Santoso, Cindy

1

Source: NovaTech

FWD Moving Forward

Cindy Santoso

Professor Washburn

MGMT 300

May 09, 2016

Santoso, Cindy

2

Table of Content

Executive Summary ………………………………………………………………………………………………………………………………. 3

Introduction …………………………………………………………………………………………………………………………..… 3

The Company and Concept …………………………………………………………………………………………….……….. 5

Market Research Analysis ……………………………………………………………………………………………………….. 5

The Economic …………………………………………………………………………………………………………………..……… 6

Obstacle and Disadvantage …………………………………………………………………………………………………….. 7

Cost and Pricing ……………………………………………………………………………………………………………………… 8

First Year Expenses …………………………………………………………………………………………………..… 9

Balance Sheet ………………………………………………………………………………………………………..…. 10

Income Statement ……………………………………………………………………………………………….…… 11

Break-Even Analysis…………………………………………………………………………………………………… 11

The Marketing Strategy ………………………………………………………………………………………………………… 12

Design and Development Plans……………………………………………………………………………………………… 12

The Manufacturing and Operation Plan ………………………………………………………………………………… 13

The Management Team ………………………………………………………………………………………………………… 14

Appendence ……………………………………………………………………..………………………………………………………………… 16

Santoso, Cindy

3

I. Executive Summary: FWD is a company that produces electricity using food waste and biogas.

Eventually, every household would want to have their own small generator with biogas. Biogas

generators would be one of the best big companies that sells solar panel. There are 133 billion

pounds of food wasted in 2010. That is about 31% of the food leftover in the United States go

to trash. By making food waste to biogas, we could help managing food waste and reducing

methane that damage the environment. Furthermore, it makes a clean renewable energy.

A. FWD is a segment of biogas industry that is similar to natural gas and liquefied

petroleum gas, but so much more environmental friendly than coal and diesel. FWD will

provide Long Beach neighborhood with cleaner air because it would provide a better

source of electrical energy. Using FWD generator, customers would not experience a

cut off on their electricity. Furthermore, biogas is one of the most stable gas, which

means, it is less combustible. Unlike solar energy that is dependent on the sun and

season of the years, biogas from food waste has a stability on how much input and

output. Biogas energy is more dependable for all seasons.

B. Long Beach area is one of the most beautiful city in Los Angeles County. It has many

parks, trees, golf courses, and have the natural environment to offer. With FWD, we

want to make a sustainable community. Since there are many attractions in Long beach,

there are many food stores, cafes, and restaurants emerging in the area. According to

suntopia.org, there “are 185 food pantries in the Long Leach area.” From lnschools.net,

there are approximately 48 elementary school, nine K-8 schools, 18 middle school, 15

high school, and two charter schools. For Long Beach Cafeteria budget in 2014-15 alone

is equal to $ 10,924,571. CBS News mention that the schools in the U.S has increased

their health standard by putting more vegetables and fruit to the students’ lunch, but

Santoso, Cindy

4

56% of it were thrown away. Related to the facts that all-you-can-eat cafeterias

encourage food waste at college campuses is mention by endfoodwastenow.org. The

food waste from those places and schools’ cafeteria would make a negative impact

toward the Long Beach city. To prevent that, FWD wants to collect the food waste as

much as possible and makes a clean renewable energy.

C. FWD’s main focus is making a better place for Long Beach. The pollution of Long Beach

area is becoming worst since the active pollution was generated by the ports of Los

Angeles and Long Beach. The focus market will be for Long Beach community and its

sustainability. The food waste form the food industry can’t be dumped and forget about

it. The more food waste that is dumped, the more gas methane going to develop form

the organic material. It is in fact, waste management world stated that food waste has

20 more times more dangerous and toxic than carbon dioxide. Not to mention, the

economics of scales for the biogas production will compete efficiency with electricity

companies and solar panel that has complicated bureaucracy and multiple taxations.

D. There is only a handful of companies in Los Angeles that focus on transforming food

waste to biogas. In fact, the Biogas Magazine states that there is no record of a

company that have created biogas from food waste in the Long Beach area. The barrier

of entry to the market will be about four months. Many non-profit environmentalist

organizations will help immediate effects on pursuing this industry. With the help from

those organizations, we will try to explain to the community on the need of gathering

food waste to make a better environment for the future.

Santoso, Cindy

5

II. The Company and The Concept

FWD is an environmental company that deals with food waste from different sources such as

restaurants, school’s cafeteria, household, and grocery store food waste. Rather than those

food waste get dumped into a dumpster and produce methane, FWD will buy, collect, and

accept various food waste in various location around Long Beach. The advantages of the FWD

company will reflect not just for economic purpose, but also for the sustainability of the Long

Beach area. The outcome of the food waste will be biogas that can be used for lightning,

cooking, and water heating. It is a self-generator that needs extra cable through lamp, gas, and

water heating. Thus, unlike solar panel, customer can have more privilege on connecting which

part of the utilities to be connected with FWD generator. There will be installation of gas pipe

that has valve and pressure gauge. Emergency stop button also provided to ensure safety of any

leakage. Customers do not need to have a house renovation. They can simply arranged the

cables to throughout the room.

III. Market Research and Analysis

The market growth is sustainably high. Electricity has a high demand especially during summer

session. Most people in California can bear not using heater in the winter, but most people

cannot bare the hot weather in the summer. Not to mention, almost nobody can survive not

Santoso, Cindy

6

using some kind of electricity. According to city-data.com, in 2013, Long Beach’s population was

469,428 with average size of 2.8 people per house. This mean there is about 167,652

households in Long Beach. The market will continue to growth throughout Orange county and

Los Angeles county. We are competing with solar panel, but FWD will have lower cost. The solar

panel has been booming and electricity company has scared that it will take their revenue

away. But, it has not yet taken over because of the high fixed cost that not everybody able to

afford. On the other hand, FWD has a lower fixed cost that will attract customer from different

levels of income to start using biogas from FWD. FWD’s biogas can be bought and used all year

long, whereas solar panel does not work as effectively for all seasons. Thus FWD has more

chance on becoming the number one source of renewable source. It will have a warm welcome

to the customers and easy to attract buyers to try the product. There will be a high potential

market of household use biogas from food waste for their electricity. The ebschohost.com

states that the result of experimental in biogas is self-sufficient in electricity and even producing

a surplus. FWD will also compete with the electric supplies from solar panel.

IV. The Economic

Gross and operating margin of FWD is one cubic meter of biogas is equal to about six

kWh. FWD can managed up to 3,806.4 cubic feet a day. It is equal to 573,615.6 kWh per

year and we will be able to provide.

Food Waste (ft3/day) kWh

kW produced per year

Average household use per year (kWh)

Total house can be served (units)

46,615 .4 573,616 573 1002

The averages of U.S household on electricity is about 573 kWh a month. The cost

California is 15.2 cents which is much higher than the average (12cents). According to

Santoso, Cindy

7

electricity local, the commercial electricity rates in Long Beach is 11.81 cents per kWh

and 15.98 cents per kWh for residential. Using FWD product, each household can

reduce their utility bills by more than 40%. It is much lower than using solar panel

energy. Here is an example of an average household user’s bill comparing electricity,

with solar panel, and FWD using 573 kWH per month.

Full Electricity Solar Energy FWD

1 year $1,098.78 $879.03 $639.47

20 years $21,975.70 $17,580.56 $7673.62

Saving 0 $4,395.14 $14,302.08

As the electricity price fluctuating from time to time, FDW offer a valuable saving from

the first day. The solar panel has a disadvantage of the fixed cost for the first time users.

Not every household can lease or buy it. In addition, the saving is depending on the

location, and will also not going to impact households that live in apartments. FWD on

the other hand, has low fixed cost that maximize the saving and can be used in

apartments for cooking, heating, and even lightning.

V. The Obstacles and Disadvantages

It does seem that there will be many potential customer going to start using FWD right away.

But, the process of marketing and advertising will be the fundamental of success. However,

there are issues that need to be addressed. One of the issue is the difficulty on introducing

biogas energy. Most people are not familiar with the product or already bought sola panel. The

idea of new energy is hard to change because potential customers have not yet understood the

beneficial of it. Even solar panel has been around for years, and just booming for couple years

only. The introduction will be the most difficult part on selling the product. Also, the adjustment

on how modifying the use of biogas. There is some replacement needed to use it more

efficiently.

Santoso, Cindy

8

VI. Cost and Pricing

Since we are collecting food waste from around the area, we have a system similar to recycling

center. We buy 10 pounds of food waste for $.018. It does not seem much worth of money.

However, with constant of selling home or restaurant’s food waste, a household could save

about 5% of their monthly bill. The cost of biogas per kWh is $.093 plus one-time installation for

about $1300.00.

Santoso, Cindy

9

FWD

First Year Expenses

Period End May 31, 2017

Sunk Cost Operating (Monthly) Annual Total Source

Building - $1,284.67 $15,416.04 $16,700.71 cityfeet.com $3.24/sf/year

License Permit $381.43 - - $381.43 longbeach.gov

Liability Insurance - $800.00 $9,600.00 $10,400.00 hiscox.com

Office Equipment $4,000.00 - - $4,000.00 ikea.com

Office Supplies $150.00 $160.00 $1,920.00 $2,230.00 staples.com

Furniture $3,000.00 - - $3,000.00 ikea.com

Payroll $2,000.00 $4,550.00 $54,600.00 $61,150.00 455 hours per month, $10/hour

Phone and Internet $800.00 $80.00 $960.00 $1,760.00 att.com

Salary - $1,920.00 $23,040.00 $23,040.00 160 hours per month, $12/hour

Advertising

Website $950.00 $100.00 $1,450.00 $2,400.00 Updated every 6 months

Logo $400.00 - - $400.00 Freelance Online Advertisement $40.00 - $7,500.00 $7,540.00 lbpost.com

Flyer $40.00 - $40.00 $80.00 ticketprinting.com

Equipment

Machine $52,000.00 - - $52,000.00 Alibaba.com and own construction

Machine essential $3,000.00 - - $3,000.00 Alibaba.com

Transportation $35,000.00 - - $35,000.00 Carfax.com Transportation Insurance and Gasoline - $700.00 $8,400.00 $9,100.00 Statefarm.com

Misc. $5,000.00 - - $5,000.00

Total Expenses $106,761.43 $9,594.67 $122,926.04 $237,182.14

Santoso, Cindy

10

Assets 1st 2nd 3rd 4th 2017 ($) 1st & 2nd 3rd & 4rd 2018 ($)

Cash and equivalents - 27,508.00 50,295.28 65,570.00 143,373.3 165,729.00 180,590.0 346,319.0

Recievables - 6,877.00 12,573.82 16,392.50 35,843.3 41,432.25 45,147.5 86,579.8

Inventories 12800 8,636.20 31,809.40 47,910.40 88,356.0 49,520.22 74,300.0 123,820.2

Total Current Assets 12800 43,021.20 94,678.50 129,872.90 267,572.6 256,681.47 300,037.5 556,719.0

Property, Plant & Equipment 3,854.01 3,854.01 3,854.01 3,854.01 11,562.0 8,093.4 8,093.4 20,000.0

Depreciation -3,250.00 -3,250.00 -3,250.00 -3,250.00 -9,750.0 -7,515.0 -7,515.0 -13,000.0

Other Non-Current Assets 61.88 82.50 82.50 82.50 247.5 198.0 198.0 330.0

Total Non-current Assets 665.89 686.51 686.51 686.51 2,059.5 776.4 776.4 7,330.0

Total Assets 14,131.77 44,394.22 96,051.52 1,373.02 141,818.8 257,457.9 257,457.9 514,915.8

Accounts Payable 5,100.00 5,100.00 5,100.00 5,100.00 20,400.0 9,180.0 9,180.0 18,360.0

Short Term Debt 2,555.00 2,555.00 2,555.00 2,555.00 10,220.0 4,088.0 4,088.0 8,176.0

Total Current Liabilities 7,655.00 7,655.00 7,655.00 7,655.00 30,620.0 13,268.0 13,268.0 26,536.0

Long Term Debt 2,446.25 2,466.25 2,466.25 2,466.25 9,785.0 4,892.5 4,892.5 9,785.0

Total Non-Current Liabilities 2,446.25 2,466.25 2,466.25 2,466.25 9,785.0 4,892.5 4,892.5 9,785.0

Total Liabilities 10,101.25 10,121.25 10,121.25 10,121.25 40,405.0 18,160.5 18,160.5 36,321.0

0.0

Retained Earning 6,000.00 6,000.00 6,000.00 6,000.00 24,000.0 18,000.0 18,000.0 36,000.0

Total Equity 6,000.00 6,000.00 6,000.00 6,000.00 24,000.0 18,000.0 18,000.0 36,000.0

Total Liabilities & Equity 16,101.25 16,121.25 16,121.25 16,121.25 64,405.0 36,160.5 36,160.5 72,321.0

Quarter

Liabilities & Shareholder Equity

Quarter

FWD

Balance Sheet Forecast

For Years Ending May, 31 2017 and May, 31 2018

0100000200000300000400000500000600000

Balance Sheet Forecast

1st 2nd 3rd 4th

2017 ($) 1st & 2nd 3rd & 4rd 2018 ($)

Santoso, Cindy

11

The break-even analysis is on the second year of second quarter.

2017 2018

Net Revenue 179,216.6 432,898.8

Cost of Goods Sold 6,093.4 14,718.6

Gross Profit 173,123.2 418,180.2

Selling, General, and Administrative Expenses 237,182.1 162,702.1

Income from Operations -64,058.9 255,478.1

Interest Expenses 905.0 821.0

Other Expenses 5,000.0 5,000.0

Income Before Income Taxes -69,963.9 249,657.1

Income Taxes (9.3%) -6,506.6 23,218.1

Net Income -63,457.3 226,438.9

For Years Ending May, 31 2017 and May, 31 2018

Income Statement Forecast

FWD

Period Cummulative Exp. Cummulative Rev. Gross Profit

1st quarter 202,032.10$ -$ (202,032.10)$

2nd quarter 203,201.19$ 34,385.00$ (168,816.19)$

3rd quarter 206,507.83$ 97,254.10$ (109,253.73)$

4th quarter 212,601.19$ 179,216.60$ (33,384.59)$

1st quarter 384,918.44$ 282,797.23$ (102,121.21)$

2nd quarter 398,055.29$ 386,377.85$ (11,677.44)$

3rd quarter 415,029.67$ 499,246.60$ 84,216.93$

4th quarter 435,841.59$ 612,115.35$ 176,273.76$

Santoso, Cindy

12

VII. The Marketing Strategy

FWD will be using campaign through different platform of media and let environmentalist

organizations. The first thing to do is a mass broadcast through various restaurants that willing

to cooperate. We will put posters of facts and information about FWD willing to take their food

waste, just like recycling places taking their recyclable materials. These restaurants that willing

to cooperate with us will have the firsts hand on having their first generators and biogas for

electricity in their restaurants: so that when customers ask, they will know and understand how

it works. Environmentalist has informed more and more people to care about the environment.

With this effect, alternative to make sustainable environment will have a positive growth rate

compare to other substance. The second phase of the marketing campaign is through Long

Beach Post. This will be and effective way to advertise because according to Long Beach Kit

2015, there are 261,395 visits on LBpost.com with more than 36,000 subscribers, and various of

household income. The advertisement will be posted in Leaderboard which will cost $ 750.00

per day and will be on the website for two whole weeks. The third phase will be direct

marketing through door-to-door or salesman advertising in different part of Long Beach area for

the first one month. These campaign will be a continuous campaign until there is a decent

growth in the use of biogas in Long Beach Area. After the succeed in Long Beach area, FWD will

expand the use of biogas to Orange County and Los Angeles County in the same approach as in

Long Beach area.

VIII. Design and Development Plans

A. Biogas need to be set up for the first time users, to make it more marketable, we will over

the service of setting the cable to connect to biogas for kitchen only. This will be a type of

promotion for two months and will be longer depending on the market. The first customers

Santoso, Cindy

13

that we will approach are restaurants around the area. They have the most food waste that

we can develop become biogas. For the first few customer, we will over full service for free

from collecting the food waste, delivered it back, and install it to the kitchen.

B. The major difficulty for FWD is safety. Biogas is one of the safest renewable energy, but we

don’t want to take any chances. So, we will have a training for all employees on the first day

of the business. We will stimulate different approaches and possibility to keep the customer

and facility safe for all time. In the meantime, we can’t have the perfect technician for the

practice because of the current budget. However, in the next 18 months, we will have

inspection and technician to teach new employees and maintenance skill of all employees

every six months.

C. Other than the biogas itself, in approximately two years, we are planning on selling small

biogas plant for individual home. The potential customer for this section is household who

have enough backyard to keep the plant. The size of the plant would be about 8x2.5 feet

that can produce enough for some light every month.

IX. The Manufacturing and Operation Plan

A. FWD is an energy renewable industry, therefore, the operation will be everyday all year

long. This is because there is a wait time to produce the biogas. So, during holiday season,

as long as the machine filled up, one person can take care of the whole process of the

waiting process. As long as the scheduling plan is made, holiday season operating hours will

be more flexible.

FWD will be located in Signal Hill, Long Beach area because we want to focus on the busy

district of Long Beach restaurants and will be able to reach Los Angeles area in later years.

Biogas that FWD will produce will depends on the facilities. We have calculated the best

Santoso, Cindy

14

size for the facility will be 4758ft2. That is 70% of it will be used for three machines and the

rest will be for office, receiving, and parking. The disadvantage of renewable energy is the

space has to big enough for the waiting process to produce the biogas.

B. The quality control, production control, and inventory control have to be control because

even biogas has less risk of flammable, the is still a change of risk to be considered. As

energy.ca states that the biogas container can only contain biogas and then transported.

The inspection of the whole process will also be dedicated to keeping the pure biogas in

every container.

X. The Management Team

A. FWD will be consist of myself, a full-time employee who work as administrator and

supervisor that will directly have access to myself; two part-time employees who will be

running the process. The first part-time employee will be mainly doing transportation and

cleaning, and the other two would be operating the machine. There will be three additional

employees, one full-time and two part-time. The full-time employee will be the supervisor

for the whole operation and the other two would focus mainly on a new machine that will

be bought in the middle of the third year. I would most likely prefer on hiring two

individuals who have worked in either biogas or recycling industry.

B. FWD will be operating from 6:00 AM to 5:30 PM from Monday to Friday and 8:00 AM to

01:00 PM on Saturday and Sunday. For the first 18 months, the administrative will be

working full-time from 8:00 AM to 4:00 PM Monday to Friday with the salary of

$1,920/month and $13/hour for any additional hour. The part-time driver will be working

from 6:00 AM to 10:00 AM and within that hours, he would also have the responsibility to

maintain the cleanness of the truck and the facility. There would be two shift for running

Santoso, Cindy

15

the machine and receiving. The first shift will be from 6:00 AM to 12:30 PM and the second

shift will be from 12:00 PM to 5:30 PM.

C. FWD employees would have one or more criteria of customer service, administrative, no

accident in the last five years, and knowledge of basic renewable energy. The most

important part of being employee in FWD is have a good character such as punctuated,

reliable, responsive, and want to know how.

D. There will be a day of practice on how to run the process effectively and efficiently. The cost

of the technician practice will be $2,000/day. The technician will teach all employees on

how to control temperature, safety, and some basic maintenance knowledge.

Santoso, Cindy

16

Appendence:

Alibaba.com

Att.com

Biogas Magazine states

Carfax.com

CBS New

City-data.com

Cityfeet.com

Ebschohost.com

endfoodwastenow.org

Energy.ca

Hiscox.com

Ikea.com

Inschools.net

LBpost.com

Longbeach.com

Novatech.com

Staples.com

Statefarm.com

Ticketprinting.com

waste-management-world.com