Table of Contents
I.
Executive Summary
II.
Method Of Obtaining Facts
III.
General Company Description
IV.
Description of Product (Rainwater Collection System)
V.
Management and Organization
VI.
A.
Company Structure
B.
Employment
C.
Standards & Licenses
Operational Strategy
A.
Potential Location & Facilities
B.
Services
C.
Material Suppliers/Vendors
VII.
Marketing Strategy
VIII.
Financial Plan
A.
Startup Expenses
B.
Capitalization
Nader
Mohammed
Bhushan
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I. Executive Summary
II. Methods of Obtaining Facts
A wide variety of resources were used for the completion of this document, for each
specific sections herein. Different forms of articles, such as forms, journals, legislative
documents, scientific articles, published papers, etc., were used to extract the required
information for this document. A large portion of the data was collected from the medium
of the world wide wed. Therefore, the major resources on the internet included
government websites, online journal collections, corporate and public web pages, open
source websites, blogs, etc.
Part of the Product Description section used the information from a scientific paper, from
the Urban Water Journal Volume 1 Issue 4. This information illustrated the relation of
the efficiency of a rainwater harvest system with the tanks size and roof area. Some of the
information gathered for the Product description section also included use of open source
webpage and images.
The Management and Organization section used some information from the Internal
Revenue Services website, for the details on a Limited Liability Company (LLC). For
this section, other sources were also used to verify the advantages of the LLC, like
websites such as the ExpertLaw.com, concerned with the legal part of the LLC, and
business consultation sites like Active Filing and AllBusiness. For the Employee Structure
part of this section, information was used from some sources to analyze and specify
different employee positions and their specific duties.
For sections, such as the company structure and licenses section, information was
obtained from a few different branching government web pages, like the Washington
Secretary of State website, Washington State Department of Licensing (WSDL) website,
Washington State Department of Labours & Industries and City of Seattle website.
Specifically, for the licenses section, the documents like the Environmental Permit
Handbook, from the Washington state Department of Ecology was used to find the
appropriate permits for the rainwater system and the company. Also, a very efficient
system of the WSDL, which provides a questionnaire and determines some of the basic
licenses required, was used as part of the research for this section.
The Financial Plan section utilized a business practice of using the 1:3:9 Rule for the
formulation of the financial costs for the entire company. Other efficient economic
practices were used in calculating the costs and profits of the financial plan. Sample
business cost analysis articles such as, A Company Perspective Cost Analysis of The
Personal Dust Monitor (Reed, Volkwein, Joy), were used to gain an advance idea for
formulating a cost analysis section. Other cost data and statistics were obtained from
specific sources, such as the Seattle Electric Light Company, and the above mentioned
Washington based government websites, for business setup costs.
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III. Product Description
Our System
The concept behind our systems is to collect rainwater and use it for interior and exterior
use in residential structure.
The Above Ground System
Appearance
Equipment:
1- Gutter and gutter’s protection
2- Downspout’s filter
3- 4-inch-diameter PVC Pipes
4- Dayton Sump Pump, which could be used for the above and the underground
systems.
5- A plastic tank (ranges from 300 gallon tank – 2500 gallon tank)
6- A tank’s level indicator
Operation
The above ground system collects the rainwater from the roof in order to get the best
quality rainwater that requires the least treatment. The system uses gutters connected to
3
4-inch-diameter PVC pipes that pump the rainwater to a filter and then to the storage tank
due to gravitational force. A gutter protection is required to prevent debris from getting
into the collecting PVC pipes. A pump, such as Dayton Sump Pump, is used to supply a
customer’s home with the conserved rainwater that would be drawn from the rainwater
tank whenever you need it. The system will also include equipment needed to pump
rainwater from the storage tank to the various appliances in the home. The equipment
depends on each individual’s home structure and plays an important role in shaping the
entire system.
Function
The efficiency of the above ground system is measured by its tank size. Moreover, it is a
flexible system. It is easy to expand or relocate. However, the location is a problem for
those who do not have enough space unless a customer would use a small tank, which as
a result would reduce the amount of rainwater collected. The storage fraction is a
measure of how effectiveness the system is. The storage fraction equation, S (storage
size)/A (the roof area)*R (the annual rainfall), depends on the tank size S; the greater the
size, the greater the effectiveness of the system and the greater of the storage fraction.
The system’s location is also a problem for those who want to keep the beauty of their
home’s landscape since this system occupies significant amount of space.
The Underground system
Appearance
Equipments:
4
1- Gutter and gutter’s protection
2- 4-inch-diameter PVC Pipes
3- Downspouts’ filters
4- Dayton Sump Pump
5- Flexible hoses
6- A tank ranges from 600 gallon tank - 2500 gallon tank
7- A tank’s level indicator.
Operation
The underground rainwater system collects the rainwater from the roof. The system uses
gutters connected to 4-inch-diameter PVC pipes that pipe that water to filters that connect
to flexible hoses connected to an underground tank in which the water is collected.
Unlike the above ground system, the underground system has two drainpipes place on
opposite sides of the home. A gutter protection is required to prevent debris from getting
into the collecting PVC pipes. A pump, such as Dayton Sump Pump, is used to supply
your home with the conserved rainwater that would be drawn from the underground
rainwater tank whenever you need it. The system will also include equipment needed to
pump rainwater from the storage tank to the various appliances in the home. The
equipment depends on each individual’s home structure and plays an important role in
shaping the entire system.
Function
The underground rainwater collection system helps you collect a tremendous amount of
rainwater by collecting water using drainpipes connected to the underground tank. The
two downspouts would increase the amount of collected water in the tank despite the roof
size of a home. The underground system also gives an advantage of choosing any tank’s
size you want because it is an underground system which means that the house landscape
would still the same. Therefore, it is more effective, attractive, and unnoticeable.
VI. Management and Organization
A. Company Structure
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The company structure will define the type of company being proposed in the business plan. This
will be followed by the employee structure which will define the different types of employees of
the company.
Online sources show that there are six main types of company structures which can be considered
for the new company:
1. Sole Proprietorship -- One individual owns the company and is responsible for both its
assets and liabilities.
2. General Partnership – Two or more people, within a contract, run the business with equal
responsibilities and liabilities.
3. Limited Partnership -- Some of the partners in the partnership have less interest and
liability in the company. In this type of partnership, there must be at least one general
partner.
4. Limited Liability Company (LLC) – One or more owner(s) who invest in the company
and have limited personal liability for the debts and actions of the LLC. “a hybrid business
entity having certain characteristics of both a corporation and a partnership”[3]
5. C Corporation -- A traditional corporation that, when set up, leaves you with little or no
personal liability.
6. S Corporation -- The liability aspect is the same as a C corporation. The difference is the
way it is taxed. C corporations are taxed twice, once on the corporate level and again on the
personal level. S corporations are only taxed on the personal level.
The proposed rainwater company will not be a large organization in the beginning of its
establishment. Therefore, the last two options of the corporation structure will not be
used. The proposed company will be a partnership, so the first option of Sole propriety
option will also not be considered. Between the three remaining options, the Limited
Liability Company (LLC) option seems most suitable. According to activefiling.com, a
LLC “is designed to provide the limited liability features of a corporation and the tax
efficiencies and operational flexibility of a partnership”[4]. And according to IRS.gov, the
LLC can provide “management flexibility and the benefit of pass-through taxation” [1].
There are two main advantages considering the LLC over the other structures.
Firstly, this business plan is intended to convince sponsors to financially support the
company. In a general partnership the sponsors will provide financial support in some
form of a loan. But in a LLC structure the sponsors can be directly part of the company
through their investment, but with limited liability. Members are protected from liability
for acts and debts of the LLC [6]. Secondly, with an LLC, the profit of the company is not
6
considered to be earned income to the members (owners), and therefore is not subject to
self-employment tax, thereby avoiding double taxation to the members and the company
[2]
.
Limited Liability Company Fees in the State of Washington[3]
Original Filings
$180
Amendment to Filing
$ 30
Dissolution/Withdrawal
No Fee
Initial or Amended Annual Report
$ 10
Annual Renewal
$ 59
Reservation of Name
$ 30
Merger
$ 20 per merging entity
Resignation of Registered Agent
$ 20
Delinquency Fee
$ 25
Any other statement or report
$ 10
**cite for: Company structure Section
[1]http://www.irs.gov/businesses/small/article/0,,id=98277,00.html
[2]http://www.allbusiness.com/business-planning/business-structures-limitedliability/1679-1.html
[3]http://www.sos.wa.gov/corps/LimitedLiabilityCompaniesLLC.aspx
[4] http://www.activefilings.com/resources/content/llc_structure.htm
[5] http://www.allbusiness.com/business-planning/business-structures-limitedliability/2517-1.html
[6] http://www.limitedliabilitycompanycenter.com/llc_advantages.html
B. Company Employee Structure
The employee structure for the company will be a simple one, with 15-16 employees
after the establishment of the company. The employees will be responsible for the daily
functioning of the company and the company hierarchy will determine each employee’s
responsibility. Further details about the powers and limitations of the company members
(owners) and the employees will be stated in the Operational Agreement (see 3.
Standards & Licenses). Following is the breakdown of the company structure:
a. Members: The members of the company are the individual owners of the
company or the institutes which have invested in the company, and who seek
capital returns for their investment [3]. The members are not responsible for the
daily functioning of the company, instead they are, in other words, shareholders
of the company [0]. The only duty of the members is to elect or appoint the
manager of the company through consensus.
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b. Attorney: The attorney will be responsible for all the legal affairs of the
company. The attorney will be appointed at the time of establishing the company
to process all legal agreements, such as the Operational Agreement.
c. Head Manager: The head manager will be responsible for the overall functioning
of the company by utilizing the company’s resources. The manager will execute
his/her managerial skills to meet the company’s goals, coordinate projects, plan
new strategies whenever necessary, act as a supervisor to the staff, delegate
specific duties to staff and act as a mediator between the company and its
members (investors) [1].
d. Finance Manager: The finance manager will be responsible for all the financial
management of the company. He/she will supervise all financial records and
accounts of the company. He/She will also be responsible for planning and
executing new financial strategies for the company. The financial manager will be
responsible to the head manager. [4]
e. Customer Services Manager: The customer services manager will be
responsible for communicating with the customers, assessing their specific needs
and provide them with the appropriate services to maintain a high level of
customer satisfaction [2]. He/She will be responsible for formulating and executing
the marketing strategy of the company. They will also be responsible for keeping
records of the customer. The customer Services manager will be responsible to
the head manager.
f. General Staff: The general staff will consist of 2-3 people who will work, either
under the financial manager or the customer services manager, as assigned by the
head manager.
g. Head Senior Engineer: The head engineer will be a professional licensed
engineer with prior experience of residential house design. He/She will be
responsible for revising and approving the designs of the rainwater system
designed by junior engineers delegate specific work to the technical staff and
junior engineers. He/She will also supervise the work of all the subordinate
engineers and the technical staff. He will be responsible to the head manager.
h. Junior Engineers: The junior engineers will work on specific projects delegated
to them by the head senior engineer. They will be responsible for designing the
rainwater system for the customers and implementing the design with the aid of
the technical staff. All the engineers working for the company must be licensed in
the state of Washington. There will be approximately 2-3 junior engineers during
the first few year of the company. The number may increase later due to work
load.
i. Technical Staff: The technical staff is responsible for implementing the designs
provided by the junior engineers. They are also responsible for maintaining
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technical equipment and supplies and install, repair and replace the rainwater
system for the customers. There will be approximately 4-5 technical staff
members. Of the 4-5 technical staff members, there will be at least one member
licensed by the State of Washington, from each of the following categories:
1)Plumber, 2) Electrician and 3) Mechanic.
j. Interns: In addition to the regular staff, every year there will be a provision to
allow 1-2 student interns to assist the company and provide the students with
practical experience. The interns may either be inducted as general staff or
technical staff.
**cite in Company Employee Structure:
[0] http://www.expertlaw.com/library/business/limited_liability_company.html
[1] http://rt-ba.com/research-articles-leadership-mgrdo.html
[2]http://www.prospects.ac.uk/p/types_of_job/customer_services_manager_job_descripti
on.jsp
[3] http://www.activefilings.com/resources/content/llc_structure.htm
[4] http://www.prospects.ac.uk/p/types_of_job/financial_manager_job_description.jsp
C. Standards & Licenses:
In order to establish the company as legal and a legitimate institution, the company will
need to acquire licenses and permit from the State of Washington and/or the City of
Seattle. The following are the list of licenses and permits require for the purpose of the
rainwater company.
For establishing the Limited Liability Company the following applications must be
completed:
1. Register the LLC with the Washington Secretary of State: Registering the
LLC will requires filing a Certificate of Formation; and listing registered agents
and members. And also filing an initial annual report (must do so within 120 days
of filing your Certificate of Formation) [1]
The Certificate of Formation, given in the Revised Code of Washington (RCW),
Chapter 25.15, Article II, requires the following [4]:
a) The name of the limited liability company;
b) The address of the registered office and the name and address of the
registered agent for service of process required to be maintained by RCW
25.15.020;
9
c) The address of the principal place of business of the limited liability
company;
d) If the limited liability company is to have a specific date of dissolution, the
latest date on which the limited liability company is to dissolve;
e) If management of the limited liability company is vested in a manager or
managers, a statement to that effect;
f) Any other matters the members decide to include therein; and
g) The name and address of each person executing the certificate of
formation.
2. Obtain Federal Employee Identification Number (EIN) [5]: The EIN is a
federal identification number issued by the Internal Revenue Service to business
institutes operating in the United States.
3. Draft Operational Agreement: This agreement will be a legal document which
details all the functioning, ownership, capitalization, etc. of the company.
According to Julie Martin, the operation agreement “dictates how the company
will be run, how the members will contribute, how and when the members will
receive profits, and when and how the members will part ways, if need be.” [1]
Therefore, drafting of this document will be done with the supervision of an
attorney.
Other then the LLC registration processes there are a few other permits and licenses
required in order for the company to perform its expected operations. Following is the list
of the rest of the licenses and permits required, which can be obtained through the
Washington State Department of Licensing or are otherwise specified below.
Note: Not all the permits will be required. They are specific to certain rainwater
installations.
1. File a Master Business Application: The Master Business Application (MBA) is
a simplified application to obtain state licenses, permits and is required for first
time business registration [1.2]. Along with the MBA a City Business License
Addendum (CBLA) must be submitted. The CBLA is required to do business
within city limits of other cities in Washington [6]. Under the MBA the following
licenses and registrations will be acquired[2]:
a. Master Licenses Application Fee - $15
10
b. City Business License Addendum – $ 30 for City of Bellevue and Avg.
$75 for other cities
c. Trade Name Registration - $5 per name
d. Industrial Insurance: (no fee) – Required if employ one or more people,
you must apply for industrial insurance coverage.
e. Unemployment Insurance: (no fee) – Required if employ one or more
people, you must apply for unemployment insurance coverage.
f. Underground water tank License - $160 per tank
2. Pump Installer Combination General Contractor Registration and Electrical
Contractor License [7]: A general contractor license and registration is required
in the state of Washington for the proposed company. This is special combined
application for a general contractor license, pump installer license and electrical
contractor license. The proposed rainwater company will act as a contractor and
will be involved in installation of pumps and also electrical work will go along
with the installation of the rainwater system for the customers.
As part of this licensing application, it is mandatory for to provide a contractor
surety bond of $12,000. The bond can be obtained from a bonding company or an
insurance agency. In addition to the bond it is also mandatory to show proof of a
general liability minimum insurance coverage of either [7]:
a. $50,000 property damage policy and $200,000 public liability policy, or
b. $250,000 combined single limit policy.
3. Obtain Business License of the City of Seattle [8]: A separate business license is
required in order to engage in any business activities in the city of Seattle. The
cost for to maintain the business license is $90 per year. The permit can be
obtained from the Municipal office of the city of Seattle.
4. Commercial/Industrial Permit [11]: This permit will be required for the
establishment and use of the office space and storage facility of the proposed
company. The permit can be obtained from the Municipal office of the city of
Seattle. Costs vary.
5. Building Permit [9]: The Building permit is required for construction of a
permanent building or an additional facility. This permit will only be required for
the installation of an underground tank system. The permit can be obtained from
the Municipal office of the city of Seattle. Cost varies with project.
6. Water System Construction and Operation Approval [10]: This approval will
be required for providing water through pipes to two or more residential connects.
11
This permit can be obtained from the Washington State Department of Health.
Cost varies with project.
**cite in section: Standards & licneses
[1] http://www.avvo.com/legal-guides/ugc/forming-a-llc-in-washington-state
[1.1] https://fortress.wa.gov/dol/mls/wali/guidesheet.asp?intTranId=822898
[1.2] http://www.dol.wa.gov/business/file.html
[2] http://www.dol.wa.gov/forms/700031.pdf
[3] http://www.lni.wa.gov/forms/pdf/F500-104-000.pdf
[4] http://apps.ecy.wa.gov/permithandbook/index.asp
[5] http://www.irs.gov/businesses/small/article/0,,id=98350,00.html
[6] http://www.dol.wa.gov/forms/700032.pdf
[7] http://www.lni.wa.gov/TradesLicensing/Contractors/HowReg/Register.asp?WT.svl=3
[8] http://www.seattle.gov/rca/licenses/licmain.htm
[9] http://apps.ecy.wa.gov/permithandbook/permitdetail.asp?id=81
[10] http://apps.ecy.wa.gov/permithandbook/permitdetail.asp?id=28
V. Operational Strategy
A. Location & Facilities:
From the data obtained through research, it was concluded that the area that will best
benefit from a rainwater company will be the city of Seattle, Washington region. Annual
rainfall maps of the United States show that the north-western part of the country receives
a large amount of rainfall annually, compared to other parts of the country. And Seattle
being one of the largest cities in the region, it would seem reasonable to start the
rainwater company at such a location.
12
http://www.accuracyproject.org/w-FreezeFrost.html
The primary reason for choosing the Seattle region for the location is because it receives
a large amount of rainfall annually. This will benefit the company, as it will give it a
chance to provide people with a means of conserving rainwater harvesting.
B. Services
The main service the rainwater company will provide is the installation of a rainwater
system. Along with this, the company will also provide addition services, in the form of
consultation and other installations, to its customers in the following categories:
a. Water Treatment (optional): This part of the consultation will involve the
company engineers surveying the customer’s home to add a water treatment
system to their rainwater system or just for their home in general.
b. Waste Water Treatment (optional): This part of the consultation will involve
the company engineers and designers surveying the customer’s homes and
designing a waste treatment water system for the used water of the home.
Example: Filtering shower water to be reused. Note: This will part of the service
will not involve any form of sewage treatment system.
c. Water gardening (optional): This part of the consultation will involve the
company designers to design the rainwater system to connect with the gardening
of the customer’s home. Note: This part of the service will not include the design
or installation of the actual water garden.
d. Rainwater System Repair/Maintenance: This part of the company service will
include a technical check-up and repair of the rainwater system or parts of the
13
system. The company will provide a warranty on the rainwater system for the first
year from installation. The warranty will include the replacement and/or repair of
defective components of the system.
e. Help Customers File Stormwater Facility Credit Application: With Seattle’s
new Stormwater Credit Program, the company will help customers receive
stormwater facility credits. The credits are applied as a percentage discount off a
customer’s annual drainage bill (up to a maximum 50 percent discount), for
rainwater systems that have been properly installed and maintained [1].
**cites in Services section
[1] http://cedb.asce.org/cgi/WWWdisplay.cgi?0812091
C. Material Suppliers/Vendors
The following is a list of supplier and vendors with whom the company plans to begin a
contractual relationship, for acquiring material resources for the rainwater system(s).
More than one supplier is mentioned below as a secondary option in case the primary
vendor is not available at a particular time. The primary vendor(s) for the company
should be finalized only after the company has setup to a level where the head engineer
and head manager are available to make recommendations and decisions. It is also
recommended that a survey be conducted on the listed suppliers during this time, by the
head engineer, to insure products quality, before finalizing the primary and secondary
contractors.
Gutter System [1]:
1. Roof Drainage Components & ACC
2. Leaf Filter Gutter Protection
3. Level Line Gutters & Downspout
4. Leaffilter Northwest
5. A 1 Aluminum Continuous Gutter
Pipes [2]:
1. UNITED PIPE & SUPPLY
2. PACIFIC STATES CAST IRON PIPE
3. WESTERN UTILITIES SUPPLY CO
Water Tanks:
1. Corrosion Resistant Technologies, Inc. [3]
2. Peabody Engineering [4]
3. B2 Equipment Co, Inc. [5]
Tank level Indicator
1. Cruising Equipment Co. [6]
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2. Index Sensors & Controls Inc [7]
3. Kistler-Morse [8]
**cite for material Supplier/Vendors seection
[1] http://seattle-wa.yellowusa.com/Gutters_and_Downspouts.html
[2] http://seattle-wa.yellowusa.com/Pipe_Wholesale.html
[3] http://www.corrosionresistanttech.com/plastictanks.html
[4] http://www.etanks.com/products/default.aspx?cat=1&subcat=14
[5] http://www.b2equipment.com/
[6] http://www.kellysearch.com/us-product-55544.html
[7] http://www.indexsensors.com/
[8] http://www.kistlermorse.com/
VII. Marketing Strategy
VII. Financial Strategy
For any operation cost analysis is divided into two segments variable cost and
fixed cost.
According to street Authority definition Variable costs are corporate expenses that vary
in direct proportion to the quantity of output. Unlike fixed costs, which remain constant
regardless of output, variable costs are a direct function of production volume, rising
whenever production expands and falling whenever it contracts. Examples of common
variable costs include raw materials, packaging, and labor directly involved in a
company's manufacturing process.
The formula for calculating total variable cost is: Total Variable Cost = Total Quantity of
Output * Variable Cost Per Unit of Output.
Our team did a preliminary analysis of our design’s cost estimating the cost of our
product we used two methods
1. The 1:3:9 rule
2. Calculations based on labor
Variable costs:
15
Labor Costs:
Annual costs for labor, including environmental research, engineering, product
Development, and training support for workers, is presented in the figure below. Costs
are based on a representative mix of job descriptions for a model that consist of 15workers. Labor costs for starting the research was not included as these costs would tend
to vary on the scale of the funding that is going to be available later on.
Note: All operating cost figures in the comparative analysis are expressed in U.S.
Dollars and based on a year time frame.
Head manager
Financial manager
Customer services manager
Head engineer
Type 1 engineer
Type 2 engineer
Technical workers
Genitors
Other staff
Total
1. The 1:3:9 rule
The method for estimating the cost was to determine the cost of a material in raw form
and then use the 1-3-9 Rule. The 1-3-9 rule calls for multiplying the raw cost of a
material by 3 to obtain the manufacturing cost and multiply this value by 3 to get the
actual cost. This is just a general approximation of the cost and takes into account the
cost of rework.
Our team has developed tow main system installations system A and system B. The cost
analysis conducted took into account more than one supplier and computed the mean
value of the material costs.
System A and B material described in the technical part
Part
Name
Leaf Beater
Leaf Eater
Qty (n) Material
1
1
Material Cost ($)
M=U*W
Aluminum
Aluminum
16
Total Cost ($)
(M* N * 9)
Rain Catcher
1
Aluminum
In-ground
diverters
1
Aluminum
Post/Wall
Diverter
1
Aluminum
Storage
gallon
1
N/A
Leaf Beater
1
Aluminum
Leaf Eater
1
Aluminum
Rain Catcher
1
Aluminum
In-ground
diverters
1
Aluminum
Post/Wall
Diverter
1
Aluminum
Storage gallon
1
steel
Leaf Beater
Leaf Eater
17
Rain Catcher
In-ground Diverter (12" pipe not included)
Post/Wall Diverter
18
3,000 gallon green polyethylene
The cost would be estimated depending on the services claimed by the customer the chart
above include all the materials and costs we provide.
Fixed Costs:
Electric Power:
Annual costs reflect commercial rate schedules of respective local electric utilities.
According to Seattle Electric Light Company the annual electric power costs vary
greatly, ranging from a high in excess of $3,000 to a low of $1200. We will consider the
Mean of the two which comes out to be $2100
Facility Lease Costs
Annual costs for the leasing of Class-A research and office space in Seattle are detailed in
Figure 1.2. For purposes of comparative analysis, annual costs are keyed to effective
asking rates and reflect the leasing of a 400 square feet of total space for offices and
management team In Addition to a 500 storage facility that can be located far from cities.
19
According to The Seattle times business/technology office lease rates range as shown in
Figure 1
Office lease rates
A COMPARISON of weighted average rental rates per square foot for local office space:
Downtown Seattle: $38.47
Downtown Bellevue: $38.57
Suburban Eastside: $30.48
North End: $24.74
South End: $23.08
Fiqure 1.2
Source: Cushman & Wakefield
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