Updated:

Replay Plastics Company Business Plan Report

Exclusively available on Available only on IvyPanda® Written by Human No AI

Executive Summary

The continued growth and use of plastics in packaging consumer products as well as in both commercial and industrial applications has contributed to the augmented demand for plastics. Most importantly, the consumer awareness of environmental implications of the use of plastics and the need to recycle the solid plastic wastes has added to the increased demand for plastics particularly from the recycled wastes. The increased demand for recycled plastic products and the few plastic recycling manufacturers provide an opportunity for establishment of plastic recycling and manufacturing firm.

Replay Plastics will be manufacturing plastic products from recycled polyethylene terephthalate (PET) majorly from used water and beverage bottles. As the major raw materials for the manufacturing process, PET is currently the largest quantity collected plastic material for recycling. Replay Plastics will take advantage of both increased market for the recycled plastics and the huge availability of raw materials to establish in the American market.

Replay Plastics will be located in western US particularly California to take advantage of the excess raw materials and available market. Once established, the firm will be incorporated as a private liability firm and operational within six months. The business plan provides an overview of the firm detailing every step in its operations and development as well as financial requirements.

Company Summary

As indicated, Replay Plastics will be manufacturing plastic products from recycled polyethylene terephthalate (PET) majorly from used water and beverage bottles. In addition, Replay Plastics will take advantage of both increased market for the recycled plastics and the huge availability of raw materials to establish in the American market. Replay Plastics will also be producing Recycled PET (RPET), extruded spin stock-sheet PET as well as high-strength and well-built extruded PET. The product will be sold out to the industrial clients for commercial purposes.

The Background of the Owner and the Management Team

Replay Plastics ownership and senior management team consists of the three founders. Barack Braddock is one of the founders and owners of Replays Plastics. Currently, Barack Braddock is the president and Chief Executive Officer (CEO) of the firm and possesses over thirty years experience in the industry. The practical knowledge of the president in plastic recycling manufacturing process is wide and covers all conversion facets and entrepreneurship development. Barack Braddock has been involved in various successful ventures in the industry and productively transformed over five plastic manufacturing companies. The other management team and owners of Replays Plastics include Sam McGuire and Carl Smith.

Sam McGuire is the Chief Operations Officer (COO) and Senior Vice President (VP). The COO holds a degree in engineering with over twenty years experience in the consumer recycling industry. Sam McGuire is also the inventor of the technology applied in the principal cleaning and decontamination of used plastics and the technology will primarily be applied in the manufacturing process. Sam McGuire patented the technology, which has been applied in over twenty-five plastic recycling projects around the globe. Carl Smith is the Chief Financial Officer (CFO) of Replays Plastics. Carl Smith is highly experienced in financial management. Carl Smith has also served as board member in various institutions both in public and in private sectors.

The Mission of Replays Plastics

Replay Plastics will be committed to transforming solid plastic waste into commercially viable merchandise through the application of recycling techniques that takes into consideration the environment. In addition, Replay Plastics will also be committed to upholding responsive, just, and ingenious work atmosphere, which values diversity, innovation, and hard work.

Objectives of Replays Plastics

The main objectives of the firm are financial. In fact, within five years Replays Plastics will be committed to attaining a financial goal that will enable its continuous operations. The main objectives of the firm include:

  • Sales growth of over $15 million from the first year of operation to over $43 million in the third year of operation
  • The growth in gross margin of over 35% from the first year of operation to over 50% in the third year of operation
  • The growth of net profit margin of over 13% in the first year of operation and over 20% beginning from the second year.

The Key Successes or the Competitive Advantage

Replay Plastics’ success will depend on the secure supply of used bottles and industrial solid plastic wastes to stock PET raw materials. The suppliers will be contracted from both waste-collecting firms and industries. In addition to constant supply of raw materials, the firm will enjoy constant sales of the final products. In fact, there is a huge market for the recycled plastics in industries and consumer packaging. The availability of the huge market presents a colossal opportunity for the firm to succeed amid increased competition. Moreover, the administrative team of the company is additional advantage. The executive management of the firm is drawn from highly experienced and respected personnel in the industry.

The Products

From the solid plastic wastes, Replay Plastics will produce the Recycled PET (RPET) flakes majorly from the used water and beverage bottles. In addition, the company will produce extruded spin stock-sheet PET as well as high-strength and well-built extruded PET used in securing large packages. The products will be manufactured from the RPET produced within the company. In other words, the RPET produced in-house will be used in the manufacturing of other products while the remaining will be sold to other manufacturing companies.

The spin stock-sheet PET will be distributed to the firms that use it as raw materials to produce high-visibility packaging materials. In other words, the product targets producers of laminates as well as fabricated plastic packaging merchandise. In addition, the product forms the primary raw materials in the manufacture of pallets used in engineering as well as construction.

The products will be manufactured through a patented recycling process in which cleaning and refining of the used solid plastic wastes are achieved. The extra flakes undergo another manufacturing process that results in high-strength strapping, which are then vented to other manufacturing industries, which add value to end up with more quality final product.

Competitive Advantage of the Products

Pricing will be a critical determinant of the products to potential clients. Given the fact that most of the products are manufactured from cheap used recycled raw materials, the final product prices will be lower in relation to the competing products. Low prices combined with quality packaging products will form a strong competing factor that will enable the company attain a sizable market share. In addition, timely delivery of the products to the end users will be another competitive advantage. The quality of the products, which are almost practical to the end users, quick delivery as well as cheaper prices of the final product will enable the company capture and sustain a sizable market share.

Sourcing of Raw Materials

As indicated the final products will be manufactured from recycled used solid plastic wastes, particularly water and beverage bottles. The firm will rely on excess of used PET water and beverage bottles collected every year from most of the states in US where the company will be located. The collected used solid plastics are made available for recycling companies while excess is shipped out to overseas destinations. Symbiotic relationship created with firms dealing in raw materials will enable continuous flow of inputs. The close relations with the firms will ensure a constant inflow of required raw materials as well as continuous availability in the near future.

Manufacturing and Operations Plan

Location and Operation Processes

Replay Plastics will establish a refining plant to be located in California, USA to take advantage of enormous quantity of raw materials collected in nearby states as well as the huge market in the industries in close proximity. Initial capacity projections of the firm is estimated to be around 46 million tons of manufactured products taking advantage of stock of used plastic bottles currently being collected in most of the states in the US states. Moreover, Replay Plastics will be vertically integrated to increase its efficiency in production. The products will be distributed through packaging division while the extra-recycled merchandize will be sold to be used as raw materials in another manufacturing process. The establishment of the recycling facility is expected to take four months after initial funding.

Management

The creators of Replay Plastics will form senior management team. However, several qualified employees are expected to join the firm. Balance employees in terms of technical skills, managerial capabilities, and financial knowledge will be hired and trained to take various responsibilities for the smooth and efficient operations of the firm. Though the operations of Replay Plastics will depend on the senior management, junior employees will be trained on other responsibilities. The management team consisting of the senior managers and various departmental employees will ensure smooth operations of the firm. The full management team is expected within six months of the firm’s operations.

Financial Summary

The expectations are that the firm’s essential facilities are put in place within four months after preliminary funding. However, sales and profit margins will be achieved in six months after the start of operations. The sales and profit margins are expected to grow gradually in the next three years. The initial investments are estimated at $2.7 million for the construction of the facilities, purchase of equipment, and related expenses.

The owners of the firm will contribute sixty percent of this amount while forty percent will be funded by outside investors who will receive thirty percent equity in Replay Plastics in addition to Internal Rate of Return (IRR) of fifty percent on dividends in the next five years. At the end of the third year, the firm will consider various options including public offering, and is estimated that Replay Plastics will be valued at over $250 million resulting into over 7 times EBITDA. Initial funding is expected immediately to establish facilities for manufacturing processes.

Market Opportunities

Market Size and Expected Growth Rate

The increasing demand for reused plastics will offer significant benefits to the operations of the plastic industry. In addition, the augmented demand for recycled materials will result in improved orders for finished recycled plastic products. Presently, PET leads in terms of volume of reused resin. Actually, the annual delivery of PET exceeds eight hundred million tons. In the coming years, the supply of PET is projected to record growth in excess of one billion tons. In addition, the users of recycled plastic products will continue to increase creating strong demand for the final product of the firm.

The polyethylene terephthalate controls the market for recycled resins due to its ever-increasing significance, visibility, and use. Studies postulate that approximately 16.5% of the entire four billion pounds of PET utilized fifteen years ago accounted for recycled sources. Additionally, in the United States, the yearly production of plastics from recycled sources account for estimated four percent. US remain the biggest producer of plastic waste approximated to be over ninety billion tons yearly. Apart from aluminum, synthetics account for greater value products in waste stream markets as well as the highest forecasted market growth rates.

Market Trends

The recent years have experienced significant expansions in the market and uses of recycled plastics. Indeed, over four million US families have been leading in the collection of used plastic containers for recycling. The market for reused plastics in the US is projected to continue spreading out. As such, firms are expected to utilize innovative expertise to ensure efficiency in the separation and reprocessing of high-purity resins. Due to increased prices of alternative products and quality of the recycled products, expansion and growth in demand is expected in the near future. Further, application of environmental-friendly technologies in the plastics market will also ensure growth.

The market segmentation will be in terms of the kind of the finished products. In essence, the surveys indicate increasing fanaticism trends in amassing as well as segregating superfluous packages among US populace. In other words, the households are willing to do without degrees of expediency in order to enhance the disposability of the recycled items. Further, several families are going as far as purchasing premiums for reprocessed plastic items.

Another critical inclination in the plastic market is the increasing refusal by households to consider burning of synthetic products before reprocessing. In reality, the public has been in support of materials that can be reprocessed. Studies show that the reprocessing pace of PET containers sold has reached thirty percent from fifteen percent previously recycled. The rate of PET bottle reprocessing has been alarming over the recent past and is projected to increase in the coming future.

Data from the US Environmental Protection Agency (EPA) show that synthetic beverage containers form an estimated three percent of the solid wastes cast off in the United States. As such, the plastic recycling industry players have augmented the reprocessing of such beverage containers and launched research and development initiatives. Most importantly, the EPA aims to recycle twenty-five percent of the municipal solid waste stream.

The reprocessing production projects augmented levels of synthetic recycling in order to develop long-lasting solutions to the solid waste menace. As such, analysts forecast that in 2015, over 50% of the entire PET bottles will be reprocessed. In addition, the plastic market forecasters anticipate that more plastics will be recycled annually. Through the creation of superior value using recycled thermo-formable sheets for packaging market, Replay Plastics will provide solutions to the plastic waste menace.

The yearly collection of PET post-consumer materials in US account for over 200 million pounds. However, the market lacks local cleaning and refining facilities that aid in the conversion of containers into resins for re-manufacturing. Replay Plastics manufacturing processes will be concentrated in United States due to the presence of the big market and availability of raw materials. Replay Plastics will utilize other firms located in various parts to increase the presence of its products. However, cheap products from Asia will dampen demand for recycled plastic products in US.

Currently, parts of United States and Canada lack autonomous extrusion plants of PET sheets. However, plastic recycling industry is growing in some states such California, Oregon, and Washington due to enabling factors such as raw materials availability and market. Further, the states have numerous clients for the recyclable products. Nonetheless, contracting deliveries and shipping costs of the recyclable products to some parts of the US as well as the rest of the world make the project unappealing.

Expected Market Share

Replay Plastics is aware of the existing prospects in the market. Therefore, the firm will put forward an upright-incorporated conversion facility that produces extruded sheet as well as high-strength strapping exploited from reprocessed PET post-consumer containers. In order to seize the opportunity, the firm will utilize high-tech expertise as well as employ own cleaning and refining processes.

The expected market share will depend on market segmentation strategy. The high demands for recycled PET as flake resin, roll stock to manufacture elevated visibility wrapping, and strapping for lumber industries will form the basis of the market aggregation. The firm will also consider operating within the proximity of markets to gain competitive advantage over rivals.

The total annual demand for recycled PET flakes is over a billion pounds. However, the US market produces approximately 800 million pounds. Consequently, the firm’s clients are forced to utilize expensive products manufactured by original materials. Such clients are compelled to import cheap merchandise from developing economies. Since sales are price-sensitive, the firm will attract customers by offering recycled PET flake at lower prices ranging between $0.42 to 0.53 compared to virgin resin whose current pricing ranges between $0.63 to 0.75.

Further, the firm will tend to capture a market for other finished products. Studies show that the market demand for recycled PET sheet and film is over a billion pounds. In addition, Replay Plastics will be expecting to capture a share of the domestic plastic strapping market worth over 200 million pounds. Replay Plastics will use the recycled PET to produce cheap strapping to take over the strapping market.

Moreover, data from the American Plastic Council (APC) show that consumers of PET in California are sixty-three, eight in Oregon, and ten in Washington. On the other hand, the consumers of HDPE in California are seventy-three, nine in Oregon, and thirteen in Washington. Replay Plastics will target such consumers in order to augment the market share.

Environmental and Industry Analysis

Industry Analysis

The firm faces no direct competition in its operations in United States presently. The firm intends to capture entire production in US. The firm’s capability of sourcing post-consumer container inventories will be a critical segment in Replay’s vertical incorporation tactic of operations as well as the production of highly demanded products by consuming industries. In addition, the firm will have own refining and cleaning segments to gain competitive edge over rivals.

The Company strategic operations will revolve around reaching the target clients at the shortest time possible, in the most convenient ways, and at the least cost possible. As such, Replay Plastics will strive to create a channel of distribution that endeavors to attain the major operational goals. The strategic operations will be based on the mission of providing value to the customers

Environmental Analysis

The analysis of the plastic industry in which Replay Plastics operates will exploit the application of five forces model developed by Porter. The model will provide the necessary tools that are critical in the appraisal of the competitiveness of the companies within the plastics industry. Most importantly, the model will offer analytical tool on how the external environment influences the strategic operations of Replay Plastics.

The Buyers Bargaining Power

The demand of products made from recycled PET has been steady over the years. However, the purchasing patterns of consumers depend on products’ eminence, price, delivery period, market closeness and the firm’s repute. The consumers can effortlessly surrogate the products offered by Replay Plastics in the plastic recycling industry through purchasing merchandise provided by other companies in the industry such as virgin PET.

As a result, the organization’s share of the market can be abated. The Company will have to look into the quality, prices, and delivery times of products to attract numerous buyers. Moreover, the firm will consider locating its operations near the market to capture more buyers. Therefore, the buyers have high bargaining power in the plastic recycling industry.

Bargaining Power of Sellers

The demand for recycled PET resins remains high. However, the Recycled PET is under-supplied due to improbability in delivery. Therefore, the firm will have to consider sourcing post-consumer as well as post-industrial waste before venturing in the industry. Further, Replay Plastics will reflect on having independent cleaning and refining facilities instead of buying flake in the open market.

In addition, the firm will consider securing agreements with vendors and manufacturers to ensure efficient and constant supply of plastic inventory. The management will also have to consider locating its cleaning and refining plants near the delivery stores to avoid expenses incurred when hauling plastic materials. In principle, the suppliers in the plastic industry enjoy high bargaining power.

Threats of New Market Entrants

The expenses incurred in the establishment of cleaning and refining plants are expensive and industry-specific. In addition, the paucity of recycled PET flake leads to the institution’s post-consumer container facilities. As such, the firm will incur the additional costs in sustaining trademark devotion as well as establishing plants. Most importantly, the business will consider its delivery chains, localities, and trademarks as well as the financial capital to gain the advantage of warding off potential competitors.

Competitive Rivalry in the Industry

The Company will exploit technological advancements as well as financial strengths to increase competitive edge over other firms. In addition, Replay Plastics will encounter competition from other companies operating in the extruded sheet trade such as Advance Extrusion, Plasti-Shell Packaging, Petco, and Klockner. The competitors will reduce the share of market controlled by Replay Plastics.

Threat of Substitute Products

The players in the plastic industry offer diverse similar products. Replay Plastics will consider employing convenience and low-price strategies to counter substitute threats. Moreover, the firm will consider using two-stage manufacturing plants including cleaning and refining post-consumer bottles as well as extruding the consequential flake to produce high quality products.

Management Team

The management team of Replay Plastics will consist of both experienced and skilled workforce. The skilled and experienced workers will mainly be employed in management and supervisory positions. However, at the lower levels, unskilled temporary labor force will be requid. Replay plastics will majorly depend on the vast experience and technical skills of its founders. The founders have over thirty years experience in almost all aspects of plastic manufacturing processes as well as business enterprise development and operations.

Braddock Ben has been involved in the formation of various successful companies including multi-cavity Plastic Injection Molder Container (PIMC) facility. The manufacturing processes of Replay Plastics will depend on the Braddock’s expansive experience in polymer raw materials facets, plastic recycling and transformation methods as well as business enterprise development and growth.

Besides, the CEO has been involved in the start-up, development and growth of other plastic transformations and manufacturing companies. In addition to the involvement in the management of plastic conversion manufacturing firms, the CEO has over fifteen years experience in plastic industry consultations. The consulting firm has been involved in establishment, development and growth of the plastic manufacturing plants.

Besides vast experience of the President and CEO, Replay Plastics will rely on the technical skills of Sam McGuire, the executive VP and (COO). Sam McGuire holds a degree in engineering with over twenty years experience in the consumer recycling industry. Moreover, Sam McGuire is also behind innovations that have been used in the recycling process. The firm will primarily depend on this technology. Sam McGuire patented the technology, which has been applied in over twenty-five plastic recycling projects around the globe. Further, the VP has been involved in the management and operations, design, installation, construction and commissioning of diverse private companies involved in recycling processes of solid wastes around the globe.

Before joining Replay Plastics, Sam McGuire served as Vice President International Business Development and Engineering (VP-IBDE) in the previous firm. The major functions in this position included implementing corporate business models in other countries, licensing intellectual property to various firms including joint ventures, managing, designing, and constructing recycling facilities as well as continuous technical and business support to other companies. The technical and business support produced various joint ventures in the industry. Sam McGuire is expected to bring his vast experience and technical skills in the development and growth of Replay Plastics.

The firm’s financial capabilities will depend entirely on the experience and technical skills of CFO. Carl Smith is the Chief Financial Officer (CFO). The CFO is an experienced banker and financial investments consultant. Carl Smith has also served as board member in various institutions both in public and in private sectors. Smith has successfully raised funds for various organizations including over forty firms in both private and public domain.

Previously, Smith served as a CEO of various organizations besides being board member of diverse financial organizations both in banking and non-banking sector. The expectations are that Smith will bring in his vast financial experience to raise fund for the establishment, development, and growth of the firm. Combined with managerial and technical experiences as well as financial skills, the capabilities in terms of personnel will be significant for the growth and development of Replay Plastics.

The Personnel Plan

Besides the technical, managerial, and financial capabilities of the founders of the firm, Replay Plastics will also depend on the junior personnel drawn from various fields and capabilities. The expectations of the firm are that the junior personnel will be increased with time.

However, at the beginning, the firm will have fifty-three junior employees including six part-time staff. The junior staff is expected to increase with the growth of the firm. In the second year of the firm’s operations, the junior personnel will have grown to fifty-nine including nine part-time while in the third year, the junior management team will have grown to seventy-three including fifteen part-time employees. The capabilities and competencies of the expected junior management team are provided in the summary of the personnel plan.

The Benefits of Replays Plastics to the Community

Environmental Benefits

Replays Plastics is involved in the plastic solid waste recycling process, which is considered one of the greater environment management practices. Since the raw materials used in the manufacturing processes are mainly plastic wastes, the firm is involved in the better way of managing the environmental waste. As indicated, data from the US Environmental Protection Agency (EPA) show that synthetic beverage containers form an estimated three percent of the solid wastes cast off in the United States. As such, appropriate waste management practices such as recycling in necessary.

Economic Benefits

Besides employment opportunities, Replay Plastics will form end-user products of collection firms based in various states in US. The symbiotic relationships established will ensure continued existence of both firms as well as provision of revenue to the governments. Moreover, Replay Plastics will contribute to the continued growth of other related industries as well as support economic activities of the surrounding communities.

Financial Plan and Data

Replay Plastics will require over $5 million start-up capital comprising of total assets and expenses. The start-up expenses will include costs incurred during the facility preparation on on-site construction services, legal services and accounting, special consulting, local engineering, lab equipment and supplies as well as contingency plans. The costs in these activities add to the total expenses that the firm will incur to start the operations.

However, the largest start-up in terms of finance is required for the building of manufacturing facility. Once completed, the facility will be one of the long-term assets. Besides buildings, machinery, and fixtures, inventory as well as cash are categorized as assets.

The expectations are that the installation of the equipment will take approximately six months. Upon completion, the operations of the firm will immediately begin and the production process will proceed as planned. However, the realization of the profits will come after another six months. In other words, net income from sales and daily cash flows to finance operations will be realized within six months after the start of manufacturing processes.

Financial Assumptions

For Replay Plastics to start collecting net revenues, the following financial assumptions will be made.

  • There will be thirty days allowed to collect the accounts receivables. Thirty days are allowed because of prior experience and understanding of the customers within the industry
  • The prediction for inventory turnover is twelve times
  • The burden of the personnel contribution consists of the employee’s healthcare
  • The accounts receivable financing will be seventy percent charged at twelve percent interest rate per year.
  • New equipment will be bought in terms of hire-purchase requiring down payment of thirty percent while the remaining amount paid on delivery of the merchandise. The purchase is cataloged as long-term asset bought from the cash flows
  • Growth rate of five percent is predicted in all costs and sales
General assumptionsYear 1 (%)Year 2 (%)Year 3 (%)
Current interest rates12.012.012.0
Long-term interest rates8.08.08.0
Tax rate30.030.030.0

Break-Even Analysis

Break-even is the point the Company will begin making profits. For Replay Plastics to break even, the Company has to produce over 716,000 units per month. The units are arrived at after taking into consideration the monthly fixed cost of about $184,000 and a variable cost of 51% of prices per unit. According to the estimates, the firm is likely to break even in the first month of sales. The general assumptions of break-even analysis are summarized below.

DescriptionUnits (000)
Monthly unit break-even715.962
Monthly revenue break-even373.890
AssumptionsUnits ($)
Average revenue per unit0.52
Average variable cost per unit0.27
Monthly fixed cost184.160

Projected Profit and Loss

In the first and second years of operation, the expectations are that the firm will experience rapid growth in sales. The growth in sales is attributed to the augmented production capacity as new production facility is added to the manufacturing process. The assumptions is that all the products will be sold and the favorable gross margin will be attained in the first month of sales at least cost.

The constructive income on sales will be attributed to straight-down combination of the firm’s operations. In addition, the management capabilities in supervising the preliminary sales and marketing enable Replay Plastics incur minimum costs in sales and marketing.

Projected Cash Flow

According to the planned estimates, Replay Plastics will start generating encouraging income in terms of cash flow six months after the start of operations, which is the twelfth month after initial investments. As indicated in the summarized cash flow table below, Replay Plastics will start clearing long-term debts in its balance sheet while adding new equipment and facilities for the production processes. The activities will be achieved within two years of operation. The owners and other investors will start earning dividends in the second year of operation.

Pro Forma Cash Flow

Year 1Year 2Year 3
Cash Received
Cash from Receivables$13,094.219$29,385.192$38,167.380
Subtotal Cash Received$13,094.219$29,385.192$38,167.380
Expenditures
Cash Spending$1,315.857$2,298.430$2,594.018
Bill Payments$9,762.949$20,983.849$24,120.412
Subtotal Spent on Operations$11,078.806$23,282.279$26,714.430
Long-term Liabilities Principal Repayment$79.2$80.0$80.0
Purchase Long-term Assets$1,591.0$3,229.0$0.0
Dividends$0.0$3,000.0$8,000.0
Subtotal Cash Spent$12,749.006$29,591.279$34,794.430
Net Cash Flow$345.213($206.088)$3,372.950
Cash Balance$990.213$784.125$4,157.075

Projected Balance Sheet

The projected balance sheet indicates the net worth of the firm in the next three years of operation. The projected net worth is the result of combination of immediate sales conventions, rapid increase in production capacity as well as straight-up incorporation of the manufacturing processes. The net worth is estimated in excess of the reserves in terms of resources. The indication is that growth in profit margins will be greater in relation to the resources reserves put in the firm.

Projected Business Ratios

The ratios are projected against the industry growth. The ratios indicate the premeditated strong expansion in returns on investments, productivity, resources as well as cash flows. The returns on investments are expected to increase every year to allow financing of the internal daily operations of the firm as well as purchase of new equipment to increase production capacity.

The increased capacity, the straight-down combination of production processes as well as increased efficiency in business operations explains the rapid growth in profitability. Moreover, the significant diversion of the Company ratios and that of industry is attributed to the capability of the firm to utilize the low-cost recycled materials in the production process.

Long-Term Plan

The firm’s long-term plan includes full production capacity within the first three years of operation. To attain the required full capacity, the firm needs to reach a third of production capacity in the first year of operation using initial production facilities constructed during the start-up. In addition, a third of production capacity needs to be arrived at with introduction of new production facility in the second year of operation. With additional production facility equipment in year three, the full capacity is expected to be attained.

From the beginning of the production process to the attainment of full capacity, the products are expected to have been sold and the projected net margins arrived at. The assumption is that there will be constant five percent increases in the sales prices as well as cost of resources in terms of input and workforce in every year of operation. The result will be constant increase in profit margins from the first year of operation through to the third year assuming the expansion of production capacity is invariable.

The Company Exit Strategy

Even though there is no indication that Replay Plastics will be sold in the near future, the industrial trends show that the firm will cost over $250 million in the next five years of operation. According to the industrial trends in private sales, purchases below $25 million result in 5.4 times EBITDA whiles purchases ranging between $26-260 million result in 7.3 times EBITDA. The worth of Replay Plastics after five years is based on the projections. However, the management of the firm is indifferent in ensuring that Replay Plastics remains under their ownership or retains the annual cash flows.

References

Lee, J, The right-brain business plan: A creative, visual map for success, New World Library, San Francisco Bay, 2011. Web.

McKeever, M, How to write a business plan, Nolo, Berkeley, 2012. Web.

Pinson, L, Anatomy of a business plan: The step-by-step guide to building your business and securing your company’s future, aka associates, Chicago, 2008. Web.

Stutely, R, The definitive business plan: The fast-track to intelligent business planning for executives and entrepreneurs, FT Press, Upper Saddle River, 2002. Web.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2020, May 9). Replay Plastics Company Business Plan. https://ivypanda.com/essays/replay-plastics-company-business-plan/

Work Cited

"Replay Plastics Company Business Plan." IvyPanda, 9 May 2020, ivypanda.com/essays/replay-plastics-company-business-plan/.

References

IvyPanda. (2020) 'Replay Plastics Company Business Plan'. 9 May.

References

IvyPanda. 2020. "Replay Plastics Company Business Plan." May 9, 2020. https://ivypanda.com/essays/replay-plastics-company-business-plan/.

1. IvyPanda. "Replay Plastics Company Business Plan." May 9, 2020. https://ivypanda.com/essays/replay-plastics-company-business-plan/.


Bibliography


IvyPanda. "Replay Plastics Company Business Plan." May 9, 2020. https://ivypanda.com/essays/replay-plastics-company-business-plan/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
1 / 1