This sample business plan has been made available to users of Business Plan Pro ®, business planning soft ware published published by Palo Pa lo Alto Soft ware, Inc. Nam Names, locat ions and numbers numbers may may have been c hanged, and substant ial portions portions of the original original plan text may may have been omitte omitted d to t o preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to resell, reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing arketing department department of Palo Alto Sof tware tw are at marketing@pal
[email protected] oalto.c om om.. F or product inform information visit our website: www.paloalto.c www .paloalto.c om or c all: all: 1- 800-229-7526. 800-229-7526. Copyright Co pyright © Palo Alto Software, Software, Inc. Inc.,, 1995-2009 1995-2009 All rights reserved rese rved..
Confidentiality Agreement
The undersigned undersigned reader acknowledges t hat the inform information provided by ________ ____________ ________ ________ ________ _____ _ in this business business plan is is c onfidential; onfidential; therefore, t herefore, reader agrees agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to ________ ____________ ________ ________ ________ _____. _. Upon request, this document is to be immediately returned to _________________________. ________ ____________ ________ _______ ___ Signature ________ ____________ ________ _______ ___ Name (typed or printed) ________ ____________ ________ _______ ___ Date This is a business plan. It does not imply an offering of securities.
Confidentiality Agreement
The undersigned undersigned reader acknowledges t hat the inform information provided by ________ ____________ ________ ________ ________ _____ _ in this business business plan is is c onfidential; onfidential; therefore, t herefore, reader agrees agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to ________ ____________ ________ ________ ________ _____. _. Upon request, this document is to be immediately returned to _________________________. ________ ____________ ________ _______ ___ Signature ________ ____________ ________ _______ ___ Name (typed or printed) ________ ____________ ________ _______ ___ Date This is a business plan. It does not imply an offering of securities.
Table of Contents 1.0 Executive Executive Summary............................................................................... Summary............................................................................... ..............................................1 Char t: t: Highlights........................................................................ Highlights ........................................................................ ..............................................3 1.1 Objectives Objectives ..................................................................................... ..............................................3 1.2 Mission.......................................................................................... Mission.......................................................................................... ..............................................3 1.3 Keys to to Success .......................................................................... ..............................................4 2.0 Company Co mpany Summary Summary............................................................................... ............................................................................... ..............................................4 2.1 Company C ompany Ownershi Ownership p ................................................................... ..............................................4 2.2 Start-u Star t-up p Summary............. Summary ........................................................................ ........................................................... ..............................................4 Table: Start-up........................................................................... Start-up........................................................................... ..............................................5 Table: Star t-up t-up Funding............................................................ Funding ............................................................ ..............................................6 Chart: Chart: Start-up ........................................................................... ..............................................7 2.3 Company Company Locations and Facilities ............................................ ..............................................7 2.3.1 Rail Spur Purchase Purchase at D&L Landfill............................... Landfill............................... ..............................................7 3.0 Services........... Services.................................................................................................. ....................................................................................... ..............................................7 3.1 Service Description Description ..................................................................... ..............................................8 3.2 Competitive Comp Comparison arison............................................................ ............................................................ ..............................................8 3.3 Sales Literature.... Literature ............................................................................ ........................................................................ ..............................................9 3.4 Technology Technology......... .................................................................................... ........................................................................... ..............................................9 3.5 Future Future Services Ser vices ........ ............................................................................ .................................................................... ..............................................9 3.5.1 New New York York City C ity Waste Stream ......................................... ...........................................10 4.0 Market Analy A nalysis sis Summary.................................................................... Summary.................................................................... ............................................11 4.1 Market Segmentation Segmentation................................................................... ................................................................... ...........................................11 4.1.1 Market Trends .................................................................. ...........................................11 4.1.2 Value Value Enhancing Enhancing Factors Fac tors................................................ ................................................ ...........................................12 4.2 Target Market Market Segment Strategy................................................ Strategy................................................ ...........................................12 4.2.1 4.2.1 Market Mark et Trends Trends ...........................................13
Table of Contents Chart: Break-even Analysis ...................................................... ...........................................22 Table: Break-even Analysis...................................................... ...........................................22 8.3 Projected Profit and Loss ............................................................ ...........................................23 Table: Profit and Loss ............................................................... ...........................................23 8.4 Projected Cash Flow.................................................................... ...........................................24 Table: Cash Flow....................................................................... ...........................................24 8.5 Projected Balance Sheet............................................................. ...........................................25 Table: Balance Sheet................................................................ ...........................................25 8.6 Business Ratios............................................................................ ...........................................25 Table: Ratios .............................................................................. ...........................................26 Table: Sales Forecast ...............................................................................................................................1 Table: Personnel........................................................................................................................................2 Table: General Assumptions ....................................................................................................................3 Table: Profit and Loss ...............................................................................................................................4 Table: Cash Flow.......................................................................................................................................5 Table: Balance Sheet ................................................................................................................................6
Good Earth Resources, Inc. 1.0 Executive Summary Objective Nationwide, many landfills are closing or exhausting their remaining capacity, yet due to environmental rest rictions, zoning laws, and other regulatory and bureaucratic delays, pitifully few new landfills are opening to offset the looming space crisis. Meanwhile municipal waste continues to flow in greater volume. Handling the nation's waste stream has become a major problem for most municipalities. With more waste created daily, landfills nationwide are rapidly fac ing a capac ity c risis. Landfills are akin to owning a reverse gold mine. Good Earth Resources, Inc. (GER) has been formed to provide a solution for municipal waste problem in the St. Louis, Missouri area and capitalize on the lucrative benefits of possessing fully permitted landfills. The Operation There are f our components in this operation: purchase t wo landfills; sort and rec yc le incoming waste; import an out-of-state waste stream; and convert landfill gas to either electricity or a fuel alternative. GER will purchase the landfills, one in Eastern Missouri (Martin Creek Landfill) and one in Southern Illinois (Barton Sanitary Landfill). Both landfills are near St. Louis, Missouri and the initial waste stream for both landfills will emanate from the St. Louis area. At both landfills, all waste will be sorted and recyclables removed. The remainder will be compacted, baled, and buried in the landfills. Today, only 10% of the landfills nationwide perform these functions, the remainder preferring to dump raw waste into their landfills, thereby
Good Earth Resources, Inc. into the permitted area. By compacting, the deposited volume is increased five-fold. For instance, the Martin Creek landfill permit covers an area of 42 acres to accept 3,612,000 cubic yards. 2,000 cubic yards of loose wast e buried daily without compaction would fill the landfill in 6+ years. By rec ycling, c ompacting and baling, 2,000 yards is reduced t o 220 cubic yards and the life of the landfill is extended to 32 years. This increases both value and gross income. The current fee per cubic yard of waste is $11.33 ($34.00 per ton) in the St. Louis area. 2,000 cubic yards/day of loose waste for 42 acres generates $35,328,000 in 6+ years. By recycling, compacting and baling, the same area c an be used for 32 years and generates $176,640,000 or daily volume can be increased. Sorting and compacting costs are minor in comparison to the valuation increase, and recyclables offset these expenses. Company Objectives Anticipating agreements from waste haulers, GER expec ts to collect 940 tons daily for Barton in the first months of operations. This generates in excess of $5,500,000 revenues per year. An additional 600 tons/day for Martin Creek, transported to Barton during Martin Creek's construction, adds $4,000,000 more. Investors can expect an outstanding annual return as well as ownership in a profitable business wit h dividends in the first year. GER principals will seek other sources of waste to augment this projected waste stream, such as New York City, Chicago, and other large municipalities. Rail spurs are part of this plan and, once operational, will facilitate the incoming flow of waste from distant cities. Within twelve months of commencing operations, GER will collect the methane gas and c onvert it to saleable energy in the form of either elect ricity sold into the national grid or methanol for sale as a gasoline alternative. This will augment annual revenues. Management
Good Earth Resources, Inc. At this time, the principals of GER are seeking a $16,469,951 net investment to: 1. 2. 3. 4. 5. 6. 7.
Purchase both the Martin Creek and Barton landfills. Augment the daily waste st ream to Barton landfill by hauling waste. Install sorting and compact ing machinery at Barton to maximize landfill life. Complete t he construction of Martin Creek landfill. Lease or purchase machinery and vehicles needed for operations. Build two transfer stations to collect waste in Missouri cities. Utilize methane generated to augment revenues.
Good Earth Resources, Inc. In the instance where some waste haulers would normally direct waste to other landfills, GER will haul that waste from certain designated transfer stations to either of its two landfills. This will benefit both parties, since it will lower GER customer's costs, and through GER's more efficient transportation, will provide an additional waste stream to GER. GER will remove and sell all rec yc lable materials. At t he landfills, GER will acc ept used vehicle tires for income. Every aspect of this operation not only increases the cash flow, but also protects the environment. GER principals will take the necessary steps to utilize every resource to ensure environmental protec tion.
1.3 Keys to Success 1. 2. 3. 4.
Concentrate on bringing to Martin Creek and Barton as much waste c apacity as possible. Process the waste stream as efficiently and profitably as possible. Strive to reduce down time and st oppages. Operate t he landfill operation as efficiently and safely as possible using every method to increase profits y et maintain a high concern for the environment. Maintain family-like at mosphere for all associated with GER, c o-workers and c ustomers alike.
2.0 Company Summary GER intends t o operate two landfills, Martin Creek and Barton. At both landfills, wast e will be sorted t o remove 99% of all recyclable materials. T he remaining wast e will be c ompacted into bales and deposited into the landfills.
Good Earth Resources, Inc. At Martin Creek, the construction phase involves complying with current state ordinances, installing additional monitoring wells, submitting a financial instrument, obtaining insurance, leasing equipment, and c ompleting site development. This w ill require bet ween seven and twelve months. In phase two, management will install conveyers, compactors, and the baling systems. A permit to recycle incoming waste will be readily obtainable, since both states are eager to comply with federal requirements mandating recycling. Construction of this facility will require approximately six months. Each site will have a facility to house a compactor/baler and expansion space for a second baling system. T hese facilities will be built aft er c ash flow is assured and initial operations c ommence . Both landfills will have identical equipment. Included in the purchase will be the rail spur sites and outlying transfer stations for both Barton and Martin Creek. Ongoing income will support rail spur renovation.
Table: Start-up Start-up Requirements Start-up Expen ses Legal Insurance
$10,000 $10,672
Total Start-up Expenses
$20,672
Start-up Assets
Good Earth Resources, Inc. Table: Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
$20,672 $7,479,328 $7,500,000
Assets Non-cash Assets from Start-up
$7,350,000
Cash Requirements from Start-up Add it io nal Cash Raised Cash Balance on Starting Date Total Assets
$129,328 $0 $129,328 $7,479,328
Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accou nts Payab le (Outstand in g Bi ll s)
$3,500,000 $0 $0
Other Current Liabilities (interest-free) Total Liabilities
$0 $3,500,000
Capital Planned Investment Investment Amount Other Add it io nal Investme nt Re qui reme nt
$4,000,000 $0 $0
Total Planned Investment
$4,000,000
Good Earth Resources, Inc.
2.3 Company Locations and Facilities GER intends to purchase the adjacent 293 acres to Martin Creek for the following reasons. The Missouri and Southern Rail line runs through this property and a rail spur can be constructed to accept rail cars loaded with waste from distant sources, (New York and Chicago). Owning this property will allow GER to haul waste from the rail spur to the landfill on company roads rather
Good Earth Resources, Inc. landfill. The bales will form "bale cells" which include conduits for landfill gas capture. Each cell will be sealed in order to c reate an anaerobic environment for optimum gas generation and vec tor control. After construct ing the rec yc ling fac ility and obt aining a permit, used tires will be crumbled and used throughout the landfill instead of crushed rock (inside bale cells to protect gas conduits, on landfill roads, and in the drainage system). Currently used tires generate an income of $1.75 to $2.00 per tire. Approximately 30,000 to 43,000 tires can be used per acre of landfill. This eliminates t he c ost of roc k and requires no additional space for disposal. Each bale cell will be wrapped with 60 mil polyvinyl chloride (PVC) sheets and sealed on all sides to trap and collect methane gas generated. Landfill gas is 55% methane (CH4), 45% carbon dioxide (C02), with trace amounts of nitrogen (N). The gas is cleaned, dried, and separated with membranes and filters. The methane can be used as fuel for electrical generators on site, providing substantial electricity savings. Sales of electricity into the electrical grid is an alternate source of income for GER. Although large elec tric generators represent a significant capital investment, there is ample return on investment to warrant such e xpenditure. This opt ion has the pot ential of adding approximately $4,000,000+ annually to the gross income. Another process requiring different equipment and a significant capital investment is reforming the methane into methanol and food-grade C02. This process requires filtering, scrubbing, and bott ling C02 for use in food and c arbonated drinks and methanol for use as fuel, solvents, and windshield washer fluid. In bulk form, methanol sales can generate $0.48 per gallon. As a vehicle fuel, this product is called M-85 and contains a mixture of 85% methanol and 15% gasoline and is used in vehicles
Good Earth Resources, Inc. half. At the landfills, roads are muddy in the fall, spring, and winter and dusty in the summer. Here is where the majority of wast e t ruck breakdowns oc cur due to punc tured tires, stalling, and mechanical problems. Both Martin Creek and Barton landfills will have paved dumping areas. Operation hours will be longer as well (6 AM to 8 PM daily and 6 AM to 2 PM on Saturdays). In the four hours aft er other landfills are closed, GER landfills will att ract hauling firms whose trucks have been delayed during the day, or whose pickup routes are longer. 2.
A city-owned transfer station on the south side of St. Louis operated by USA Waste will continue to service the southern side of the city. The charge for outside waste companies t o dump at this fac ility is $35.93/ton. T he fac ility is managed by USA Waste under contract with the city of St. Louis. Collected waste is hauled to a landfill owned by USA Waste in Milan, Illinois. Fees for the two landfills in Illinois are $34.00 per ton. USA Waste inquired about diverting a portion of their waste st ream to Barton. However, the owners of Barton declined as they did not desire to add additional employees t hat an increased waste stream would require.
3.3 Sales Literature GER will prepare maps and information about Martin Creek and Barton for dissemination to users. Sales personnel will visit each nearby waste hauler with pricing, maps, and reminders of the facility. Especially noted will be hours of operation, free coffee and sodas for drivers, savings on driving distanc es, and all other benefits users c an obtain when using GER's fac ilities.
3.4 Technology
Good Earth Resources, Inc. decisions regarding the final utilization of methane will be made. Marketing programs will commence to bring in baled waste from cities such as Chicago, Boston, Cleveland, New York, Washington, Providence, Hartford, Newark, and Philadelphia, as well as other Missouri municipalities and markets, such as Fort Leonard Wood, a U.S. Army base approximately 85 miles from the landfill in Rolla, Missouri. All of these locations have increasing problems with burgeoning waste and fewer available landfills. Rail-hauling baled waste is expected to be a significant profit center for GER. New York City's residential waste fees are normally $140.00 per ton (currently being held at an artificially low price by c ity government), whereas St. Louis fees are $34.00 per ton. The rail access at both GER landfills allow importat ion of this high profit waste stream. Rail shipping costs are approximately $7.00 per ton, thus facilitating reasonable means to import this profitable source of income in a manner that does not attract attention by using surface roads. Income from methane gas generation will be gravy for an already lucrative waste and recycling business. Nationwide elect rical and gasoline shortages add an urgency to utilize this valuable byproduct. The American Methanol Institute has been helpful in providing information regarding methane reformation into methanol. The cost of waste removal is expected to rise dramatically over the next decade. GER selected its landfill sites in rural locations, yet reasonably close to a major population center to capitalize on the growing need for landfills. Martin Creek and Barton are optimally situated to take advantage of the impending rising costs and landfill closure crisis. GER intends t o defuse any public concern by maintaining highly sanitary facilities that use ozone generators to eliminate odors, insects, and rodents. Baled waste does not cause the landfill to have t he messy, litt ered appearance of t raditional landfills. Baled wast e is dense, and, with paper and ot her recyc lables removed, there is minimal blowing wast e t o litter t he area. The "act ive" area is covered by earth and Poly Vinyl Chloride (PVC) sheet s, thus
Good Earth Resources, Inc. 4.0 Market Analysis Summary Barton landfill will be in a positive cash flow condition at c lose of esc row. During the first month of operations, GER road tractors will haul waste from transfer st ations in the cities of St. Louis and St. Charles to the landfill at the rate of 690 tons per day. This will supplement the local waste st ream of 250 tons per day to bring the tot al to over 940 tons per day. An additional 600 tons per day is available from sources near Martin Creek landfill and until Martin Creek construction is complete, GER intends to haul this waste to Barton as well. With commitments from St. Louis waste collection firms and local hauling firms, GER expects to att ain the break-even mark within the first 60 to 90 days aft er assuming ownership. Once this benchmark is passed, primary focus will be on generating more customers both in the local St. Louis, Washington, Jefferson, and St. Francis Counties. Martin Creek landfill will require a period of seven t o twelve months of construct ion to bec ome operational. By that t ime, GER will be able to direct sufficient waste from St. Louis and other municipalities to Martin Creek to create a positive cash flow in the first month of operation.
4.1 Market Segmentation GER personnel plan to contact waste generators, such as food processing plants, breweries (Anheuser Busch), pet food manufact urers (Purina Dog Chow), restaurants, and financial institutions. Marketing personnel will contact each waste hauler in this part of Missouri and Illinois, alerting them to GER locations, hours and rates.
Good Earth Resources, Inc. In 1992 the document was updated and showed a dec line to 5,345 landfills. In 1995, the document was updated once again and showed a further decline in landfills to 3,581. (Source U.S. Environmental Protection Agency website http://www.epa.gov/epaoswer/non-hw/muncpl/ landfilVtflist). This report substantiates the increasing value of a landfill permit and t he increasing difficulty to obtain a permit to dispose of municipal waste. The trend is obviously favorable for owners of landfills that are available to accept waste. It will not be many years before rates increase substantially and even local waste fees will skyrocket.
4.1.2 Value Enhancing Factors As mentioned, landfills are becoming more and more scarce, especially on the eastern seaboard. T hose possessing permitted landfills own virtual gold mines as values c ontinue to rise. Martin Creek landfill has 284 ac res with 42 acres c urrently permitted by the Missouri Department of Natural Resources. Barton Sanitary landfill has 300 ac res and a permitted area of 65 acres and is permitted by the State of Illinois Environmental Protection Agency. Martin Creek will treble in valuation when construct ion is complete. A typical landfill with final permits ready for operation carries a price tag from $6-7 million, and, in some cases, more. Over the past decade, recycling has reached every household in the United States. Many municipalities have mandatory recycling laws. It makes economic sense for people to remove recyclables from the waste stream. This is a practice that can help preserve the earth's resources. Even when citizens remove the majority of recyclables, an operation such as is proposed in this plan will remove an additional 25% of the volume in white paper, cardboard, glass, plastic, ferrous, and aluminum. GER is performing the ultimate "recycling" by enclosing the baled waste and capturing the gas to be used for productive, profitable means. By using this often-w asted energy, our national dependency on fossil fuels may diminish, albeit slightly. Each bale cell generates methane for years after closure.
Good Earth Resources, Inc. Martin Creek. It has also inquired about purchasing Martin Creek landfill at a fut ure date. As mentioned previously, USA Waste approached the present owners of Barton to accept overflow waste as it attempts to reduce the waste flow to its Milan, Illinois landfill. GER has c ontac ted local hauling companies for some or all of t heir business. For t hese companies, a favorable location with more favorable hours of operation will be of benefit to the owners who realize a closer landfill and longer hours will help increase their profitability. Currently there is a proposal for several small municipalities in Eastern Missouri to join in an effort to develop a landfill property to meet their collective needs for the next twenty five years. With a projected cost of $37,250,000 there is staunch opposition to the project. The fact that local government would consider such a high cost project underscores the value of Martin Creek and Barton.
4.2.1 Market Trends Landfills or transfer stations are selected, if dumping fees are the same, solely due to the proximity of the wast e hauler's route to their fac ility. Most likely, Martin Creek or Barton will not capture the business from hauling firms whose facilities are more than 100 miles distant, unless they need to dump their load after the closing hours of the other facilities. On the other hand, the hauling firms whose routes are c lose to the landfill will find these locat ions a boon to their business. Both Martin Creek and Barton will acc ept wast e on Sat urdays. Small trucks and local residents will utilize t he fac ility during this t ime. Rates for this t ype of wast e are generally higher than for commercial waste hauling firms.
Good Earth Resources, Inc.
4.2.2 Market Growth As mentioned in preceding sections, Associated Waste and USA Waste Technologies are the two major firms in the waste business nationwide. Both are NYSE listed. Their operations include collec ting residential and commercial wast e, operating transfer st ations, and operating landfills.
Good Earth Resources, Inc. 80 miles. Madison trucks pickup waste and drive to Fredericktown, Madison County Transfer Station where it is trucked to Butler County Landfill, Poplar Bluff, Missouri. The distance Washington County trucks would travel to Martin Creek is 18 miles round trip vs. 104 miles. The distance St. Francois County trucks would travel to Martin Creek is 36 miles round trip vs. 92 miles. The distance St. Genevieve County trucks would travel to Martin Creek is 72 miles round trip vs. 144 miles. The distance Jefferson County trucks would travel to Martin Creek is 22 to 75 miles round trip vs. 90 miles. The distance Iron County trucks would travel to Martin Creek is 44 miles round trip vs. 56 miles. The distance Madison County trucks would travel to Martin Creek is 68 miles round trip vs. 80 miles. In every case these county trucks would save time and mileage by using Martin Creek. This translates into money saved for the each county or hauling company. At present there are no long-term contracts that would prevent a change to Martin Creek. These counties produce the following amounts of waste daily: · · · · · · ·
Washington: 80-120 yards. St. Francois: 250-300 yards. Jefferson: 2,000 yards. St. Genevieve:250 yards. Iron: 60 yards. Madison: 60-80 yards. Total: 2,700 to 2,800 yards per day from local counties.
5.0 Sales Forecast
Good Earth Resources, Inc.
Table: Sales Forecast Sales Forecast Year 1
Year 2
Year 3
Unit Sales 690 tons/day x 26 days
215,280
241,750
267,350
250 tons/day x 22 days
66 000
66 000
66 000
Good Earth Resources, Inc. 6.0 Management Summary The initial management team depends on the founders themselves, and a small cadre of professionals. As GER grows, it will add additional consulting help, engineering, sales, and marketing.
6.1 Organizational Structure GER has two founding principals whose duties will be divided between operations and administrative/sales. Once operations commence, GER will hire supervisors trained to assume responsibility f or operations while the principals oversee the business. One of the principals, Don Smith, has two adult sons who currently work with him at Smith Environmental Services. Both will take t he Missouri and Illinois courses of fered by e ach state's landfill regulatory division for landfill supervisors and will assume supervisorial positions at the landfills.
6.2 Management Team Co-founder Don Smith c urrently ow ns and operates Smith Environmental Services, one of the largest subsurface soil remediating businesses in Missouri with contracts throughout the state. In 1983 Smith built a transfer station in Wellston, Missouri, a St. Louis suburb that accepted waste, removed recyc lables, baled and hauled it t o t he same landfill in Washington County that GER has under contract , Martin Creek. At that time, he obtained the landfill-operating permit from the
Good Earth Resources, Inc. (Missouri Division). Smith c ontinued to operate the fac ility through 1995. After leaving he founded Smith Environmental Services that he c urrently owns and operates. Smith Environmental has remediated several hundred sub-surface tank sites and hazardous wast e spills throughout Missouri, bot h private and municipal owned. Co-founder John App met Smith in 1984 and has maintained a business relationship since that time. App owned several mobile home parks, one in House Springs, Missouri. Others were in Tucson, Arizona (four), and Las Vegas, Nevada. App also owned and operated Corporate Pension Funding, Inc. a licensed California Mortgage Brokerage firm. This business operated during the late 1970's and early 1980's and funded many mortgages with millions of dollars in private pension money. Recently App was International Marketing Manager for a computer Compact Disk (CD) Duplicating Tower manufacturing firm based in Rome, Italy. App has a sales and management background both in business and the military, where he was an offic er and Marine Aviator for t he U.S. Marine Corps and served as helicopt er pilot and maintenance test pilot in Vietnam. He was extensively trained in maintenance procedures and is an asset to GER with his extensive engineering and marketing experience. He was educat ed at Brown University, Providence, Rhode Island. App will operate the sales and marketing team for GER as well as perform management duties as administrative principal. G. Calvin Rathbone serves as Corporate Counsel and is a member of the California State Bar. He has specialized in civil litigation, including commercial, products liability, toxic litigation, and environmental issues. Rathbone served in the U.S. Marine Corps as a Marine Aviator and Marine Air Group Operations officer in the Republic of Vietnam. Prior to entering law, he was a professional airline pilot with a major airline and manager of sales and marketing for a manufacturer of severe service control valves for use in the exploration and production of oil and gas. He is a graduate of Carnegie Mellon University and Western State University College
Good Earth Resources, Inc. 6.4 Personnel Plan The following table summarizes GER's personnel expenditures for the first three years at Barton Landfill. There are also truckers and the employees at Martin Creek constructing that property.
Table: Personnel Personnel Plan Office Clerks (2) @$76.00/Day Operators (6) @ $100/day
Year 1 $47,424 $187,200
Year 2 $49,972 $196,560
Year 3 $52,470 $206,388
Laborers (1) @ $80/day Maintenance Mechanic (1) @ $100/day Supervisors (3) @ $140/day
$24,960 $31,200 $131,040
$26,208 $32,670 $137,592
$27,518 $34,398 $144,471
Managers (2) @ $5000/month Total People
$120,000 15
$126,000 15
$132,300 15
Total Payroll
$541,824
$569,002
$597,545
7.0 Strategy and Implementation Summary After opening and stabilizing operations, management will establish c ontac t with t he New Y ork City Residential Waste Department and NYC Trade Waste Association. Contact will also be established with officials and c orporations in Chicago, Philadelphia, Washington DC, Cleveland, and other cities on the Eastern Seaboard. Fort Leonard Wood, the U.S. Army base at Rolla, Missouri approximately 85 miles from Martin
Good Earth Resources, Inc. driving time, f uel, wear and t ear on the vehicle, and longer hours of operation.
7.2 Milestones The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates GER's emphasis on planning for implementation. What the table doesn't show is the commitment behind it. The GER business plan includes complete provisions for plan-vs.-actual analysis, and it will hold monthly follow-up meetings every month to discuss the variance and course corrections.
Table: Milestones Milestones Milestone Complete Incorporation Offer on Landfill
Start Date 4/2/1999 6/15/2000
End Date 4/2/1999 7/31/2001
Budget $500 $5,000
Manager John O'Neal John O'Neal
Department Administrative Administrative
Start Landfi ll Perm it Process Business Plan Seismic Testing Totals
8/1/2001 5/1/2001 6/30/2000
8/1/2003 5/15/2001 8/1/2001
$300,000 $5,000 $20,000 $330,500
John/Don John O'Neal Don Smith
Admi ni strati ve Administrative Operations
7.3 Marketing Strategy Good Earth Resources personnel will call on hauling firms to advise them of GER's facility, and
Good Earth Resources, Inc. 8.0 Financial Plan The purchase of Barton landfill at the onset is essential. Since Barton is currently operating, it allows GER the opportunity to augment the current waste stream by hauling from St. Louis and St. Charles, Missouri. The present ow ners of Barton have been ready to retire for several years and have lost interest in increasing this business. This affords GER the opportunity to build both businesses using Barton's c ash flow and c ustomer base. GER can solicit additional business in anticipation of Martin Creek's opening day. Prior to opening, waste would be transported to Barton. Thus, at Martin Creek's opening, there will be excellent revenue sources on the first day of business.
8.1 Important Assumptions The financial plan depends on important assumptions, most of w hich are shown in the tables. GER expects a 30 to 45 day lag between services rendered and payment receipt because of the nature of the business. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Some of the more important underlying assumptions are: ·
·
·
GER assumes to be able to obtain the final Missouri Department of Natural Resources permit for operation of the landfill. GER assumes, of course, that there are no unforeseen changes in technology to make landfills obsolete. A recessionary economy would not have an major negative effect on the cash flow, however t here may be adjustments in both income and expenses should the recession
Good Earth Resources, Inc. 8.2 Break-even Analysis This chart and table summarize the break-even analysis. GER expects to break even shortly after commencing operations as a result of GER personnel going to the hauler's transfer stations and using GER road tractors and divert t he wast e st ream. Eac h trailer holds 80 yards. The monthly units refers to the number of trailer loads with approximately 27 tons (80 yards). Total truckloads for 690 tons daily is 673 loads per month, six days per week easily provided by seven road tractors.
Good Earth Resources, Inc. 8.3 Projected Profit and Loss GER projected profit and loss is shown on t he following table, with s ales at $6,354,720 the first year and increasing each year thereafter. Due to expenditures in the first year, initial profits are lower in comparison to the second year. Once Martin Creek landfill is fully constructed, profits rise dramatically. This chart reflects 940 tons per day to Barton. GER has verbal commitments to bring in this amount st arting with the first day of ownership. T he Martin Creek Profit & Loss Statement in the Appendix shows 600 tons per day diverted to Barton in the first year and in the 13th month delivered to Martin Creek. By hauling to Barton during Martin Creek's construction phase, GER will both increase profits and se cure this business for Martin Creek at the time it is ready to accept its own waste stream. The additional 600 tons per day provides an additional sales pote ntial of bet ween $4,492,800 on the low s ide and $5,241,600 on the high side, depending on the length of contract with this transfer station agreed upon.
Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales
Year 1 $6,354,720 $85,022
Year 2 $6,990,000 $37,771
Year 3 $7,604,400 $40,754
Geothermal Mat Total Cost of Sales
$0 $85,022
$0 $37,771
$0 $40,754
$6,269,698 98.66%
$6,952,229 99.46%
$7,563,646 99.46%
Gross Margin Gross Margin %
Expenses
Good Earth Resources, Inc. 8.4 Projected Cash Flow Cash flow projections are shown in the table below.
Table: Cash Flow Pro Forma Cash Flow Year 1
Year 2
Year 3
Cash from Operations Cash Sales Cash from Receivables
$1,588,680 $3,984,939
$1,747,500 $5,164,414
$1,901,100 $5,627,780
Subtotal Cash from Operations
$5,573,619
$6,911,914
$7,528,880
Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free)
$0 $596,090 $0
$0 $0 $0
$0 $0 $0
New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets
$448,692 $0 $0
$448,692 $0 $0
$448,692 $0 $0
$7,548,000 $14,166,401
$0 $7,360,606
$0 $7,977,572
Year 1
Year 2
Year 3
$541,824
$569,002
$597,545
Cash Received
Add it io nal Cash Recei ved
New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending
Good Earth Resources, Inc. 8.5 Projected Balance Sheet The following table shows the projected balance sheet for Good Earth Resources.
Table: Balance Sheet Pro Forma Bal ance Sheet Year 1
Year 2
Year 3
Current Assets Cash Accou nts Recei vabl e
$2,764,710 $78 1,10 1
$6,493,725 $85 9,1 88
$10,677,624 $93 4,7 08
Other Current Assets Total Current Assets
$350,000 $3,895,811
$350,000 $7,702,912
$350,000 $11,962,331
Long-term Assets Long-term Assets Accum ul ate d Dep recia ti on
$12,002,281 $0
$12,002,281 $0
$12,002,281 $0
Total Long-term Assets Total Assets
$12,002,281 $15,898,092
$12,002,281 $19,705,193
$12,002,281 $23,964,612
Year 1
Year 2
Year 3
Accou nts Payab le Current Borrowing Other Current Liabilities
$22 1,02 9 $596,090 $0
$22 7,6 02 $296,090 $0
$23 9,3 23 $0 $0
Subtotal Current Liabilities
$817,119
$523,692
$239,323
Assets
Liabilities and Capital Current Liabilities
Good Earth Resources, Inc. Table: Ratios Ratio Anal ysis Sales Growth
Year 1 n.a.
Year 2 10.00%
Year 3 8.79%
Industry Profile 7.24%
Percent of Total Assets Accou nts Recei vabl e Other Current Assets
4.9 1% 2.20%
4.3 6% 1.78%
3.9 0% 1.46%
7.2 2% 25.93%
24.50% 75.50% 100.00%
39.09% 60.91% 100.00%
49.92% 50.08% 100.00%
33.95% 66.05% 100.00%
5.14% 2.82%
2.66% 4.55%
1.00% 5.62%
17.37% 23.19%
Total Liabilities Net Worth
7.96% 92.04%
7.21% 92.79%
6.62% 93.38%
40.56% 59.44%
Percent of Sal es Sales Gross Margin
100.00% 98.66%
100.00% 99.46%
100.00% 99.46%
100.00% 31.67%
48.74% 2.0 5% 50.61%
47.76% 2.0 0% 53.52%
45.73% 1.9 7% 56.57%
14.70% 0.2 9% 2.51%
Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities
Selling, General & Administrative Expenses Adve rtisin g Exp enses Profit Before Interest and Taxes Main Ratios Current
4.77
14.71
49.98
1.24
Quick Total Debt to Total Assets Pre-tax Return on Net Worth
4.77 7.96% 21.68%
14.71 7.21% 19.97%
49.98 6.62% 18.77%
0.84 62.44% 2.35%
Pre-tax Return on Assets
19.96%
18.53%
17.53%
6.25%
Appendix Table: Sales Forecast Sales Forecast Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
0%
17,940
17,940
17,940
17,940
17,940
17,940
17,940
17,940
17,940
17,940
17,940
17,940
0% 0%
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
5,500 0 23,440
Unit Prices 690 tons/day x 26 days
Month 1 $24.00
Month 2 $24.00
Month 3 $24.00
Month 4 $24.00
Month 5 $24.00
Month 6 $24.00
Month 7 $24.00
Month 8 $24.00
Month 9 $24.00
Month 10 $24.00
Month 11 $24.00
Month 12 $24.00
250 tons/day x 22 days Other
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
$18.00 $0.00
690 tons/day x 26 days 250 tons/day x 22 days
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
$430,560 $99,000
Other Total Sales
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
$0 $529,560
Unit Sales 690 tons/day x 26 days 250 tons/day x 22 days Other Total Unit Sales
5,500 0 23,440
Sales
Direct Unit Costs 690 tons/day x 26 days 250 tons/day x 22 days
0.00% 0.00%
Month 1 $2.08 $2.27
Month 2 $0.13 $0.15
Month 3 $0.13 $0.15
Month 4 $0.13 $0.15
Month 5 $0.13 $0.15
Month 6 $0.13 $0.15
Month 7 $0.13 $0.15
Month 8 $0.13 $0.15
Month 9 $0.13 $0.15
Month 10 $0.13 $0.15
Month 11 $0.13 $0.15
Month 12 $0.13 $0.15
Other
0.00%
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$37,396 $12,500 $0 $49,896
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
$2,393 $800 $0 $3,193
Direct Cost of Sales 690 tons/day x 26 days 250 tons/day x 22 days Other Subtotal Direct Cost of Sales
Page 1
Appendix Table: Personnel Personnel Plan Office Clerks (2) @$76.00/Day Operators (6) @ $100/day
0% 0%
Mon th 1 $3,952 $15,600
Mo nth 2 $3,952 $15,600
Mo nth 3 $3,952 $15,600
Month 4 $3,952 $15,600
Month 5 $3,952 $15,600
Mon th 6 $3,952 $15,600
Mon th 7 $3,952 $15,600
Mon th 8 $3,952 $15,600
Mon th 9 $3,952 $15,600
Month 10 $3,952 $15,600
Month 11 $3,952 $15,600
Month 12 $3,952 $15,600
Laborers (1) @ $80/day Maintenance Mechanic (1) @ $100/day Supervisors (3) @ $140/day
0% 0% 0%
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
$2,080 $2,600 $10,920
Managers (2) @ $5000/month Total People
0%
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$10,000 15
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
Total Payroll
Page 2
Appendix Table: General Assumptions General Assumptions Plan Month Current Interest Rate
Month 1 1 8.00%
Month 2 2 8.00%
Month 3 3 8.00%
Month 4 4 8.00%
Month 5 5 8.00%
Month 6 6 8.00%
Month 7 7 8.00%
Month 8 8 8.00%
Month 9 9 8.00%
Month 10 10 8.00%
Month 11 11 8.00%
Month 12 12 8.00%
Long-term Interest Rate Tax Rate Other
8.00% 30.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
8.00% 0.00% 0
Page 3
Appendix Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales
Month 1 $529,560 $49,896
Month 2 $529,560 $3,193
Month 3 $529,560 $3,193
Month 4 $529,560 $3,193
Month 5 $529,560 $3,193
Month 6 $529,560 $3,193
Month 7 $529,560 $3,193
Month 8 $529,560 $3,193
Month 9 $529,560 $3,193
Month 10 $529,560 $3,193
Month 11 $529,560 $3,193
Geothermal Mat Total Cost of Sales
$0 $49,896
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$0 $3,193
$479,664 90.58%
$526,367 99.40%
$526,367 99.40%
$526,367 99.40%
$526,367 99.40%
$526,367 99.40%
$526,367 99.40%
$526,367 99.40%
$526,367 99.40%
Gross Margin Gross Margin %
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Truck Rental Utilities Insurance Telephone
$526,367 99.40%
$526,367 99.40%
Month 12 $529,560 $3,193 $0 $3,193 $526,367 99.40%
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$45,152
$15 7,659
$1 57,65 9
$1 57 ,65 9
$ 157 ,6 59
$ 15 7,6 59
$1 57,659
$1 57,65 9
$ 157 ,6 59
$ 157 ,6 59
$ 157 ,6 59
$ 157 ,6 59
$ 16 7,6 59
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$0 $23,400
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,200 $5,366
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
$19,867 $0
Total Operating Ex penses
$253,644
$253,644
$253,644
$253,644
$253,644
$253,644
$253,644
$253,644
$253,644
$253,644
$253,644
$263,644
Pro fit Be fo re Interest a nd Ta xes
$22 6,020
$2 72,72 3
$2 72 ,72 3
$ 272 ,7 23
$ 27 2,7 23
$2 72,723
$2 72,72 3
$ 272 ,7 23
$ 272 ,7 23
$ 272 ,7 23
$ 272 ,7 23
$ 26 2,7 23
EBITDA Interest Expense Taxes Incurred
$226,020 $249 $67,731
$272,723 $860 $0
$272,723 $1,470 $0
$272,723 $2,081 $0
$272,723 $2,691 $0
$272,723 $3,302 $0
$272,723 $3,913 $0
$272,723 $4,523 $0
$272,723 $5,134 $0
$272,723 $5,744 $0
$272,723 $6,355 $0
$262,723 $6,965 $0
Net Profit Net Profit/Sales
$158,040 29.84%
$271,863 51.34%
$271,252 51.22%
$270,642 51.11%
$270,031 50.99%
$269,421 50.88%
$268,810 50.76%
$268,200 50.65%
$267,589 50.53%
$266,979 50.42%
$266,368 50.30%
$255,758 48.30%
Payroll Taxes Other
44%
Page 4
Appendix Table: Cash Flow Pro Forma Cash Flow Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Cash from Operations Cash Sales Cash from Receivables
$132,390 $0
$132,390 $13,239
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
$132,390 $397,170
Subtotal Cash from Opera tio ns
$ 132 ,3 90
$14 5,629
$5 29,56 0
$ 529 ,56 0
$ 529 ,5 60
$52 9,560
$5 29,56 0
$ 529 ,56 0
$ 529 ,5 60
$52 9,560
$5 29,56 0
$ 529 ,56 0
$0 $0 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$0 $54,190 $0
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$37,391
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$5,848,000 $6,017,781
$1,700,000 $1,937,210
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
$0 $621,141
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$45,152 $10,879 $56,031
$45,152 $322,574 $367,726
$45,152 $212,565 $257,717
$45,152 $213,176 $258,328
$45,152 $213,786 $258,938
$45,152 $214,397 $259,549
$45,152 $215,008 $260,160
$45,152 $215,618 $260,770
$45,152 $216,229 $261,381
$45,152 $216,839 $261,991
$45,152 $217,450 $262,602
$45,152 $218,394 $263,546
Cash Received
Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures
0.00%
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment
$3,500,000 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
$0 $0 $0
Purchase Other Current Assets Purchase Long-term Assets Dividends
$0 $2,422,018 $0
$0 $319,933 $0
$0 $150,833 $0
$0 $218,833 $0
$0 $145,833 $0
$0 $196,033 $0
$0 $465,833 $0
$0 $220,133 $0
$0 $313,333 $0
$0 $13,333 $0
$0 $278,083 $0
$0 $258,083 $0
Subtotal Cash Spent
$5,978,049
$687,659
$408,550
$477,161
$404,771
$455,582
$725,993
$480,903
$574,714
$275,324
$540,685
$521,629
$39,732 $ 169 ,0 60
$1,249,551 $1,41 8,611
$212,591 $1 ,6 31,20 2
$143,980 $ 1,775 ,18 2
$216,370 $1,991 ,5 51
$165,559 $2,15 7,110
($104,852) $2 ,0 52,25 9
$140,238 $ 2,192 ,49 7
$46,427 $2,238 ,9 24
$345,817 $2,58 4,741
$80,456 $2 ,6 65,19 7
$99,512 $ 2,764 ,71 0
Net Cash Flow Cash Bala nce
Page 5
