Natural Fertilizer Natural Fertilizer AgEc 75.6 Capstone Final Presentation AgEc 75.6 Capstone Final Presentation Chad Nykolaishen Michael Wheeler Kristen Bestrop Sarah Eymann

2 Natural Fertilizer  Natural Fertilizer is finished compost  Has many advantages for soil improvement  Plans are to process 450 tonnes of compost/year

Natural Fertilizer 3 Philosophy  Focusing on Saskatchewan  Focusing on the environment in mind  Trying to use our resources and markets to the fullest

Operations Plan

Natural Fertilizer 5 Organizational Structure Board of Directors 7 External, 1 Internal Manager Marketing Department Operations Department Bagging Technicians Secretary/ Treasurer  Shareholders  Investors  Manager

Natural Fertilizer 6 Site Plan

Natural Fertilizer 7 Floor Plan

Natural Fertilizer 8 Site Setup Land costs: (10ac) 3,750 Site Setup: Yard lights 2,000 Building86,800 Swage System 3,500 Electricity installation 25,000 Town water installation 14,300 Landscaping400 Total:135,750

Natural Fertilizer 9 Building Costs Building Costs: Cover-All60,000 Office Building20,000 Sasktel500 Plumbing6,000 SaskPower300 Total Building Costs:86,800

Natural Fertilizer 10 The Facilities  Large shell type building for bagging equipment and storage

Natural Fertilizer 11 Equipment Costs Equipment Costs: Bagger45,505 Screener49,595 Scale6,500 Total cost of equipment:103,600

Natural Fertilizer 12 Flow of Work Chart

Natural Fertilizer 13 Work Plan  Plan to operate year round with processing during certain months  Haul compost in fall  Bag half of the product in the spring and the other half in fall  2 full time employees and 3 part time employees.

Natural Fertilizer 14 Cost of Goods Sold  Beginning finished goods inventory is $0  Cost of goods manufactured is $38,099  Cost of goods available for sale $38,099  Ending finished goods inventory $3,500  Costs of goods sold is $34,599

Natural Fertilizer 15 Costs of Goods Manufactured Direct materials Bags $4,784 5,714 Handling $930 Nutrient tests $500 Direct labor Part time baggers $3,9604,213 Overhead Variable Overhead $8,212 28,172 Fixed Overhead $19,960 Cost of good manufactured38,099

Natural Fertilizer 16 Production and Inventories  Production of compost for bulk is 100 tonnes and for bags 350 tonnes which is equal to 17,500 bags  Average days inventory will be held for 60 days  Year ending inventory is equal to $3500

Natural Fertilizer 17 Working Capital A/R3,538 Raw Inventory0 Finished Inventory3,500 A/P13,839 Total:20,877

Natural Fertilizer 18 Capital Budget Summary Land 3,750 Building 86,800 Equipment 106,200 Working Capital 20,877 Total Capital Required217,627

Natural Fertilizer 19 Funding  Private and business investment  Loans

Human Resources Plan

Natural Fertilizer 21 Human Resources  Manager/Marketer- to have a degree in business management  Secretary/Accountant- post secondary diploma  Baggers/Screeners- grade 10 education. Knowing how to work the machines is more important.

Natural Fertilizer 22 Human Resources Plan Wages: Manager / Marketer 59,000 Secretary15,000 3 $11.00/hr 3,465 Employment Insurance 986 Canada Pension Plan1409 Workers Comp784 Total of wages:80,644

Marketing Plan

Natural Fertilizer 24 The Marketing Mix  Products & Services – composted beef cattle manure in bulk and 20kg bags  Pricing – competitive pricing - selling bags for $6.00/bag - selling bags for $6.00/bag - selling bulk for $225/tonne - selling bulk for $225/tonne  Promotion – promote locally - environmentally friendly - environmentally friendly - natural product - natural product  Place – based mainly in Saskatchewan through retail and direct sales

Natural Fertilizer 25 Opportunities and Threats  Opportunities -growth in organic farming -environmentally friendly -contracts -gardening industry is growing  Threats -how much product will be sold -indirect competition is the greatest threat

Natural Fertilizer 26 Competition - Bags Agricore – the real thing Lethbridge, AB 40L is equal to 18kg $8.98 NU- Grow Calgary/Ontario20kg$3.99 Green Leaf Olds, AB 20kg$3.68-$3.99 Wholesale $2.44 ***Prices shown are retail prices which may vary.

Natural Fertilizer 27 Competition - Bulk Lakeshore Garden Centre $24.99/cubic yard Retail Wilson’s Greenhouse $14-$15/cubic yard Own Use Agricore – the real thing 20 tonne truck delivered $ ***Prices shown are retail prices which may vary.

Natural Fertilizer 28 Segmentation, Targeting and Positioning  Segmentation – environmentally friendly green thumb  Targeting – gardeners - green houses, landscapers - green houses, landscapers  Positioning – promote environmentally friendly products

Natural Fertilizer 29 S.W.O.T.  Human Resources Strengths - does not require a large number of laborers Weakness - seasonality and location

Natural Fertilizer 30 S.W.O.T.  Physical Resources Strengths - located by the supplier - deals with a large company - only large scale operation in Saskatchewan * Weakness - climate only allows the company to operate during certain months due to cold

Natural Fertilizer 31 S.W.O.T  Financial Resources Strengths - lower over head - inventory level is low in off season. Weakness - profits are based less on large margins and more on volume - pay out large dividends in the second year.

Natural Fertilizer 32 Market Analysis  On average a store sells around 400 bags a year  61 garden centers in Saskatchewan  14 landscaper companies in Saskatoon  15 greenhouses in Saskatoon  Potential for increased sales due to increased environmental awareness and Kyoto

Natural Fertilizer 33 Marketing Strategy  Sales and Profit- receiving 20% on selling of 450 tonnes across Saskatchewan.  Channels of Distribution- bags sold retail and bulk will be sold direct.  Pricing Policy- making 20% of the price Natural Fertilizer will receive

Natural Fertilizer 34 Marketing Strategy  Select Markets/Products/Service Mix- competitive market, consisting of peat moss and chemical fertilizers  Selling and Advertising – –advertising through a web page, flyers, & pamphlets. –marketing manager will be traveling around promoting the product.

Natural Fertilizer 35 Marketing Plan Budget Marketing and Advertising : Traveling500 Cell phone480 Internet - Web page350 Flyers and pamphlets300 Trade shows3,000 Hotel1,200 Meals300 Business Cards100 Total$6,230

Natural Fertilizer 36 Selling Features  Saskatchewan made product  Natural fertilizer  Contains less weed seeds and pathogens than raw manure  Slowly releases nutrients

Financial Plan

Natural Fertilizer 38 Income Statement Sales Revenue: Bulk 22,500 Bags 119,000 Total 141,500 Cost of Goods Sold 34,599 Gross Margin 106,901  The quantity stays the same, but the inflation rate of 2.5% is added on to each year.

Natural Fertilizer 39 Year One Cash Flow  Cash from (used in) operating activities $42,218  Cash from (used for) financing activities $257,597  Cash from (used for) investing activities $241,950

Natural Fertilizer 40 Risk Analysis  Over the next 10 years, very stable with no extremes.  Internal Rate of Return is 26.2%  External Rate of Return is 19.2%

Natural Fertilizer 41 Worst, Base,& Best Case Scenarios VariableWorst CaseBase CaseBest Case Quantity of Sales 50%100%110% Average Selling Price 75%100%125% Average Trucking Costs 150%100%75%

Natural Fertilizer 42 Dividend Policy  Dividends are paid out when cash available exceeds 1.5 times the cash required for the following year.  Dividends start being paid out in the second year.

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