly expanding. Plastic containers are being collected at the curb for recycling in nearly 500 communities, representing more than 4 million households. U.S. demand for recycled plastic will continue to expand and new markets will develop as technologies permit the efficient segregation and reprocessing of high-purity resins. Improved quality of resins, environmental issues and higher prices for virgin resin will contribute to growth.

Packaging is expected to be the largest market segment for recycled plastics, with sheet and lumber following. Surveys indicate that Americans are increasingly willing to collect and separate discarded packages, foregoing a degree of convenience to make products more disposable, and even paying a premium for a recycled item.

Increasingly, communities are refusing to consider incineration until every effort is made first to recycle; public sentiment is strongly in favor of products that can be recycled or are made of recycled materials.  In recent years, the household recycling rate of PET bottles has more than doubled to 30% of all PET soft drink bottles sold.  In fact, PET’s recycling rate is the fastest growing among all beverage containers. The future of PET recycling is even brighter than it has been in the past. PET intrinsic scrap value is second only to aluminium among container materials. The plastics industry has launched a research and development program aimed at increasing PET recycling. According to the U.S. Environmental Protection Agency (EPA), plastic soft drink bottles account for approximately 2% of the solid waste discarded in America. The EPA has set a national goal to recycle 25% of the municipal solid waste stream and the industry is committed to achieving its share of that important goal.

The recycling industry intends to accelerate the rate of plastic recycling as part of its commitment to develop solutions to the solid waste problem. Industry analysts have projected that 50% of all PET containers will be recycled by the year 2007. More plastics will be recycled annually than any other recyclable material. Replay believes a significant answer to America’s waste problem lies in creating high value, recycled thermoformable sheet and other extruded products for the packaging market.

Although more than 200 million pounds of PET post-consumer materials are collected in the western United States each year, there is presently no local cleaning and refining facility converting the bottles into resins suitable for re-manufacturing. Originally, recycled PET (RPET) was used primarily in the carpet fiber industry, which is located along the eastern seaboard. The early development of the RPET industry was therefore focused in the eastern USA, with eastern states adopting the first bottle deposit laws that resulted in collection of post-consumer bottles that can be recycled. Recently, California, Oregon and Washington have adopted bottle deposit programs, and accumulation of recyclable materials in those states has begun. With all of the cleaning and recycling plants and the majority of consumers traditionally located in the eastern part of the country, development of consumers of recycled flake and down-line products, such as film and sheet, has been slow to develop in the West. A strong demand for post-consumer bottles from Asia has prevented the buildup of inventories and reduced the pressure for the collection industry to find or develop western markets.

There is currently no independent extrusion plant of recycled polyterephthalate (PET) sheet in the western United States or Canada that services the roll stock requirements of major custom and proprietary formers. With the development of the recycling industry for PET starting in the eastern part of the country, and the preponderance of consumers of sheet there as well, development of independent extrusion facilities using RPET has been slow to develop. It appears that in order to attract such companies, local sources of RPET would have to available. While there are customers in the West for the products, contracting a supply and shipping it from the East makes the venture unattractive.

Our founders recognize that an opportunity exists and propose a vertically integrated conversion facility that will employ state-of-the-art technologies to produce extruded sheet and high strength strapping from 100% recycled PET post-consumer bottle stock, cleaned and refined in our own facility.

4.1 Target Market Segment Strategy

The Company has chosen its target markets because recycled PET (RPET) is in high demand as flake resin by converters,  as roll stock sheet used to produce high visibility packaging and as high strength strapping for the lumber industry.  Sales are price-sensitive, so that proximity to markets and feed stock source provide a competitive edge. Replay Plastics identified an opportunity to take advantage of both circumstances in the western United States.

RPET Flake

Total market demand is reported as 1.2 billion pounds per year. Since only 800 million pounds are processed in the USA, consumers are forced to look at wide spec virgin PET (virgin resin that is outside of spec but still usable) which is normally sold at a discount to virgin prices, but still higher than recycled (RPET) pricing. Some manufacturers are also forced to import materials from Mexico, India and South America. Some converters are being forced to use more expensive virgin resin.

The current pricing for virgin resin is $0.65-0.73 per lb. and $0.42-.53 for RPET flake.  The spread between the two has traditionally been maintained at approximately $0.20 per lb.

PET Film & Sheet

The total reported market of extruded film and sheet is 872 million pounds, of which identified industry usage of RPET is 160 million pounds.

The reported market demand (to replace virgin PS, PVC and PET) if RPET was available is estimated at 1 billion pounds.

Current pricing for RPET sheet is $0.70-0.79 per lb.

RPET Strapping

The total reported domestic plastic strapping market is 240 million pounds. Of this market, industry usage of virgin polypropylene is 132 million pounds and of PET is 108 million pounds.

It is generally accepted in the industry that less expensive strapping made from RPET could not only take over the polypropylene strapping market, but convert as much of the much larger and more expensive steel strapping market as RPET strapping was available.

Current pricing for RPET strapping is $0.90 -1.08 per lb.

4.2 Market Segmentation

The primary market can be broken down as follows.

Consumers of PET in:

California: 62
Oregon: 8
Washington: 9

Consumers of HDPE in:
California: 73
Oregon: 10
Washington: 12

4.3 Industry Analysis

Currently there is no direct competition in the western United States for either of the two divisions of the Company. Any production in the trading area remains captive and not available to our target market.

The ability of the Company to obtain a source of post-consumer bottle stock is an integral component of the strategy to vertically integrate operations and manufacture products in demand by western consuming industries. Without the cleaning and refining division, it would be difficult to source sufficient RPET flake resin at costs that would allow the Company to be competitive.

4.3.1 Barriers to Entry

Limited Supply of raw material
Recycled PET (RPET) resins are in high demand, and demand is currently under-supplied. Many manufacturers are delaying expansion because of uncertainty of supply. Entrants would have to consider sourcing post-consumer or post-industrial waste and clean and refine it rather than attempting to purchase flake on the open market. Even at that, there is not an over-abundance of post-consumer or post industrial material in the marketplace.

Equipment costs are high and industry specific, resulting in a high exit cost.
Because of the scarcity of RPET flake, entrants may be forced to establish cleaning and refining facilities for post-consumer bottles. The equipment required is costly and very industry specific. It would not easily be re-sold as a system.
There is a market for used extrusion equipment, which normally sees 60-70% of new value being realized.

Vertical integration is an important consideration and difficult to accomplish successfully.
Because of the scarcity of RPET resin, and to maximize profit potential, entrants must consider a two-stage production facility. Cleaning and refining post-consumer bottles and extruding the resulting flake into commercial products requires a management team such as Replay has, with a broad range of expertise, experience, industry contacts and knowledge in both areas.

Firm contracts for supply and sales.
Replay Management’s industry contacts will allow us to secure contracts for both supply of feed stock and sale of finished goods.

Freight is a major cost of operations; proximity to source of supply and markets is crucial.
Hauling plastic materials is expensive so entrants will have to consider establishing facilities close to materials and markets. Entrants with existing operations would have to consider new separate facilities in many cases, reducing economies of scale and making management more difficult.

4.3.2 Competition and Buying Patterns

There has been a strong demand (sellers’ market) for our products for several years. Traditional buying patterns in this industry are based on quality, price, reputation of manufacturer, freight costs, delivery times and proximity to markets. During such a sellers’ market, buying patterns are often more influenced by availability.

4.3.3 Main Competitors

Currently in the western United States, there is no direct competition for cleaning and refining post-consumer or post-industrial PET. Nor is there any non-captive extrusion of roll stock sheet.

The extruded sheet required by thermoformers is currently supplied by:

  • Advance Extrusion, Becker, MN
  • Kama, Pittsburgh, PA
  • Plasti-Shell Packaging, Gonzales, LA
  • Petco, Montreal, Canada
  • Klockner, VA

In a news release dated September 10, 2004, Itec Environmental Group, Inc. announced their intention to open a PET and High Density Polyethelene (HDPE) recycling operation in Riverbank, CA (east of San Francisco). The news release states that the Company’s new and yet unproven technology lets it work with bottle streams that others have to reject as too dirty. This Company is familiar to our Management, and is not considered a significant factor in any of our markets.

Click here to view this full business plan

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending