Septic Tank Contractor Business Plan
William’s Environmental is an underground tank removal and installation business that offers customers a complete waste control system. Jean William is starting William’s Environmental in response to the housing growth in Webster County over the past three years. Webster County has approved a rebate program for replacing older septic tanks.
William’s Environmental has over twenty-five years of experience in waste management. Jean served as the general contractor for Hayes Honeybucket Services for ten years before starting William’s Environmental. The rest of the staff have over fifteen years of experience serving customers in Webster County. Jean has extensive contacts with property managers, home builders, and homeowners.
The county projects 2,000 more housing starts this year. Currently, there are 80,000 homes in the county, outside the city of Monroe. 50% of these homes have underground tanks to manage waste.
Webster County approved a program to assist owners of underground septic tanks that are 15 years old or older. The program will pay up to 40% of the replacement cost starting in May. The county estimates that 40% of these older homes have underground tanks that must be replaced to limit groundwater contamination. This represents over 20,000 homes needing new underground tanks.
William’s Environmental plans to target the homes in this program. A salesperson has been hired to pursue this opportunity full-time. William’s Environmental will handle all the paperwork to get the home approved for assistance, which is crucial for many of the elderly homeowners.
Jean will invest personal savings in William’s Environmental, and a silent partner will match her investment. Additionally, she will obtain a long-term loan.
1.1 Objectives:
– William’s Environmental has three objectives:
– Gain a significant market share of septic tank replacement orders.
– Establish a strong relationship with area home builders.
– Increase sales steadily for the next three years.
1.2 Mission:
– The mission of William’s Environmental is to exceed customer expectations in service and product. When customers call with emergencies or requests, they will receive fast help.
– William’s Environmental is an underground septic tank installation, service, and removal business that offers customers a complete waste control system from start to finish.
– They have over 25 years of experience in waste management.
– Jean William has assembled a team of top professionals in septic tank installation and replacement.
– William’s Environmental will hire a salesperson to target older homes eligible for a 40% rebate on septic tank replacement offered by the county.
– The facility/storage yard is located at 3456 Main St., Munroe, New York, spanning 10,000 square feet at the junction of Highways 55 and 102.
2.1 Company Ownership:
– William’s Environmental will be incorporated in New York as a C Corporation.
– Jean William owns 70% of the company shares, with the remaining 30% owned by a silent partner.
2.2 Start-up Summary:
– The start-up plan for William’s Environmental includes purchasing specialized hand tools as part of expensed equipment.
– Excavating equipment (e.g., backhoe, trailers, dump truck, powered hoist) will be leased initially, with the option to buy, until the business is profitably established.
Start-up
Requirements
Start-up Expenses
Legal – $1,000
Stationery etc. – $200
Brochures – $1,000
Office Setup – $10,000
Insurance – $3,000
Rent – $2,000
2 Vans-used – $22,000
Installation Inventory – $10,000
Tank Inventory – $30,000
Expensed Equipment – $20,000
Other – $0
Total Start-up Expenses – $99,200
Start-up Assets
Cash Required – $80,800
Start-up Inventory – $0
Other Current Assets – $0
Long-term Assets – $30,000
Total Assets – $110,800
Total Requirements – $210,000
Start-up Funding
Start-up Expenses to Fund – $99,200
Start-up Assets to Fund – $110,800
Total Funding Required – $210,000
Assets
Non-cash Assets from Start-up – $30,000
Cash Requirements from Start-up – $80,800
Additional Cash Raised – $0
Cash Balance on Starting Date – $80,800
Total Assets – $110,800
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
Jean William – $50,000
Investor 2 – $60,000
Other – $0
Additional Investment Requirement – $0
Total Planned Investment – $110,000
Loss at Start-up (Start-up Expenses) – ($99,200)
Total Capital – $10,800
Total Capital and Liabilities – $110,800
Total Funding – $210,000
Services
William’s Environmental installs, removes, and maintains underground waste storage tanks in the Webster County area. William’s Environmental offers a 24-hour troubleshooting service that provides customers with around-the-clock coverage.
Market Analysis Summary
As the city of Monroe expands its borders, more city dwellers are choosing to live outside of Monroe in surrounding Webster County. The county’s population has grown by 10% over the past three years and is projected to have 2,000 more rural housing starts for 2002. Most of these new homes will have independent waste management systems. The area’s prominent builders, who have been in the county for over twenty years, have an excellent reputation with these builders. The new housing is clustered near the towns within 25 miles of Monroe (Bradford, Lincoln, Tracy, and Madison).
Currently, there are 80,000 homes in the county, outside the city of Monroe. Of these homes, 50% have underground tanks to manage waste. Importantly, 40% of these homes are more than 20 years old. The county estimates that 60% of these older homes have underground tanks that must be replaced to limit the threat of groundwater contamination. This represents over 20,000 homes that need new underground tanks. The majority of these homes are located in and around the villages of Riley, Jacksonville, Oakland, and Reed.
Market Segmentation
William’s Environmental will focus on the following target customers:
– Owners of older homes (20 years old or older)
– New home builders.
Market Analysis:
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Older Homes 8% 20,000 21,600 23,328 25,194 27,210 8.00%
New Homes 15% 2,000 2,300 2,645 3,042 3,498 15.00%
Other 0% 0 0 0 0 0 0.00%
Total 8.69% 22,000 23,900 25,973 28,236 30,708 8.69%
Strategy and Implementation Summary:
Webster County recently approved a program to assist owners of underground septic tanks that are 15 years old or older. The program will pay up to 40% of the replacement cost and will begin in May.
William’s Environmental plans to target these homes and has hired a dedicated salesperson to pursue this opportunity. The company will handle all the paperwork for homeowners, which is crucial as many of these homes have elderly owners.
In addition, Jean, an active member of county activities, will be a focus of the campaign. She is well-known by county residents and is involved in women’s organizations that include many of the program’s target audience.
For new homes, Jean will sell William’s Environmental to the builders she has previously worked with. Her reputation as a contractor will give her an advantage in competing for waste management tank installation contracts.
5.1 Competitive Edge:
William’s Environmental’s competitive edge lies in its experienced staff, each with extensive experience in septic tank installation and removal. The staff is customer-oriented and committed to providing quality products and services.
The staff includes:
– Bill Johnson: 7 years of septic tank installation and removal.
– Roger Davidson: 5 years of septic tank installation and removal.
– Rudy Willis: 6 years of septic tank installation and removal.
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5.2 Sales Strategy:
William’s Environmental will employ a full-time salesperson to promote the county septic tank replacement program to residents. The salesperson will assist homeowners in filing for the septic tank rebate.
Jean will focus on securing installation work with new home builders.
5.2.1 Sales Forecast:
The following is the sales forecast for three years. Sales and work primarily occur during the temperate months. Excavation for tank replacement is more challenging in winter months due to snow and frozen ground, but not impossible.
Sales Forecast
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| Septic Tank Replacement | $237,000 | $280,000 | $320,000 |
| Septic Tank Installation | $130,000 | $180,000 | $230,000 |
| Septic Tank Removal | $49,000 | $76,000 | $89,000 |
| Other | $0 | $0 | $0 |
| Total Sales | $416,000 | $536,000 | $639,000 |
Management Summary
Jean William will manage William’s Environmental. She is an experienced project manager with years of supervisory experience in the construction industry.
6.1 Personnel Plan
The personnel plan for William’s Environmental is as follows:
- Manager
- Salesperson
- 3 Installation/Removal Staff
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Manager | $42,000 | $45,000 | $48,000 |
| Salesperson | $36,000 | $40,000 | $43,000 |
| 3 Installation/Removal Staff | $100,800 | $106,800 | $113,000 |
| Other | $0 | $0 | $0 |
| Total People | 3 | 3 | 3 |
| Total Payroll | $178,800 | $191,800 | $204,000 |
Here is the financial plan for William’s Environmental.
7.1 Break-even Analysis
The monthly break-even point is calculated based on estimated average monthly costs and variable percentage of costs of sales.
Monthly Revenue Break-even: $40,613
Assumptions:
– Average Percent Variable Cost: 44%
– Estimated Monthly Fixed Cost: $22,723
7.2 Projected Profit and Loss
The projected profit and loss for three years is as follows.
Pro Forma Profit and Loss for Years 1 to 3 showcasing Sales, Direct Cost of Sales, Other Production Expenses, Total Cost of Sales, Gross Margin, Gross Margin %, Expenses, Payroll, Sales and Marketing and Other Expenses, Depreciation, Leased Equipment, Utilities, Insurance, Rent, Payroll Taxes, and Other. Additionally, it includes the Total Operating Expenses, Profit Before Interest and Taxes, EBITDA, Interest Expense, Taxes Incurred, Net Profit, and Net Profit/Sales.
7.3 Projected Cash Flow: The projected cash flow for three years is presented below.
Pro Forma Cash Flow:
Year 1 Year 2 Year 3
Cash Received:
Cash from Operations:
Cash Sales $208,000 $268,000 $319,500
Cash from Receivables $183,667 $260,981 $313,475
Subtotal Cash from Operations $391,667 $528,981 $632,975
Additional Cash Received:
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $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 $391,667 $528,981 $632,975
Expenditures:
Expenditures from Operations:
Cash Spending $178,800 $191,800 $204,000
Bill Payments $260,746 $333,251 $375,925
Subtotal Spent on Operations $439,546 $525,051 $579,925
Additional Cash Spent:
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $9,996 $9,996 $9,996
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $449,542 $535,047 $589,921
Net Cash Flow ($57,875) ($6,066) $43,054
Cash Balance $22,925 $16,859 $59,913
Projected Balance Sheet:
Year 1 Year 2 Year 3
Assets:
Current Assets:
Cash $22,925 $16,859 $59,913
Accounts Receivable $24,333 $31,353 $37,377
Inventory $17,875 $21,557 $25,093
Other Current Assets $0 $0 $0
Total Current Assets $65,133 $69,769 $122,384
Long-term Assets:
Long-term Assets $30,000 $30,000 $30,000
Accumulated Depreciation $8,856 $17,712 $26,568
Total Long-term Assets $21,144 $12,288 $3,432
Total Assets $86,277 $82,057 $125,816
Liabilities and Capital:
Current Liabilities:
Accounts Payable $34,858 $26,722 $31,272
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $34,858 $26,722 $31,272
Long-term Liabilities $90,004 $80,008 $70,012
Total Liabilities $124,862 $106,730 $101,284
Paid-in Capital $110,000 $110,000 $110,000
Retained Earnings ($99,200) ($148,585) ($134,673)
Earnings ($49,385) $13,911 $49,205
Total Capital ($38,585) ($24,673) $24,532
Total Liabilities and Capital $86,277 $82,057 $125,816
Net Worth ($38,585) ($24,673) $24,532
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 28.85% 19.22% 6.60%
Percent of Total Assets:
Accounts Receivable 28.20% 38.21% 29.71% 46.40%
Inventory 20.72% 26.27% 19.94% 8.70%
Other Current Assets 0.00% 0.00% 0.00% 29.30%
Total Current Assets 75.49% 85.02% 97.27% 84.40%
Long-term Assets 24.51% 14.98% 2.73% 15.60%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities:
Accounts Payable 40.40% 32.57% 24.86% 47.20%
Long-term Liabilities 104.32% 97.50% 55.65% 9.10%
Total Liabilities 144.72% 130.07% 80.50% 56.30%
Net Worth -44.72% -30.07% 19.50% 43.70%
Percent of Sales:
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.95% 58.77% 59.74% 26.50%
Selling, General & Administrative Expenses 67.82% 56.17% 52.04% 14.60%
Advertising Expenses 1.73% 1.49% 1.56% 0.40%
Profit Before Interest and Taxes -9.60% 5.29% 12.17% 2.20%
Main Ratios:
Current 1.87 2.61 3.91 1.87
Quick 1.36 1.80 3.11 1.47
Total Debt to Total Assets 144.72% 130.07% 80.50% 56.30%
Pre-tax Return on Net Worth 127.99% -80.55% 286.54% 6.80%
Pre-tax Return on Assets -57.24% 24.22% 55.87% 15.50%
Additional Ratios:
Net Profit Margin -11.87% 2.60% 7.70% n.a
Return on Equity 0.00% 0.00% 200.58% n.a
Activity Ratios:
Accounts Receivable Turnover 8.55 8.55 8.55 n.a
Collection Days 57 38 39 n.a
Inventory Turnover 10.18 11.21 11.03 n.a
Accounts Payable Turnover 8.48 12.17 12.17 n.a
Payment Days 27 35 28 n.a
Total Asset Turnover 4.82 6.53 5.08 n.a
Debt Ratios:
Debt to Net Worth 0.00 0.00 4.13 n.a
Current Liab. to Liab. 0.28 0.25 0.31 n.a
Liquidity Ratios:
Net Working Capital $30,275 $43,047 $91,112 n.a
Interest Coverage -4.22 3.34 10.37 n.a
Additional Ratios:
Assets to Sales 0.21 0.15 0.20 n.a
Current Debt/Total Assets 40% 33% 25% n.a
Acid Test 0.66 0.63 1.92 n.a
Sales/Net Worth 0.00 0.00 26.05 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Appendix:
Sales Forecast:
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales:
Septic Tank Replacement $10,000 $14,000 $17,000 $36,000 $42,000 $35,000 $25,000 $20,000 $8,000 $5,000 $5,000 $20,000
Septic Tank Installation $7,000 $8,000 $10,000 $15,000 $20,000 $20,000 $12,000 $15,000 $3,000 $3,000 $3,000 $14,000
Septic Tank Removal $2,000 $3,000 $4,000 $6,000 $8,000 $8,000 $3,000 $4,000 $2,000 $2,000 $2,000 $5,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $19,000 $25,000 $31,000 $57,000 $70,000 $63,000 $40,000 $39,000 $13,000 $10,000 $10,000 $39,000
Direct Cost of Sales:
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Septic Tank Replacement $5,000 $7,000 $8,500 $18,000 $21,000 $17,500 $12,500 $10,000 $4,000 $2,500 $2,500 $10,000
Septic Tank Installation $3,000 $3,500 $4,000 $6,500 $8,000 $8,000 $5,000 $6,500 $1,000 $1,000 $1,000 $5,000
Septic Tank Removal $500 $750 $1,000 $1,500 $2,000 $2,000 $750 $1,000 $500 $500 $500 $1,250
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $8,500 $11,250 $13,500 $26,000 $31,000 $27,500 $18,250 $17,500 $5,500 $4,000 $4,000 $16,250
Personnel Plan
| Personnel Plan | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Manager | 0% | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 |
| Salesperson | 0% | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 |
| 3 Installation/Removal Staff | 0% | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 | $8,400 |
| Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total People | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | |
| Total Payroll | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | |
General Assumptions
| General Assumptions | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| 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% | |
| 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% | |
| 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% | |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Pro Forma Profit and Loss
| Pro Forma Profit and Loss | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Sales | $19,000 | $25,000 | $31,000 | $57,000 | $70,000 | $63,000 | $40,000 | $39,000 | $13,000 | $10,000 | $10,000 | $39,000 | |
| Direct Cost of Sales | $8,500 | $11,250 | $13,500 | $26,000 | $31,000 | $27,500 | $18,250 | $17,500 | $5,500 | $4,000 | $4,000 | $16,250 | |
| Other Production Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total Cost of Sales | $8,500 | $11,250 | $13,500 | $26,000 | $31,000 | $27,500 | $18,250 | $17,500 | $5,500 | $4,000 | $4,000 | $16,250 | |
| Gross Margin | $10,500 | $13,750 | $17,500 | $31,000 | $39,000 | $35,500 | $21,750 | $21,500 | $7,500 | $6,000 | $6,000 | $22,750 | |
| Gross Margin % | 55.26% | 55.00% | 56.45% | 54.39% | 55.71% | 56.35% | 54.37% | 55.13% | 57.69% | 60.00% | 60.00% | 58.33% | |
| Expenses | |||||||||||||
| Payroll | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | $14,900 | |
| Sales and Marketing and Other Expenses | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | |
| Depreciation | $738 | $738 | $738 | $738 | $738 | $738Pro Forma Cash Flow
Pro Forma Cash Flow is a financial statement that shows the projected cash inflows and outflows over a certain period. It is an essential tool for businesses to assess their financial performance and stability. Below is a pro forma cash flow table that outlines the cash received and expenditures for the periods specified: Cash Received – Cash from Operations – Cash Sales – Cash from Receivables – Subtotal Cash from Operations – Additional Cash Received Expenditures – Expenditures from Operations – Cash Spending – Bill Payments – Subtotal Spent on Operations – Additional Cash Spent Net Cash Flow and Cash Balance: – Net Cash Flow represents the difference between cash received and cash spent during a specific period. – Cash Balance is the remaining amount of cash after deducting expenses from the initial balance. Understanding your pro forma cash flow is crucial for managing and planning your business finances effectively. By analyzing the projected cash inflows and outflows, you can make informed decisions to optimize your cash flow and ensure the financial health of your business. Please note that this table is a sample and should be customized according to your specific business needs. |
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