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.
Contents
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:
- Offering innovative janitorial products, essential for maintaining the niche market sectors mentioned in the mission statement.
- Reliable and timely deliveries. ChemSafe must fulfill its delivery promises.
- 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.
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.
– Consumers: Concern for the environment has created a group of consumers who will only use biodegradable, environmentally safe cleaners in their homes.
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.
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 | |
The financial plan for ChemSafe includes the following:
7.1 Break-even Analysis:
The monthly break-even point is approximately $26,200.
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.
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
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.
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 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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