Business Plan - Earth Nurture homepage

advertisement
Outline of Proposal - to fund a company which will sell biodegradable additives
which convert conventional plastics into plastic products which will biodegrade in
landfills or natural bodies of water.
Business Mission
To develop and sell patent-pending additives which will cause conventional plastic
disposable items to biodegrade in landfills or natural bodies of water. These additives are
not oxodegradable, which has been accused of resulting in fragmented but not
biodegraded plastics, and which renders subsequent recycled plastics vulnerable to UV
degradation. These additives are also neither bioplastics nor starches.
Management
Tim Dunn, MA, founded, owned, and managed for a number of years, a manufacturing
company, Steel Silhouettes, that sold primarily to Costco Wholesale, through special
events in Costco Wholesale and Sam's Club, which were also managed by Tim at Steel
Silhouettes.
Tim’s experiences have given him knowledge of all aspects of starting and running small
entrepreneurial businesses, including experience in manufacturing, distribution, sales,
importing into the US, financial management, satisfying a wide range of governmental
regulations, satisfying standards bodies, shipping, understanding raw materials market
fluctuations, and understanding the effects of currency market fluctuations, etc.
Tim worked as a contractor with BioGreen Products Co. for two years. BioGreen
Products Co. brokered the manufacture and sale of biodegradable plastic disposable
products such as cutlery, cups, straws, etc.
Tim has had thousands of conversations and e-mail exchanges with food service
distributors, large end users, small end users, additive manufacturers, competing
companies, food service disposables manufacturers in Europe, Asia, the US and Canada,
and other interested parties such as trade journal representatives and trade show
organizers.
Tim’s role in working with BioGreen Products Co. evolved into his being BioGreen
Products Co.’s expert on biodegradability of plastics, in all aspects, including technical,
legal, and marketing issues. Biogreen has no rights in Tim's patents, however.
Tim filed a 77 page provisional patent for these additives in the United States in October
of 2010. The provisional patent includes technology for enhancing the biodegradability
of many persistent materials besides conventional plastics. Other persistent materials
which the technology addresses include pollutants such as PAHs, paper, and polylactic
acid (PLA,) which intrinsically degrades in commercial compost facilities, but which do
not quickly degrade in landfills or in natural bodies of water.
Tim's academic degrees are in psychology. At first glance, that might seem to be an
unrelated field to biodegrading plastics. From Tim's point of view, biodegrading plastics
is a matter of inducing a desired series of behaviors in specific microorganisms capable
of biodegrading plastics.
Technology
Microbiodegradable conventional plastic is made by combining FDA/EU approved
plastics with additives made from FDA/EU approved ingredients that encourage soil
microbes to eat the plastic, but not until it has been disposed of in landfills or natural
bodies of water. Many studies have proven that microbes and fungi found in the soil eat
many kinds of conventional plastics, and will do so more quickly if encouraged.
The first version of ENA has been tested, and it proved to degrade LDPE in both aerobic
and anaerobic environments, that is to say, in landfills and in commercial compost
facilities. Research has demonstrated that landfills are in fact, microaerophilic
environments, in which biodegradation takes place aerobically. Other polyolefin plastics
are quite similar structurally, and would be degraded by the same processes. Via a
different mechanism, ENA biodegrades ester-based plastics, including PET, Nylon, and
PFE.
The great majority of our competitors are selling products that are made from plant
starch, which is expensive and which has inferior physical properties to conventional
plastic. Some people like the idea of plant starch based plastics in theory, because it is
renewable, and others dislike the idea, because making food into plastic drives up the
prices of food, which the billion poorest people on the planet already cannot afford.
Another negative for starch-based plastics is concern in some quarters about genetically
modified foods. In either case, the great majority of competitors are trying to sell
products that are 350% more expensive than our product, which can spoil before it is
used, and which is not advertised as guaranteed to biodegrade in landfill conditions.
Microbiodegradable plastic - It is possible to buy existing additives on the market that are
claimed to encourage soil microbes to biodegrade conventional plastic. One company in
the field has a patent, and its only competitor relies on trade secrets to protect its
business. We may be able get a final patent for combined technology which combines
several different biodegradable technologies into one product, which is feasible,
according to scientific studies in the field. Neither company has published third party
laboratory reports demonstrating the accuracy of their claims.
After extensive study of reports by microbiologists regarding biodegradation, Tim has
deduced what ingredients are required to attract and facilitate the growth of microbes that
biodegrade plastic. The ingredients are FDA/EU approved for food contact, and are
neither exotic nor expensive compared to a realistic market price for the additive, based
on the prices at which the two competing products are being sold.
The company could market both our proprietary additive, and contract to have finished
products made for sale to large end users and to distributors.
If other technologies are developed or improved which make our technology obsolete in
the marketplace, once we have developed our brand and business relationships, we can
simply switch to other technologies and market products made with the new
technologies.
Tim filed an exhaustive 77 page provisional patent for the additives, described in this
document, in the US in October of 2011. Tim is the sole inventor of the patent, and owns
all rights in the technology.
Technology Verification
Tim has disclosed all information about ENA's technology and testing to two scientists at
the Tampere University of Technology, in Tampere, Finland. These professors and their
university have signed Tim's NDA, but have no business or personal affiliation with him
or affiliated companies, though Dr. Jarvela has agreed to make a test batch of the ENAEu food contact version for Tim. These professors may be consulted for a fee for an
analysis of the validity of the ENA technology. The scientists are Dr. Matti Karp, and
Dr. Pentti Jarvela. Contact: http://www.tut.fi/en/person-id-card/index.htm?id=474781
and http://www.tut.fi/en/person-id-card/index.htm?id=280052 .
Manufacturing
The production of this additive is a simple matter of purchasing readily available food
contact grade chemicals and mixing them with melted plastic to create extruded pellets.
The plastics manufacturing industry uses such pellets regularly to add various ingredients
such as coloring agents to products being manufactured through extrusion,
thermoforming, or injection molding.
Tim has completed a plan for sourcing all needed ingredients in or near Mumbai, India,
contracting with a GMP, EU approved neutraceutical company to prepare and assemble
the ingredients near Mumbai, and with another company to convert the active ingredients
into plastic pellets suitable for mixing into thermoplastics at factories worldwide.
Mumbai is a major container harbor, and the product can be conveniently shipped
worldwide at about 1% of the selling price of the additive.
Tim has also developed a manufacturing chain in Mexico and in Texas, in the US. The
pelletizing of the additive, a step in which active ingredients are incorporated into 3mm
plastic pellets, at Alloy Polymers, to render the additive easy to use in customers'
factories, would be done near Houston, a major container port, from which the additive
can be easily shipped worldwide. The active ingredients can be prepared by a GMP,
FDA-approved neutraceutical firm in Mexico.
The mark-up including all costs, including all sales costs, should easily exceed 100% of
the product's cost, based on extensive research regarding costs, while still undercutting
competing similar products by at least 33%.
Sales and Target Market
The wholesale raw material price alone for the world's annual production of plastic is in
the neighborhood of $400 billion USD. About 1/3 of the world's plastic production is
made into disposable articles with a useful life of less than one year. At an additive sales
price of 20% of the raw materials cost, if all disposable products made with plastics were
treated with the company's additives, the sales would exceed 10 billion US dollars, and
profits would exceed 4 billion US dollars. Clearly, the company does not have to capture
a very large percentage of that potential market to be extremely successful.
Of the world's annual production of plastic, less than 1% is bioplastics, or plastics made
from plant rather than a fossil fuel base. Coca Cola and Pepsi have decided that the
bioplastic best suited for bottling their products is biobased PET, or the closely related
PFE, which are no more biodegradable than fossil fuel-based PET.
Biodegradable plastic use is expected to grow by about 20% a year according to a
business study by Freedonia, Inc.
Conventional food service disposables are a 14.8 billion dollar a year industry in the US
currently. One tenth of one percent of that is 14.8 million dollars, and even that amount
would represent a significant return on the investment required to take advantage of this
opportunity.
The packaging industry, of which about 1/3 is plastics, is a 433 billion dollar industry,
according to ‘Plastics Today’ magazine. One tenth of one percent of that is 143 million
dollars. Therefore, a very small market share of this industry could also equal a very
large return on a modest initial investment.
Public opinion in the United States, especially in the North East and on the West coast, is
strongly in favor of making all disposable products biodegradable. Three quarters of
persons randomly chosen state that they are ‘environmentalists,’ and 10% to 12% to
regularly seek out and buy green products, regardless of how much more they cost or
what lengths one must go to find them.
Most people in the United States state that they would pay 6% more for a product with an
environmental benefit. Our goal, which is realistic, is to meet that target figure,
something that our competitors have not done.
Our primary market for additive is companies that manufacture disposable plastic items,
such as those in the food service and packaging industries.
These products would undercut the existing biodegradable plastic products pricing. It
seems likely that once one major chain starts using biodegradable products, competitive
pressures will compel their competitors to do the same. Fast food is a 170 billion dollar
industry in US sales, and they use a very large amount of disposable paper and plastic
products.
There are three main reasons why biodegradable plastics are not in wide use now - the
first is that they are expensive, and the second is that they have inferior physical
properties (inferior to conventional plastics,) being subject to premature degradation due
to heat and humidity, poor resistance to water penetration, and lower strength than
conventional plastics. The third reason is that the best known technologies for
biodegrading plastics are not effective in landfills, which is where most plastic articles
are disposed of at the end of their useful lives, worldwide.
Products made with microbiodegradable technology are much less expensive than
currently available biodegradable options, and have the physical properties of
conventional plastic products.
Our intended markets are worldwide. Many countries have recently passed laws
restricting the use of the common polyethylene shopping bag – Italy, India, Ireland,
China, and many local jurisdictions worldwide have banned non-biodegradable bags
such as the common polyethylene shopping bag. It is clear that public and governmental
opinion has turned against non-biodegradable disposable plastic products.
It is anticipated that the company will generate the great majority of its revenues by
selling additives for biodegrading conventional plastics, including polypropylene (PP),
LLDPE, LDPE, and HDPE, polyethylene (PP), and PET to companies which currently
manufacture items made with these plastics.
The European Union has mandated that packaging materials be recoverable, the official
definition of which includes biodegrading in compost facilities. ENA renders plastic
items compostable in commercial compost facilities, and also renders conventional
plastics into feedstock for the harvesting of methane in anaerobic digesters, which is a
technology in which Europe is investing. The European Union market is about the same
size as the American market for disposable plastic products.
Sales Plan
Directly contact the many companies which have approached Tim, asking Tim to sell
them pro-degradant additives, and others which have not, but which manufacture
conventional plastic disposable items, including food service and packaging products.
Advertise in trade journals and exhibit in trade shows for all relevant industries - Plastics
manufacturing, food service, packaging, water bottling, food, private label, etc. (Lists of
trade journals and trade shows are already compiled.)
Contact large corporations in the above industries directly. (a list of sales prospects is
available.) Tim has made arrangements with ENA Europe, which has built up a
worldwide sales network specifically for selling ENA, as well as having arrangements
with direct contractors.
Once the company has sold to a major buyer, use their distributors to distribute to other,
smaller customers.
Use the 'proof of commercial success' to enhance the company's advertising and sales
efforts.
Capital Requirements
The company needs funding for the following operations:
Complete testing and certifications of the additive at the Fraunhoffer Institute and OWS.
Apply for worldwide patents.
Purchase a supply of raw ingredients.
Contract with a neutraceutical company to warehouse, weigh, mix, and grind the
powdered ingredients to the requisite fineness for making additive. Have the liquid
ingredients mixed separately.
Have a contract plastics additive mix the powdered and liquid ingredients into plastic,
and make the plastic into the pellets which are commonly used to add ingredients such as
colors into thermoplastics.
Contract with fulfillment companies or distributors for distribution of ENA.
Implement the sales plan described above.
Bring the additives to market could be done with an extensive advertising and
commercial trade show campaign, while simultaneously preparing a reasonable inventory
of additive available for immediate shipping.
The optimum capital funding for this plan is one million USD. The plan is so well
developed that it could be launched immediately, with inventory available within no
more than two months.
Business Structure
Incorporate in an advantageous jurisdiction which does not tax corporations which do not
do business in the country, such as Bermuda, the Cayman Islands, St. Kitts and Nevis,
Sint Eustatius, or the British Virgin Islands.
Exit Strategy
Sell the company to another company, or for the company to purchase the shares of the
venture capital investors using the credit that would be available to a successful ongoing
business.
More Information
About the products, see http://earthnurture.com .
Thone (360) 654-4417 ; email [email protected]
Skype: earthnurture
Copyright Timothy Eugene Dunn, 2010-2012