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Seedlings Ltd.

Seedlings Ltd.

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Seedlings Ltd.

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  1. Seedlings Ltd. AG EC 75.6 Agribusiness Capstone

  2. Business Plan Proposal

  3. Introduction • The largest expense to greenhouse owner/ operators is heating! • With natural gas and other heating alternatives rising in cost, it seems natural for the business to be built on a waste heat site, where heat is put into the atmosphere daily • The proposed greenhouse will be built near the Cory potash mine to take advantage of the waste heat.

  4. Mission Statement “To provide high quality, hardy tree seedlings to Saskatchewan’s forestry industry while utilizing industrial waste products that may otherwise be detrimental to the environment.”

  5. Environmental Trends • There are efforts to reduce pollution that harms the environment. • There are also efforts to further use by products from manufacturing and other industries.

  6. Operations and Human Resource Plan

  7. Organizational Structure General Manager + Head Grower General Laborer (Part-time) Worker* Worker* Worker* Worker* Worker*

  8. Proposed site

  9. Site Plan/Building and Floor Plan

  10. Access Seed Place the peat in Styrofoam blocks Seed blocks and water Transfer blocks to greenhouse Sorting and Packaging Application of fertilizer during watering. Removal of weeds when needed Continue growing in greenhouses (8 months) Thin seedlings to one/cell and pick weeds Low quality seedlings are discarded High quality seedlings are plastic wrapped and placed in cardboard boxes Seedlings are picked up by contracted company Work Plan and Flow of Work

  11. Waste Heat Savings • 1,296,000 BTU/hr • 31,104,000 BTU/day • $217.00/day to heat • $65,100 in savings for one month

  12. Cost of Goods Manufactured

  13. Cash Conversion Cycle • CCC=Average days inventory (10 months*30 days=300 days) + Average collection period (30 days) – Average days payable (30 days) • Total CCC=300 days

  14. Marketing Plan

  15. The Marketing Mix 4 P’s • Product- hardy tree seedlings grown to the customers specifications • Price- below industry standard of $0.25 a seedling because of waste heat advantage • Promotion- using waste heat to grow tree seedlings, that will benefit the environment • Place- government, pulp and paper along with lumber companies that are involved in reforestation

  16. Segmentation, Targeting & Positioning • Segmentation- this is a very narrow market so all buyers will be aggregated into one group • Targeting- buyers will be mainly targeted within the province of Saskatchewan, out of province customers will be targeted if supply allows • Positioning- the company will be seen as a producer of high quality seedlings at a lower cost grown to customer specifications

  17. SWOT Analysis • Internal Strengths and Weaknesses • Human Resources • Strengths Management and head grower will have expert knowledge. • Weaknesses Finding employees with greenhouse experience willing to work seasonally. • Physical Resources • Strengths Capital costs and operating costs will be reduced because the greenhouse does not require natural gas. • Weaknesses The greenhouse requires sunlight for maximum plant growth. • Financial Resources • Strengths Lower production costs because of waste heat advantage. • Weaknesses The cash conversion cycle is very long.

  18. Product/Service Features • The seedlings will be grown to the buyers specifications as determined by a height and root collar diameter (RCD).

  19. The Opportunity • The opportunity to heat the greenhouse at competitive cost to conventional greenhouses, which gives a profit advantage when selling the tree seedlings.

  20. Financial Plan

  21. 2006 Income Information • IRR= 71.0% • ERR= 47.9% • Net Income= $ 154 688 • Sales Revenue= $ 375 000 • Total Liabilities= $ 235 222

  22. Leverage Ratios • Debt Ratio= 37.2% • Debt to Equity= 59.3%

  23. Profitability Ratios • Gross Profit Margin= 63.2% • Net Profit Margin= 41.3% • Return on Total Assets= 24.5% • Return on Equity= 39.0% • All ratios are calculated after tax

  24. Risk Analysis

  25. Risk Analysis • Critical Variables • Quantity of sales, Selling Price, Wage rates • Breakeven Analysis • Selling Price • Best, Base and Worst Case Scenarios • Pricing • Number of Seedlings sold

  26. Conclusion • Seedlings is feasible • Sensitive to success of contract negotiations • Contractors would be very aware of the vulnerability of the company and would try to take advantage of this. • High potential to be profitable • Carries a high level of risk • Risk will diminish when contracts are secured

  27. Questions ???