Cleaning Products Business Plan

The marketplace for janitorial products and services is changing, in both nature and scope. Consumers are increasingly conscious of the environmental impact of cleaners as the market expands.

ChemSafe offers an innovative line of biodegradable, environmentally safe citrus cleaners to janitorial services, retail outlets, and consumers.

The product line includes automotive cleaners, industrial cleaners, degreasers, hand cleaners, odor control, tar remover, concrete cleaners, and vehicle wash and wax products.

ChemSafe products will be used by car washes, churches, food service outlets, hospitals, manufacturing companies, and schools. Retail outlets will also carry a range of ChemSafe products, and customers can purchase any product from the company’s secure website.

The safety of cleaning products is a major concern today. Consumers want to know if the products they use harm the environment. ChemSafe is dedicated to providing safe products that protect the environment.

Cleaning Products Business Plan Example

1.1 Objectives

  • Establish ChemSafe products as the regional leader in selling biodegradable, environmentally safe cleaners.
  • Increase the number of retail outlets carrying ChemSafe products by 20% in the next two years.
  • Build a solid working relationship with all the region’s janitorial companies.

1.2 Mission

ChemSafe’s mission is to introduce innovative cleanser products to its target customer base. Charles Marshall, owner of ChemSafe, will utilize his janitorial background, experience in the cleanser products industry, and contacts with the region’s wholesale distributors and janitorial companies to create products that target consumers want.

1.3 Keys to Success

The keys to success in ChemSafe’s business are:

  1. Offering innovative janitorial products, essential for maintaining the niche market sectors mentioned in the mission statement.
  2. Reliable and timely deliveries. ChemSafe must fulfill its delivery promises.
  3. A reliable administration that is ready to serve customers, prepare accurate billing, follow-up on orders and other documentation, and maintain a close watch on expenses and collection of accounts receivable.

Company Summary

ChemSafe produces an innovative line of biodegradable, environmentally safe citrus cleaners.

2.1 Company Ownership

ChemSafe is owned by Charles Marshall, who has ten years of janitorial experience and seven years of experience in manufacturing cleaners.

2.2 Start-up Summary

The start-up cost of ChemSafe will primarily consist of equipment and inventory. Charles Marshall will invest $81,500, along with a silent partner contributing the same amount and securing a $100,000 loan.

Cleaning Products Business Plan Example

Start-up

Requirements

Start-up Expenses

Legal: $1,000

Stationery etc.: $800

Brochures: $2,000

Insurance: $1,000

Rent: $3,000

Expensed Equipment: $140,000

Truck: $20,000

Total Start-up Expenses: $167,800

Start-up Assets

Cash Required: $40,200

Start-up Inventory: $5,000

Other Current Assets: $0

Long-term Assets: $50,000

Total Assets: $95,200

Total Requirements: $263,000

Start-up Funding

Start-up Expenses to Fund: $167,800

Start-up Assets to Fund: $95,200

Total Funding Required: $263,000

Assets

Non-cash Assets from Start-up: $55,000

Cash Requirements from Start-up: $40,200

Additional Cash Raised: $0

Cash Balance on Starting Date: $40,200

Total Assets: $95,200

Liabilities and Capital

Liabilities

Current Borrowing: $0

Long-term Liabilities: $100,000

Accounts Payable (Outstanding Bills): $0

Other Current Liabilities (interest-free): $0

Total Liabilities: $100,000

Capital

Planned Investment

Charles Marshall: $81,500

Silent Partner: $81,500

Additional Investment Requirement: $0

Total Planned Investment: $163,000

Loss at Start-up (Start-up Expenses): ($167,800)

Total Capital: ($4,800)

Total Capital and Liabilities: $95,200

Total Funding: $263,000

Products

The ChemSafe product line includes:

– Automotive cleaners

– Industrial cleaners

– Degreasers

– Hand cleaners

– Odor control

– Tar remover

– Concrete cleaners

– Vehicle wash and wax products

ChemSafe products will be used by car washes, churches, food service outlets, hospitals, manufacturing companies, and schools. A number of ChemSafe products will be available from retail outlets and any product can be purchased from the company’s secure website.

Market Analysis Summary

Consumers are demanding environmentally safe cleaners in public spaces. Additionally, janitorial firms are finding that biodegradable, environmentally safe cleaners are a strong selling point when competing for contracts.

Last year, 1.5 billion dollars was spent on commercial cleaners. Of those sales, biodegradable, environmentally safe cleaners represented 15% of total sales. This is a 20% increase over sales the previous year.

4.1 Market Segmentation

ChemSafe will focus on three customer groups:

– Wholesale Distributors: This group is the critical supplier to retail outlets and pivotal to the success of ChemSafe cleanser products.

– Janitorial Professionals: An important key to the janitorial market is the ability to add value to cleaners through innovative products or techniques. We believe that ChemSafe products are an invaluable tool to janitorial professionals.

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– Consumers: Concern for the environment has created a group of consumers who will only use biodegradable, environmentally safe cleaners in their homes.

Cleaning Products Business Plan Example

Market Analysis

Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR

Wholesale Distributors 4% 20,000 20,800 21,632 22,497 23,397 4.00%

Janitorial Companies 6% 35,000 37,100 39,326 41,686 44,187 6.00%

Consumers 10% 100,000 110,000 121,000 133,100 146,410 10.00%

Total 8.40% 155,000 167,900 181,958 197,283 213,994 8.40%

Strategy and Implementation Summary

ChemSafe products will focus on becoming the leading provider of biodegradable, environmentally safe, citrus cleaners.

5.1 Competitive Edge

Charles Marshall is the competitive edge of ChemSafe. Charles has worked for both Acme Janitorial Products and Wilson Cleaning Services over the past fourteen years. In his last position with Acme Janitorial Products, Charles sold cleaning products to numerous markets on the West Coast, generating annual sales in excess of $4 million. His strength lies in customer relations and expanding product range for wholesale distributors in his sales region.

Before joining Acme Janitorial Products, Charles was a supervisor for Wilson Cleaning Services for six years. Wilson Cleaning Services is the largest janitorial firm in the greater Lane County area, with annual sales of over $4 million.

During his years with both Acme Janitorial Products and Wilson Cleaning Services, Charles has made valuable contacts with wholesale distributors, janitorial professionals, and commercial retail outlets. This gives ChemSafe products a competitive edge in introducing its new products to target customers.

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5.2 Sales Strategy

ChemSafe products are safe yet strong cleaning products. Our target customers understand the importance of using environmentally-friendly products that do not harm the environment. Furthermore, ChemSafe products pose no health risks.

ChemSafe products will employ three sales approaches:

For Wholesale Distributors: We will offer distributors a 20% discount on wholesale purchases for the first three months. Charles Marshall will market ChemSafe products to distributors, emphasizing the advantages for institutions such as schools and hospitals.

For Janitorial Professionals: We will offer janitorial professionals the wholesale price for ChemSafe products for the first six months. Charles Marshall will market ChemSafe products to the janitorial firms, highlighting the cost-effectiveness and safety of our products compared to their current cleaning materials.

For Consumers: We will offer consumers prices that are only 5% above wholesale for ChemSafe products. ChemSafe will be marketed to consumers through ads in natural living magazines, such as Natural Life magazine and Conscious Living magazine.

5.2.1 Sales Forecast

During the first month, there will be no sales as the company establishes its operations. We anticipate rapid sales growth in the second and third months of operation.

The following is the sales forecast for three years.

Cleaning Products Business Plan Example

Cleaning Products Business Plan Example

Sales Forecast:

Sales Forecast
Year 1 Year 2 Year 3
$188,500 $210,000 $234,000
$25,000 $32,000 $40,000
$149,000 $180,000 $230,000
$362,500 $422,000 $504,000
Direct Cost of Sales
Year 1 Year 2 Year 3
$46,800 $55,000 $60,000
$5,000 $6,000 $7,000
$32,800 $43,000 $52,000
$84,600 $104,000 $119,000

Management Summary:

Charles Marshall will be responsible for sales and marketing, while ChemSafe will have a Production Manager in charge of daily manufacturing operations.

6.1 Personnel Plan:

The personnel of ChemSafe are as follows:

  • Owner/sales and marketing manager;
  • Production manager;
  • Production staff (4);
  • Office manager/Web administrator;
Personnel Plan
Year 1 Year 2 Year 3
$33,600 $36,000 $39,000
$30,000 $33,000 $35,000
$60,000 $65,000 $70,000
$24,000 $28,000 $30,000
6 6 6
$147,600 $162,000 $174,000

Financial Plan:

The financial plan for ChemSafe includes the following:

7.1 Break-even Analysis:

The monthly break-even point is approximately $26,200.

Cleaning Products Business Plan Example

Break-even Analysis

Monthly Revenue Break-even: $26,291

Assumptions:

1. Average Percent Variable Cost: 23%

2. Estimated Monthly Fixed Cost: $20,155

7.2 Projected Profit and Loss

The following table and charts will highlight projected profit and loss for the next three years.

Cleaning Products Business Plan Example

Cleaning Products Business Plan Example

Pro Forma Profit and Loss

Sales

Year 1: $362,500

Year 2: $422,000

Year 3: $504,000

Direct Cost of Sales

Year 1: $84,600

Year 2: $104,000

Year 3: $119,000

Other Production Expenses

Year 1: $0

Year 2: $0

Year 3: $0

Total Cost of Sales

Year 1: $84,600

Year 2: $104,000

Year 3: $119,000

Gross Margin

Year 1: $277,900

Year 2: $318,000

Year 3: $385,000

Gross Margin %

Year 1: 76.66%

Year 2: 75.36%

Year 3: 76.39%

Expenses

Payroll

Year 1: $147,600

Year 2: $162,000

Year 3: $174,000

Sales and Marketing and Other Expenses

Year 1: $18,000

Year 2: $36,000

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Year 3: $46,000

Depreciation

Year 1: $2,880

Year 2: $2,880

Year 3: $2,880

Leased Equipment

Year 1: $0

Year 2: $0

Year 3: $0

Utilities

Year 1: $6,000

Year 2: $6,000

Year 3: $6,000

Insurance

Year 1: $6,000

Year 2: $6,000

Year 3: $6,000

Rent

Year 1: $36,000

Year 2: $36,000

Year 3: $36,000

Payroll Taxes

Year 1: $25,380

Year 2: $27,000

Year 3: $28,800

Other

Year 1: $0

Year 2: $0

Year 3: $0

Total Operating Expenses

Year 1: $241,860

Year 2: $275,880

Year 3: $299,680

Profit Before Interest and Taxes

Year 1: $36,040

Year 2: $42,120

Year 3: $85,320

EBITDA

Year 1: $38,920

Year 2: $45,000

Year 3: $88,200

Interest Expense

Year 1: $9,589

Year 2: $8,176

Year 3: $6,535

Taxes Incurred

Year 1: $7,935

Year 2: $10,183

Year 3: $23,636

Net Profit

Year 1: $18,516

Year 2: $23,761

Year 3: $55,150

Net Profit/Sales

Year 1: 5.11%

Year 2: 5.63%

Year 3: 10.94%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Cleaning Products Business Plan Example

Pro Forma Cash Flow

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $181,250 $211,000 $252,000
Cash from Receivables $140,433 $204,300 $242,767
Subtotal Cash from Operations $321,683 $415,300 $494,767
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $6,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $327,683 $415,300 $494,767
Expenditures
Expenditures from Operations
Cash Spending $147,600 $162,000 $174,000
Bill Payments $178,786 $238,011 $270,914
Subtotal Spent on Operations $326,386 $400,011 $444,914
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $1,500 $3,000 $1,500
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $14,160 $14,160 $14,160
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $342,046 $417,171 $460,574
Net Cash Flow ($14,363) ($1,871) $34,193
Cash Balance $25,837 $23,966 $58,159

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Pro Forma Balance Sheet

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $25,837 $23,966 $58,159
Accounts Receivable $40,817 $47,516 $56,749
Inventory $11,660 $14,334 $16,401
Other Current Assets $0 $0 $0
Total Current Assets $78,314 $85,816 $131,309
Long-term Assets
Long-term Assets $50,000 $50,000 $50,000
Accumulated Depreciation $2,880 $5,760 $8,640
Total Long-term Assets $47,120 $44,240 $41,360
Total Assets $125,434 $130,056 $172,669
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $21,378 $19,400 $22,524
Current Borrowing $4,500 $1,500 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,878 $20,900 $22,524
Long-term Liabilities $85,840 $71,680 $57,520
Total Liabilities $111,718 $92,580 $80,044
Paid-in Capital $163,000 $163,000 $163,000
Retained Earnings ($167,800) ($149,284) ($125,524)
Earnings $18,516 $23,761 $55,150
Total Capital $13,716 $37,476 $92,626
Total Liabilities and Capital $125,434 $130,056 $172,669
Net Worth $13,716 $37,476 $92,626

7.5 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 2842, Polishes and Sanitation Goods, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 16.41% 19.43% 1.10%
Percent of Total Assets
Accounts Receivable 32.54% 36.54% 32.87% 25.90%
Inventory 9.30% 11.02% 9.50% 17.80%
Other Current Assets 0.00% 0.00% 0.00% 39.70%
Total Current Assets 62.43% 65.98% 76.05% 83.40%
Long-term Assets 37.57% 34.02% 23.95% 16.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities
Accounts Payable 21.38% 19.40% 22.52% 29.10%
Current Borrowing 4.50% 1.50% 0.00% 23.60%
Other Current Liabilities 0.00% 0.00% 0.00% 0.00%
Subtotal Current Liabilities 25.88% 20.90% 22.52% 52.70%
Long-term Liabilities 85.84% 71.68% 57.52% 23.60%
Total Liabilities 89.07% 71.18% 46.36% 52.70%
Net Worth 10.93% 28.82% 53.64% 47.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 76.66% 75.36% 76.39% 41.60%
Selling, General & Administrative Expenses 75.66% 72.66% 67.94% 23.00%
Advertising Expenses 3.31% 7.11% 7.94% 2.80%
Profit Before Interest and Taxes 9.94% 9.98% 16.93% 5.00%
Main Ratios
Current 3.03 4.11 5.83 2.51
Quick 2.58 3.42 5.10 1.51
Total Debt to Total Assets 89.07% 71.18% 46.36% 52.70%
Pre-tax Return on Net Worth 192.85% 90.57% 85.06% 7.20%
Pre-tax Return on Assets 21.09% 26.10% 45.63% 15.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 5.11% 5.63% 10.94% n.a
Return on Equity 135.00% 63.40% 59.54% n.a
Activity Ratios
Accounts Receivable Turnover 4.44 4.44 4.44 n.a
Collection Days 56 76 76 n.a
Inventory Turnover 10.35 8.00 7.74 n.a
Accounts Payable Turnover 9.

Personnel Plan

Charles Marshall

0% $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800

Production Manager

0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Production Staff (3)

0% $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Office Manager/Web Administrator

0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Total People

6 6 6 6 6 6 6 6 6 6 6 6 6

Total Payroll

$12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300

General Assumptions

Plan Month

1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate

30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other

0 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss

Sales

$0 $21,000 $21,000 $26,000 $31,000 $32,500 $35,000 $36,000 $38,000 $39,000 $41,000 $42,000

Direct Cost of Sales

$0 $4,200 $4,200 $5,000 $5,900 $7,400 $8,400 $8,600 $9,600 $10,100 $10,600 $10,600

Other Production Expenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales

$0 $4,200 $4,200 $5,000 $5,900 $7,400 $8,400 $8,600 $9,600 $10,100 $10,600 $10,600

Gross Margin

$0 $16,800 $16,800 $21,000 $25,100 $25,100 $26,600 $27,400 $28,400 $28,900 $30,400 $31,400

Gross Margin %

0.00% 80.00% 80.00% 80.77% 80.97% 77.23% 76.00% 76.11% 74.74% 74.10% 74.15% 74.76%

Expenses

Payroll

$12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300

Sales and Marketing and Other Expenses

$1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $

Pro Forma Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Received

Cash from Operations

Cash Sales $0 $10,500 $10,500 $13,000 $15,500 $16,250 $17,500 $18,000 $19,000 $19,500 $20,500 $21,000

Cash from Receivables $0 $0 $350 $10,500 $10,583 $13,083 $15,525 $16,292 $17,517 $18,033 $19,017 $19,533

Subtotal Cash from Operations $0 $10,500 $10,850 $23,500 $26,083 $29,333 $33,025 $34,292 $36,517 $37,533 $39,517 $40,533

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $6,000 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $0 $10,500 $10,850 $23,500 $32,083 $29,333 $33,025 $34,292 $36,517 $37,533 $39,517 $40,533

Expenditures

Expenditures

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300 $12,300

Bill Payments $71 $2,440 $11,011 $11,469 $14,380 $16,644 $18,755 $19,602 $19,241 $21,344 $21,464 $22,365

Subtotal Spent on Operations $12,371 $14,740 $23,311 $23,769 $26,680 $28,944 $31,055 $31,902 $31,541 $33,644 $33,764 $34,665

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $250 $250 $250

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