Bi0dor,LLC
GrandRapids,MI
Bi0dor
Business Plan
2015
TABLE OF CONTENTS
Contents
I.
Executive Summary ________________________________________________________________________________ 1
II.
Vision and Mission Statement _____________________________________________________________________ 3
III. Industry Profile and Overview ____________________________________________________________________ 4
IV.
Business Strategy___________________________________________________________________________________ 8
V.
Company Products and Service __________________________________________________________________ 12
VI. Marketing Strategy ________________________________________________________________________________ 13
VII. Competitive Analysis ______________________________________________________________________________ 18
VIII. Management Team ________________________________________________________________________________ 20
IX. Operations _________________________________________________________________________________________ 23
X.
Financial Forecast _________________________________________________________________________________ 25
XI. Loan Proposal _____________________________________________________________________________________ 26
EXECUTIVE SUMMARY
I.
Executive Summary
A. COMPANY NAME
Our company name is Bi0dor, LLC, the name representing the services we provide. Our systems utilize
naturally occurring biological metabolism to reduce and remove odorous chemical compounds from
contaminated waste air.
B. BUSINESS PLAN OVERVIEW
Bi0dor is a privately owned service provider that designs biofilters for odor reduction in industrial
use. Biofiltration is a process by which naturally occurring biological metabolism is used to reduce
odorous chemical compounds in waste air before it is released into the atmosphere. The most
common contaminant is hydrogen sulfide, a malodorous compound that is a product of the
decomposition of organic material and waste. This is a constant and growing need in the wastewater
treatment industry in particular, which is the primary market Bi0dor will be servicing.
The most common odor-reducing technologies are wet chemical scrubbers and carbon adsorbers.
These technologies are expensive, inefficient, difficult to maintain, and often produce hazardous
byproducts. We intend to supply our clients with a low maintenance, low cost, and low energy-use
alternative. Additionally, we intend to customize each biofilter to the specific needs of the facility,
optimizing efficiency and ensuring sustainability of the design.
Our staff of four engineers provide the system designs for the product. As part of the design process,
we have the capabilities to construct a complete analysis of each site we service and we provide
construction administrative services.
C. MARKET OVERVIEW
Our initial business strategy focuses on the wastewater treatment industry over the first few years of
startup. The Wyoming Clean Water Plant, the wastewater treatment facility for the City of Wyoming
and the surrounding area, is our first client and will serve as our “test market”. This initial project will
serve to establish operational details such as cost estimates, project timelines, and supplier
relationships.
Our business strategy will be adapted to include other odor-producing industries after we have
established our practice and our name in the market. Secondary markets include the pulp and paper
industry, composting facilities, paint industry, and livestock processing and production.
D. BUSINESS STRATEGY OVERVIEW
The business plan incorporates market research and projected trends. Based on this information, our
company has developed specific strategies to make our company a success in our target market. Our
Page 1
EXECUTIVE SUMMARY
company values environmental and economic sustainability, considering the efficiency of the
processes we design and the carbon footprint of the manufacturers we recommend. We wish to serve
our client by providing a superior product in respect to project lifetime and overall cost. We plan to
promote ourselves as designers of the most efficient and sustainable biofiltration systems, which will
differentiate our product in the market.
To do this, we will market to wastewater treatment facilities in particular by submitting
advertisements in relevant magazines and distributing informational brochures. As a startup
business, a challenge we must overcome as a company is establishing our name in the market of
wastewater treatment. However, our greatest strength is our confidence that through customer
relations and sustainable biofilter design, we will provide a higher quality, longer lasting, and more
cost efficient product than our competitors. Understanding our strengths and weaknesses will help
us maximize opportunities and avoid threats in the existing market.
E. MANAGERIAL STAFF OVERVIEW
Our staff includes four design engineers, each with an impressive resume in chemical or
environmental engineering. These individuals are responsible for the founding of this company and
will be making executive decisions during startup. Their primary role is to serve as the designers of
our product and they will interact with clients on a regular basis ensuring we meet their needs. In
addition, business personal will facilitate operations. We plan to staff a CFO, a business executive, and
a marketing executive to handle business operations.
F. FINANCIAL OVERVIEW
To ensure the success of our company, we will need additional funds to jumpstart a sustainable
operation. Based on financial analysis, we are requesting the bank finance a loan valued at $311,000.
The purpose of this loan will be to provide salaries for our seven employees during the first year of
operation. The four co-founders of this company are confident in the success of this firm, and as
confirmation they are willing to receive an annual salary of $30,000 for year one of operation. After
one year, we are confident our company will have a substantial net income at which point salaries
will be raised. With an average revenue on each project we complete of $250,000, we expect to repay
this loan in full after 2 years of operation.
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VISION AND MISSION STATEMENT
II.
Vision and Mission Statement
A. ENTREPRENEUR’S VISION
The vision of Bi0dor is to design a biofiltration system that is personalized to the specific needs of
each facility. Our service performs a thorough investigation of air quality for each biofilter design. Our
engineers will optimize each system with respect to sustainability, long-term use, cost, and operation
and maintenance.
B. COMPANY VALUES
Bi0dor operates under three primary principles: caring, transparency, and stewardship. These
principles establish the basis upon which our company makes decision and steers the direction we
wish to move within the market.
Transparency
Thebasisofthedesignnorm“transparency”comesdowntocommunication.Wearecommittedto
beingtransparentwithourclientsthroughoutthedesignandinstallationprocess,meaningwewill
always be ready to answer questions or explain concerns in a clear and effective manner.
Furthermore, our staff will be transparent with each other, recognizing that each individual
contributesuniqueinsighttothediverserangeofexpertiseofourcompany.
Stewardship
The mostmarketableaspects of the biofilteris that it is a low-maintenance, low-cost, and energy
efficientalternativeforodorreduction.Ourcompanyvaluesstewardshipbyaimingtoaccomplish
odor reduction through sustainable means. Bi0dor has the means and resources to introduce an
effectiveandsustainabletechnologyintothemarket,andwefeelthatitisourresponsibilitytodoso.
Our product isa natural,simple, andinexpensivealternative toconventional odor treatment. The
superiorqualityofourproductbenefitsourcustomersandtheenvironment.
Caring
Ourcompanyoperateswithacaringmentality,aprinciplethatappliesnotonlytoourclientbutto
thesurroundingcommunityaswell.Odorreductionisdesiredbyourclientlargelyduetoconcern
forthepublic.Wearemotivatedtoofferourservicesinordertofacilitateodorreductionthuscreating
abetterenvironmentforourclientandforthepublic.
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INDUSTRY PROFILE AND OVERVIEW
III. IndustryProfileandOverview
A. INDUSTRY BACKGROUND
Biofiltrationtechnologyhasbeenaroundfornearly50years,butitspopularityintheUnitedStates
lagsthatinEurope.Biologically-basedodorcontrolsystemshaveanestablishedhistoryinEurope
andcurrently80%ofwastewatertreatmentfacilitiesusingbiofiltrationforodorcontrol.Thereare
currently7,500biologicalcontrolsystemsinstalledinEurope,halfofwhichareinstalledatsewage
treatmentplantsandpumpingstations[1].IntheUnitedStates,however,popularityforbiofiltration
isrelativelyrecentandcompetingodor-controltechnology,primarilywetchemicalscrubbersand
carbonadsorbers,arestillmuchmoredominantinthemarket.Thismaybeattributedtoalackof
regulatory standards and government-funded research and development, which has begun to
increaseonlywithinthelastdecade[1].ThemarketforbiofiltrationisgrowingintheUnitedStates
anditwasestimatedthatthisisan$800millionmarketfortheyear2015[2].
Biofilterscanbeconfiguredinavarietyofwaystoaccomplishcontaminantremovaldependingon
thecompositionoftheodorousair.Themostimportantcomponentofabiofilteristhemediaused
forcontaminantremoval.Themediacanconsistofnaturalorsyntheticmaterialandisoptimizedto
haveahighsurfacearea,appropriatestructuretoresistcompactionsturdy,andhighporosityinorder
to adsorb large quantities of contaminants andextend time tosaturation.Naturalmedia includes
woodchips,peat,orlavarockandisgenerallyinexpensive.Syntheticmediaisengineeredtofunction
optimallyandthereforelastlonger,butisoftenfarmoreexpensive.Biofiltermediaisinoculatedwith
specificbacteriausedtometabolizethetargetedcontaminant.
Biofiltrationisacosteffective,sustainable,andlow-maintenancealternativetoconventionalodor
control technologies. Media replacements requirements is lower for biofilters than it is for other
technologyallowingforareductionintheoverallcostofthesystem.Theprocessrequiresnochemical
additions,makingitanattractivealternativefromanenvironmentalandsafetyviewpoint.Themedia
inthebiofiltermustbemonitoredfortemperature,pH,andmoistureduetobacteriasensitivity.The
design is developed around these parameters in order to produce an effective system that is
essentiallyself-sustaining.
B. CUSTOMER GROUPS
Our primary customer group is wastewater treatment plants in the United States. According to
BiotechnologyforOdorandAirPollutionControl,“Residentialdevelopmentwillcomeevercloserto
plants,increasingthelikelihoodofodorcomplaints”[3],thereforeodorcontrolisagrowingneed.
Wastewater treatment plants produce the gaseous compound hydrogen sulfide, a malodorous
chemical, that biofiltration has proven to efficiently remove. Operators of wastewater treatment
facilitiesarefamiliarwithbiologicalprocessesbecauseotherbiological-basedtreatmentisusedfor
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INDUSTRY PROFILE AND OVERVIEW
various components of the overall treatment process. Subsequently, operators are accepting of
biofiltrationbecausetheyhaveexperiencewithoperationsinvolvingintricatemetabolicprocesses.
Secondarymarketstoconsiderinthefuturearepulpandpaperfactories,compostingfacilities,the
paintindustry,andlivestockprocessing.Theseplantsproducewastegasinlargequantitiesthataffect
factoryworkersaswellasthoseworkingandlivinginthesurroundingcommunity.Ourgoalisto
enterthismarketbyfirstestablishingagoodcompanynameinthewastewatertreatmentindustry.
Afterouroperationiswellunderwayandwehavebuiltasuccessfulresumeofprojects,wehopeto
extendourservicestotheseindustries.
C. REGULATORY RESTRICTIONS
Onthefederallevel,theUniteStates’governmenthasdirectedtheEnvironmentalProtectionAgency
(EPA)tocompletestudiesinvolvingcompostingbiosolidwastefromagriculture,septicsolids,and
sewagesludge,howevertheenforcementofnuisanceodorcontrolislefttotheState,localcourts,and
theirexecutiveagencies[3].Regulationofodorprovestobechallengingduetothesubjectivityofits
measurements. No systematic “odor scale” exists due to the variability of the compound and
individualreactions[3].Odorisnotregulatedaccordingtosetquantitativestandardsforwastewater
facilities[4].However,theproductionofhydrogensulfideatthesefacilitiestypicallyrequiresaction
betakenforodorpreventionduetonuisanceodors.
A permit to install will typically need to be acquired by the facility prior to construction of the
biofiltrationsystem.Specificregulationsinthisregarddependonstateandlocallaws.Weintendto
applyforandobtainanyregulatorypermitsnecessaryforinstallingodorcontroltechnology.
D. SIGNIFICANT TRENDS
Biofiltration is gaining popularity in the market due to its advantages in terms of cost, effective
removal rate, and sustainability options. Familiarity with the process is growing and biofiltration
technology is becoming more readily accepted and implemented by the wastewaterindustry. The
needforodorcontroltechnologyisalsoincreasingbecauseofadditionalresidentialandcommercial
developmentslocatedclosertotheplants.InamarketresearchreportfromBCCResearch,“theglobal
marketforsludgetreatmentandodorcontrolequipmentwasvaluedatnearly$5.3billionin2011
andwasexpectedtoreach$5.5billionin2012.By2017,themarketshouldtotalnearly$7billion,
whichisacompoundannualgrowthrateof4.7%from2012to2017”[5].
LookingtoEuropeantrends,biofiltrationwillsoonbecomethemostpopularandwidespreadform
ofodorcontrol.Inaddition,withinthenextfewdecadesitisestimatedthat$298billionwillbespent
onwastewaterandstormwatersystemupgradesorreplacementsduetoaginginfrastructureacross
theUnitedStates[6].Thisprovidesanopportunityforourcompanytomoreeasilyenterthemarket
because of the increasing demand. Advanced odor control will likely be incorporated into facility
upgrades.Plantscurrentlylackingodorcontrolorthoseoperatingwithunsatisfactorysystemswill
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INDUSTRY PROFILE AND OVERVIEW
bemoreinclinedtoexpandtheiroperationtoincludebiofiltrationasaresultofadditionalfederal
funding.
E. GROWTH RATE
AccordingtoareportbyBCCResearchpublishedinJune2014,thecompoundannualgrowthratefor
sludgeandodortreatmentisestimatedtobe5.9%duringthetimeperiodrangingfrom2014to2019
[7].Thisisanincreaseof1.2%fromaprevious2012studyandresultsinanexpected$9.2billion
industry by 2019. This shows significant promise for the future of odor treatment at wastewater
treatmentplants.
F. BARRIERS TO ENTRY AND EXIT
Ourcompanywillfinditchallengingtoenterthemarketbecauseexistingcompaniesaretrustedand
haveprovidedproventechnologyinthepast.Companiessimilartooursthatdesignalternativeodor
controltechnologiesalreadyhaveclientsandreceivereferrals.Wewillneedtopromoteourproduct
based on differentiation, but to do so we must first publicize successful projects and our team’s
qualificationsbynetworkinginthemarket.Thiswillbeparticularlychallengingbecausethesuccess
ofourservicespeakstoourabilitytogaincontractswithwastewatertreatmentplants.Inorderto
gain these contracts, we have to first prove ourselves as competent engineers with an innovative
solutiontotheproblems.Givenourengineersexperienceinthewastewaterindustry,weexpectthat
theirconnectionswillprovideabasisforthestartup.Thisbarriercanbeovercomewiththeaidand
referrals of our first client, the Wyoming Clean Water Plant, for whom we are optimizing and
retrofittinganexistingodorcontrolsystem.
Wemakeacommitmenttoourclientsthatourdesignsarelonglasting,andwehavewarrantieson
ourproductstoensurethispromise.However,thispresentsabarrierforexitingthemarketbecause
wewillhaveanobligationtocontinueprovidingourserviceforthelifeofthewarranty.
G. KEY INDUSTRY FACTORS FOR SUCCESS
Tobesuccessfulinthisindustry,itwillalsobeimportanttounderstandvariousmediatypesandtheir
usesoastoproducethemostefficientdesignforeachparticularfacility.Thewastewatertreatment
industry favors sustainability and long-term cost effectiveness over quick-fixes and low quality
products,evenifthismeanscompromisingcost.Weintendtoprofitfromthisnotionbyguaranteeing
along-lastingdesignwhichwillhaveahighappealthanlowcosts.
Furthermore, for the success of our company we must gain an understanding of governmental
regulationscurrentlyinplace.Thiswillhelpustoaccuratelyinformourclientsofdetailsconcerning
implementationofthesystem.
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INDUSTRY PROFILE AND OVERVIEW
H. OUTLOOK FOR FUTURE
Odorcontrolisapersistentproblem.Althoughthenatureofthisproductservesone-timecustomers,
the number of industries is constantly growing. Odor control machinery is projected to reach $3
billionworldwideby2017,indicatingthisisagoodtimetoenterthemarket[8].Itisexpectedthat
biofiltrationwillbecomethedominantformofodorcontrolduetoitseconomicandenvironmental
superiority.
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BUSINESS STRATEGY
IV. BusinessStrategy
A. DESIRED IMAGE IN MARKET
Ourcompanyimagewillbecustomer-focused,personable,reliable,andefficient.Weaimtoestablish
ourselves as innovative with respect to sustainability and attention to detail with our designs by
investigatingtheuniquecharacteristicsofeachproject.Withthisapproach,wewillbeabletodesign
andoptimizeeachsystemsothatitoperatesefficientlywithaguaranteeoflong-lastingoperation.
Ourbiofiltrationsystemswilloperatesustainablyintermsoftheirfunctionallongevityaswellas
reduced environmental impact. We are dedicated to environmental sustainability by designing to
reduce energy consumption of the system as well as incorporating recycled or natural media
materialsintothedesignwheneverpossible.
B. COMPANY GOALS
1. Operaonal
Tooptimizeasolutionbasedonneedsspecifictoeachclient,wewillperformafullcharacterization
ofthecontaminatedairstream.Thisensuresbyproductsarenotformedasaresultofunforeseen
biochemicalreactionsduringthetreatmentprocess.Inaddition,thedesignwillaccommodatethe
plant’s geographical location. For example, in West Michigan, annual temperature changes and
seasonalchanges will bea moresignificant design criteriacompared to anoperationlocatedin a
regionwithamoretemperateclimate.
2. Financial
Withinthefirstthreeyearsofstartup,ourcompanywillreachalevelofprofitabilitythatwillallow
ustorepayourstartuploan.Threeyearsintoourcompanyhistory,weexpecttoachieveacashflow
thatsignificantlyreducesliabilityrisksforthemembersofourcompany’ssharedownership.With
thesuccessofouradvertisingandpromotionalplan,thegoalofourorganizationistooperateasa
milliondollarcompanybythistime.
C. SWOT ANALYSIS
1. Internal Strengths
Wehaveaskilledsetofemployeesforourstartupcompanythatallowsustoenterthecompetitive
market successfully. Our employees have an extensive background in chemical, civil, and
environmentalengineeringandareknowledgeableinthemostrecentleadingtechnologyinthisfield
aswellasthetrendsofthemarket.Furthermore,wehavetakenonskilledexecutiveleadershipinour
business,accounting,andmarketingdepartmentswhowillgreatlycontributetothesuccessofour
company.
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BUSINESS STRATEGY
Incomparisontootherodorcontroltechnologies,ourfirm’sadvantageisthefactthatourtechnology
results in less maintenance. We can use this to advertise that our biofilters will result in far less
operationandmaintenancecoststhantheiroutdatedandineffectivetechnology.
Our particular biofiltration design plan is advantageous over our competitors because it is
customizedtothespecificneedsofeachclient.Eachfacilityhastheirownuniquesetoffactorsthat
will be taken into consideration in order to design an optimized and highly sustainable system.
Optimization includes energy use, utility of space, and cost effectivness while retaining product
quality.Whenatallpossible,wearededicatedtousingrecycledornaturalconstructionandmedia
materials,aswellaslookingatthepossibilityofretrofittinganyexistinginfrastructure.
2. Internal Weaknesses
Our company is at a disadvantage in a market consisting of well-established and experienced
companies.Additionally,ourstaffisyoungandlimitedintheirresumeofpublicationsandpatents,
whichmaydecreaseourcredibility.
Thedesignofoursystemsisnotyetproven,butbasedonpreviousexperienceofourengineerswe
expectourdesignstobesuccessful.Ourfirstfewprojectswillservetostabilizethefoundationofour
companyandsolidifyourcapabilitytoproduceaqualityproduce.
Wecurrentlyhavenoresearchteamorfacilitiesforexperimentaltesting.Ourdesigncapabilitieswill
belimitedinthisregarduntilwereachalevelofprofitabilitywherewecanstaffaresearchlaband
development team, which is a priority as we expand our company. We are also not staffed in
mechanicalorelectricalengineers,whichmaybebeneficialfordesigningcertaincomponentsofthe
system.
Incomparisontoalternativeodor-reducingtechnologies,biofiltrationsystemhaveagreaterweight,
requirealargeareaforsetup,andinvolveacertainleveloffragilityduetothesensitivityofbiological
activity.Incomparisontootherbiofiltrationdesigners,ourcompanymandatesaslightlyhighlabor
cost for design due to the extensive investigationwe perform in order to optimize a system fora
specific plant. The capital cost of our system may turn potential clients away. However, we are
confidentourdesignisfarmoresustainableandthereforelessexpensiveinthelong-term.
3. External Opportunies
The trend of the market for odor control technology provides an external opportunity for our
company.Biofiltrationtechnologyhasbecomemoretechnicallypreciseandwidelyused.Additionally,
based on European trends biofiltration can be applied to a variety of industries including food
processing, chemical processing, and livestock. Our long-term goal is to expand our business to
includethesevariousindustriesinadditiontowastewatertreatmentplants.Thisprovidesuswithan
externalopportunitytosignificantlygrowourclientbaseinfutureyears.
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BUSINESS STRATEGY
In comparison to alternative odor reducing technologies, biofiltration has many advantageous
qualities that are attractive to our market. The cost of maintaining a biofiltration system is
substantially lower than chemical scrubbing; biofitlration costs approximately 1.2% of chemical
operating costs [9]. Whereas other technology requires constant input of chemicals or frequent
maintenance,biofiltrationisessentiallyself-sustaining.
Our product puts us at an advantage in the market because weare dedicated to designing a high
quality, sustainable, and environmentally-efficient system. This approach will allow for the
opportunity of promoting ourselves based on environmental conscientiousness, an image that is
greatly valued by most of the industrial professionals we will be interacting with. Although this
approachmaycauseourupfrontcoststobehigher,wewillactaccordingtothesestandardsbasedon
thevaluesofourcompany.
Although we are marketing to wastewater treatment facilities, our product has the support of
surroundingcommunitieswhowouldgreatlybenefitfromreducednuisanceodors.Citiescontinue
toexpandasurbanareasexperiencepopulationgrowth,whichpushcommunitiescloserandcloser
towastetreatmentfacilities.Manyofthefacilitieswewillbeprovidingservicestoarepublicentities,
therefore they have the best interest of the public in mind and will spend funds to meet the
community’sneeds.Thisprovidesanexternalopportunityforourcompany.
Inaddition,wastewaterfacilitiesintheUnitedStatesarecurrentlyratedverypoorlyandmanyarein
desperateneedofupgrades.Weexpectthiswillincludethelatestandmostefficientodorcontrol
technology,whichourcompanycanprovide.
4. External Threats
Ourlargestinitialexternalthreatisdevelopingaclientbaseandgainingrecognitionwithintheodorcontrol market. Our primary competitors produce alternative odor-control technologies, such as
chemical scrubbers and carbon adsorbers. These companies are well-established in the market
becausethesetechnologieshavealongerhistory,butinmanycasesthesetechnologieshaveproven
to fail. Until recently, there was little government supported research and development for
biofiltrationwhichdelayeditspopularityintheUnitedStates.Unfamiliaritywithbiofiltrationitself
mayturnsomeclientsawayfromthestartanditmaybeachallengetopersuadetheirdecision.
Additionally,clientswhoarefamiliarwithbiofiltrationwillnotbefamiliarwithourcompanyname,
puttingusatadisadvantage.Wewillneedtorelyonthingsotherthanaresumeofsuccessfulcase
studiesortestimonialstoproveourselvestoourclients.Wehopetoremedythisbycompetingon
productdifferentiation.Engineerswhohaveworkedwithaparticularfacilityinthepastcommonly
recommendothercompanieswhenanicheengineeringspecialtyisneeded.Asastartupcompany,
wewillneedtorelyonpersonalreferencesofindividualsinourcompany.
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BUSINESS STRATEGY
D. COMPETITIVE STRATEGY: DIFFERETIATION
Weaimtocompeteinthemarketprimarilythroughproductdifferentiationbyestablishingourselves
as a unique service. Our competitors typically design a “one-size-fits-all” biofilter, meaning each
system is over-designed to accomplish odor-reduction for a variety of circumstances. A biofilter
designedinthismannerisnotspecifictotheneedsofeachgivenfacilityandincludesunnecessary
system components. These additional components inevitably increase the complexity, but not the
effectiveness, of the system. This design approach may be operational, but it lacks the efficiency,
sustainability,quality,andeconomicviabilitythatourservicesprovide.
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COMPANY PRODUCTS AND SERVICE
V.
CompanyProductsandService
A. SERVICE FEATURES
Theserviceweprovideisthedesigndrawings,specifications,andconstructionadministrationfor
on-site biofilters used to treat nuisance odors at wastewater treatment facilities. To deliver a
satisfactoryproducttoeachofourclients,weplantoperformthefollowingservices.
•
•
•
•
•
•
•
•
•
•
•
•
Investigateonsiteodorsourcesandevaluatepotentialinstallationareas
Characterizeodor-producingcompoundsinwastegasstreams
Understand priorities for each client (i.e. low energy system, low cost system, all natural
material,etc)
Seekqualitysuppliersofconstructionmaterialsandmedia
Optimizetheuseofnaturalorrecycledmaterialinourdesign
DesignincompliancewithregulatoryEPArequirements
Applyforandobtainpermits
Providedesigndrawingsandspecifications
Performcostestimationsforconstruction
Identifypotentialconstructioncontractorsandrequestbids
Provideconstructionplanstocontractor
Provideconstructioninspectionoversightduringinstallation
B. WARRANTY POLICY
We guarantee our design will be sustainable in operation. We ensure a warranty of the selected
packing media of 15 years. In addition, we will guarantee a warranty of the operational system
(exteriorandinteriorstructure,fans,ductilework,electroniccomponents,etc.)of30yearscovering
anynecessaryrepairsandreplacements.
C. FUTURE SERVICES
Weexpecttoexpandourcompanyinthefuturetoprovideadditionalservicestoalargermarket.
First,ourbiofiltrationdesigncanbeappliedtoindustriesotherthanwastewatertreatment.After
sevenyearsofoperation,weexpecttohavetheexpertiseneededtoexpandourclientbasetoinclude
other industries (i.e. food and beverage processing, composting facilities, fermentation plants,
livestockindustry,etc.).Weintendtoofferthesamepersonalizedservicetoourfuturecustomerbase,
whichwillrequireustobecomefamiliarwiththeseindustries.
Weintendtoexpandourcompanytoincludeaskilledresearchanddevelopmentteam,providingus
withaleadingedgeonbiofiltrationtechnology.Thisisarelativelyrecentbutgrowingfieldofresearch
whichweexpecttocontributetoonceourresourcesallowforustodoso.
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MARKETING STRATEGY
VI. MarketingStrategy
A. TARGET MARKET
TheWyomingCleanWaterPlant,thewastewatertreatmentfacilityfortheCityofWyomingandthe
surroundingarea,hasshowninterestintheservicesweintendtoprovideandwillserveasourinitial
client.Itisanticipatedthatduringtheinitialstart-upyearsofouroperationourserviceswillattract
municipal wastewater treatment facilities, therefore this client base will serve as our short-term
targetmarket.Currently,thereareapproximately16,255wastewaterfacilitiesintheU.S[10].
However, biofiltrationcan be applied to a wide range of industries,many of which emit thesame
problematicodor-producingcompoundsasdoeswastewaterfacilities,thereforeourskillrangewill
be versatile giving us the opportunity to expand our target market. Our long-term target market
consistsofprocessesthatemitodorousgasinlargequantitiesandatnuisancelevels.Dataconcerning
theprojectedtrendsintheU.S.arebasedonhistoricaltrendsinEurope.Biofiltrationhasbeenapplied
tothefollowingindustriesandwillbeincludedinourtargetmarketasalong-termgoal.
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•
•
•
•
•
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•
wastewatertreatmentplants
sulfidechemicalplants
foodandbeverageprocessing
flavormanufacturing
compostingfacilities
paintindustry
biogasfermentationplants
wastehandlingplants
livestockindustry
1. Benefit Offered
PublicConcern
Theprimaryodor-producingcompoundatwastewatertreatmentfacilitiesishydrogensulfide(H2S),
which the Michigan Department of Environmental Control (DEQ) describes as a colorless,
transparent gas with a characteristic of a “rotten-egg” odor [4]. While rarely released in such
quantities,H2Shasthepotentialtobedetrimentaltoone’shealth.Ourgoalasacompanyistoreduce
H2S odor emissions by installing biofiltration systems. Our product is desirable by governmentoperated facilities looking to satisfy public concern. Addressing odorous emissions improves the
livingconditionsintheareaandcouldincreasethesurroundingrealestateandtaxincomeofthe
municipalities.
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MARKETING STRATEGY
AdvantagesofBiofiltration
Alternative odor reducing technologies include wet chemical scrubbers and carbon adsorbers,
however,thesetechnologiesrequireexpensiveandfrequentmaintenance.Someplantshavereported
thesesystemsperformfarlesssatisfactorythanwhatthemanufacturerexpected.
Operational advantages of biofiltration in comparison to alternative technologies include the
following:
•
•
•
•
•
•
•
•
Thedesignisdiversewithrespecttothetypesofcontaminantsitcantreat
The system functions optimally for high volumes of contaminated air with nuisance
contaminantlevels,whichischaracteristicofodorsproducedatwastewaterfacilities
Theprocessisnaturalandtypicallydoesnotinvolvechemicaladditions
Thereisnosecondarywastestreamsinthedesign
The packing material is often inexpensive (i.e. wood chips, peat, perlite, etc) and in some
cases,themediamaybefoundon-sitefornocost
Media replacements are infrequent or are not required at all (depending on the selected
mediatype)
Thesystemcanbedesignedtobestackable,helpingtoconservespaceandfootprint
The system provides a contaminant removal efficiency equal to or greater than that of
competingtechnologies
Biofiltrationprovidesincredibleeconomicadvantages.Thedesignofthesystemrequiresminimal
materialsandlessfrequentmediareplacements,whichgreatlycontributestoalowoverallprojectlifecost.Table1showsacostcomparisonofvariousodor-reducingtechnologies.
Table 1. Cost Comparison of VOC Control Technologies [9]
ODOR CONTROL TECHNOLOGY
Chlorine-basedChemicalScrubber
ActivatedCarbonAdsorption
Biofiltration
Chlorine-basedChemicalScrubber
TOTAL COST
U. S. $
ቆ ଺ ଷ
ቇ
10 FT AIR
130
20
8
130
2. Demographic Profile
Thedemographicprofileofourclientbaseareindustryprofessionals,specificallyengineers,plant
owners,andplantoperatorsofindustrialodor-producingfacilitieslocatedacrosstheUnitedStates.
In the context of municipal wastewater treatment facilities, our business will involve interactions
withgovernmentpersonnel,requiringfamiliaritywithregulatorystandards.
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MARKETING STRATEGY
Inmanycases,ourclientwillhavepreviousexperiencewithcompetingtechnologies.Dependingon
theeffectivenessoftheirexistingodor-controlsystem,thismayimpacttheirinclinationtochangeto
biofiltration.Forthisreason,ourcompanymustbewell-versedinthetrendsofthemarketandhave
adetailedunderstandingofthecompetingalternatives.
B. CUSTOMER MOTIVATION TO BUY
Ourtargetmarketismotivatedtoinstallodor-reducingsystemsforthebenefitofthesurrounding
community.Thisisparticularlytrueforurbanareaswherethepublicisincloseproximitytotheodor
source.Cityboundariesarebeingpushedcloserandclosertowastewaterplants,increasingtheneed
forgovernmentstoencourageodor-controloutofconcernforthepublic.
C. MARKET TRENDS
1. Size
OurcurrentmarketcanbeestimatedbythenumberofexistingwastetreatmentplantsintheU.S.
About 75% of the U.S. population is served by publicly owned treatment plants. There are
approximately 16,255 wastewater facilities in the U.S, which has grown by approximately 200
facilities since 1998 [10]. At each of these facilities, there are multiple locations where odors are
emitted,providingourcompanywithalargepotentialforbiofiltrationinstallments.
2. Dynamic Trend
Markettrendsindicateariseindemandforodor-control,provingthisisagoodtimetoenterthe
market.BiofiltrationhasanestablishedhistoryinEuropewhereithasbeenfoundtobeeconomically
advantageous for large volumes of low pollutant off-gas streams [11]. As of 1991 in the U.S and
Canada,however,itwasestimatedthatlessthan50odor-controlbiofiltrationunitswereinstalled
[11].
Intoday’smarket,timehasbeenallowedforadequateR&Donbiofiltration.Ourpotentialclientsare
alreadyinformedofthetechnologyandareawareofthebenefits.Furthermore,theAmericanSociety
ofCivilEngineers(ASCE)reportedthatwithinthenexttwodecades,anestimated$298billionwill
be spent on wastewater and stormwater system upgrades or replacements [6]. ASCE reported
wastewater facilities in the U.S. were graded a D+ in 2013 due to aging infrastructure across the
country, meaning wastewater treatment plants across the U.S. will be expanding and replacing
existingplantfacilitiesinthecomingyears.
D. ADVERTISING AND PROMOTION
1. Message
Wewillpromoteourservicebasedonitssuperiorityperformanceandlowcostincomparisonto
alternative odor reducing technologies. Differentiation of our design includes the decrease in
Page15
MARKETING STRATEGY
environmental, operation, and economic impact. Furthermore, we will promote our dedication to
deliveringasustainablebiofiltrationsystembasedonspecialtyneedsofeachclient.
2. Media
We intend to advertise our services by promoting our name through magazines and literature
directed at the wastewater industry. We will advertise in publications issued by national
organizationssuchastheAmericanSocietyofCivilEngineers(ASCE),theAmericanWaterWorks
Association(AWWA),andtheNationalAssociationofCleanWaterAgencies(NACWA).Asourclient
base grows, industry recommendations will contribute substantially to broadcasting our image.
Using existing civil industrial connections, we plan to connect with engineering firms who work
closelywithmunicipalities.Feedbackfromtheseengineerswillbevaluable.
3. Budget
Asastartupcompany,ourbudgetforadvertisingislimited.Inordertoestablishasuccessfulcompany,
we must allocate a significant amount of funds towards promoting our services in order to gain
clients.Weintendtospend$11,000inadvertisinginthefirstfewyearsofstartup.Theamountspent
insubsequentyearswillbeadjustedaccordingtoourinitialprofitability.
4. Publicity
Our strategies to promote our services include publishing magazine advertisements, distributing
informationalbrochures,andbuildingtrustingrelationshipswithourclientsandsupplierssuchthat
ourcompanynamebecomeswell-knownandreputable.
E. PRICING
1. Desired image
Withrespecttopricing,weaimtobecomparablewithourcompetitorsinthemarket.Duetothe
natureofthisindustry,asastart-upcompanywerecognizethatourpriceswillnotfeasiblyundercut
that of our highly established competitors. We aim to work closely with each client to provide a
system that remains within their budget and our designs will be differentiated based on
sustainability.Ourcustomerswillreceiveasuperiorbiofiltrationsystemwhichmaximizesremoval
efficiencyandminimizesoverallprojectlifecosts.
2. Competors’ Prices
Weintendtoworkcloselywitheachclientensuringtheyreceivethemostefficientsystemcustomized
totheirspecificoperation.Thetimewewillneedtospendoneachspecializeddesignwilllikelybe
longerthanthatofourcompetitors,whosedesignbasisforbiofiltrationisageneralone-size-fits-all
approach,thereforeourcostforlabormaybeslightlyhigheraswell.Ourproductdifferentiationwill
balancethisdisadvantage.
Page16
MARKETING STRATEGY
3. Budget Management
Asourcompanygainsprojectexperience,weaimtoensurethesatisfactionofourclientsbyproviding
aqualityproductthatisreliableandsustainable.Asaresult,mostofourclientswillbesingle-item
buyers.Wearecommittedtoworkingcloselywitheachclienttoensuretheyreceiveasystemthat
willprovidelong-termsatisfactionandthatiswithintheirbudget.
Insomespecialtysituations,ourclientsmaydesiremultiplebiofiltrationsystemsthroughouttheir
facility.Ifweforeseeanopportunitytoinstallmultiplesystemsatonefacilitywithinseparatetime
frames,wewillconsiderthepossibilityoflimitingthecostfortheinitialinstallmentandperforma
multiple-phasedesignprocess.Afterourdesignhasprovenitselftobereliable,thecustomerwill
likelyemployourservicesforfutureneeds.Wewillcontinuetoworkwithintheirbudget.
4. Gross Profit Margin
Basedonourfinancialforecastcalculations,weanticipateagrossprojectmarginof74%,69%,and
72%foryears1,2,and3respectively.Thesenumbersarerelativelyhighbecausethevariablecosts
forourservicecompanyarerelativelylow.
F. DISTRIBUTION STRATEGY
Formostsituations,ourbiofiltrationsystemswillbeconstructedonsite.Distributionofourproduct
isultimatelycoordinatedthroughthecontractorsandmanufacturersofthematerials.Ourcompany
provides services drafting contract documents with specifications proper for the operation and
equipment for each design. After creating a bid sheet with estimated unit prices we will request
quotesfrommultipleconstructioncompaniesandevaluatetheadvantagesanddisadvantagesofeach
offer.Ourclientmakestheultimatechoiceforcontracting,butweprovideourbestrecommendation.
Theclientchargestheconstructioncompanydirectlyformaterialandinstallationcosts.Becausethe
engineers are most familiar with the design, we will oversee construction to inspect for proper
installationofthebiofilter.
G. TEST MARKET
OurfirstspecializedbiofilterisbeingdesignedfortheWyomingCleanWaterPlant.Thisfacilityhas
employedourservicestoprovideafeasibilitystudyanddesignplansforabiofiltrationsystem.Our
clientwillfunctionasatestmarketforsimilarprojectsinthefuture.Fromthisstudy,wewillacquire
knowledge of the necessary management, budget, and timeline requirements for our company to
providebiofilterdesignservices.Costsassociatedwiththedesignwillbedeterminedandwillprovide
amoreaccuratebasisforprovidingaquotetofutureclients.
Page17
COMPETITIVE ANALYSIS
VII. CompetitiveAnalysis
A. EXISTING COMPETITORS
Existingcompetitorsofourcompanyaredesignersandmanufacturersofbiofiltrationsystemaswell
asalternativeodorcontroltechnologiesandwastewatertreatmentplantaccessories.Thefollowing
isalistofexistingcompaniesthatwewillbecompetingwithinthemarket.
•
BioRem
•
BohnBiofilte
•
L.S.Enterprises
•
DanielCompany
•
PPCAirPollutionControlSystems
•
Vapex
1. Strengths
Thefollowingdescribethemainstrengthsofourcompetitors.
Experience:Thecompaniesidentifiedasourcompetitorsarestrongintermsofexperience,someof
thembeinginbusinessformorethan25years.Thismeanstheyhaveawell-establishednameinthe
marketandareknownfortheircapabilitiesandproductquality.Additionally,theirexperiencehas
likelyledtotrustedrelationshipswiththeirclientsandmaterialsuppliers,placinganobstacleforus
asweenterintothemarket.
QuickResponse:Theexperiencethesecompanieshelpsthemdesignasystemmorequickly.Theyhave
developedrelationshipswiththeirsupplierswhichallowsthemtoknowpricesandquantitiesmore
efficiently.Experiencealsoimpliestheyhaveabetterunderstandingofwhatworksandwhatdoesn’t,
whichhelpsshortenthedesignprocessandcompletetheprojectquicker.
LessRestrictedBudget:Ourcompetitorshavebuiltuptheirprofitabilityanditwillbedifficulttomatch
theirpricesuponentryintothemarket.Thismakesitvirtuallyimpossibleforourcompanytotryto
undercutprices.
2. Weaknesses
Thefollowingdescribetheassumedweaknessesofourcompetitors.
One-TimeCustomers:Thenatureofthisbusinessusuallyimpliesclientsareone-timebuyers.Forthis
reason,acustomerofthesecompaniesmaylikelynotbeareturningcustomeroncetheirneedshave
been met. In this sense, they are essentially only marketing to new clients, which brings the
competitiontothesamelevelasourcompany.
Page18
COMPETITIVE ANALYSIS
NonExclusive:Noneofouridentifiedcompetitorsspecializeinbiofiltrationspecifically,butrather
offeranarrayofwaterorair-relatedtechnologies.Inthisregard,ourcompanyhasanadvantagein
themarketbecausewecanspendmoretimeandenergyoptimizingeachbiofiltertofittheneedsof
each client. We can adjust our budget to support researching and optimizing the best possible
biofiltrationsystem.
Regional:Manyofourcompetitorsoperatewithinaspecificregion,thereforelimitingtheirpotential
customer base. We intend to operate nationally and will therefore be knowledgeable about
regulationsspecifictocertainstatesaswellastheeffectsaspecificclimatemayhaveonourdesign.
B. POTENTIAL COMPETITORS
Asbiofiltrationtechnologybecomesmoreandmorepopular,additionalcompetingcompaniessimilar
to ours may arise. Additionally, companies currently designing conventional odor-control
technologiesmayexpandtheirservicestoincludebiofiltration.
Ifthesecompetitorsweretoenterthemarket,theymaynothavetheabilitytoundercutourcostsor
offerasystemthatissignificantlymoreeffective,buttheirpresencewilldirectbusinessawayfrom
us.Becausethecustomerbaseforthisproductislimited,anyadditionalbiofilterproviderswillaffect
ourpotentialmarket.Atthistime,however,ourcompanyisoneofasmallfewthatoffersspecialty
biofiltration design. No additional future competitors have been identified. We intend to place a
strongemphasisonpromotionaladvertisingsothatourcompanydevelopsatrustedclientbase.
Page19
MANAGEMENT TEAM
VIII. ManagementTeam
A. KEY EMPLOYEES
1. Co-Managers
The following individuals have invested in the founding of this company and will serve as comanagersduringstartup.Allfoundingmembershavebackgroundinengineeringandaretoperform
alldesignworkforthestartupofthiscompany.Thesefourindividualswillalsoactasco-leadersfor
allexecutivedecisionsforthecompany.
JonathanGingrich:ChemicalEngineerP.E.Specialty:BiochemicalEngineering
JonathanGingrichisalicensedP.E.inbiochemicalengineering.HegraduatedCalvinCollegewitha
doublemajorinChemicalEngineeringandBiochemistryandhecontinuedontograduateschoolat
theUniversityofMinnesotainbiochemistry,withaspecialtyinbiologicalremediation.Hehasworked
forthepast7yearsatacompanyspecializinginindustrialbioremediationofwasteforlarge-scale
contaminatedwastesites.Asaresultofhiseducationandexperience,heisanexpertintheareaof
biochemicalreactionsandmetabolism,thebasisforbiofiltrationdesign.Jonathan’sexperiencebrings
anessentialtechnicalcomponenttoourcompanyandallowsforagreaterlevelofsophisticationwith
our designs. Optimization of biofiltration ultimately depends on the success of the biochemical
processesinvolved,whichisanentireareaofstudy.Inthisregard,Jonathanbringsanunmatched
technicalexpertisetoourcompany.
LaurenGrimley:CivilandEnvironmentalEngineerP.E.Specialty:WastewaterTreatmentEngineering
LaurenGrimleyisalicensedpracticingcivil/environmentalengineerwhospecializesinwastewater
treatmentprocesses.Shehasworkedintheindustryofwastewaterengineeringforthepast9years
andhasahistoryofhighlysuccessfulandinnovativeprojectsinthisfield.Herresumeofpastprojects
shows a particular emphasis on energy use optimization of conventional wastewater treatment
processes.EnergyconservationisanareaLaurenispassionateabout,whichhelpstoprovideabasis
fordifferentiationofourcompanyinthemarket.Weaimtodesignsystemswithoptimalefficiency
withrespecttoenergyuseandprojectlife,andLauren’sinputishighlybeneficialinthisregard.She
hasestablishedanameforherselfinthewastewatertreatmentindustryduetothesuccessofher
low-energy designs and her good name and clientele connections will greatly contribute to the
successofourstartupcompany.
CassandraMiceli:ChemicalEngineerP.E.Specialty:ChemicalDesignProcessEngineering
CassandraMiceligraduatedwithaChemicalEngineeringandBiochemistrydoublemajorfromCalvin
College.SheworksasaP.E.asachemicalengineer.Herareaofspecialtyisinchemicalprocessesand
shehasworkedforthepast8yearsatOdnoTech,acompanyspecializinginvariousformsofodor
control technology. She an extensive background designing chemical scrubbers, one of our main
Page20
MANAGEMENT TEAM
sourcesofcompetitioninthemarket,andunderstandstheadvantagesofbiofiltrationovercompeting
technology. She is well-versed in the market of odor control and has many connections with
wastewater facilities. Her contribution to the company in this respect is incredibly valuable and
providescredibilitytoourcompany.Herexperienceequipsourcompanywithabasisforcontacting
potentialclientsandherpositiveconnectionswithindividualsinthemarketgreatlyenhancesour
image.
KeralaSmith:CivilandEnvironmentalEngineer:Specialty:AirQualityControl
Kerala Smith graduated Calvin College with a Civil/Environmental Engineering degree. After
graduating,shespenttwoyearsatacivilengineeringfirmintheirwaterresourcesdepartment,and
forthepast6yearsshehasworkedattheMichiganDepartmentofEnvironmentalQuality(MDEQ)
specializinginairquality.Thiscombinationofexperiencehasprovidedherwithanunderstandingof
aircontaminantsandtheirsourcesinmunicipalityfacilities.Sheisexperiencedwiththe“how-to”for
airqualitytesting.HerexperienceattheMDEQprovidesourcompanywithaninsideknowledgeof
regulationsandpermittinginvolvedwithodor-control.Thisprocesshasthepotentialtobeconfusing
andslow,butwithKerala’sexperiencewecanapproachthissituationwithconfidence,puttingusat
anadvantageovercompetitors.
B. EMPLOYEES TO BRING TO THE TEAM
Thefollowingemployeepositionsaretobeaddedtoourteamtoensureasuccessfulcompanystartup.
Theywillassistwithbusinessoperationsofthecompanybecauseoftheirexperienceandexpertise.
CFO:WeplantobringonanexperiencedCFOtomanagethefinancesofourcompany.Thiswillbe
essentialasnoneoftheco-managersaretrainedinfinancesandourlargecashflowmustbewellmanaged for the success of our company. Our potential hire will be someone with experience in
financialmanagementforwastewater,municipality,orgeneralengineeringwithatleast8-10years
ofexperience.
BusinessExecutive:Wewillbeaddinganexperiencedbusinessexecutivetoourteamtohandlethe
organization of our company. This individual will be in charge of executing marketing strategies
duringthegrowthofourcompany.Thispositionwillensurethatourcompanymaintainsitsvision
and acts according to our mission statement. They will oversee operations and ensure all
departments act uniformly. The ideal candidate is one who has at least 5-7 years of business
managementexperience,preferablywithsomehistoryinthefieldofengineering.
Marketing Executive: A marketing executive will serve as the go-between for our engineers and
potentialcustomers.Thisindividualwillattendmarketingevents,createanddistributepromotional
informationtoourtargetmarket,andmanageadvertisements.Inaddition,wewilldelegatewebpage
managementtothisthisindividualandexpectthemtobeexperiencedinthisarea.Ourpotentialhire
willbesomeonewithatleast5yearsmarketingexperience.
Page21
MANAGEMENT TEAM
C. FUTURE EMPLOYEE POSITIONS
Ourcurrentstaffhasthecapabilitiestofullymanageallaspectsofourbusiness.However,wedonot
havespecialtytraininginspecificaspectsofbusinessandoperation.Duringtheinitialstartupofour
company,wewillberequiredtospendtimeandenergyinareasoutsideofourexpertise,thereforeas
ourcompanygrowswewillacquireadditionalstaffforproperemployeeutilization.Descriptionsof
futureadditionstoourcompanyareasfollows.
ResearchandDevelopmentDepartment:Bi0dorplanstoexpandourresourcestoincludeadiverse
researchanddevelopmentdepartment.Thishighlyskilledteamwilladvanceourcompanyinthefield
ofbiotechnologybydevelopinginnovativemeanstoaccomplishodor-control.
ElectricalandMechanicalEngineers:Certainaspectsofthebiofiltrationdesigninvolveelectronic
andmechanicalcomponents.Furthermore,manycomponentsofoursystemcouldbedesignedtobe
automated. As research and development continues, it would be beneficial to bring on a team of
electricalandmechanicalengineerstoprovideourcompanywithamorediversesetofskills.
MarketingDepartment:Ourmarketingdepartmentwillaidinpublicrelationsandpromotionofour
companyname.ThisdepartmentwillreporttotheMarketingExecutive.Theywillbeemployedto
manageadvertisements,companyevents,andclientinteractions.
FinancialManagement:ExpansionofourcompanywillnecessitateadditionalstafftoaidourCFO.
Asweexpandourcompanyandgrowinthemarket,weintendtoemployawell-trainedbusiness
managementstaff.Theinitialexpansionwillincludeachiefaccountantandasalesteam.
HumanResources:Asourcompanygrowsandweseetheneedtoexpandourstaff,wewillgreatly
benefitfromadepartmenttrainedinfindingtalentedindividualsforeachofourdepartments.
Page22
OPERATIONS
IX. Operations
A. LEGAL FORM OF OWNERSHIP
Thelegalformofourcompanywillbealimitedliability.Alimitedliabilitycompany(LLC)isoneof
the most common type of private companies because it lowers the liabilities associated with
ownership.Thisformofownershipisadvantageousforastartupcompanybecauseitallowscapital
toberaisedmorequickly.ALLCprovidesfinancialriskprotectionfortheownerandhasadvantages
associatedwithtaxrequirements.BecauseaLLCisrecognizedonalegallevel,itequipsthecompany
with credibility in the eyes of clients and suppliers. At startup, our company will have a shared
ownershipbetweenemployees,soestablishingourcompanyasanLLCwillallowforeachmember
tohaveliabilityprotectionandwillensuredistributionofprofit.Ourcompanywillnothaveaboard
ofdirectorsatstartup.
B. COMPANY STRUCTURE
ThemanagerialflowchartofourcompanyisshowninFigure1.Thisisadiagramofthecompany
supervisorypositionsandtheirdesignateddepartmentsincludingourplanforfutureadditionsto
theteam.
Figure 1. Long-Term Managerial Flowchart
C. DECISION MAKING AUTHORITY
Thefourco-managerswillhaveexecutiveauthority.Afteroneyearofoperation,weplantopromote
oneofthefourfoundingmanagerstoCEOofthecompany.Thisselectionwillbebasedonsupportof
theremainingemployeesanddesireforthispositionbytheindividual.TheroleofCEOistoprocess
allexecutivedecisions.
Thedirectorofeachdepartmentwillhaveauthorityoverdecisionsmadeamongtheirdesignated
staffmembers.Departmentswillbeinclosecommunicationwithoneanothertoensureaseamless
operationamongthecompany.
Page23
OPERATIONS
D. COMPENSATION AND BENEFIT PACKAGES
Ourfirmwillhavelimitedfundsintheinitialyearsofstart-up.Becauseweareconfidentinthesuccess
of our company, the founding co-managers (our four design engineers) are willing to receive a
significantsalarycutduringthefirstyearofstartup.Thefoundingmemberswillbereceivingasalary
of$30,000forthefirstyearofoperation.Afterthistime,theseindividualswillbecompensatedwith
anannualsalaryof$70,000.Theemployeepositionsweintendtobringtoourteamwillreceivefull
salariesatstartup.Wehavebudgetedforasalaryof$67,000forourCFOand$62,000forourbusiness
andmarketingexecutives.Additionally,wewillensureemployeesareequippedwitha401Kplanand
healthcareinsurance.
E. CAPACITY CONSTRAINTS
Thecapacityofourcompany’sservicesisrestrictedbythenumberofemployeesandtheirtalents
andworkload.Theexpectnumberofprojectsourcompanycanfeasiblytakeonisapproximately8
odor-controldesignsinthefirstyearofoperation,9inthefollowingyear,and10inyearthree.Aswe
growandexpandouremployeenumbers,wewilladjustouroperatingcapacityaccordingly.
Page24
FINANCIAL FORECAST
X.
FinancialForecast
A. KEY ASSUMPTIONS
Forecasting our company’s finances required several key assumptions to be made concerning
expectationsforouroperation.
GrowthRateofStartup
Theprimaryassumptionisthatourcompanywillexperienceaconstantandupwardgrowth.Startup
companies are designed to grow quickly and we intend to monitor our growth rate frequently to
ensureourcompanyisontrack.
Demand
Theinitialmarkethasbeendefinedas16,255wastewatertreatmentfacilities[10].Althoughsome
facilitieswillinstallmorethanonesystem,somewillnotinstallany,thereforewewillassumethis
number to be the startup demand. This figure excludes other odor-producing facilities, which we
intendtoexpandourtargetmarkettoincludeinyearsfollowingthefirstfewyearsofstartup.
ProductionCosts
Productioncostsarehighlyvariablefromcasetocasebecauseeachsystemisauniqueandspecialized
design.Theinitialinvestmentcostofoursystemscanrangeanywherefrom$400,000to$800,000,
dependingonthecomplexityofthedesignandlaborrequired[3].Asadesignfirm,ourengineersare
producingasetofplansanddocumentsnecessaryfortheinstallationofabiofiltrationsystem.Our
client pays for the engineering services we provide, which includes design plans and contract
assembly.
B. BASIS OF COST ANALYSIS
Theexpectedlaborcostchargedtoourclientassociatedwiththedesignofeachbiofilteraveragesto
$100,000. Additionally, we charge 25% of the total project costs for construction administration
services.Ourconstructionadministrationcostscovertheserviceofidentifyingandrequestingbids
fromconstructioncompanies,recommendingabiddertoourclientbasedonthecapabilitiesofthe
constructioncompanyandourexperiencewiththem,andobtaininginstallationpermits.Theclient
hastheultimatesayinwhichconstructioncompanytoemploy,howeverwehavetheexpertiseof
knowingwhichbidoffersthemostfeasibleprojectcostbasedonourownestimatedunitprices(refer
totheAppendixforalistofunitprices).Anaveragefortheinitialinvestmentcostofabiofiltration
systemis$600,000totheclient,thusatypicalprojectrevenueforourservices(withoutconstruction
costs)$275,000.RefertotheAppendixforallfinancialforecastingcalculations.
Page25
LOAN PROPOSAL
XI. LoanProposal
A. AMOUNT REQUESTED
Asastartupcompany,wearerequestingaloanof$311,000fromthebanktojump-startoperation.
Theloanwillhaveanannualinterestrateof17%,whichisrelativelyhighduetotheriskassociated
withinvestinginanewcompany[12].
B. PURPOSES OF FUNDS
Thepurposeofthisloanwillbetofinanceoneyearofsalariesforallsevenofourstartupemployees.
Toshowourconfidenceinthesuccessofourcompany,thisloanimpliesthefoundingco-managers
arewillingtoreceiveacutinsalaryduringthefirstyearofoperation.
C. REPAYMENT SCHEDULE (EXIT STRATEGY)
Weintendtorepayinatimelymanner,andbasedonourfinancialforecastwebelievethiswilleasily
beaccomplished.Weintendtopayoffhalfoftheloaneachyearsothatitwillbepaidinfullafter2
years of operation. If it were that our company financial forecast is inaccurate and we do not
accomplishthisgoal,ourassets(includingcurrentcashvalueofwarranties,technicalequipment,and
accountsreceivable)canserveasadequatecollateralfortherequestedloan.
D. TIMETABLE FOR LAUNCHING BUSINESS
Giventheexperienceofourstaff,wehaveconnectionsintheindustryandexpecttolaunchourfirst
project immediately after startup. We are in contact with interested parties providing us with
confidencethatstartupwillbesmoothandfullyfunctioning.Startupofourcompanycanbeginifand
whentherequestedloanisgranted.
Page26
APPENDIX
Appendix
BREAKDOWN OF OPERATING COSTS
Operating Components
Components
Testing Equipment
of Fixed Costs Office accessories
Salaries
(Fixed Costs)
*Assets
*Liabilities
Variable Costs
Internet/Phone
Letterhead/Printing
Rent
Marketing
Software License
Employee Insurance
Liability Insurance
Business Executive
Marketing Executive
CFO
Co-Manager (4)
Office accessories
Accounts Receivable
Testing Equipment
Warranty Coverage
Needed for Salaries
Paid per Year
Accounts Payable
Notes Payable
Other Current Liabilities
Year 1
Year 2
Year 3
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
10,000
10,000
3,600
2,000
25,000
11,000
15,000
35,000
15,000
62,000
62,000
67,000
120,000
10,000
70,000
10,000
250,000
311,000
7,000
6,000
10,000
10,000
5,000
3,600
2,000
25,000
11,000
10,000
35,000
15,000
62,000
62,000
67,000
280,000
10,000
70,000
10,000
250,000
311,000
155,500
7,000
6,000
10,000
10,000
5,000
3,600
2,000
25,000
11,000
10,000
35,000
15,000
62,000
62,000
67,000
280,000
10,000
70,000
10,000
250,000
155,500
155,500
7,000
6,000
10,000
20% of Annual Fixed Costs
*Note: Assets and Liabilities listed here are one-time payments and the values shown do not
accumulateoverthethree-yearspan
Page27
APPENDIX
UNIT PRICES (ESTIMATION OF CONSTRUCTION COSTS)
The following unit price estimates will be used during the bidding process for construction to
determineareasonablebidapproximation.
Estimated Unit Prices
Steel structural elements
Fiber glass ductile work
Fan
Electronics
Geotextile
Insulation
Sprinkler system
Pressure sensors
Media (average)
Concrete base
$
$
$
$
$
$
$
$
$
$
9.00
9.00
80.00
150.00
0.30
0.35
50.00
20.00
46.00
4.00
per sq. ft.
per ft.
each
each
per sq. ft.
per sq. ft.
each
each
per cubic ft.
per sq. ft.
Bi0dor
Statement of Income
Page28
Year 1
Year 2
Year 3
Sales revenue
2,000,000
2,250,000
2,500,000
Depreciation
3,573
6,123
4,373
Gross Margin
1,996,428
2,243,878
2,495,628
Variable Operating Costs
87,520
117,520
117,520
Fixed Operating Costs
437,600
587,600
587,600
Operating Income
1,471,308
1,538,758
1,790,508
Interest Expense
26,435
39,653
13,218
Income Before Tax
1,444,873
1,499,105
1,777,290
Income tax (40%)
577,949
599,642
710,916
Net Income After Tax
866,924
899,463
1,066,374
APPENDIX
Bi0dor
Statement of Cash Flows
Year 1
Page29
Year 2
Year 3
Beginning Cash Balance
-
1,162,496
1,918,582
Net Income After Tax
866,924
899,463
1,066,374
Depreciation expense
3,573
6,123
4,373
Invested Capital (Equity)
6,000
6,000
29,000
Increase (decrease) in borrowed funds
311,000
(155,500)
(155,500)
Equipment Purchases
(25,000)
-
-
Ending Cash Balance
1,162,496
1,918,582
2,862,828
APPENDIX
Bi0dor
Break - Even Analysis
Year 1
Year 2
2,000,000
Sales revenue
Year 3
2,250,000
2,500,000
Less: Variable Costs:
Variable Cost of Goods Sold
-
-
-
Variable Operating Costs
87,520
117,520
117,520
Total Variable Costs
Contribution Margin
87,520
117,520
117,520
1,912,480
2,132,480
2,382,480
Less: Fixed Costs
Fixed Cost of Goods Sold
-
-
-
Fixed Operating Costs
437,600
587,600
587,600
Depreciation
3,573
6,123
4,373
Interest Expense
26,435
39,653
13,218
Total Fixed Costs
Income Before Tax
467,608
633,375
605,190
1,444,873
1,499,105
1,777,290
Year 1
Page 30
Year 2
Total Fixed Costs
Contribution Margin %
467,608
96%
633,375
Break Even Sales Volume
489,006
668,280
Year 3
605,190
95%
95%
635,042
APPENDIX
Equipment
Purchases
Equipment Purchases Year 1
25,000
MACRS Rates (7-year
recovery period)
Year 1
Year 3
3,573
6,123
4,373
3,573
6,123
4,373
0.1429
0.2449
0.1749
Interest Expense
Annual interest rate on debt
17%
Year 1
Year 2
Year 3
Average debt balance
155,500
233,250
77,750
Interest expense
26,435
39,653
13,218
Gross Margin of Revenue
Profit Margin
Net Asset Turnover
Debt to Equity Ratio
Page 31
Depreciation
Year 2
Year 1
0.74
0.43
6.31
51.83
Bi0dor
Ratio Analysis
Year 2
0.69
0.40
7.10
25.92
Year 3
0.72
0.43
7.35
0.00
REFERENCES
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