1. NorSask Seedlings Ltd. AG EC 75.6 Agribusiness Capstone

2. Business Plan Proposal

3. Introduction The largest expense to greenhouse owner/ operators is heating! 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 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. 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 efforts to reduce pollution that harms the environment. There are also efforts to further use by products from manufacturing and other industries. 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*

8. Proposed site

9. Site Plan/Building and Floor Plan

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

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

12. Cost of Goods Manufactured Direct Materials $36 864 Direct Labor $66 447 Manufacturing Overhead $34 305 Cost of Goods Manufactured $137 616

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

14. Marketing Plan

15. The Marketing Mix 4 P’s Product- hardy tree seedlings grown to the customers specifications Product- hardy tree seedlings grown to the customers specifications Price- below industry standard of $0.25 a seedling because of waste heat advantage 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 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 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 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 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 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 Internal Strengths and Weaknesses Human Resources Human Resources Strengths  Management and head grower will have expert knowledge. Strengths  Management and head grower will have expert knowledge. Weaknesses  Finding employees with greenhouse experience willing to work seasonally. Weaknesses  Finding employees with greenhouse experience willing to work seasonally. Physical Resources Physical Resources Strengths  Capital costs and operating costs will be reduced because the greenhouse does not require natural gas. 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. Weaknesses  The greenhouse requires sunlight for maximum plant growth. Financial Resources Financial Resources Strengths  Lower production costs because of waste heat advantage. Strengths  Lower production costs because of waste heat advantage. Weaknesses  The cash conversion cycle is very long. 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). 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. 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% IRR= 71.0% ERR= 47.9% ERR= 47.9% Net Income= $ 154 688 Net Income= $ 154 688 Sales Revenue= $ 375 000 Sales Revenue= $ 375 000 Total Liabilities= $ 235 222 Total Liabilities= $ 235 222

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

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

24. Risk Analysis

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

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

27. Questions ???