Waterless Composting Toilet Systems - Case Study Example

FEASIBILITY STUDY Name of Business Confidentiality Statement TABLE OF CONTENTS PART 1: INTRODUCTION 4 PART 3: MARKET ANALYSIS 7 Target Market size and segments 7 Market Trends 8 Lifecycle / Seasonality 9 Target market characteristics / customer profile 10 Location and/or distribution methods 11 Product Mix 11 Pricing 12 Promotion 12 Forward contracts / Letters of interest 13 Preliminary Sales Projections 13 Future Opportunities 13 PART 4: RESOURCE REQUIREMENTS 14 Business Premises 14 PART 5: FINANCIAL VIABILITY 17 PART 6: CAPITAL REQUIREMENTS 18 Summary of Capital Required 18 Sources of equity capital / details of ownership structure 18 Sources of Loan Capital 19 CONCLUSION 20 APPENDICES 21 Bibliography 22 Lynn, Annette, ‘Introducing the new eco-restroom: composting toilets do more with less for less money’, Parks & Recreation, vol 2, 2010. 22 PART 1: INTRODUCTION PERSONAL DETAILS The business is owned by three partners who possess the following qualifications: 1. NAME: Mr. Johnson P. Edwards P. O. Box Email address; johnsonp@enviromarval.com.au Academic qualification; masters in business administration 2. Janet Pertsy P.O.Box Email address; janetpertsy@enviromarval.com.au 3. Fracisca D. Wersan P.O.Box Email; francisca@enviromarval.com.au DESCRIPTION OF THE BUSINESS The business idea is a franchise business which will provide services to the people by availing composting toilets to the urban and rural communities in Australia. The franchisor chosen for the business is Sun-Mar which is a world leading composting toilet manufacturer. Sun- Mar has wide range of models which are developed for every need both for electric and non-electric toilets of different designs. Most of these designs are adaptable and fitting for the market available in Australia. Composting toilets are toilets which treat waste on site and require little or no water at all. These toilets work best in an enclosure that support aerobic decomposition of the waste and the natural process of decomposition and evaporation are used to recycle human waste. This is the basic principle that will work for this business. Sun-Mar is however continually modifying the design and structure of her toilets in order to make them more customers friendly. Most of the designs in the market consume a lot of space and unique designs that save both on space, cost of purchase and maintenance will be introduced. PRODUCTS AND SERVICES This business will deal with selling composting toilets, installation of the toilets and selling of composting toilet accessories. In order to gain a competitive edge the business will provide maintenance services to the customers focusing on the rural areas. Composting toilets have a lot of benefits to individuals and the community as a whole. This is because they reduce water consumption at the house hold level, produces compost and saves community members the maintenance cost of sewerage systems. COMMENCEMENT DATE The proposed commencement date for this business is 1st May 2010. This will happen after attaining franchise authority from Sun-mar the leading manufacturers and sellers of compost toilets in Australia. The business will target the unexploited rural market in Australia. The allowance of four months is to enable time to get required capital and all required legal documents. The commencement of the business will be done after a launching event. This is to make as many people as possible aware that such a business will be in operation. All the key players and partners will be invited as well as the franchisor and the local community. After this event, all plans will be in place to have the business operate smoothly. HYPOTHESIS An environmental friendly business idea in an unexploited rural market is likely to do well. Further franchising with a well established company like Sun-mar will make it easy for customers to accept the products on sale. This will cut on marketing cost for the business. Engaging professionals in delivering services to customers and full observance of all legal requirements will boost the performance and profitability of the business. PART TWO: CRITICAL FACTORS Critical factor 1 Composting toilets have a lot of benefits and therefore are likely to be fully accepted by all people in the country. They have also been marketed for over thirty years and have gained popularity among the people. In addition, the Australian standards have certified the use of composting toilets in all states. According to snider (1), some of the benefits are that it saves on the amount of water used by families and communities thereby reducing the cost of water. Since these toilets can also be used to recycle other organic household waste they are therefore the most environmental friendly asset that all environmental conscious families can own. The business will capitalize well on this point when marketing the product to gain a customer base for a start. Critical factor 2 The other critical factor that will be capitalized on is the fact that Nature Loo Company is the only franchise business dealing with the composting toilets in the whole country. This means that the market is not fully covered a fact that we will capitalize on to ensure full exploitation of the market. To be effectively felt on the ground the business will invest in modern marketing and an elaborate distribution channel. This will assist in withstanding competition from the already established business. PART 3: MARKET ANALYSIS Target Market size and segments Since Enviromarvels is a small scale business, the capital base is not as high. The main target market is the government and non-governmental organizations. This is because the business intends to concentrate on non-electric composting toilets. The non-electric composting toilets are exclusively environmental friendly (Snider,1). Majority of the companies have concentrated on waterless or low water use electric toilets which only solve one environmental problem and creates another one in the process. Electricity is one of the greatest sources of greenhouse gases thus its increased use results to continued destruction of o-zone layer. Full concentration on the non-electric toilets will capture a large rural market segment as well as accommodate low income earners due to its low maintenance cost. However, all water saving toilets will be availed in the market with more emphasis on the non-electric toilets. The management is more focussed on marketing the composting toilets in the rural areas. With adequate training on use of these toilets, farmers use toilet waste to improve their productivity. Acceptance of these toilets in rural areas will pave way for the same technological development in the arid and semi arid areas. This is because increased production in the rural areas will be the green light for those in dry areas. Market Trends Though the demand for toilets in Australia is on the increase, the demand for single flush toilets is on the decrease. The demand for these toilets was standing at 21% by the end of 2007 and the toilets are expected to be out of the market by 2036. This is owed to sensitivity on environmental issues resulting from the use of such toilets. This factor has resulted to a higher demand for water saving double flush toilets to replace single flush toilets in the already existing buildings. The demand for water saving toilet is on the rise especially with the estimated increase in population in Australia’s major cities to about five million by 2030. ( Schlunke, 137) Lifecycle / Seasonality With regard to seasonality, composite toilets are all season commodities due to their environmental friendly nature. According to Wagner (5), with increased urban population density, Enviromarvels has focused on the festivity seasonality. With extensive waste trail emitted during festive seasons, composite toilets supply will be purposively increased in the sense that the toilets are odourless, waterless and above all they are naturally favourable. Other than festival seasons, large events such as those held by the government will make use of portable composite toilets whereby ecological waste management will be introduced to millions of people in just a single event. Target market characteristics / customer profile Constant campaigns associated to global warming and its rapid effect on the environment, Enviromarvels business will ensure that people are environmental conscious. In its quest to satisfy customer preferences, Enviromarvels with the help of Sun-Mar Company has identified the opportunity of selling composite toilets in the quest of safeguarding the Australia heritage (Lynn, 1). Targeted customers include educational centres e.g. colleges and universities where population is high. This is very important since minimal amount of water will be consumed and the composed waste will be used by agricultural students. Other than educational centres, we have environmental and government institutions, this target is very important since it will act as an example to Australians. Government revenue channelled for water use will dramatically go down or it will be channelled to other use. Ideally these are toilets for those committed to environmental protection and those who seek double benefit of water conservation and ecological continuation by using these systems (Lynn, 1). COMPETITION The main competitor for the business is Nature Loo Company which has been providing domestic waste solutions for over ten years. Composting and waterless toilets have been part of their business. This company poses a great challenge since it has already established itself as a leader in the country. However, this will be counteracted by the application of proper strategies and the use of a franchise. COMPETITIVE ADVANTAGE This refers to the strengths that a company has over the competitors in the market which puts the business at a better position as compared to its rivals. Enviromarvels business will invest in internet marketing and use of information technology to market its products. This is a competitive advantage in the sense that majority of people in the country are computer literate and capable of accessing the internet. Online purchasing will be considered as a key way to reach many people (Wagner, 10). Human resource and personnel in a company are key determinants of competitive advantage. The business will therefore employ fully qualified professionals in all its operations and train them on good customer relation. With such skills, it will be easy for all first time customers to refer their friends and relatives to the company. In addition, those that purchase our products are likely to come back for more Location and/or distribution methods Enviromarvels will be located in Caniberra. This location is favourable for their toilet parts since majority of their customers are frequent users of the water consuming toilets. The business location will not change since urban dwellers form part of their targeted market for the new and old products. Their products will be distributed to the rural areas by use of the business trucks. The business also plans to collaborate with some agents in the rural areas to assist in advertising, educating the rural dwellers on their products and distributing them. Product Mix The products sold by Enviromarvels business will be high standards since the management’s intention is to purchase products from the most prominent producers. The business targets to purchase products and spare parts from Clivus Multrum, Biolet, SunMar and Envirolet. Products and services will include installation of composting toilets, distribution of toilet parts and repair and maintenance of already installed toilets. The composting toilets will range from electric, automatic, non-electric, dry toilet, urine- diverting, foam flush, waterless, remote controlled water and waterless composting toilets. Spare Parts include the fans, heaters and mixing motors outside compositors amongst many others. Enviromarvels will be considered as a great supplier of quality toilet products hence the ease in gaining customer loyalty in their newly introduced products and services (Wagner, 15). Pricing Since the business is a franchise, the intention is to sell the products at the range within which each manufacturing company sells its products. Only a few costs such as transport and advertising costs incurred by the business will be incorporated into the supplier’s price. The price therefore ranges from $1400 to $7000 depending on the type, size of the toilet and the manufacturing company. The spare parts are also sold within the manufacturing companies range. Promotion Majority of the already established companies have been unable to achieve their goals due to inability to control the most prevalent odours from composting toilets. This has been the most warring problem with regard to this technology since the general public view it as failure of social sophistication and a sign of being backward. The management has focussed in solving this problem through investment in public training as one of the promotional strategy. The two sources of odour are methane released by anaerobic digestion and ammonia released from urine. Enviromarvels has planned to produce some booklets and pamphlets for customer reference. Reference materials will be written in a variety of languages for the purpose of originality and to serve the targeted customers effectively. Forward contracts / Letters of interest The letter of interest from Clivus Multrum, Biolet, SunMar and Envirolet are none-binding and only intended forming business partnership whereby we will act as their distributing agents. These letters do not define the future of the business and Enviromarvels is free to operate on its own in the future if she so wishes. Preliminary Sales Projections According to Posner (155), Enviromarvels targets to acquire a market of 20 percent. This will majorly be from unexploited markets. This means that she is expected to sell a total of 5 000 toilets. The highest sales are expected to be made in November and December when the public high spending capital at their disposal. Future Opportunities The reason for Enviromarvels focussing on composting toilets is that its future in Australia is bright and predictable. The business management is targeting to expand to the dry areas of the country where water supply is inadequate. They are planning to do this through proper marketing and advertising to the government and the non-governmental organizations (Posner, 170). The government is responsible for community development and creation of environmental friendly atmosphere to the citizens. The government will find this as a way of promoting hygiene in the most economical way. Since the business is a franchise, there is a possibility of acting as the agents of the less popular mobile composting toilets. This can be easily be achieved by writing to international companies requesting for tenders. Mobile toilets will be of benefit to the events organizers such as weddings and parties amongst many others. PART 4: RESOURCE REQUIREMENTS Business Premises Since Enviromarvels is a medium size business, it was decided that it was better to rent a business premises other that purchasing a new one so as to minimize on the capital requirements. However, this is one of the long term goals of the business. The leasing amount will be $ 530 and this will be on monthly basis. In addition to the leasing amount, the company is expected to be in charge of all leasing documentation charges as per agreed terms stated in Australia real property act. The business premises located in Caniberra has been leased the premises to Enviromarvels promising that there will be no form of limitation towards diversification of the business (Posner, 15). Plant and Equipment There are different equipments needed in establishing the business since it will be dealing with several types of composite toilets. Since the toilet main idea is that of decomposing waste, the main equipment is a composting bin. The availability of composting bins within markets makes it is clear that the business will operate effectively. Other than the composing bin a shovel and gloves are the other fundamental equipments needed to establish a composite toilet. The equipment will also include compost aerator and starter, thermometer earth engine double bins and an oxygen meter (Hawkins, 25). Distributions Channels Distribution channels are very important aspects within companies since they act as pathways for the companies to sell their products to potential customers. Enviromarvels Company has developed multiple channels through which products will be distributed to the customers. By the use of direct sale team, the business is able to reach customers from their location. This is very important since the team is able to get views directly from the customers regarding the composite toilet. Customers are able to be provided with information concerning the toilets and its advantage over the other toilets (Hawkins, 37). With growth of technology, Enviromarvels has found it importance to indulge in e-commerce marketing. Here, the company has come up with an e-catalogue where products are defined including their saving capabilities. In the introduction page, the catalogue has explained on how they are environmental friendly this new composite toilets are and their capability in water saving. The company has establishes several dealers and retailers whereby they buy the composite toilets and later resell them to potential customers especially in areas where the company is not located. The retailers do not necessarily have to obtain commodity from the company since there are several wholesaler outlets that buy goods composite toilets in bulk and later sell them at small quantity. Sources of supply of stock, components or raw materials Supply of stock and component towards our business will be carried out by Sun-Mar Company which is the world first developer of self contained compositing toilets. Due to its variety of toilets we found it important for them to be our supply since most of their products are known by customer across Australia. Not only is the company work unique but their products are elegantly simple based on usage. All of sun-mar products are designed to fill up a specific need through the several innovative designs (Hawkins, 50). Technical expertise required In each and every business, technical expertise is required so as to assist in the event of technical break down. Enviromarvels have ensured that it has come up with qualified technical staff which will ensure that technicality surrounding the composite toilet is dealt with to customer satisfaction. The team of technical staffs have diverse talents and experiences in dealing with toilets which will ensure that composite toilets run effectively. The technical expertise required includes electrical and civil engineers. Technical assistance will also be obtained from manufacturers of composite toilets such as Clivus Multrum, Biolet, SunMar and Envirolet. Management expertise required Management expertise required by the Enviromarvels business ranges from an effective administration team to run office work, a human resource management team which will ensure that only desirable candidates are recruited and financial team whose mandate is to check both inflow and out flow of the business. This management expertise are expected to work together so as to achieve the business idea and mission. Professional advisors Every business requires professional advice for it to be successful and be able to work competitively with other companies and businesses. In its quest to prosper, Enviromarvels has incorporated a consultant whose mandate is to develop relationship with other rental companies. Other than building relationship, it is his duty to recommend the business chief executive on matter regarding composite toilet which is for customer satisfaction. As a way to obtain custom solution regarding composite toilet, Enviromarvels has incorporated the need of a value added reseller who advices on prices been offered by other competitive companies in conjunction with our research team. This is very essential because the company will be able to adjust the prices of composite toilets to fit in customer demands. Other professional advice will be from sun-mar company team. PART 5: FINANCIAL VIABILITY Include a summary of the calculations you used to prove the financial viability of the opportunity. Include all the detailed calculations in the Appendices. PART 6: CAPITAL REQUIREMENTS Summarise the capital requirements of the business opportunity under the following headings. Include details in the Appendices. Summary of Capital Required Sources of equity capital / details of ownership structure Sources of Loan Capital CONCLUSION This should be brief and concise and clearly state whether or not the opportunity is a viable proposition and what further action should be taken. APPENDICES List in bullet point form the items you are attaching in support of this document. Residential demand projections for Australia Bibliography Schlunke, Anne. Lewis J. & Fane, S, “Analysis of Australian opportunities for more efficient toilets,” [prepared for the Australian Government Department of the Environment, Water, Heritage and the Arts], Institute for Sustainable Futures, University of Technology, Caniberra, February, 2008. Lynn, Annette, ‘Introducing the new eco-restroom: composting toilets do more with less for less money’, Parks & Recreation, vol 2, 2010. Snider, N. ‘Composting Toilets Emerge as Viable Alternatives’, Oxford University Press, Melbourne, Australia,2009. Steinfield, Charlotte. ‘Composting Toilet System Book: A Practical Guide to Choosing, Planning and Maintaining Composting Toilet Systems. New York : Center for Ecological Pollution Prevention, 2000. Tonkin, Georges. ‘Waterless Composting Toilet Systems’, Clivus Multrum Australia, 2010. Viewed 29th Jan 2010. http://www.clivusmultrum.com.au/bestchoice.pdf Sun-mar garden composters. Composting toilets...the environmental solution retrieved 29th Jan 2011http://www.sun-mar.com/ Hawkins, Gene. Feasibility study for all-white pavement marking system. Washington, D.C.: Transportation Research Board, 2002, pp 12-52. Posner, Walter. The leasing process: a guide for commercial tenant. Concord, Ont.: Captus Press, 2002, pp 149-157. Wagner, Kenny. Remedial action technology for waste disposal sites. Park Ridge, N.J., U.S.A. : Noyes Data Corp., 2000, pp 5-15. Read More