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Business Plan for Metal Recycle Management

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Biz plan fcr2

  1. 1. Page 1 of 11Metal Recycle Management, LLC Business Plan May 2012
  2. 2. Page 2 of 11Metal Recycle Management, LLC 500 N. Main Street Springfield, Missouri 65802 (417) 501-4643
  3. 3. Page 3 of 11 ContentsExecutive Summary 4General Description 5The Product 6The Marketing Plan 7The Production Line 8The Staffing Plan 9The Capital Plan 10AppendixFinancial StatementsCash Flow – Year 1 Pro FormaCash Flow – Year 2 Pro FormaCash Flow- Year 3 Pro Forma
  4. 4. Page 4 of 11 Executive SummaryMetal Recycle Management, LLC is a company in the metal and expanding to the nonmetal reclamation field thatis responding to the need to decrease the amount of landfill waste and to increase recycled raw materials. Thecompany was founded in October 12, 2010. Melvin Johnson committed his personal time and money to start therecycling company. As a metal recycler, Mr. Johnson thought that recycling metal was one dimensional and wantedto find a way to recycle other material. In 2011, that opportunity opened up to him. He was introduced to Brent Cox,a sales representative for Marck Recycling, a recycling company based in Arkansas. Brent offered him a baler and adistribution facility in Republic, MO, where the recycled material can be shipped. Since Melvin was able to nowrecycle plastic, paper, cardboard, and metal. His company, Metal Recycle Management, LLC, will be doingbusiness as one of the only recycling companies in the Midwest to recycle both metal and non-metal material.The materialThe material recycled is post-consumer plastics, cardboard, and metal that has been baled is sent to Marck Recyclingfor redistribution to End Product Manufacturers. Metal Recycle Management, LLC collects polyurethane (PET),high-density polyurethane (HDPE), low-density polyurethane (LDPE), acrylic (Plexiglas), heavy iron, scrap iron,aluminum, and copper. The material above is a very diverse type of material. Each is processed differently.The MarketManufacturers of new products are rapidly increasing their use of recycled material in many of their products. Thisis due to the increasing legislative pressures to ban plastics, metals, and cardboard from landfills; increasedconsumer awareness of recycled products, and the lower cost of recycled materials over virgin resources.ProductionRecycling of the all material will be accomplished by creating recycle bins from recycled wood. Collection of thematerial will be accomplished by scheduled routes to businesses and neighborhood collection centers. Material willbe brought to the warehouse and will be sorted, shredded, washed, and baled. In the case of heavy metals, they willbe handled as is, and turned into the local scrap yard.DistributionT he plastic, cardboard, and aluminum will be sold Marck Recycling. Reclaimed steel will be sold to local scrapyard.Financing RequiredThe company needs $65,000 to fund the start up and three-month operation of the recycling center, installation ofreclamation equipment and implementation of a manufacturing plan to produce 40,000 pounds of reclaimed materialper month.
  5. 5. Page 5 of 11 General Company DescriptionLegal form of ownership: Limited liability company (LLC)This form of company was chosen for its ability to grow and provide a platform for diversity.Metal Recycle Management, LLC is a company that will provide Commercial and Residential Recycling Servicesto the Springfield, Missouri area. Our primary operation is to: o Recycle Plastics, Cardboard, Paper, and Metals. o Provide on call pick up for Commercial clients o Educate each community about recycling Our secondary operation is to: o Remove household appliances, such as Washers, Dryers, Stoves, and Refrigerators. o Remove broken down cars, trucks, and mobile homes.FCR collects recyclables and sells each commodity to a local broker. All plastic and paper commodities are: o Shredded o Baled o Stacked for shipment o Trucked to Distribution center All Metal commodities are shipped as they are with minor baling requiredMission Statement: Metal Recycle Management, LLC will help the mid-west increase recycle effortsBusiness Philosophy: Nothing should be wasted, all garbage has value.Our motto “recycling starts with you.”Company Goals and Objectives: Primary Goals: o Create a viable material resource for the plastic, paper, and metal industry o To waste less good material in Mid-America o To educate the public on effective recycling o To be a Stable employer Secondary Goals: o Create different avenues of recycling o Create new markets for recycling:  Glass bottles  Tires  Organic waste Primary Objectives: o Support education of recycling through neighborhood drives. o Create a systematic recycling process for convenience o Create jobs in Springfield
  6. 6. Page 6 of 11 ProductsThe MaterialPlasticThe materials are reclaimed post-consumer that have been brought to our facility for processing. The first material isPET. This plastic is reclaimed from post-consumer soft drink bottle and other containers. Feed stock is oftenprocessed through a series of steps that will separate, shred, and bale.As such, this product generates a premium price among brokers. Marck Recycling is paying $400 per ton.The second material is petroleum HDPE bottle waste. This plastic is reclaimed from post-consumer oil; brake fluid,transmission fluid and antifreeze containers. Unlike with the PET feed stock, HDPE feed stock is oftencontaminated with a petroleum product of some kind. The containers will be processed through a series of steps thatwill separate, shred, wash, and bale. The average price per pound being paid by Marck Recycling is $400per tonThe third material is HDPE colored and opaque containers. The colored plastic comes from used washing detergentbottles and other household liquid containers. The opaque plastic comes from milk, juice, and tea containers. Unlikethe petro HDPE this plastic is processed like the PET plastics. The price for this plastic is $400per ton for coloredand $580 per ton for opaque.The forth material is mixed plastic wrapping. This type of plastic comes from used grocery bags, hardware, andmany other sources. It is simply placed directly in the baler from transport route. The price received from Marck willbe $200 per ton. Most of the wrap obtained is from manufacturing companies. Eventually 35% of the expectedvolume will come from residential recycling as education about recycling increases.The last plastic material is Acrylics and Sign plastic. These plastics are also considered Hard mix plastic. This typeof plastic comes to me from Pinnacle Sign Group, Payne Sign Company, and Springfield Neon. The plastic will alsobe baled. The price paid for Hard Mix is $220 per ton.MetalsMetal Recycle Management, LLC has dealt with, metals in the past. The most common were heavy steel,heavy aluminum, iron food containers, aluminum cans, insulated and non-insulated copper.The heavy steel and aluminum will be sent to the scrap yard. They can steal and aluminum will be baled. They canstill be sent to local scrap yard and began aluminum will be sent to Marck Recycling.Heavy steel sells for $290 per ton, aluminum sells for $.65 a pound or $1300 per ton. The can scrap steel sells for$210 per ton. Lastly, copper has two categories, insulated and non-insulated. Insulated sells for $2 per pound andnon-insulated copper sells for $3 per pound.
  7. 7. Page 7 of 11 Marketing PlanThe MarketManufacturers of plastics, paper and metal goods are dramatically increasing their use of reclaimed materials in theirproduction processes. They are demanding high quality reclaimed materials for their consumer products. To datemanufacturers have only been able to obtain sufficient reclaimed plastic to replace 10 to 15% of virgin resins used intheir products. They are actively encouraging local recycling efforts to increase the availability of reclaimed plastic.Manufacturers have four main interests in maximizing their use of reclaimed materials:1. Reclaimed materials offer a way to reduce their manufacturing costs.2. Consumers are beginning to show a preference for environmentally aware manufacturers.3. Many states have mandated a timetable to eliminate recyclable materials from the waste stream.4. Anticipation of a federal mandate to include recycled materials in their finished goods.Metal Recycle Management, LLC intends to continue to forge ties with businesses and communities across the state.Within two months of reclamation facility going on-line, Metal Recycle Management, LLC will launch anadvertising campaign alerting the targeted communities of the facility announcing the recycling of post-consumermaterial. This campaign will consist of:• Direct mail brochures announcing the collection of plastic in the target areas.• Newspaper articles announcing the plant opening.• Establishment of a 1-800 information line to answer plastic recycling questions.• Direct mail brochures describing the Dos and Donts of plastic recycling.• Promotional events conducted with the community business partners.The Council for Solid Waste Solutions has determined that consumer participation in a collection program quicklybecomes a matter of habit. They have found that direct mail brochures informing residents that plastics were beingcollected in their neighborhood, the kinds of plastics currently being accepted, and how to prepare plastics forcollection provide the greatest impact. In addition, bin hang tags will be attached directly to the recycling containersindicating which plastics are being collected. Metal Recycle Management, LLC will make available educationalmaterials that will be focused at the area school districts. Recycling awareness programs will be set up with the localcollege systems as well.The FacilityThe production plan calls for the construction of six 10’ x 4’ x 5’ storage bins. The facility will house a baler, theshredder, but washing station, in the scale. The facility will also have the forklift and a fork truck, both of which willbe used to handle the bales produced. It has a 10 foot bay door, which is receiving, and an 8 foot bay door used forshipment. The facility is leased through Zerr Incorporated. It is 3200 ft.² and Metal Recycle Management, LLC has asix month lease.
  8. 8. Page 8 of 11 The Production LineThis system will be composed of a sorting platform, a shredder, wash systems, and a baler. Loose feed stock will befeed into the line. Each shipment is picked up from various locations, from here, the material will be sent to thesorting platform. On the sorting platform material sorters will separate the metal from nonmetal. TheCouncil for Solid Waste Solutions has determined that one person can reliably sort plastic at a rate of 500 poundsper hour. Metal Recycle Management, LLC, will employ 1 individual to handle sorting, 1individual to handleshredding, 1 individual for baling and 1indivual to transport material. Holding bins will be used to store items thatare being prepared for the bailer.The materials will be processed as follows; 1. PET shredded and bailed for shipment 2. HDPE petro shredded, washed and bailed for shipment 3. HDPE shredded and bailed for shipment 4. Plastic wrap bailed for shipment 5. Cardboard bailed for shipment 6. Aluminum bailed for shipment 7. Iron bailed/loose local turn in. 8. Copper loose local turn in.The washing processWashing will consist of mixing 50 gallons of water and 2 cups of Dawn dishwashing liquid inside of 100 gallon tub.This system will remove any residual oil left on the plastic. The wash system is an open system and will requireflushing and therefore generate waste water. Oil will be filtered oil from the water and the filtered oil will be sent toa 50 gallon drum, where it will be recycled also. Once the product is cleaned it is sent to the baler.Shipment and storageEach material is packaged, and then stacked and await transport. Metal Recycle Management, LLC has planned toaccommodate at least seven days of trailer storage capacity for the bales. The heavy steel is sold as is, withoutbailing.The Collection of FeedstockIt is critical that Metal Recycle Management, LLC build a reliable supply network of post consumer materials. Thisis to ensure the ability to meet clients requirements as well as check competitor’s request for raw materials. Thiswill be accomplished by focusing efforts in three main areas: – Partner with or develop community drop-off recycling programs. – Partner with local business to provide recycling pickup service – Partner with local colleges to provide pickup site. – Forge ties with communities within the region to develop curbside collection programs.Materials Suppliers Lbs./MonthPayne sign Co. 4,000Pinnacle Sign Group 5,000Springfield Neon 4,000SRC remanufacture 6,000Auto Repair shops 6,000Andy’s Custard 3,000McAlister’s 3,000Total 33,000
  9. 9. Page 9 of 11 The Staffing PlanThe facility will be staffed five days a week, one shift per day. During the facility start-up phase staffing will befamiliarized with the equipment. Each employee will be used interchangeably on all equipment.The following table outlines the fully staffed organization and projected monthly salaries.Position Staffing Level Monthly SalaryPlant Administrator 1 $1,225PT /Material Sorter 1 $800PT/ Baler 1 $800PT /Washer 1 $800PT/Shredder 1 $800Total $4,425The ManagementResumes in the appendix outline the details of Metal Recycle Management, LLC founding manager and accountingofficer. Melvin Johnson has fourteen years of experience in managing military medical projects. Melvin hasconsistently delivered each project on time. Melvin developed Metal Recycle Management, LLC business plan andwill be responsible for managing the company to the plan. He will also be responsible for the implementation of thecollection plan. Other responsibilities will include managing the logistics of the facility to ensure timely pickup anddelivery to clients as well as maintaining an adequate supply of feedstock on hand. Metal Recycle Management,LLC recognizes that the companys success depends on the talents Nicole Johnson, the chief accounting officer.Nicole has fourteen years of accounting experience and has worked in a variety of accounting positions. Sinceaccounting in recycling is much different than other businesses, she has established an appropriate accountingsystem and procedures to fit the needs of this company.
  10. 10. Page 10 of 11 The Capital PlanMetal Recycle Management, LLC requires both capital for asset acquisition and operating capital to fund operationsfor the first 3 months. Initial capital will be used to for equipment purchase, employee salaries , the bins constructed,the processing line and various office assets. The operating capital is to be guaranteed by the SBA. The capital loanis estimated to be paid off over a 10 year term. The company will have a positive cash flow by month 3. Once intothe second year, sufficient cash flow will be available to repay the operating capital note on an accelerated scheduleas well as fund expansion on a cash basis.The Capital Plan Equipment Shredder $10,000 Building Deposit $500 Washer (custom built) $1700 1 Pickup Truck (used) $5,000 2 Flatbed Trailers (used) $1,400 Wooden Containers $1,625 Fork Lift (used) $10,800 Hardware $600 Scale $1,500 1 Computer $800 2 Cellular Phones $200 1 Desks & Chairs $400 Total $33,125 Business Expenses rent $3000 auto/biz insurance $2724 Marketing $1,680 Working Capital $22,000 Total Business Expenses $29,404 Total Start up $65,000
  11. 11. Page 11 of 11Appendix