MGMT20143 Think Big: Business Model Validation & Plastic Recycling

This report outlines a venture idea focused on recycling non-biodegradable plastics into new products like roofing and flooring tiles, addressing environmental protection concerns. The business model details problem-solving, monetization strategies, and financial feasibility, including break-even analysis, ratio analysis, and cash flow projections under best-case and worst-case scenarios. Operational feasibility is assessed, emphasizing the identification and testing of plastic properties. The report also discusses the scope and scalability of the idea, what is being sought from investors, and what can be offered in return, such as a percentage share of the company and influence in decision-making. References to relevant research articles are included.

Venture idea underling the
business model
Using the non-biodegradable plastics to manufacture new
products.
The products to be manufactured include; roofing tiles
and flooring tiles.
This will help in the protection of the environment since
the non-biodegradable plastics will be removed from the
environment.

The problem solved
The major problem that will be solved is environmental
protection.
With the increased number of plastic bottling companies, it is
important that an affirmative action be taken to help reduce the
effect of caused by the disposed bottles on the environment.
 The project intends to provide a solution to this increasing
problem. Many companies all over the world use plastics to pack
their products and this is not about to change (Taylor, 2015).

Cont’d
It is important to know that the environment plays an
important role in the sustainable living of humans.
The use of the environmental must be mutual.
Unfortunately, this is not the case today.
Attention must be drawn towards sustainable use of the
environment. In fact this is in line with the global
objective of sustainably using the environment.

How the idea is monetised
Well as the finances needed for the implementation of the project are too
much, it will still be feasible.
This is because the money needed in the business can be acquired over a
long period of time.
 The project requires little money in the initial stages and this can be
catered for. In the initial stages, the project will be sponsored from the
personal savings.
 It is anticipated that as the project progresses, there is a high possibility
that the project will attract sponsors and this will help to accelerate the
project(Hoekstra, 2016).

financial feasibility
• Break-even point
• The breakeven point (units) = the fixed costs/ (sales for each unit - Variable cost for each unit)
• Although contribution for each unit = the sales price for each unit - the variable cost for each unit,
• Therefore, breakeven in unit terms = Fixed costs/contribution margin for each unit
• Fixed costs=$640000.00
• Sales price for each unit=$15.00
• The Variable cost for each unit =$3.0
• The Contribution margin= ($15.0-$3.0) =$12.0
• The break-even in terms of units=640000.0/ (15.0-3.0)
• The breakeven point in units=53,333.00 units
• It will necessitate the company to sell 53,333.33 units to be in a position of generating enough revenues to meet all
its expenditures.
• Break-even in dollars= sales price per unit* Breakeven point in units
• The break-even in dollars=$15.00*53,333.330
• The break-even in dollars= $800,000.00
• It will necessitate the company to make $800,000.00 in terms of revenue to be able to achieve zero loss and zero
profit.
Units to
Break-
Even
53,3
33
Sales in
dollars to
Break-
Even
$800
,000
Variable
Costs Per
Unit
$3
Overall
Variable
Costs:
$159
,999
Overall
Fixed
$640
,000

Ratio analysis
Current ratios 2.4300 5.1100
Quick ratio 2.0800 4.6600
Debt to Assets ratio 0.2554 0.1467
Net Profit Margin ratio 0.1541 0.2984
Return on income ratio 0.3680 0.7839
Receivable Turnover ratio 7.6000 7.6000
Collection period(days) 29.0000 43.0000
Inventory Turnover ratio 15.7600 15.4300
Payable Turnover 7.7600 12.1700
Asset Turnover ratio 1.7800 2.2400
Debt to Net Worth 0.3400 0.1700
Assets to Sales ratio 0.5600 0.4500
Acid Test ratio 0.7000 2.0900
Sales/Net Worth ratio 2.3900 2.6300
Dividend Pay-out ratio - 0.6800

Operational feasibility
The operations carried out during the project will be
directly concerned with the success of the project.
 First, the chemical nature and properties of the plastics
that are chosen to be used will be identified. The
characteristics will be identified with the help of technology.
Testing for the various properties for example strength of
the plastics, the durability of the plastics, reaction towards
various weather conditions will be done.

Cont’d
All the required processes are achievable since the human
resource to carry them out can be easily accessed on the
global market.
As mentioned earlier, the operations will be stepwise and
therefore the operational costs will not be cleared at once.
In this way, the operations will be achieved without
suffering serious financial constraints.

Scope and scalability of the idea for
commercialisation.
The project will initially focus on the large areas were
plastics are deposited.
 This will help to narrow down the costs that are involved
in searching for waste plastics.
It is obvious that the project will attain a high market once
it is successful.

What is being sought from the
investor
• As mentioned earlier, the initial costs that will be used in
the project will be from personal savings.
• However, as the project proceeds, there will be an
increase in financial costs. To cater for these financial
costs and publicize the project, there will be need for
more money.
• In this regard, an investor will be of great help in
providing both the finances and the project publicity
needed.

What is to be offered in return
• We shall look forward to providing the investor with
percentage share of the company.
• The investor will also be promised a certain degree of
influence in terms of the decision making of the company.
• The investor will also be promised a certain percentage of
the company dividends for a given period of time(Walker
and Xanthos,2018).

Cash flow projections for the first two years
Best case scenario
july 2019- oct2020 Nove19-Feb 2020 march2020-june 2020 july 2020-Oct 2020 Nov2020-feb2021 March 2021-June2021 July2021-Oct 2021
Financing activities
Stock issued 1,250.00$ 1,250.00$ 1,250.00$ 2,500.00$ 2,500.00$ 2,500.00$ 2,500.00$
Repurchased stock repurchased (2,440,737.25)$ (2,440,737.25)$ (2,440,737.25)$ (6,030,103.00)$ (6,030,103.00)$ (6,030,103.00)$ (6,030,103.00)$
Cash dividend paid (773,554.75)$ (773,554.75)$ (773,554.75)$ (791,845.00)$ (171,901.06)$ (171,901.06)$ (343,802.11)$
Net financing cash flow 60,512.75$ 60,512.75$ 60,512.75$ 2,722,397.00$ (6,199,504.06)$ (6,199,504.06)$ (6,371,405.11)$
Operational activities
business licence cost 3,273,554.75$ 3,273,554.75$ 3,273,554.75$ 9,541,845.00$ 9,541,845.00$ 9,541,845.00$ 9,541,845.00$
Liabilities principal repayment (19,800.00)$ (19,800.00)$ (19,800.00)$ (80,000.00)$ (4,400.00)$ (4,400.00)$ (8,800.00)$
Net cash from operations 3,253,754.75$ 3,253,754.75$ 3,253,754.75$ 9,521,845.00$ 9,521,845.00$ 9,521,845.00$ 9,521,845.00$
Investing activities -$
Purchase Current Assets (397,750.00)$ (397,750.00)$ (397,750.00)$ -$ (22,097.22)$ (22,097.22)$ (22,097.22)$
Long-term Assets purchase -$ -$ -$ (2,000,000.00)$ -$ -$ -$
Net cash flow from investing actvities (397,750.00)$ (397,750.00)$ (397,750.00)$ (2,000,000.00)$ (22,097.22)$ (22,097.22)$ (22,097.22)$
Net Cash Balances 2,916,517.50$ 2,916,517.50$ 2,916,517.50$ 10,244,242.00$ 3,300,243.72$ 3,300,243.72$ 3,128,342.67$