A sample business plan of recycling industry

Birmingham graduate school Index 1. Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1. Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2. Keys to success. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3. Mission statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.4. Aims and Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2. Industrial analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.1. SWOT analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2. PESTL analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.3. Potential risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.4. Potential barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3. Marketing summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.1. Company summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.2. Ownership of the company. . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.3. Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 3.4. Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.5. Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.6. Target marketing strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 4. Implementation strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4.1. Marketing strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4.2. Sales strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 5. Financial summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6. References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1

Birmingham graduate school 1. Executive summary: Day to day increment in the utilization of plastic, as it was light weighted as well as strong enough, to build various components, there was a great demand for the recycling of plastic. Tom White waste is a recycling organization, based on UK. The main source for the waste plastic, are the used water bottles, furniture, house hold plastic tools, industrial plastic wastes etc. There are mainly two divisions in the company, recycling and packing divisions. The company sells the recycled plastic material as well. The company has the machinery for the recycling of paper, card board, plastic and polythene

covers

etc.

The

company

was

mainly

operated

in

Coventry,

leamingtonspa, Warwickshire and the other places in West midlands. The company was started as a skip hire company in 1981, as they have grown, they entered in to the business of domestic waste collection, waste management and recycling. The company was operating its units, mainly in Coventry and they have collaboration with Coventry city council for the efficient handling of waste management. As the company was concentrated mostly on regional business, it was very successful in its operations. The company supports many of the local charities and sports teams 1.1. Management: Leonard White, the managing director and co secretary has 20 years experience in the waste management, recycling industry, plastic resins and polymers. The founder, Thomas White, had started this company in the year of 1981 as a local skip hire organization. Now all of the plants consist of a multi million pounds equipment and good transportation facilities. The managing director has four senior managers, working under him and twenty general managers and fifty team leaders. And the company has sufficient man power to collect the industrial and domestic waste, transport the waste and to recycle the collected waste.

2

Birmingham graduate school 1.2. Keys to success: 

Strong and dedicated management



Specific target market



Collaboration with city council



Firmly established infra structure



The plan of local skip



Online market facilities



Strong market position



Less competition

1.3. Mission Statement: 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. 1.4. Aims and Objectives:  To become a leader in domestic recycling industry  To yield a revenue of £5 million per month  To become a principle voice in recycling industry  To promote the innovative ideas of individuals about the recycling industry  To develop the best practises in recycling industry  To provide good opportunities and support for the organizations, which encourages the recycling  To make the people aware about waste management and recycling  To decrease the environmental pollution  To produce eco friendly products

3

Birmingham graduate school 2. Industrial analysis: 2.1. SWOT analysis: Here I am using SWOT analysis as a tool to recognize the strengths, weaknesses, opportunities and threats for the recycling industry, specially Tom White waste Ltd. Strengths 1. Focus on maintain strong customer relationship is very integral aspect of the company. 2. Felicitating customer by being seamless and invisible. 3. Market diversification is a key policy which is done through expansion of market by branching in countries like china, India and UK. 4. Being ahead of competitors through acquisitions and by adopting robust payment method. 5. No direct competition in online shopping. 6. Business model and intellectual property. 7. Double digit growth factor. 8. Daily implementation of innovative strategies for product sale is possible. Weaknesses: 1. Inability to control fake or illegal auctions. Majority of auction are still those which scam the buyers. For example several sellers try to scam the customer by just selling the packaging box of the product and claiming it to be a real product. 2. It enforce the buyers to adopt the payment method of its choice like money transfers which results in lack of protection of money and loosing it when buyers are not coming back. 3. Increased cost of shipping which get edit to the original price of the product. Thus making it expensive for the customers which results in buyers fleeing away from retail stores to better alternatives.

4

Birmingham graduate school 4. Majority of contents are analyzed and control only after auction is made. This inability to control the contents of auction is the biggest weakness. 5. Lack of efforts to facilitate to promote sale of copy right and resale items. 6. Increasing advertisement expenditures. 7. Slow technological development. 8. Service is limited to online business rather than diversifying it to other modes of promotion. .

Opportunities 1. Main opportunity of the company is to promote the sale of product on a normal website. The lengthy recycle process takes from three to fifteen days and in this specific time customers lose their interest in the product. In order to sort out this the companies need to initiate instant buying schemes by shorting product manufacturing process. 2. It can generate new tools to facilitate buying process for the customers i.e. generating ‘make an offer icon which provides buyers and seller a power to go forward with the transaction or deal in a convenient manner. 3. It should recycle the present technologies to create opportunities for generation of modern and scientific methods of communication. 4. Further expansion into international market. 5. Branch out into other online services. 6. New and emerging markets in developing countries like Japan, China where consumers are rich and have more free time than their ancestor. Consumers are growing potential target for all online shopping companies. 7. Unexploited opportunities in Western Europe and US, which has got a pool of customers that are yet to be, discovered the advantages of online shopping. 8. Focus on acquisition, which provides ‘a new ray of opportunities to the business ‘through scientific business strategies.

Threats

5

Birmingham graduate school 1. Threat from local competitors in a domestic market, as it is diversifying and expanding it market on foreign soil. 2. Threat from the scammers who uses companies goodwill to promote their duplicate products. 3. There is no seamless integration of seller store. 4. A cut throat approach adopted by market leaders like Google to check out a rival from the competition. 5. Close competitors using aggressive strategy that is by providing massive discounts on products to attract the buyers is a biggest threat to infant industries. 6. Established enterprises are using a conference and party approach for inviting their customers for switch over which is not feasible for small firms to practice. This creates monopoly of big firms in the market and is seen as biggest threat for growing firms. 7. Fluctuating demand of the product according to the seasonality conditions. 8. Online security breach could be disastrous to the company. 9. Threats from other ecommerce sites like Amazon, monster, eBay etc. 10. Changing currency exchange rate affects the profit margin. 11. E- Marketplaces are fluid in nature; new market places are established every day, so there can be a greater threat in respect to competition from the local companies as well.

2.2. PESTL analysis: There are several factors which influences the company’s working in day to day life. Some of them are in the control of the management and there are others which are totally uncontrollable. Some of the major factors are affecting the company’s working are discussed below. 1. Political factor: government policies with regard to promoting or demoting new enterprises have a great impact on their growth prospects. Government can promote new enterprises by providing them easy credit and financial services to promote them. Government can also help them through the process of dumping when these companies find it difficult to sell their product in the

6

Birmingham graduate school market. These points reflect the one side of a coin where as if the government regrets to promote the company for their goodwill in respective country due to the violation of their policies by the company. This may force the company to change some of their strategies which are not accepted by the respective government at the cost of their visualized profit margin. 2. Economic factors: Economic factors like instability, recession, inflation, boom etc. have a major impact on the working of new enterprises. During the time of recession Company sales get affected inversely. As customers has less money in their hand to spend. These types of situation reduce company’s profit margin and declining sales unit. On the contrary, during the phase of boom customers has got lot of money to spare, which positively impacts company’s sales revenue and profit as well ,but

the company needs to

maintain stability in their profit margin otherwise it would resist the company to build a strong position in the market. 3. Social factors: social factors like believes obscenity customs traditions etc. has a great influence on the working of the business. Customer tastes and preferences are developed according to the society, he or she has born and rose up. Society’s tradition and perception along with its ability to adapt new things impacts the growth of the business in a society. Social influences have an effect on the buying and purchasing capacity of the consumer. Positive and negative believes towards one product May impacts its development prospects. 4. Technological: Technological factors have a profound effect on the growth prospects of the company. Society’s ability to handle and manage advance technological goods can help company, saving lot of money on man power recruitment. Technological implications help the company in reducing its cost of production and in promoting quality products to the desired customers at cheaper rates. Effective technology helps in developing user friendly website; from which customer can easily analyze what is the product he is looking for. Thus helps the customer in selecting product of his choice. 5. Environmental factors: environmental factors like global warming, increasing pollution etc. Is increasing the temperature of the planet and shortening the length of winters. Thus it is impacting the sale of winter goods like woollen

7

Birmingham graduate school clothes, jackets, central heating items etc. To a great extent. Companies selling these goods will encounter a great decline in their sales that will affect the company’s overall gross profit margin. 6. Legal factors: Government legal policies to curb several items like polythene bags, papers, rubber etc. Impacts the overall gross profit margin for the company. Government policies to stop consumption of these goods impact consumer’s usage and indirectly affect the industries promoting these goods. It again depends on government rules and policies of respective countries which would restrict the company with the barriers at the cost of the sales 2.3. Potential risks: Unavailability of raw materials: As recycling business was extensively depends up on the used materials by the consumers, the availability of such materials are not constant, sometimes scarcity may occur.

Employed technology may be unreliable: The technology used for recycling is a patented one. All the recycling companies, including tom white are implementing the same technology in recycling the Pet bottles, which was patented to a southern US company. So the technology utilized by Tom white is not their own, so it may be unreliable or Unproven.

Market challenges: As all the recycling companies are producing the same type of materials, there will be an intense competition and may be a chance of price war between the companies, which may leads to less market for the products of Tom White wasteltd. The location of the plants: The plant locations must be very nearer to the available markets, but in some areas it is not possible to be nearer to the markets. This phenomenon could guide the

8

Birmingham graduate school potential markets to shift to other companies, in order to avoid the transportation costs. Environmental standards: This environmentally-favourable 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.

Production Capability: The company has to produce the sufficient quantity of products in order to meet the marketing requirements. But sometimes, it may not be possible, because of lack of man power, machinery failure and some internal reasons. 2.4. Potential Barriers to entry: Limitation in raw materials: The raw materials for recycling industry have high demand, and now a days the demand was under supplied. So the new entrants have to make sure that they have enough supplies from the industries or not. The best way for new entrants is to refine and clean use of available material, rather than buying it from other industries. High equipment costs: Due to the limited availability of raw materials, the new entrants has to establish a cleaning and refining equipment, which is very expensive and cannot be resold as a whole system.

Contracts for suppliers and buyers: In order to establish a successful organization, the new entrants must have strong and firm relationship with the supplier companies as well as buyer companies. The

9

Birmingham graduate school new company requires secured contacts and agreements with the suppliers as well as buyers. Management's industry contacts will allow us to secure contracts for both the supply of feed stock and sales of finished goods. 3. Marketing summary: 3.1. Company summary: The company has two operating units in order execute its recycling and packing operations Recycling unit: The operations of this unit include collection of waste materials and recycling process. The recycling process will be takes place in each every plant located all over the west midlands area, which are very nearer to the packing units. The main plant was located at Longford, Coventry. 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. Packing unit: The packing unit operations include picking and packing of recycled products. The main products of tom white waste ltd are card boards and plastic roll of sheets. These products will be collected from the recycled units and will be neatly packed with company logo and kept ready for transport and export. The main advantage of Tom white ltd is the packing and recycling units are very nearer to each other. The Company currently has commitments from customers to purchase all of the initial production capacity. Excess flake will be sold to outside customers. 3.2. Ownership of the company: Tom White waste ltd was owned by the founder Thomas White and the managing director was Mr. Leonard White and it was a privately owned organization. The basic plan of the organization was developed these two individuals with their extensive experiences in recycling industry, and the company was grown as a profitable organization 3.3. Products:

10

Birmingham graduate school The main products of Tom white waste are recycled plastic PET flake and plastic roll on sheets, which were produced by the pet and beverage bottles 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.

3.4. Sourcing: The company collects all the plastic wastes and other wastes from the registered customers, households, offices, restaurants, bars and the manufacturing units of various products and kept this waste as a raw material for recycling. And the company has strong relationship with other organizations, which can provide these materials. The company provides special waste bins to the registered customers, in which they can put the waste materials and kept for pick up, and the company will pick up and transport to the recycle units, once in a week. There are other sources of post-consumer feed stock known to Tom white, and they are confident that they will have sufficient materials available for their production needs.

3.5. Technology:

11

Birmingham graduate school The company was using the patented technology of recycling and they have got the proper licenses and permissions to use such technology in their operations. 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. 3.6. Target market strategy: The company chooses various industries like lumber industry as its target, where the demand for the recycled pet resins and roll on sheets is high. The PET resins are used to produce high visibility packaging and roll on sheets are used to produce high strength strapping for lumber industries. 4. Implementation strategy: The company is using its strong relationships and contacts to get more important contracts for its production. Some business will be directly done by the management and some products will be sold through a sales agent. The company is using its strong contacts, to secure its contracts and agreements. Competitive edge: Tom White's competitive edge rests with its proximity to its target markets, as well as the industry knowledge, reputation and contacts of its senior management. Their many years of direct experience have led them to identify this unique opportunity and put together the technology and sources to take advantage of it. Their reputation in the specific market segment will result in the achievement of long-term commitments for our production

12

Birmingham graduate school 4.1. Marketing strategy: Tom whites waste has chosen the recycled products of the plastic and other materials as its market. The raw materials for its market are the used PET and beverage bottles from the households, industries, bar and restaurants etc. By using the industrial expertise, they have located their main plant in Coventry, where the raw material was available in plenty. The initial marketing strategy of the company is to secure the contracts in the field and came up with well planned capacity. 4.2. Sales strategy: Due to the expertise and prime position in the market, Tom White can easily recognize its potential customers. While most of the production of flake is ultimately intended to be used internally, we are confident that any developed surplus will be sold immediately. To market the products the company fallows two way strategies. One is direct sales by the management and the other is sales through a sales agent. All these sales agents are well experienced and having good relationships with the management. 5. Financial Summary: After a four month start-up period to build the recycling and packaging facilities, buy equipment, and incorporate the business, the company will begin a quick turnaround of product. Sales will begin in May, and with over $15 Million in sales the first year, we will see a first year net profit of $2.3 Million. The owners are investing $500,000 each, for a total of $1.5 Million, and are securing an $800K long-term loan The Company is also seeking an investment of $2,700,000 in order to begin operations. These funds will be used for the purchase of one recycling line and one manufacturing line, for the set up of the plant facilities and for working capital. An outside investor providing this amount would receive 48% equity in Replay, and receive an IRR of 69% from simple dividends alone over the next 5 years. At the end of that period, we will consider a public offering of stock or a buy-out by a related

13

Birmingham graduate school business. Recent information on private sales of similar industry companies has indicated that transactions under $25 million have averaged 5.3 times EBITDA, while transactions in the range of $25-250 million have averaged over 7 times EBITDA. Further details can be found in the Financial Plan, below.

14

Birmingham graduate school

References: 1. Chandra Bose. D., “Principles of Management and Administration 2. Gerald A Michaelson “Winning the Marketing War: A Field Manual for Business Leaders” ISBN

9780333933732

3. David Jobber, “Principles and Practice of Marketing”. 5th Edition, McGraw Hill Publication. 4. http://www.smarta.com/tools/business-plans/recycling-and-waste 5. http://www.tomwhitewaste.co.uk/commercialwaste/industry.html

15