Water Purification Business Plan
H20 Industries, Inc. (H20 Industries) offers ion exchange portable tanks for purifying water for industrial use. H20 Industries will meet the market demand for segregated resin regeneration on a portable basis. The company’s main marketing focus will be on providing segregated regeneration services to customers with high-quality DI water treatment facilities. The facility, located in Newark, California, is currently in limited production and will begin full production in September. Sales will gradually increase, reaching near capacity by the end of the first year and continuing to grow in the second and third years.
1.1 Objectives
The primary objectives are:
1. To segment the market for portable regeneration service by emphasizing H20 Industries’ capability in providing segregated regeneration. The goal is to reach monthly sales of 1,710 cu ft of segregated resin by the end of the first year.
2. To establish a network of 15 water service companies who will represent H20 Industries in areas outside direct sales.
3. To set up a bulk regeneration facility with a daily capacity of 40 cu ft and sell its entire capacity in the portable exchange service market through direct sales and the dealership network.
1.2 Mission
H20 Industries aims to serve niche markets in specialized industry sectors that are not adequately served by larger water suppliers. An example of this is the niche product of segregating a customer’s resin and regenerating it in portable tanks for hospital dialysis units. This product emphasizes quality and service for customers willing to pay a premium price.
1.3 Keys to Success
H20 Industries’s primary keys to success:
- Quality control. Customers in the high purity water industry have a low tolerance for flaws.
- Fast response. Cost of water is not a major factor for H20 Industries’s customers, but poor servicing could result in expensive shut-downs.
- High-profile allegiances. Success in developing a network of service-oriented water companies is crucial for overall company success.
Company Summary
H20 Industries acquired a customer base and assets from a predecessor company. By relocating and improving productivity, H20 Industries aims to enter the portable DI exchange market by October 1999.
2.1 Company Ownership
H20 Industries was established in October 1998 through the purchase of Commercial Waters Systems, Inc. (CWSI) assets. CWSI was an under-capitalized DI exchange tank service provider. David R. Smith, the vice president of sales and applications at PROSYS, a water treatment equipment manufacturer, owns 360 shares of H20 Industries. John Jones, regional sales manager for DUFF, owns 560 shares. The remaining 200 shares are held by the seller’s daughter, but will soon be transferred to new owners.
Additional investors are interested in investing, which would bring in administrative expertise and increase equity.
2.2 Start-up Summary
H20 Industries bought out a former operating company and continues to service its customers. However, due to the lack of reliable financial figures and the move to new facilities, this plan is considered a start-up. There was also a dispute over the agreed sales price due to misrepresentations by the seller. It is expected to be resolved with a reduced payment.
The chart and table below summarize the start-up requirements for H20 Industries.
Start-up Requirements
– Legal: $10,000
– Stationery: $850
– Brochures: $6,500
– Consultants: $5,000
– Insurance: $0
– Rent: $0
– Research and Development: $0
– Expensed Equipment: $0
– Other: $0
– Total Start-up Expenses: $22,350
Start-up Assets
– Cash Required: $124,223
– Start-up Inventory: $10,000
– Other Current Assets: $90,000
– Long-term Assets: $220,000
– Total Assets: $444,223
Total Requirements: $466,573
Start-up Funding
– Start-up Expenses to Fund: $22,350
– Start-up Assets to Fund: $444,223
– Total Funding Required: $466,573
Assets
– Non-cash Assets from Start-up: $320,000
– Cash Requirements from Start-up: $124,223
– Additional Cash Raised: $0
– Cash Balance on Starting Date: $124,223
– Total Assets: $444,223
Liabilities and Capital
– Liabilities
– Current Borrowing: $21,354
– Long-term Liabilities: $180,000
– Accounts Payable (Outstanding Bills): $61,409
– Other Current Liabilities (interest-free): $16,810
– Total Liabilities: $279,573
– Capital
– Planned Investment
– Jim Hunt: $56,000
– Mike Pacek: $36,000
– New Investors: $75,000
– Other: $20,000
– Additional Investment Requirement: $0
– Total Planned Investment: $187,000
– Loss at Start-up (Start-up Expenses): ($22,350)
– Total Capital: $164,650
– Total Capital and Liabilities: $444,223
– Total Funding: $466,573
Company Locations and Facilities
– The facilities are located in a rented building on an industrial estate in Newark, California.
Products and Services
– H20 Industries specializes in the water purification business, specifically "Service deionization" with a focus on "segregated regeneration." They offer three tank sizes (3.6, 2.5, and 1.4 cu ft) and various types of regeneration, including mixed bed, cation, anion, and carbon.
Market Analysis Summary
– H20 Industries targets multiple industries with varying purity needs. The highest demand comes from the medical industry (dialysis, labs, and pharmaceutical) followed by the electronics and machine tool industries.
Market Segmentation
– The market for H20 Industries includes hospitals, clinics, labs, pharmaceutical manufacturers, semiconductor manufacturers, electronics manufacturers, machine tool manufacturers, and various other industries such as car washes, food and beverage, cosmetics, electroplating, ceramics, textile, railroad, and more.
In conclusion, H20 Industries specializes in water purification with a focus on service deionization and segregated regeneration. They target industries with varying purity needs, particularly the medical, electronics, and machine tool industries.
Market Analysis:
Customers who do not rent tanks will either own their own tanks or buy tanks from H20 Industries. Tank sales are estimated to be five percent of monthly rental tank sales, with a sales price of $1,200 and a cost of $450.
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Unit Sales | |||
| Segregated Anion Service 10 cu ft | 445 | 728 | 764 |
| Segregated Cation Service 10 cu ft | 445 | 728 | 764 |
| Segregated Mixed Bed 10 cu ft | 445 | 728 | 764 |
| Bulk Regen 10 cu ft (MB) | 367 | 598 | 687 |
| Bulk Regen 10 cu ft (Cat) | 183 | 299 | 344 |
| Bulk Regen 10 cu ft (An) | 183 | 299 | 344 |
| Tank Rentals (each 3.6 cu ft): | 1,436 | 2,347 | 2,546 |
| Tank Sales: | 67 | 117 | 127 |
| Other | 0 | 0 | 0 |
| Total Unit Sales | 3,572 | 5,844 | 6,340 |
| Unit Prices | |||
| Segregated Anion Service 10 cu ft | $476.00 | $476.00 | $476.00 |
| Segregated Cation Service 10 cu ft | $476.00 | $476.00 | $476.00 |
| Segregated Mixed Bed 10 cu ft | $526.00 | $526.00 | $526.00 |
| Bulk Regen 10 cu ft (MB) | $359.00 | $359.00 | $359.00 |
| Bulk Regen 10 cu ft (Cat) | $267.50 | $267.50 | $267.50 |
| Bulk Regen 10 cu ft (An) | $267.50 | $267.50 | $267.50 |
| Tank Rentals (each 3.6 cu ft): | $40.00 | $40.00 | $40.00 |
| Tank Sales: | $1,200.00 | $1,200.00 | $1,200.00 |
| Other | $0.00 | $0.00 | $0.00 |
| Sales | |||
| Segregated Anion Service 10 cu ft | $211,820 | $346,528 | $363,664 |
| Segregated Cation Service 10 cu ft | $211,820 | $346,528 | $363,664 |
| Segregated Mixed Bed 10 cu ft | $234,070 | $382,928 | $401,864 |
| Bulk Regen 10 cu ft (MB) | $131,753 | $214,682 | $246,633 |
| Bulk Regen 10 cu ft (Cat) | $49,080 | $79,983 | $92,020 |
| Bulk Regen 10 cu ft (An) | $49,080 | $79,983 | $92,020 |
| Tank Rentals (each 3.6 cu ft): | $57,440 | $93,880 | $101,840 |
| Tank Sales: | $80,400 | $140,400 | $152,400 |
| Other | $0 | $0 | $0 |
| Total Sales | $1,025,462 | $1,684,911 | $1,814,105 |
5.5 Strategic Alliances
The relationship between dealerships and H20 Industries is a strategic alliance. These water service companies have an extensive customer base. Most customers have needs such as water softening, filtration, reverse osmosis maintenance, and swimming pool maintenance. However, many dealership customers also have H20 Industries needs. Currently, these water service companies must direct their customers to US Filter or supply the customer through US Filter. Forming a relationship between H20 Industries and these dealerships would result in substantial sales increases for H20 Industries and increased prestige and profits for the dealerships.
Management Summary
The management of H20 Industries consists of individual shareholders with extensive expertise in the water treatment industry, as well as commercial and financial backgrounds.
6.1 Management Team
The management team is qualified to implement this business plan. The founders, John Jones and Dave Smith, have been active in the water treatment industry for years. John’s experience working with dealers in application engineering and sales has prepared him well to present the H20 Industries dealership to water service companies. His years of calling on dealerships in all aspects of the water industry have provided valuable insight into marketing and business practices.
Dave has been involved in the manufacturing sector of the water industry and is well respected and connected there. His training and certification as a Professional Engineer give him an advantage when consulting with customers and prospective customers.
The planned general manager has experience in finance and manufacturing. He is a former vice president of Chase Manhattan Bank, team leader of a development bank (Saudi Industrial Development Fund), and founder/general manager of a factory that was successfully operated for 10 years before being bought out in 1989.
The production manager is a chemical engineer and has successfully managed the production activity in the factory despite the challenges presented by the incomplete production line.
6.2 Personnel Plan
Regeneration Personnel:
A production manager, skilled chemical engineer, will supervise two assistants. The production manager will label the tanks and supervise the regeneration cycle. The assistants will move tanks, connect hoses, perform chemical mix and draw, and add salt to the brine tank. One assistant is already in place, and a second assistant is needed.
An engineer/fitter is needed for equipment maintenance and installations.
Sales and Marketing Personnel:
The owners will continue to maintain their present positions and provide knowledge of customers. The sales and marketing manager will call and visit potential H20 Industries users and will be paid a base salary plus commissions.
General and Administrative Personnel:
An office manager will handle phones, primary customer contact, and mail. A part-time assistant will be added within six months for bookkeeping and management.
Delivery Personnel:
One driver is currently in place, and a second driver will be added after approximately four months.
Personnel Plan
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Production Personnel | |||
| Production Manager | $41,604 | $41,600 | $41,600 |
| Assistant | $20,796 | $20,800 | $20,800 |
| Assistant | $20,796 | $20,800 | $20,800 |
| Engineer/fitter | $31,200 | $31,200 | $31,200 |
| Drivers | $54,198 | $58,400 | $58,400 |
| Other | $0 | $0 | $0 |
| Subtotal | $168,594 | $172,800 | $172,800 |
| Sales and Marketing Personnel | |||
| Sales Manager (base) | $24,000 | $24,000 | $24,000 |
| Sales Manager (commissions) | $38,660 | $51,000 | $60,000 |
| Name or title | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Subtotal | $62,660 | $75,000 | $84,000 |
| General and Administrative Personnel | |||
| Office Manager | $39,996 | $40,000 | $40,000 |
| Bookkeeper (part-time) | $9,100 | $15,600 | $15,600 |
| Name or title | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Subtotal | $49,096 | $55,600 | $55,600 |
| Other Personnel | |||
| Name or Title | $0 | $0 | $0 |
| Name or title | $0 | $0 | $0 |
| Name or title | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Subtotal | $0 | $0 | $0 |
| Total People | 9 | 9 | 9 |
| Total Payroll | $280,350 | $303,400 | $312,400 |
Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
My career is built on a foundation of helping individuals and businesses thrive financially in an ever-changing economic landscape. At phonenumber247.com, my aim is to demystify the complex world of finance, providing clear, actionable advice that can help you navigate your financial journey with confidence. Whether it’s personal finance management, investment strategies, or understanding the nuances of market dynamics, I’m here to share insights and tools that can propel you towards your financial goals.
Welcome to my digital space, where every piece of advice is a step closer to financial clarity and success!