starting a recycling business - · pdf fileand bimetal container types filled with carbonated...
TRANSCRIPT
TableofContents
Chapter 1: THE BEVERAGE CONTAINER RECYCLING AND LITTER REDUCTION PROGRAM
Overview...........................................................................................................................................3 Whataretheelementsoftheprogram?........................................................................................ 3-6 Whatarethebenefitsofbecomingcertified?...................................................................................6
Chapter 2: UNDERSTANDING THE MARKET
Whatarethedifferenttypesofrecyclingprograms?.................................................................. 7-�0 Whatisrecyclable?.........................................................................................................................�0 WherewillIgetrecyclablematerials?...........................................................................................�0 Whoaremycompetitors?..........................................................................................................�0-�� TowhomwillIsellrecyclablematerials?.................................................................................��-�2
Chapter 3: FULFILLING LOCAL AND STATE REQUIREMENTS
WhatlicensesandpermitsdoIneed?.............................................................................................�3 WhatfeesandtaxesmustIpay?.....................................................................................................�4 ArethererequirementsifIparticipateinCalifornia’sbeveragecontainerrecyclingprogram?........�4-�5 Whataretherequirementsforeachdifferentcertificationcategory?....................................... �5-�6 HowdoIapplyforcertification?.............................................................................................. �6-�8
Chapter 4: PLANNING THE BUSINESS
Whattypeoflegalstructureisappropriateforarecyclingbusiness?...................................... �9-20 WhatmaterialswillIaccept?.........................................................................................................20 HowmuchmaterialcanIexpect?..................................................................................................2� Whataremyequipmentrequirements?.................................................................................... 2�-22 Whatmakesagoodsiteforarecyclingcenter?....................................................................... 22-23 Howshouldarecyclingbusinessbestaffed?........................................................................... 23-24 Whatdoesitcosttobeginarecyclingbusiness?...................................................................... 24-25 HowcanIknowwhatmyexpensesandrevenueswillbe?...................................................... 25-27 Whataremysourcesoffunds?................................................................................................. 27-28 Whataretheelementsofabusinessplan?............................................................................... 28-30
Chapter 5: RESOURCES
Governmentagencies................................................................................................................ 3�-32 Recyclingassociations....................................................................................................................32 Recyclingpublications.............................................................................................................. 32-33 Assistanceforsmallbusinesses................................................................................................ 33-36
Department of Conservation-Division of Recycling �
Chapter 1
TheBeverageContainerRecyclingProgram
Overview
In1986,theCaliforniaBeverageContainerRecyclingandLitterReductionAct(Act)createdastatewidebeveragecontainerrecyclingprogram.TheActestablishesminimumrefundvaluesonbeveragecontainersandrequiresaconvenientsystemforconsumerstoredeemtheircontainers.ThebroadgoalsoftheActincludereducinglitteralongwithachievingan80percentrecyclingrateforallbeveragecontainertypescoveredundertheprogram.Successoftheprogramdependsoneffectivecoordinationbetweengovernmentandtheprivatesector.Communicationandavailabilityofinformationplayanimportantroleinpromotingthiscoordination.Implementedin1987,theprogramreliesonfourtypesofcertifiedrecyclingoperationstoprovideconvenientrecyclingopportunitiestoconsumers:drop-offorcollectionprograms,communityserviceprograms,recyclingcentersandprocessingfacilities.
TheprogramismanagedbytheDepartmentofConservation(Department) andisfundedthroughtheBeverageContainerRecyclingFund (Fund).TheFundconsistsofmoniesdepositedbybeveragedistributorsasCaliforniaredemptionpayments.ThedistributorsarerequiredbylawtomakethesepaymentswhentheysellbeveragecontainerstodealerswithinCalifornia.ThesepaymentsarethenpaidoutasCaliforniaRefundValue (CRV)toconsumersandotherrecyclerswhentheyredeemtheirbeveragecontainersatcertifiedrecyclingcenters.OnlybeveragecontainerspurchasedfromadealerinCaliforniacanberedeemedforCRV.Sincenoteverycontainerisredeemed,unclaimedfundsareusedforpaymentstocitiesandcountiestoimplementrecyclingprojects,paymentstocurbsidecollectionprograms,incentivepaymentstorecyclerstoestablishconvenientrecyclinglocations,grants,statewidepubliceducationandinformation,andadministrationoftheprogram.
What are the elements of the program?
TheprogramiscomposedofmanydifferentelementsdevelopedtopromoteandregulatebeveragecontainerrecyclingwithintheState.TheseincludeCRV,certificationofrecyclingoperations,processingfees,conveniencezones,handlingfeepayments,recyclingratecalculations,researchingrecycledmaterialmarkets,auditingandenforcement,andstatewidepubliceducationandinformation,includingRecycleRex,atoll-freeinformationline(1-800 RECYCLE), andawebsite (www.conservation.ca.gov).
Thissectionprovidesadescriptionofbeveragecontainersandtheotherelementsthatcomprisetheprogram.Asyoureadthedescriptions,itisimportanttonotethatthelegalandregulatoryenvironmentsurroundingrecyclingisconstantlychanging.Therefore,themostcurrentinformationcanbeobtainedbycallingtheDepartment’sDivisionofRecycling(Division) oraccessingthewebsite (See Chapter 5).
Beverage Containers
ContainersonwhichtheDepartmentconcentratesitseffortsaredefinedbylawasaluminum,glass,plasticandbimetalcontainertypesfilledwithcarbonatedandnon-carbonatedwaters,carbonatedandnoncarbonatedsoftdrinks,sportdrinks,winecoolers,distilledspiritcoolers,carbonatedandnon-carbonatedfruitdrinks,vegetablejuiceinbeveragecontainers16ouncesorless,100%fruitjuiceinbeveragecontainerslessthan46ounces,coffeeandteabeveragesaswellasbeerandmaltbeverages.HowevereachyeartheLegislaturereviewsothercontainersthatmaybeaddedtothelist,sothetypesofbeveragesincludedunderthelawmaybeexpanded.
Department of Conservation-Division of Recycling 3
A Guide to
Beveragetypesthatarenotincludedintheprogramincludewine,distilledspirits,milk,medicalfood,infantformula,100percentfruitjuicein46ounceorlargercontainers,beveragesnotspecificallyincludedintheAct,productsnotinliquidorreadytodrinkform,andproductsnotintendedforhumanconsumption.
California Refund Value (CRV)
Themaineconomicincentivethatthelegislationcreatedforthebeveragecontainerrecyclingprogramisthepaymentofarefundvalueforcontainersredeemedbyaconsumer.SuchpaymentsareonlypaidonproperlymarkedcontainerspurchasedinCalifornia.Theproperlymarkedcontainersmusthaveoneofthefollowinglabelsprintedonthecontainer:
• CaliforniaCashRefund• CACashRefund• CARedemptionValue• CaliforniaRedemptionValue• CACRV
Accordingtolaw,theamountsthatarepaidasrefundvalueforeachcontainer
thelevelofrecycling.Currently,theamountpaidis5centsforeverybeveragecontainerunder24ouncesand10centsforbeveragecontainers24ouncesormore.
canchangebasedon
CA REDEMPTIONCA REDEMPTION
CA REDEMPTION VALU
CA REDEMPTION VALU
CALIFORNIACASH
REFUND
Certification
TheDepartmentcertifiesandmonitorsrecyclingoperationsthathandleCRVbeveragecontainers.Thedifferenttypesofrecyclingoperationsthatcancurrentlybecertifiedincludedrop-offorcollectionprograms,communityserviceprograms,recyclingcentersandprocessingfacilities.
ThecertificationapplicationprocessrequiresknowledgeoftheDepartment’sregulationsandprocedures.Chapter3detailssomeoftheinformationnecessarytocompleteanapplication.
Aftercertification,theDepartmentcarefullymonitorscertifiedrecyclingoperationsbyreviewingtheirrecordsandoperatingpracticesforregulatorycompliance.Recordsinclude,butarenotlimitedto,receiptsandlogs,dailysummaries,shippingreportsandprocessorinvoicereports.Thepreparationandmaintenanceoftheserecordsarecriticalfunctionsofacertifiedoperator.
Processing Payment
Aprocessingpaymentisanamountpaidtocurbsideprograms,drop-offorcollectionprograms,communityserviceprogramsandrecyclingcenterstosubsidizethecostofrecyclingcertainbeveragecontainers.Thepaymentiscalculatedforeachbeveragecontainertypethatcannotprovideaprofittothecertifiedrecyclerwhenthecontainersarerecycled.Thepaymentisthedifferencebetweentherecycler’scosts (plus a reasonable rate of return)andthescrapvaluecalculatedforeachcontainertype.TheprocessingfeeisinitiallypaidbythebeveragemanufacturertotheFund.Sincethepaymentisconstantlychangingthroughregulationandlegislation,youshouldcontacttheDepartmentforthemostcurrentinformation.
4 Chapter 1: The Beverage Container Recycling & Litter Reduction Program
Convenience Zone
Aconveniencezoneistheareawithinaone-halfmileradiusaroundsupermarketsthathavegrosssalesoftwomilliondollars($2,000,000)ormoreperyear.EachconveniencezoneisrequiredtohaveacertifiedrecyclingcenterwithinitsboundariesunlessspecificallyexemptedbytheDepartment.Theconveniencezoneconceptwasmandatedinordertoprovideconvenientopportunitiesforconsumerstoredeemtheirbeveragecontainers.Conveniencezonesaredesignatedandmonitoredthroughouttheyear.Itistheresponsibilityofallthebeveragedealerswithintheconveniencezonetoassurethatacertifiedrecyclingcenterislocatedin theconveniencezone.Ifacertifiedrecyclingcenteris notestablishedinthezoneandthezonedoesnothaveanexemption,allbeveragedealerswithinthe conveniencezonemustredeembeveragecontainerswithintheirstoresorpaydailypenaltiestotheDepartment.
Handling Fee Payments
Recyclingcenterslocatedatsupermarketsites,ruralregionrecyclersandnonprofitorganizationsthatmeetspecificrequirementsareeligibletoreceiveamonthlyhandlingfeepayment.Handlingfeepaymentsareincentivestoencourageconvenientredemptionofemptybeveragecontainersandtorewardoperationalefficiency.Thehandlingfeesencourageincreasedredemptionbypayingasetamountforeacheligiblebeveragecontainerredeemedbytherecyclingcenterfromconsumers (up to a maximum of $2,300 per month),providedtherecyclingcenterachievesaminimumvolumeof60,000beveragecontainers.
Tobeeligibleforhandlingfees,arecyclermustbeoneofthefollowingtypesofrecyclingcenters:
•Supermarket Site Recycling Center -Tobe
qualifiedasa“supermarketsite”,yourrecyclingcentermustbelocatedwithin,oroutsideandimmediatelyadjacenttotheentranceof,orwithinaparkinglotorloadingareasurroundingasupermarketwhichisthefocalpointofaconveniencezone,oradealerthatislocatedwithinthatzone,andwhichisaccessibletomotortraffic.
• Nonprofit Convenience Zone Recycling Center - Tobequalifiedasanonprofitconveniencezonerecyclingcenter,theoperatorofthesitemustbeanonprofit organizationasestablishedunderSection501(c)or501(d)ofTitle26oftheUnitedStatesCodeandhaverecyclingcenterswhicharecertifiedandlocatedsomewherewithinaconveniencezone.Thelocationoftherecyclingcenterneednotbeatasupermarketsite.
Department of Conservation-Division of Recycling 5
A Guide to
• Rural Region Recycling Center - Tobequalifiedasaruralregionrecyclingcenter,therecyclingcentermustbelocatedinaruralregionasdefinedbytheFarmer’sHomeLoanAdministrationcriteriaandmustbelocatedsomewherewithinaconveniencezone.Thelocationoftherecyclingcenterneednotbeatasupermarketsite.Additionally,ruralregionrecyclershavetheflexibilitytocombinetotalmonthlybeveragecontainerpurchasesfromtwoormoreoftheirruralconveniencezonesitestoestablisheligibilityforasinglehandlingfeepaymentbasedontheaggregatevolumeofthesiteschosen.Thereisnomaximumnumberofsitesthatcanbeincludedinthiscombinationofrecyclingcenters,orcluster.
Eachmonth,theDepartmentdeterminesthehandlingfeeeligibilityforeveryrecyclinglocation.Tobeeligibleforahandlingfee,arecyclingcentermustbeallofthefollowingonthefirstdayofthecalendarmonthforwhichhandlingfeesareclaimed:
• Certifiedandoperational
• Inanon-exemptconveniencezone
• Thesolerecyclerinthezone
• Notagrandfatheredfacility
Eligiblerecyclersmustsubmitahandlingfeeapplicationmonthly.Thisapplicationmustaccuratelyreporttheweightofeachmaterialtyperedeemedfromconsumersforthatmonth.TheDepartmentthendeterminesthehandlingfeepaymentbasedonthenumberofcontainersredeemedandthemixofglassandplasticcontainers.Handlingfeesare
allocatedbyawardingpaymentstorecyclingcenterswiththehighestnumberofeligiblecontainersfirst.Thisrankingprocessactsasanadditionalincentivetoincreasevolumes.TheDepartmenthasprintedguidelinesthatcanassistyouwithunderstandingandapplyingforhandlingfees.
What are the benefits of becoming certified?
OneofthemajorbenefitsofbecomingcertifiedisthatyouareeligibletopayCRVforredeemedbeveragecontainers.TheCRVprovidesanincentiveforconsumersandotherstoreturntheirbeveragecontainerstoyourcenter.Asacertifiedrecyclingcenter,ahighvolumeofCRVredeemedcontainerswillprovideyouwithagreateropportunityforprofitwhenyoureturnthemeithertoacertifiedprocessororanothercertifiedrecyclingcenterforanypotentialscrapvalue.KeepinmindthattheCRVdoesnotcontributetoyourprofit.
BeingacertifiedoperationalsohelpstokeepyoucurrentonthelatestchangestotheAct.TheDepartmentwillupdateyouonanychangesinthelaworproceduresthataffectyou.
InadditiontoCRVbeveragecontainers,manyothermaterialsmayalsobeprofitabletorecycleandyoumaywanttoconsideraddingthemtoyourprogram.Thesematerialsarenotdiscussedindetailinthisguide.However,youcanobtainmoreinformationonrecyclingmaterialsotherthanCRVbeveragecontainersfromtheCaliforniaIntegratedWasteManagementBoard(916/341-6000)oryourlocalwastemanagementagency.
6 Chapter 1: The Beverage Container Recycling & Litter Reduction Program
Chapter 2
UnderstandingtheMarket
Eachday,Californiansthrowawaythreeandahalfpounds
ofgarbageperperson.Muchofthis“garbage,”includingCRVbeveragecontainers,isvaluableandrecyclable.Ifyoucancollectthisrecyclablematerialandthensellittoabusinessthatreusesthematerial,recyclingcanbeaprofitableenterprise.Ofcourse,inordertomaketheprofit,youhavetoselltherecyclablematerialformoremoneythanitcostsyoutocollectit.
Californiaishometothesixth-largestrecycledmaterialsmarketintheworld.Forexample,in2002,Californiansrecycledover10.6billionCRVbeveragecontainers.TheDepartmenthasapproximately2,000certifiedrecyclingcentersintheState.ThecomplexCaliforniamarketwillcontinuetogrowinresponsetoincreasingsolidwastemanagementconcerns,therebyprovidingnewbusinessopportunitiesintherecycledmaterialsindustry.
Tobesuccessfulintherecyclingbusiness,youmusthaveathoroughunderstandingofthemarketforrecyclablematerialsinordertoadjustrapidlytochangesinmarketconditions.
Inadditiontothisguide,anexcellentsourceofinformationistalkingtopeoplealreadyinthebusiness.Thesepeoplewillhaveup-to-date,practicalinformationandsuggestions,andwillprobablywelcomeanopportunitytodiscusscurrenttrendsintheirfield.Talkwithpeopleyoualreadyknow,callyourcityorcountyrecyclingcoordinatorforcontactsinthefield,orseekouttradeorindustrygroupsforinformation.Thissectionprovidesanintroductiontotheever-changingrecyclingindustry.
What are the different types of programs?
Thereareseveraldifferentcategoriesofrecyclingprogramsthatpresentpotentialopportunitiesforbusinesses.Byunderstandingtherecyclablematerialsmarket,youwillbeabletodecideifyouwanttostartarecyclingbusiness;andifso,whatkindofrecyclingprogramisrightforyou.
Inadditiontoregisteringcurbsideprograms,theDepartmentcertifiesoperatorsofdrop-offorcollectionprograms,communityserviceprograms,recyclingcentersandprocessingfacilities.Thiscertificationonlyregulateshowyou,asanoperatorofarecyclingcenterorprocessingfacility,buyandsellCRV-labeledbeveragecontainerspurchasedinCalifornia.TheDepartmentdoesnotcontrolothertypesofrecyclablematerialssuchaspaper,cardboard,tires,autos,scrapmetal,etc.However,manyofthosematerialscouldbepartofanyrecyclingoperation.ThisguideisfocusedonCRVbeveragecontainerrecycling.
BASIC TYPES OF BEVERAGE CONTAINER RECYCLING PROGRAMS
Recycling Centers
• OperatorsofcertifiedrecyclingcenterspayCRVforbeveragecontainersredeemedfromthegeneralpublicaswellasfromdrop-offorcollectionprograms,communityserviceprograms,othercertifiedrecyclingcentersandcurbsideprograms.ThecontainersredeemedmustbeproperlylabeledandpurchasedinCalifornia.Thecenterpays,ataminimum,CRVforthecontainers.Acertifiedrecyclingcenteroperatorisnotrequiredtobuynon-CRVmaterialsfromconsumers.Itisoptionalwhetherornotsomescrapvalueisadded,butthisisoneincentivethatyoumayusetoattractcustomers.
Department of Conservation-Division of Recycling 7
8
• Somecertifiedrecyclingcentersareequippedwith“reversevendingmachines”thatpaycustomersCRVforbeveragecontainersplacedinthemachine.Otheroperationsincludestaffedcenterswithbinsoratruckon-sitetopaytheCRVandpossiblyscrapvalue.Theserecyclingcentersareoftenlocatedwithin1/2mileofasupermarketasrequiredbythe“conveniencezone”aspectoftheprogram.(Potential recycling center operators should read Chapter 1 of this guide which explains convenience zones.)
• RecyclingcentersmustredeemalleligibleCRVcontainertypes.
• Operatorsmustbecertifiedforeachrecyclingcenterlocationtheyoperate.
• Whentheoperatorofacertifiedrecyclingcentersellsthebeveragecontainerstoanothercertifiedrecyclingcenteroraprocessor,theoperatorisrepaidtheCRVandmayalsoreceiveascrapprice.ThescrappaymentiswheretherecyclingcenterwillmakeitsprofitontheCRVbeveragecontainers.Arrangementsfortransportationofthegoodstoanothercertifiedrecycleroraprocessoraretheresponsibilityofthecertifiedrecyclingcenter.
• Certifiedrecyclingcentersthatarethesolerecyclerwithinaconveniencezonecreatedbyasupermarketmaybeeligibletoapplyforhandlingfeepayments,whicharealsobasedonvolume,iftheymeetthefollowingcriteria: (a) fornon-rural,forprofitrecyclingcenters,locatedonordirectlyadjacenttotheparkinglotofabeverageretailer (dealer) locatedwithinanactive,non-exemptconveniencezone;(b)recyclingcentersoperatedbyanonprofit,tax-exemptorganization(nonprofitconveniencezonerecycler)locatedanywherewithinanactive,non-exemptconveniencezone;or(c)recycling
A Guide to
Certificate issued to:
Assistant Director
Division of Recycling
Issued by:
State of California
DEPARTMENT OF
CONSERVATION
DIVISION OF
RECYCLING
centerslocatedinadesignatedruralregionlocatedanywherewithinanactive,non-exemptconveniencezone(based upon volume for single location or aggregated volume from more than one rural location in separate convenience zones).
Processors
•ProcessorsbuyemptyCRVbeveragecontainersfromcertifiedrecyclingcenters,drop-offorcollectionprograms,communityserviceprogramsandcurbsideprograms.Theypaytheseprograms,ataminimum,theCRV
pluspossiblyascrapprice.Inadditiontobuyingmaterialsfrom
recyclers,processorspreparerecyclablematerialsforsaletoend-userswhererecyclablematerialsareconvertedintonewproducts.Beveragecontainermanufacturers,steelmills,andpapermillsareexamplesofendusers.Aspartofpreparingbeveragecontainersformarket,processorsmaysortmaterialstorecoverthelargestamountofrecyclablematerialspossible,potentiallyinvolvingflattening,decontaminating,andbaling.Processors“cancel”thebeveragecontainers,usuallybyalteringthe
Chapter 2: Understanding the Market
shapeofthecontainersothattheycannotberedeemedforCRVagain.Forexample,aluminumbeveragecontainersmaybecanceledbyshreddingordensifying.
• ProcessorsarenotrequiredtopurchaseallCRVcontainertypes.Forexample,aprocessormaychoosetoacceptonlyaluminumbeveragecontainersandnotacceptCRVglassorplastic.ProcessorscannotpayCRVtothepublicunlesstheprocessorisalsoduallycertifiedasarecyclingcenter.
• Whensellingthesecanceledbeveragecontainersandotherrecyclablematerialstoendusers,thescrapvaluereceivedbecomestherevenuefortheprocessor.
Drop-off or Collection Programs
Operatorsofdrop-offorcollectionprogramsareprohibitedfrompayingCRVandmaybeoperatedbyindividuals,partnerships,husband/wifeco-ownerships,limitedliabilitycompanies,orcorporations.Theseprogramsmayengageinoneormoreofthefollowingactivities:
• Setupdrop-offbinsatspecificlocations,suchasofficesorschools,tocollectCRVcontainersonadonationbasis.Drop-offlocationsarecentrallylocatedandusuallyutilizebinsorboxesasthedrop-offpointforbeveragecontainers.Mostlocationsareself-serviceandopenaroundtheclockforcustomerconvenience,althoughsomearestaffedwithon-siteemployeestoanswerquestions.
• Collectlargevolumesofemptybeveragecontainersfromavarietyofplacessuchasbars,restaurants,hotelsand/orparks.
• Separaterecyclablesfrommixedmunicipalwaste.
Drop-offorcollectionprogramsrangeinsizefrom
large,nationalsolidwastemanagementcorporationstoindependentrecyclersservingtheirlocalcommunity.
Drop-offorcollectionprogramoperatorsusuallyacceptorcollectthedonatedmaterialandsellittosomeoneelseforprocessing.TheymaketheirprofitfromtheCRVandanyscrapvaluethattheymaybepaid.Theoperatorisresponsibleforarrangingtogetthebeveragecontainerstoacertifiedrecyclingcenterorprocessor.Certifieddrop-offorcollectionprogramsmaypayscrapvalue.Operationaldetailsvaryfromlocationtolocation.Somelocationsproviderecyclingforonlyonetypeofmaterial(e.g.,aluminum),someacceptmultiplematerialsandsomeprovideseasonalrecyclingofnon-CRVmaterials(e.g.,telephonebooks).
Drop-offorcollectionprogramsmaybeeligibletoreceiveannualsupplementalpaymentsasneighborhooddrop-offprogramsiftheyarelocatedinaruralregionandaredesignatedbyacityand/orcountytoproviderecyclinginspecificresidentialneighborhoods.
Community Service Programs
Communityserviceprogramsareoperatedbyanonprofit/charitableorganizationwithtaxexemptstatus,orbyacity,countyorotherpublicagency.Likecertifieddrop-offorcollectionprograms,communityserviceprograms
sitesorcollectfromvariouslocationssuchasschools,churches,orparks.Charitableorganizations(suchasenvironmentalgroups,communitygroupsand
mayengageinsettingupdrop-offbinsatspecific
Chapter 2: Understanding the Market Department of Conservation-Division of Recycling 9
A Guide to
municipalgovernments)oftenbecomecertifiedasacommunityserviceprogramaspartoftheirfund-raisingefforts.TheseprogramsareprohibitedfrompayingCRVforcontainersandmayengageinthesametypeofactivitiesasdrop-offorcollectionprograms.Theymayalsobeeligibletoreceiveannualsupplementalpaymentsasneighborhooddrop-offprograms.
Curbside Programs
• CurbsideprogramscollectCRVbeveragecontainersandotherrecyclablematerialsfromresidencesandmulti-familydwellingsinbinssetoutatthecurb.Thisisusuallyaveryconvenientandeasymethodofrecyclingforthepublic.
• Toapplyforaregistrationnumber,thecurbsideprogrammustprovidetheDepartmentwithverificationoflocalgovernmentapprovaltooperateinthearea.
• Curbsideprograms,bydefinition,donotpayresidentsCRVforbeveragecontainers.Infact,thereisnopaymentinvolvedtotheconsumers.ThecurbsideprogramtakesthebeveragecontainerstoacertifiedrecyclingcenterorprocessortoobtainCRV,scrapvalueandanyotherappropriatefees.Thisishowthecurbsideprogramcoversaportionofitsoperationcosts.
What is recyclable?
CRVbeveragecontainers,paper,glass,metal,andplasticaresomeexamplesofpotentialrecyclablematerials.Themarketvaluesofrecyclablematerialscanvaryaccordingtothetypeofmaterial.Themarketvalue,alsocalledthescrapvalue,isessentiallywhatthematerialisworthasscrapproductforreuseasarawmaterial.Scrapvaluefluctuatesaccordingtomarketconditions.Itisimportanttoknowthedifferentvaluesforthevarioustypesofbeveragecontainersandotherrecyclablematerialsbecauseyour
abilitytohaveaprofitablebusinesswilldependonthis.
Where will I get recyclable materials?
Thesourceofyourrecyclablematerialscanvarywidely.Youmaydecidetotargetyourservicestothegeneralpublic,thecommercialsector,othercollectors,ornonprofitgroups.Morespecifically,youmaytargetbars,restaurants,andhotelsassourcesoflargequantitiesofCRVbeveragecontainersthatwerepurchasedinCalifornia.Inaddition,recreationalareas,suchascityparksorsportsevents,mayalsobeagoodsourceforbeveragecontainers.Youcandiscoverothersourcesofrecyclablematerialsbyidentifyingtheconsumersofyourtargetedrecyclablematerialsandcontactingthemtodiscusscollection.
Theconvenienceofyourrecyclingoperation,theamountyoupayforrecyclablematerials,andotherservicesyoumayprovideareallfactorsthatcanincreasethevolumeofrecyclablematerialsreceivedbyyourbusiness.Oneimportantfactortokeepinmindisthatmanycertifiedrecyclersandprocessorspayahigherscrapvalueforhighvolumeloads.Therefore,itisimportanttocollectoratleasthavethepotentialtocollectlargevolumesoftherecyclablematerialsyouchoosetorecycle.Thisisimportanttoconsiderbecausethiswouldbeanopportunitytoincreasepotentialprofits.
Who are my competitors ?
Recyclingisn’tnew.ValuablemetalshavebeenrecycledsinceatleastWorldWarII,andbusinessofficeshavebeeninvolvedinofficepaperrecyclingfordecades.Manymunicipalitiesalsobegantheirrecyclingprogramsdecadesago.Eventhoughrecyclingisn’tnew,thefieldhasexperiencedanexpansionoverthepastfewyears,whichhasdrawnscoresofnewrecyclersintothearena.Consequently,therearelikelytobemanyindividualsandbusinesseswhowillbecompetinginyourmarket.
�0 Chapter 2: Understanding the Market
Asanexample,theremaybealongtimerecyclerthatisalreadyoperatinginyourchosenarea.Becauseofloyaltyorconvenience,manypeoplemaynotwantanewfacilityormaybeunwillingtosupportyourbusiness.Checkingintothestrengthoftheestablishedcentersintheareainwhichyouwishtooperatewillbecrucialtothesuccessofyourventure,becauseitwillindicatewhetheryoucanobtainsufficientrecyclablematerialstosupportyourcosts.
Amunicipalcurbsideprogramisapotentialcompetitorforrecyclablematerialsfromyourarea.Theconvenienceofcurbsiderecyclingmaycausepeopletodecidenottoredeemcontainersatyourcenter.Itwillbeimportantthentodiscussapossibleagreementwiththecurbsidehaulerforthepurchaseofhisrecyclablematerials.
Dependinguponthetypeofrecyclingoperationyouchoose,someofyourcompetitorsmayactuallybesuppliersofrecyclablematerials.Forinstance,yourneighborhoodgirlandboyscouttroops,thelocalenvironmentalgroup,orothernonprofitorganizationsmaycollectbeveragecontainersfromyoursources,buttheymaythenredeemthecontainersatyourcertifiedrecyclingcenter.Theseorganizationsareusuallyinvolvedinrecyclingasameanstoraisefunds.Seekingoutthesegroupsandcreatingsomeagreementwillbebeneficialtobothofyou.
To whom will I sell recyclable materials?
Inordertomakemoneyinarecyclingbusiness,youwillneedtosellthematerialstoacertifiedrecyclingcenterorprocessorthatpaysnotonlyCRV,butalsoascrapvalueforlargevolumesofmaterials.Astablemarketforyourbeveragecontainerswillplayacriticalroleinthesuccessorfailureofyourrecycling
business.ItisimportanttonotethattherearealimitednumberofCRVbeveragecontainers,whichmakesthemavaluablecommodityinthemarket.Itisimportantthatyouthoroughlyinvestigatethemarketpriortostartingyourbusiness.TheDepartmentmaintainsthenamesandaddressesofallcertifiedrecyclingcenters,processors,drop-offorcollectionandcommunityservicesprogramsthatprovideCRVbeveragecontainerrecyclinginCalifornia.
Thereareavarietyofmarketsavailableinwhichtosellyourmaterials.However,beforeyouopenyouroperationandneedtosellyourmaterials,someinquiryisrequiredtounderstandthevariousfactorsthatwillinfluenceyouroperation.Theitemspresentedbelowsummarizesomeoftheissuesaffectingrecyclablematerialmarkets.
TRANSPORTATION COSTS
Transportationcostsarecrucialtotheprofitabilityofanyrecyclingprogram.Somematerialsaremoreexpensivetotransportthanothers.Forexample,glassisexpensivetotransportbecauseofitsweight.
Moreover,themarketforglassculletmightbegluttedandthepriceyoureceivemaynotcoverthecoststotransportthematerials.
MINIMUM VOLUME AND WEIGHT PROFITABILITY REQUIREMENTS
AllcertifiedrecyclingcentersmayacceptanyvolumeofCRVbeveragecontainersthatisbroughttothembyothercertifiedoperators.CertifiedprocessorsmustacceptallCRVbeveragecontainersofthetypeforwhichtheyarecertifiedthataredeliveredbyothercertifiedoperators.Someprocessorswillpayabetterscrappriceforlargervolumeloads.Thisisimportant
Department of Conservation-Division of Recycling ��
A Guide to
c
torememberbecauselargerloadswillincreasetheamountofrevenue.Youmustdetermineifthecommunityinwhichyouwishtooperatewillbeabletoprovidethelargevolumeofmaterialsneededforprofitability.
MATERIAL PREPARATION REQUIREMENT
Materialpreparationrequirementsofthecertifiedprocessoryouplantouseshouldbediscussed.Crushingandbalingcontainerswillrequirethepurchaseofdifferentrecyclingequipment.Recyclingequipmentcanbeveryexpensive,soslightdifferencesinpreparationrequirementscanmakeasignificantdifferenceinyouroperatingexpenses.
PRICES
PriceswingsintheCaliforniamarketarecommonandcanbecrucialtotheprofitabilityofyourrecyclingoperation.Historically,pricesforrecyclablematerialshavefluctuatedbroadly.Reasonsforthesepricefluctuationsincludechangesinvirginmaterialprices,energypriceswings,oversupply,big-pictureeconomics(suchas
market/end-useravailabilityandaccessibility.recession),seasonalfluctuations,and
CONTRACTUAL ARRANGEMENTS
Thereareavarietyofcontractualarrangementsavailable,includingafixedpriceorafloating-pricecontract,bothshortorlong-term.Afixed-pricecontractprovidestheadvantagethatifthemarketshouldweaken,thebuyerwillstillpayyoutheset
price.Thedisadvantageofsuchacontractisthatifdemandfortherecyclablesincreases,andthemarketpriceincreases,youwillstillreceiveyoursetcontractprice.Toreducethisrisk,considerestablishingcontractswithseveralbuyers.Ifonebuyerchangesmaterialspecificationsorisunabletoacceptyourbeveragecontainers,youwillhaveotherbuyersundercontract.Adisadvantagetohavingseveralcontractswithdifferentbuyersisthatsmallerquantitiesmaybeallottedtoeachbuyerand,therefore,youmayreceivealowerprice.Theprogramdoesnotrequirecertifiedoperatorstomakecontractualarrangements.Thesearrangementsaresolelybetweenthepartiesenteringintosuchagreements.
Afteryouhaveinvestigatedeachofthesepoints,aclearerpictureofthepotentialviabilityofyour
recyclingbusinesswillappear.
ollect.Besuretotalktopeoplein
CheckyourlocalyellowpagestolocatecertifiedrecyclingcentersorprocessorswhomightbuyyourCRVbeveragecontainers.Also,checkatalibraryfornationaldirectoriesforprocessorsofotherrecyclablematerialsyoumay
thebusiness,astheyareoneofthebestsourcesforcurrentmarketinformation.
TheDepartmentcanalsoprovideyouwithalistofcertifiedrecyclingcentersandprocessors.
Youmaywanttocontactandestablishrelationshipswithseveralprocessorsbecausethescrappricesmayvarybetweenthemandthiswouldensurethatyouhavesomeotheroptions.
�2 Chapter 2: Understanding the Market
Chapter 3
FulfillingStateandLocalRequirements
Arecyclingbusinessmustsatisfynumerousstateandlocalgovernmentrequirementsinordertooperatelegally.Thefollowinginformationprovidesanoverviewwithresourcestocontactforfurtherassistanceinfulfillingtherequirements.
What licenses and permits do I need ?
Inadditiontoapplyingforcertification,therearelicensingandpermittingregulationsthatmustbefollowedinordertooperateanybusiness.Eachcityandcountywillvaryinitsspecificrequirements.Thefollowinglicensesandpermitsarecommonlyrequiredforoperationofarecyclingbusiness.Thislistisbynomeansall-inclusive;therefore,contactyourlocalcityhall,countyadministrativeoffice,orplanningdepartmentforassistanceinidentifyingandmeetinglocalrequirements.
BUSINESS LICENSES
Businesslicensesareissuedbythecityand/orcountytomonitoradherencewithappropriatelocalbusinessregulations.Failuretoobtainabusinesslicensewillresultinapenalty.Contactyourlocalcityhallorcountyadministrationfordetails.
CONDITIONAL USE PERMITS
Conditionalusepermitsaresometimesissuedbythecityorcountyforconditionalusesoflandtooperatethecenterorbecausethetypeofbusinessdoesnotfallundertheestablishedpermittingcategories.Contactyourlocalplanningdepartmentformoreinformation.
OTHER PERMITS
Landusepermits,localconstructionordinances,buildingpermits,orzoningvalidationmayaddconditionsthatmustbemet.Theserequirementswilldependonthetypeofstructure,ifany,ofyour
recyclingbusinessandbyitslocation.Contactyourlocalplanningdepartment.
SCALE CERTIFICATION
Annualfeesandscalecertificationrequirementsmustbefulfilled.Thecountydepartmentofweightsandmeasuresmonitorsthescalesthatareusedtoweightherecyclablematerials.Itcertifiesthatyourscalemeetsitsrequirementsandwillperiodicallyinspectthescalesforenforcementpurposes.ContacttheStateDepartmentofAgriculture’sDivisionofMeasurementStandards,alongwiththelocalorcountyoffice,forfurtherassistance.
LEGAL DOCUMENTS
Legalorganizationalrequirementsincludefictitiousbusinessnamestatements,articlesofincorporation,articlesoforganization,andFederalemployeridentificationnumberdocuments.Thesedocumentsarenecessaryiftheyareapplicabletoyourtypeofbusinessorganization.Fictitiouslynamedbusinessesmustbeonrecordatthecountyrecordersofficeofthecountyclerk.CorporationsandlimitedliabilitycompaniesmustregisterwiththeSecretaryofState’sOffice.Ifyouplantohirestaff,obtainaFederalidentificationnumberfromtheInternalRevenueService.
Theselicensesandpermitsarethebasicitemsthatyouneedwhenstartingarecyclingbusiness.Theycomefromavarietyofsourcesbutthelocalcityhall,countyadministrativeoffice,orplanningdepartmentshouldbeabletoleadyouintheproperdirectiontoobtainthenecessaryitemswithinyourcommunity.Theselicensesandpermitsareanimportantpartofanybusiness.Therefore,itisvitaltomaintainfeesorannualrenewals.
Department of Conservation-Division of Recycling �3
A Guide to
What fees and taxes must I pay?
Thereareseveralfeesandtaxesthatyoushouldanticipatepaying.Theseinclude:
BUSINESS LICENSE FEES
Businesslicensefeesarechargedwhenobtainingabusinesslicenseandaregenerallypaidannually.
BUSINESS TAX CERTIFICATE
Businesstaxcertificateisobtainedwhenabusinesslicenseispurchased.Occasionally,thiscertificateisusedinthesamewayasthebusinesslicenseandisissuedtoshowthatthebusinessisallowedtooperatewithinthejurisdiction.
FEDERAL INCOME TAX
Federalincometaxwillneedtobemonitoredforboththebusiness,ifitisacorporation,andthesalariesofallemployees,includingyourself.TheInternalRevenueServicewillbeabletoprovidealistofthenecessaryrequirementsforthisprocedure.
STATE INCOME TAX
StateincometaxisfiledwiththeFranchiseTaxBoardoftheStateofCalifornia.TheBoardcanprovideyouwithtaxformsandadditionalinformation.
EMPLOYEE PAYROLL TAXES
EmployeepayrolltaxesareadministeredthroughtheEmploymentDevelopmentDepartmentoftheStateofCalifornia.Itcandescribethenecessaryrequirements.
WEIGHTS AND MEASURES FEES
Weightsandmeasuresfeesareassessedwhenyou
registerwiththecountyweightsandmeasuresofficethatwillmonitoryourscales.
PROPERTY TAX
Propertytaxisassessedifyouownthelandwherethecenterislocated.Thelocaltaxassessor’sofficewillbeabletoprovideadditionalassistance.
OTHER LOCAL BUSINESS TAXES
Otherlocalbusinesstaxesmaybeassessedsuchaspayroll,grossreceipts,orcitybusinesstaxesdependingonlocalgovernmentrequirements.
LOCAL PERMITTING FEES
Localpermittingfeesmayberequiredtoobtainthenecessarypermits,suchaslanduse,building,andoccupancypermits.
Inorderforthesefeesortaxestobepaidinfullandpromptly,accuraterecordsmustbemaintained.YoumaybeauditedbyanyofthetaxagenciesortheDepartment.AccuratetaxrecordsmustbemaintainedandtheappropriateincometaxformsfiledwiththeIRS,EmploymentDevelopmentDepartment,andtheFranchiseTaxBoardforallemployeesincludingyourself.Theseagenciescanhelpyoutounderstandbetterthefeesandrequirements.
Are there requirements if I participate in California’s beverage container recycling program?
Yes!IfyourbusinessisgoingtopayandreceiveCRVforemptybeveragecontainerspurchasedinCaliforniathatyouwillcollectoracceptinlargevolumes,thebusinessmustbecertifiedbytheDepartment.Inordertobecertified,thebusinessmustfollowcertain
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Chapter 3: Fulfilling State and Local Requirements
operationalprocedures.Thesecertificationproceduresareoutlinedinthefollowingtwosections.
What are the requirements for each different certification category?
Therearefourcategoriesofcertification:drop-offorcollectionprogram,communityserviceprogram,recyclingcenterandprocessor.Readthefollowingdescriptionstodetermineintowhichcategoryyourbusinesswillfall.TheserequirementswillaffectyourdevelopmentofabusinessplanasdescribedinChapter4,therefore,itisimportanttoresearchalloftherequirementsofthesedifferentcategories.Followingthisdescriptionisanoverviewoftheapplicationprocess.
Drop-off or Collection Programs
Drop-offorcollectionprogramsmustmeetthefollowingrequirements:
• DonotpayCRVforcontainersacceptedorcollected.
• Preparelogsoftransactionsandmaintaincopiesofshippingreportsandweightticketspreparedbytherecyclingcenterorprocessingfacilitybuyingyourmaterials.
• Collectoracceptaminimumof500poundsofaluminumorplasticbeveragecontainersor2,000poundsofglassbeveragecontainerseveryyeartoremaincertified.
• Cannotqualifyasacurbsideprogram.
Unliketherecyclingcentercertification,certificationofdrop-offorcollectionprogramsisonlyrequiredonceperorganization.Foradditionalinformationonthistypeofrecyclingprogram,seetheDepartment’sregulations.
Community Service Programs
Communityserviceprogramsmustmeetthesamerequirementslistedforcertifieddrop-offorcollectionprogramsbutpreparelogsonlyforrecyclingdrivesorspecialevents.Foradditionalinformationonthistypeofrecyclingprogram,seetheDepartment’sregulations.
Recycling Center
Certifiedrecyclingcenters,informallyknownasredemptioncentersorbuybackcenters,arerecyclingfacilitieswhich,incompliancewithstateregulations,acceptfromconsumersandpayCRVforemptybeveragecontainers.Therequirementsforthistypeoffacilityinclude:
• PayingCRVtoconsumersforalleligiblealuminum,glass,plastic,andbimetalbeveragecontainers.
• Withtheexceptionofgrandfatheredfacilitiesandruralregionrecyclers,operatingatonelocationforatleast30hourseachweek,fiveofwhichareotherthanbetween9:00a.m.to5:00p.m.MondaythroughFriday.Recyclingcentersmayqualifyasruralregionrecyclersandoperatelessthan30hoursperweekprovided:1)therecyclingcenterislocatedinadesignatedruralregion;and2)theproposedoperatinghoursdonotdecreaseconsumerconvenience.
• Postingthehoursofoperation,openforbusiness,andpricingsigns.ThesesignrequirementsarelistedintheDepartment’sregulations.
• InspectingallloadsreceivedtodetermineeligibilityforCRVpayments.
• Keepingproperreceiptsandlogsoftransactionsandpreparingshippingreports.
Department of Conservation-Division of Recycling �5
A Guide to
Thecertificationisnottransferablefromonelocationtoanother.Eachrecyclingcenterlocationmustbecertified,evenifseveralareownedandoperatedbythesameentity.Thecertificationalsoisnottransferableifyousellthebusiness.Thenewoperatormustapplyforcertification.
TheDepartment’sregulationscontainsamorecompletelistingoftherequirementsforacertifiedrecyclingcenterandshouldbethoroughlyreviewedifyouplantooperateacertifiedrecyclingcenter.
Processor
Acertifiedprocessorpurchasesmaterialsfromcertifiedrecyclingcenters,drop-offorcollectionprograms,communityserviceprogramsandregisteredcurbsideprograms.ProcessorspayCRVandmaypayscrapvalueforbeveragecontainersfromcertifiedrecyclersandeligiblecurbsideprograms.TheprocessorisresponsibleforcancelingtheemptybeveragecontainersitpurchasestopreventCRVfrombeingpaidmorethanonceonthesamecontainer.
How do I apply for certification?
TheDivisionisresponsibleforcertifyingindividuals,partnerships,limitedliabilitycompanies,corporations,andotherentitiesasdrop-offorcollectionprograms,communityserviceprograms,recyclingcentersandprocessingfacilities.AnapplicationandacopyoftheregulationscanbeobtainedbycontactingtheDepartmentorbyvisitingthewebsite.
Oneofthemostimportantthingstorememberwhenapplyingforcertificationisthataseparateapplicationmustbesubmittedforeachlocationthatyouwantcertifiedtooperateasarecyclingcenterorprocessingfacility.Onceitisapproved,thecertificateisvalidfortwoprobationaryyearsandmustbekeptonthepremisesofthecenter.Attheendoftheprobationaryperiod,theDepartmentmayterminatethecertification,extendtheprobation,orgrantanadditionalthree
yearsofcertification.Inthecaseofreversevendingmachines,drop-offorcollectionprogramsandcommunityserviceprograms,thecertificatemustbekeptonfileatthemainbusinessofficeoftheoperator.Drop-offorcollectionprogramsandcommunityserviceprogramsmayoperateatmultiplelocationswithonecertification.Thecertificationisvalidfortwoyearswiththefirstyearprobationary.
Reviewofeachapplicationforcertificationisthorough.Bepreparedtoprovideallofthefollowingtypesofinformation:
• Thecategoryofcertificationrequested.
• Nameandaddressofthedrop-offorcollectionprogram,communityserviceprograms,recyclingcenterorprocessingfacility.Physicallocationofthefacility,includingthenearestcrossstreet.Nameandaddressoftheoperatorandcontactperson.
• Acopyofyourfictitiousbusinessnamestatement,ifavailable.
• Thetypeoforganizationthattheoperatorrepresents.Ifitisacorporation,youmustprovidethecorporatenumberasfiledwiththeSecretaryofState,acopyofthearticlesofincorporationandthenameandpositionofallcorporateofficers.Partnershipsmustprovideacopyofthepartnershipagreements.Limitedliabilitycompaniesshouldprovidethearticlesoforganization,statementofinformation,andanyoperatingagreement.
• TheFederalidentificationnumber(employerIDnumber).
• HistoryofanypastorpendingcertificationsrequestedfromtheDepartment.
• Nameandaddressoftheownerofthefacilitypremises.Ifyouareleasing,renting,oroperatingondonatedspace,provideacopyofalease,rental
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agreement,orwrittenpermissionfromthepropertyownerorleaseholder.Besurethedocumentidentifiesthenameoftheoperator,thespecificfacilityaddress,andreferstoarecyclingbusiness.
• Thebeveragecontainertype(s)tobeacceptedorcollected.
• Ifyourbusinessisapartnership,allofthepartnersmustsigntheapplication.Ifitisacorporationorlimitedliabilitycompany,thechiefexecutiveofficerortheindividualwithauthoritytolegallybindthecorporationtoacontractmustsigntheapplication.Forhusbandandwifeco-ownerships,bothhusbandandwifemustsign.
TheapplicationisdesignedtoprovidetheDepartmentwithenoughinformationtoassessyourbusinessanditspotentialcompliancewiththestatuteandregulations.Anewapplicationmustbefiledifanyofthefollowingoccurs:
• Achangeinfacilitylocation(forrecyclingcentersandprocessingfacilities)
• Achangeintheoperator
• Achangeinthecertificationcategory
• Withtheexceptionofanoperatorwhoisoperatingunderaprobationarycertification,expirationofthecertificate
• Achangeintypeoforganization
• Achangeinpartnersforpartnerships
Alloftheapplicationproceduresshouldbefollowedcarefully.Ifyouneedassistance,theDivisionisavailabletohelpyou.Exhibit3.1outlinestheapplicationprocesstimeframe.
Aninitialreviewwillbecompletedwithin15workingdaysofreceivingtheapplication.
Oncetheapplicationiscomplete,aprogramreviewsitevisitmaybescheduled.Thentheapplicationisapprovedordeniedwithin45calendardays.
Ifyouoperateacertifiedrecyclingcenter,onceyourfacilityisoperationalyouwillbesentasignordecalthatmustbepostedatthemainentrancetoyourfacility.Ifyouoperateareversevendingmachine,postthedecalwhereitcanbeviewedbycustomersapproachingtheunitorthemachine.
Exhibit 3.1 TIMEFRAME OF APPLICATION PROCESS
Acknowledgment 15 Notificationof Information 45 (Possible 60 thatapplication Working complete received& Calendar sitevisit) Calendar hasbeenreceived days application processed days Application daysto orrequestfor approved begin additional ordenied operations information (for sent recyclingcenters and processors only) Title 14, Department 2, Chapter 5, Subchapter 2, Article 1, Section 2030 and Subchapter 6, Article 1, Section 2500.Department of Conservation-Division of Recycling �7
A Guide to
Important Items to Remember About the Certification Process
Youcannotactasacertifiedoperatoruntilyourapplicationisapproved.RecyclingcentersandprocessorsmustprovideanoperationaldatetotheDepartmentinwritingwithinfive(5)calendardaysofstarting.
Recyclingcentersandprocessingfacilitiesmustbeginoperatingwithin60calendardaysofbecomingcertified.
Youmustbecertifiedseparatelyforeverylocationwhereyouoperate,withtheexceptionofcommunityserviceprogramsanddrop-offorcollectionprograms.
Youcannotlocatearecyclingcenterdirectlyonapublicstreetorsidewalk.Itmustbelocatedinaproperlyzonedarea.
Accuraterecord-keepingmustbemaintained,includingreceiptsandlogs,dailysummaries,taxrecords,andarecordofbusinessactivitiesfortaxandauditpurposes.Drop-offorcollectionprogramsmustmaintainlogs,copiesofshippingreportsandweighttickets.Thisisnecessarytoremaincertified.
�8 Chapter 3: Fulfilling State and Local Requirements
Chapter 4
PlanningtheBusiness
Planningyourbusinesseffectivelycanmeantheultimatesuccessorfailureofyourventure.Thereareanumberofoperationaldetailstorunningarecyclingbusinessthatyoushouldconsiderwhendevelopingyourbusinessplan.Amongotherthings,youmustdecidewhatmaterialstoaccept,whatvolumestoanticipate,andyoumustdecidewhatyourrespectiveequipmentrequirementsare,aswellashowtostaffthebusiness.Yourlocationwillplayacriticalroleinthesuccessorfailureofthebusiness.Thefinancialaspects,initialstart-upcosts,revenueandexpenseprojections,andfundingsources,needtobecarefullythoughtout.Inadditiontoreadingthefollowingsection,talktopeoplealreadyinthebusinesstogainafirmunderstandingofallthefactorsthatmakeupacomprehensivebusinessplan.
What type of legal structure is appropriate for a recycling business?
Yourbusinesscouldbeorganizedasanindividual/soleproprietorship,ahusband/wifeco-ownership,apartnership(generalorlimited),alimitedliabilitycompany,anonprofitcorporationorafor-profitcorporation.Whichoftheseisappropriateforyouwilldependonthespecificsofyourbusiness.
SOLE PROPRIETORSHIPS
Soleproprietorshipsarethesimplestforminwhichtoconductabusiness.Asasoleproprietor,youarethebusiness.Thismeansthatyouwillreceiveallprofitsandyouarepersonallyresponsibleforalldebtsandliabilities.
HUSBAND & WIFE CO-OWNERSHIPS
Husbandandwifeco-ownershipsarecomprisedofahusbandandwifeconductingabusinesstogether.Bothhusbandandwifesharetheprofitsandbothareresponsibleforalldebtsandliabilities.
GENERAL PARTNERSHIPS
Generalpartnershipsoccurwhentwoormoreco-ownersengageinabusinessforprofit.Ageneralpartnershipcanholdandconveylegaltitletorealpropertyinitsownnameinsteadofinthenameofthepartnersandcansueandbesuedinthepartnershipnameandasindividuals.Besuretohaveawrittenagreementbetweenthepartnersthatspellsouttherightsandresponsibilitiesofthepartnersaswellasaformulaastohowprofitsandlosseswillbedivided.
LIMITED PARTNERSHIPS
Limitedpartnershipsarecomprisedofoneormoregeneralpartnerswhomanagethebusinessandarepersonallyliabletothepartnership’screditors,andoneormorelimitedpartnerswhocontributecapitalandshareinprofits,buttakenopartinrunningthebusiness.AlimitedpartnershipagreementmustbefiledwiththeSecretaryofState.
NONPROFIT CORPORATIONS
Nonprofitcorporationsarespecialcorporationsformedbyoneormoreindividualsforthebenefitofthepublic,themutualbenefitofitsmembers,orforreligiouspurposes.Incomeinexcessofexpenditurescanbechanneledintooperationsexpansion,equipmentreplacement,andadvertisingandpromotion.NonprofitsinCaliforniaregisterwiththeSecretaryofState.
CORPORATIONS
Corporationsareadistinctlegalentityandhavetheirownidentity,whichisseparateandapartfromtheindividualswhocreatedit.Thecreationofacorporationrequiresthecorporatestructuretoconsistofdirectors,officersandshareholders.Thecorporateformisthemostexpensiveformofdoingbusiness.
Department of Conservation-Division of Recycling �9
A Guide to
ArticlesofincorporationmustbefiledwiththeSecretaryofState.
LIMITED LIABILITY COMPANIES (LLCs)
Limitedliabilitycompaniesofferitsmembersthelimitedliabilityofcorporateshareholders,plusthetaxadvantagesofapartnership.LLCshaveoneormorememberswhichmaybeindividuals,partnerships,trusts,estates,associations,corporations,orotherentities.LLCsregisterwiththeCaliforniaSecretaryofState.
Thereareadvantagesanddisadvantagestoeachformofbusinessentity.Youshouldconsidercarefullywhatfitsyourneedsbest.TheSmallBusinessAdministrationhasapamphletonbusinessstructures,“SelectingtheLegalStructureforYourBusiness,”availableuponrequest.
What materials will I accept?
Beveragecontainersandotherproductsmadeofpaper,plastic,metalandglassmaterialsareallpotentiallyrecyclableandperhapsprofitable.Whatyouchoosetoacceptisthekeydecisionyouwillmake.Allotherbusinessdecisions,suchasyourequipment,staffingandlocation,willflowfromthisdecision.Someoftheissuesyoushouldconsiderincludethefollowing.
MARKET SUPPLY AND STABILITY
Isthereamarketforyourselectedmaterialandarethepricesreliable?Arethereseveralmarketstochoosefrom?Ifthereareseveralmarketsavailable,evenifeachisnotentirelystable,thiswillprovideyousomeflexibilityandchoicewhenselling.Ifyoucannotfindamarketforyourmaterial,youshouldconsideranothermaterial.Withoutamarket,youwillnothavearecyclingbusiness.
HANDLING EXPENSES
Howmuchdoesitcosttohandleorprocessyourmaterialofchoice?Somematerialsareeasiertoprocessthanothersandthisaffectsthecostofrecyclingthematerial.Willthehandlingexpensesconsumetoomuchofyourproceedsfromsellingthematerial?Ifso,youmaynotbeabletomakeaprofit,andyoushouldconsideranothermaterial.
TRANSPORTATION COSTS
Duetoavarietyoffactors,suchasweightandcompactability,somematerialsaremoreexpensivetotransportthanothers.Insomecases,suchasglass,thiscanbeaseriousprobleminmakingrecyclingviable.
SAFETY
Somematerialsaremoredangerousforworkerstohandlethanothers.Forinstance,recyclingglassormetalshasmorepotentialforsafetyproblemsthanrecyclingpaper.
STORAGE COSTS
Storagecostsmayalsodifferaccordingtomaterialtype.Plasticisagoodexamplebecauseplasticismorevoluminousthanglass,evenwhencrushed.Therefore,youmayneedsignificantlymorespacetostoreplasticthanyouwouldforthesameweightofglass.Themorespacethatyourmaterialtakesupforstorage,thelessspaceyouhaveforprofit-makingoperations.
Remember,ifyouarecertifiedasarecyclingcenterinthebeveragecontainerrecyclingprogram,youmustacceptalleligibleCRValuminum,glass,plastic,andbimetalbeveragecontainers.
20 Chapter 4: Planning the Business
How much material can I expect?
Dependingonthetypeofprogram,thematerialsthatyouwilldealwithmaycomefromavarietyofsourcesincludingthepublic,nonprofitorganizationsandotherrecyclers.Thevolumeofmaterialyouwillhandlewillvarysomewhatfrommonthtomonth,dependinguponavarietyoffactors,includingthefollowing.
SUPPLY OF MATERIALS
Ifthesupplyofmaterialsislow,therewillbemorecompetitionforscarcematerials,andyouarelikelytoreceivefewerrecyclablesthannormal.
LEVEL OF COMPETITION
Themorecompetitionyourbusinessfaces,theharderitwillbetoobtainlargeamountsofmaterials,andviceversa.
MARKETING
Ifyouaremoresuccessfulatmarketingyourbusinesstothecommunitythanyourcompetitors,thecommunitymayrewardyouwithmorematerials.
LOCATION CONVENIENCE
Theconvenienceofyourlocationisimportant.Themoreconvenientyourlocation,themorecustomersyouwillhave...meaningmorematerial.
PRICE OF MATERIALS
Theamountyoucanpayforrecyclablematerialsisalsoimportant.Ifyoucanofferahigherpricethanyourcompetitors,customerswillcometoyouinsteadofyourcompetitors,againmeaningmorematerial.
Itisimportanttolookatthesefactorsspecificallyfor
yourmarketarea.Yourprojectionsofmaterialvolumewilldriveotherdecisionsyoumustmake,suchasequipmentneeds,staffing,andprojectedrevenues.Whenthinkingaboutwhatmaterialstoacceptandwhatvolumetoexpect,rememberthatthesupplyofCRVcontainersisfiniteandcompetitionisheavy.
What are my equipment requirements?
Thetypesandsizesofequipmentusedwillvaryfromcentertocenter,butcommercialrecyclingequipmentcanbegroupedintothefollowingcategories.
CONTAINERS
Thisincludesitemssuchasindividualrecyclingcontainersforcollection,bulkstoragecontainersforuseontrucksorinyourplant,andhaulingcontainersusedforlong-distancetransportation.
PROCESSING EQUIPMENT
Processingequipmentincludesmachinerynecessarytoprepareyourmaterialsformarket.Forinstance,crushers,balers,andshreddersaretypesofprocessingequipment.Remember,onlycertifiedprocessorscancancelCRVbeveragecontainers.
WEIGHING EQUIPMENT
Thisincludesitemssuchasscalesandweights,whichareusedtoweighmaterialsforconsumers,shippingreports,andthemarket.
VEHICLES
Avarietyofvehiclesmayberequiredforyouroperation,includingvehiclesforin-housematerialhandlingandhaulingmaterialstomarket.Someexamplesincludeforkliftsandrecyclingtrucks.
Department of Conservation-Division of Recycling 2�
A Guide to
Equipmentsourcesmaybefoundbyconsultingtheyellowpagesofyourlocaltelephonedirectory,tradepublicationsandlibraries.
Similartootherelementsofyourbusinessplan,yourspecificrecyclingequipmentneedswilldependonavarietyoffactors,including:
MATERIAL TYPES
Thehandlingofdifferentmaterialsmaycallfordifferentequipment.Forinstance,recyclingglassmayrequireacrusher,whilerecyclingaluminumcansmayrequireabaler.
EXPECTED VOLUME
Ifyourmaterialvolumeincreasesaboveacertainpoint,itmaybemoreefficientandeconomicaltoobtainalargerpieceofequipmentthatcanprocessalargeramountofmaterial,oranotherpieceofequipmentofthesamesize,inordertoprocessyourincreasedmaterial.
FIXED VS. MOBILE LOCATION
Ifyouhaveafixedplantlocation,yourequipmentneedswillbemuchdifferentthanifyouhaveanon-stationarytypeofrecyclingoperation.Yournon-stationaryoperationwillneedsmaller,moresturdy,mobileequipmentsuchasatrailer,binorvehicle,whereaswithafixedplant,youhavemuchmoreflexibilityinyourequipmentchoices.
AVAILABILITY AND COST OF LABOR
Ifitischeapertopaylaborerstosortcansthanitistopurchaseandoperateamechanicalcansorter,youwillobviouslywanttoavoidpurchasingtheequipment,andviceversa.
AVAILABILITY AND COST OF SPACE
Ifyourspace(indoorsandoutdoors)isexpensive,youwillwanttomakethemostusepossibleoutoftheleastamountofspace.Thiswouldmeanpurchasingcompactequipmentthatwillmakethemostofyourspaceforyourdollar.
PROCESSOR NEEDS AND REQUIREMENTS
Thisincludesitemssuchastherequiredlevelofseparation.Ifyourprocessorwillnotsortyourmaterials,decontaminatethem,orcrushthem,andsoon,youmayhavetopurchasetheequipmenttodothosejobsin-houseinordertoworkwiththatprocessor.Besuretoshoparoundforprocessors,asdifferentprocessorshavedifferentmaterialpreparationrequirements.Youmaybeabletoavoidpurchasingcertaintypesofequipment,suchascrushers,balersandroll-offbins,becauseaprocessormayprovidethem.
Considerallyouroptionswhenbuyingequipment,includingqualityusedequipment.Besuretoshoparoundandcomparepricesandequipmentspecifications.Planaheadwhenorderingyourequipment;requestthatyourequipmentarriveafewweeksbeforeyouactuallyneeditasthereareoftendeliverydelays,especiallywithlargepiecesofequipment,suchastrucks.Also,beforeorderingyourequipment,checkwithyourprocessor.
What makes a good site for a recycling center?
Agoodlocationwillbeconvenienttocustomers,inasafeareaandhighlyvisible.Itwillalsobeinalocationthatisaccessibleforcustomerswhousedifferenttypesoftransportation.Thesequalitiesareimportantforasuccessfulandprofitablerecyclingcenter.Additionalfactorstoconsiderwhenresearchingsitesforyourbusinessincludethefollowing:
22 Chapter 4: Planning the Business
CONVENIENCE ZONE
ContacttheDepartmenttodetermineifthereisaconveniencezoneintheareathatyouareconsideringforthebusiness.
Ifazoneisnotbeingservedbyanexistingrecyclingcenter,thatareamayprovideanexcellentopportunityforanewbusiness.Thedealersintheareawillmostlikelysupportyourcenterbecausetheywillnolongerhavetoredeemcontainerswithintheirstores.However,beforesitingyourbusinessinanunservedzone,youshouldcarefullyanalyzewhytheareaisunserved.Isitunservedbecauseofalackofcustomers,crimeortransportationcosts?Aservedzone,thatisonewitharecyclingcenter,maynotbeagoodlocation.Youshouldtakeacarefullookintowhetherornottheareahasenoughrecyclableproductstosupporttworecyclers.
ESTIMATES OF SUPPLY AND DEMAND
Surveythearea.Talkwiththeentitiesthatalreadycollectrecyclableproductswithinthearea.Talktopeopleintheareatodeterminethepublicsupportforyourbusiness.
LEVEL OF COMPETITION
Lookintotheotherdirectcompetitorsforyourservices.Thesemayincludeotherrecyclingcenters,orcurbsideprograms.
ACCESS TO MARKETS
Considercarefully,transportationcostsofmaterialstotheappropriatemarkets.Thesecostscanescalateinruralorhard-to-get-toplacesandmaysignificantlydecreaseprofits.
SITE COSTS
Negotiaterentorleasepaymentsaggressively.Thesemaybecostlyandlimityourprofitsandshouldbenegotiatedwiththatinmind.
EQUIPMENT SPACE REQUIREMENTS
Determinethespacethatwillbenecessarytooperateyourequipment.Thiswilldeterminewhetheryoucanoperateinastoreparkinglotorifyou’llneedmoreroom.
PEOPLE AND VEHICLE TRAFFIC FLOW PATTERNS
Findsiteswithgoodtrafficflowpatterns.Includeenoughroomforparkingandothercustomers.Makesureaccesstothefacilityiseasyanddoesnotrequirealotofmaneuveringwithintrafficoronheavilycongestedstreets.
Byanalyzingtheseissuesaboutthesiteofyourproposedrecyclingcenter,youcandeterminethebestplaceforyourbusiness.Arecyclingcenterbusinessisonlyasgoodasitsabilitytocollectmaterialsfromthepublic,andagoodlocationfacilitatesthis.
How should a recycling business be staffed?
Arecyclingoperationcanbeanowner-operatedbusinessoremployanumberofpeople.Staffingrequirementswilldependonthetypeandsizeofyourrecyclingoperation.Areasyoushouldconsiderinclude:
EMPLOYEE SKILL LEVEL
Whatkindsofmaterialswillbehandled?Ifheavymachineryisrequiredtomovetheloadsorproducts,
Department of Conservation-Division of Recycling 23
A Guide to
thenskilledlabormaybenecessarytooperatetheequipment.However,ifyourcenterismerelysortingmaterialandhandlingcustomerinteraction,lessskilledlabormaybeappropriate.Itisveryimportantthatyouremployeeshaveaworkingknowledgeoftheprogram’sregulationsandprocedures.
HOURS OF OPERATION
Learnthetimesthatmostofthepeopleareoutandaboutrunningerrandsorshoppingtomaximizetheamountoftraffic.Rememberthattobecertified,arecyclingcentermustgenerallybeopenaminimumof30hoursaweek,withfiveofthe30hoursbeingotherthan9:00a.m.to5:00p.m.MondaythroughFriday.(Theexceptionsaregrandfatheredfacilitiesandruralregionrecyclers.)
AVAILABILITY AND COST OF LABOR
Checkintowhatthesalaryorhourlywagelevelisintheareaandwhetherornotthetypeofstaffyourequireareavailableinthatarea.Forinstance,insomeareasitishardtofindminimumwageemployeestostaffcentersbecauseofalackofpublictransit.Howyoustaffyourrecyclingbusinessisimportantbecausestaffnotonlywillperformtheday-to-daytasks,buttheyarealsoanexpenseforwhichyoumustplan.Therefore,itisimportanttolookintoyourstaffingneedsverycarefully.
What does it cost to begin a recycling business?
Afterdecidingonthekindofbusinessyouwanttooperate,youshoulddevelopanestimateofthestart-upcostsrequiredtogetthatbusinessofftheground.Thesecostswillbedeterminedbythenatureofthebusiness,thelocationandthetypeofequipmentthatwillbeused.Ingeneral,theymustbepaidoutlongbeforeanyrevenueswillflowinfromtheoperation
ofthebusiness.Therefore,youshouldconsiderthemlong-terminvestmentsinthebusiness.
The costs can be grouped into the following five categories.
LICENSES AND FEES
Licensesandfeesincludethecostofobtainingabusinesslicense,locallandusepermitsandlocalspecialusepermits,ifappropriate.(SeeChapter3.)
LAND
Land,mustbeeitherpurchased,leasedordonatedfortheperiodofthebusiness’operations.Ifyouareleasingtheland,youshouldanticipatethatdepositsorbondsmayhavetobepostedwiththeowner,inadditiontothepaymentofinitialrentalcosts.
CONSTRUCTION COSTS
Constructioncosts,includingthecosttoconstructanynecessarybuildings,storageareas,sortingrooms,orshelters.Thismayalsoincludeconstructionofsortingbins,loadingdocks,andfencingfortheproperty.
EQUIPMENT COSTS
Equipmentcosts,whichmayincludematerial-handlingequipment,officeequipmenttoensureproperrecord-keepingandtransportationequipment,suchasatruck.
INITIAL OPERATIONS FUNDING
Initialoperationsfundingshouldalsoincludetheentirecosttooperatethebusinessforitsfirstfewmonths.Thiscategoryshouldbeincludedinyourestimateofstart-upcoststoensurefundingforinitial
24 Chapter 4: Planning the Business
operations,untilyoucanselltherecyclablematerialscollected.
Usingtheworksheetprovided,calculatethetotalstart-upcostsforthebusinessyouanticipate.Thenmakesurethatadequatefundswillbeavailabletocoverthesecosts.Youmaywanttoreferto“Whataremysourcesoffunds?”inthisChapterforideasonobtainingfinancing.
EXPENSES
Monthlyoperatingexpenseswillgenerallyfallintofourbroadcategories:labor(includingyourownsalary),taxesandfees,equipmentandcapital,andoverhead.Thefollowingworksheetprovidesaformforestimatingyouractualmonthlyexpenses.Incompletingthisworksheet,youshouldmake
START-UP COST CALCULATION Exhibit 4.1
CostCategory EstimatedCost LicensesandFees Businesslicensesandtaxes $_______________ Locallandusepermits $_______________ Other $_______________ Land Purchaseprice,includingclosingcosts $_______________ Initialrentalexpense,includingsecuritydeposits $_______________ Other $_______________ ConstructionCosts Buildingandshelters $_______________ Storageareas $_______________ Sortingroomsandshelters $_______________ Other $_______________ EquipmentCosts Material-handlingequipment $_______________ Officeequipment $_______________ Transportationequipment $_______________ Other $_______________InitialOperationsFunding Costtooperatethebusinessforitsfirstfewmonths $_______________ TOTAL $_______________
How can I know what my expenses and revenues will be?
Yourbusiness’expensesandrevenueswilldependonyoursuccessincollectingandmarketingrecyclablematerials.AsChapter2explains,itisdifficulttoforecastthissuccess.Toestimateyourowncostsandrevenues,youmaywanttotalktootherswhoalreadyoperaterecyclingbusinesses,localgovernmentofficials,localbusinessadvisorygroups,orconsultthepublicationslistedinChapter5.
pessimisticestimatesofyourlikelycoststoaccountforpossibleoverrunsorsetbacks.Anotherapproachistouseyourbest-guessestimateandthenaddamanagementreservefactorof10-15percenttocoverunforeseenevents.
Department of Conservation-Division of Recycling 25
A Guide to
PROJECTED MONTHLY EXPENSES Exhibit 4.2
CostCategory EstimatedCost
Labor Recyclinglocationwagesandbenefits $_______________
Maintenancewagesandbenefits $_______________
Transportationlabor $_______________
Other $_______________
Subtotal $_______________
TaxesandFees Propertytaxes $_______________
Businesslicensefees $_______________
Payrolltaxes $_______________
Federalincometaxes $_______________
Stateincometaxes $_______________
Other $_______________
Subtotal $_______________
EquipmentandCapital Recyclinglocationsiterentalorleasepayments $_______________
Equipment,toolsormachinery $_______________
Supplies $_______________
Transportationvehicles $_______________
Capitalassetpurchasecosts $_______________
Maintenanceofcapitalassets $_______________
Interest $_______________
Other $_______________
Subtotal $_______________
Overhead Utilities $_______________
Advertisingandpromotion $_______________
Insurance $_______________
Transportationfuel $_______________
General,administrative,andoverhead $_______________
Other $_______________
Subtotal $_______________
TOTAL $_______________
26 Chapter 4: Planning the Business
REVENUES
Yourbusiness’revenueswillcomefromthreegeneralareas:saleofmaterialsforscrap,variouspaymentsfromcertifiedprocessorsandotherareas.Scraprevenuescanbeforecastedbyestimatingtheamountofmaterial,bytype,thatyouwillbecollectingandmultiplyingthisbyanestimateofthemarketprice.YoushouldcarefullyreadChapter2,tounderstandthevariabilityofmarketprices.Inaddition,youmaywanttochecktherecyclingpublicationslistedinChapter5forrecenttrendsinmarketprices.
Usethefollowingworksheettoestimateyourmonthlyrevenues.Aswithestimatingyourexpenses,youshouldberealisticinforecastingrevenue.Rememberthepricesinthesemarketsfluctuatebroadlyandthepricetodaymaynotbeavailablewhenyoutrytosellyourscrapmaterials.
Balancingthesecostsandrevenuesisthemostdifficultpartofstartinganybusiness.Youshouldbefairlyconfidentintheestimatesyouusetocompletetheseworksheetsbeforeyoustartyourbusiness,sothatyournetrevenue(monthlygrossrevenuesminusmonthlyexpenses)willallowyoutocontinueoperatinglongenoughtoestablishyourselfinthecommunity.
What are my sources of funds?
Aprimaryreasonwhysmallbusinessesfailisalackofadequatecapital.Bycalculatingwhatitwillcosttostartyourbusiness,aswellasyouroperatingcosts,youwillknowwhatyourfundingneedswillbe.Thereareseveralsourcestoconsiderwhenlookingforfunding.Theseincludethefollowing:
SAVINGS
Aprimarysourceofcapitalcomingfrompersonalsavingsandotherformsofpersonalequity.Generallyothersourceswillnotlendyoumoneywithoutasubstantialinvestmentonyourpart.
LOAN GUARANTY PROGRAM
TheU.S.SmallBusinessAdministration(SBA)offersavarietyoffinancingoptionsforsmallbusinesses.However,itrarelymakesadirectloantoanindividualorcompany.TheAgencyisprimarilyaguarantor—itguaranteesloansmadebybanksandotherprivatelenderstosmallbusinessclientsthroughanetworkofsmallbusinessdevelopmentcorporations.SBAguaranteedloansgenerallydonotexceed$500,000ofwhichtheagencyguarantees85or90percentofthe
PROJECTED MONTHLY REVENUES Exhibit 4-3
RevenueType Estimate
SaleofScrap Saleofscrapaluminum $ _____________ Saleofscrapglass $ _____________ Saleofscrapplastic $ _____________ Saleofotherscrap(paper,cardboard,etc) $ _____________ PaymentsfromProcessors Administrativefeesfromprocessors $ _____________ inadditiontoCRVpayments Stateprocessingfees $ _____________ Other Grantsandawards $ _____________ Other $ _____________
TOTAL $_______________
Department of Conservation-Division of Recycling 27
A Guide to
loanbalancetothebank.TheaveragesizeofaSBAguaranteedloanis$175,000andtheaveragematurityabouteightyears.
BANKS AND CREDIT UNIONS
Privatelendersarethemostcommonsourceoffunding.Theyprovideloanstogoodcreditrisks.Personalcredithistoryandyourhistoryofsuccessoperatingsmallorrelatedbusinesseswilldetermineyoureligibility.Beforeapplyingforaloan,prepareyourbusinessplan.Awellthoughtoutbusinessplantellsabankyouareagoodcreditrisk.
NORTHERN CALIFORNIA REINVESTMENT CONSORTIUM (NCRC) EnterFund
TheEnterFundisaprogramdesignedtodelivermicroloansandtechnicalassistancetothesmallestbusinesses(thosehavingfiveorfeweremployees)inNorthernCalifornia.EnterFundwillprovideloansfrom$250to$25,000accompaniedbyextensivecounselingandtechnicalassistancetohelpensuretheentrepreneur’ssuccess.EnterFundwillbeadministeredandmanagedbyCaliforniaCapitalSmallBusinessDevelopmentCorporation.Formoreinformationcall(916)442-1729orvisitthewebsitelocatedatwww.ncrc.as.
VENTURE CAPITAL FIRMS
Thesefirmsprovidestart-upandotherneededmoneyfornewcompaniesinexchangeforequityorpartownership.
Itisimportantthatyouexploreallofyouroptionsbeforemakingadecisiononwheretoseekfunding.Tobesuccessfulinobtainingaloan,youmustbepreparedandorganized.Youmustknowexactlyhowmuchmoneyyouneed,whyyouneeditandhowyoucanpayitback.Abusinessplancanbeacriticalfactorinsecuringfinancialbackingforyourbusiness.
What are the elements of a business plan?
Yourbusinessplanisawrittendocumentthatclearlydefinesthegoalsofyourrecyclingbusinessandoutlinesthemethodsforachievingthem.Abusinessplanguidesandrecordsyourplansby:
• Providingamanagementandfinancial“blueprint”forthebusiness.
• Assistinginsecuringfinancing.
• Providinganeffectivecommunicationstoolforinvestors,suppliers,employeesandothersinterestedintheoperationsandgoalsofthebusiness.
AbusinessplanwillalsohelpyoupreparetofileacertificationapplicationwiththeDepartment.Yourbusinessplanshouldbecomplete,clear,neatandaccurate.Inaddition,bebriefandtothepointinyournarrative.Yourbusinessplanshouldincludethefollowingelements:
INTRODUCTION
Describeyourbusinessgoalsandobjectives,clarifyingwhyyouwanttobeinbusiness.Itcantaketheformofacoverletterorstatementofpurpose.Ifyouareseekingoutsidefunding,includeinformationontheloanorfundingrequest,thetermsandconditionssought,purposeofthefundingandthetimingoffundingneeds.
BUSINESS ORGANIZATION AND HISTORY
Discussthelegalformofyourbusinessincludingincorporationdateandlocation,ifapplicable.Stateanypresentorpastsuccessesthatwillimpactonyourrequest.Developamanagementprofileandashortstatementoneachprincipalstaffmemberin
28 Chapter 4: Planning the Business
yourbusiness.Providetheirbackground,education,experience,skillsandaccomplishments.
LOCATION AND SITE
Provideadescriptionofthesite,includingspaceavailable,improvementsalreadyinplace,improvementsneeded,andutilizationofspace.Describeyourlocation,particularlyasitrelatestothemarketareaserved,neighboringresidentialareas,access,zoningandcompetitiverecyclingoperations.
BUSINESS DESCRIPTION
Provideadescriptionofthebusinessandanyuniquefeaturesthatwillgiveyouacompetitiveadvantage.
PERSONNEL
Detailpersonnelneeds,includingfunctions,duties,responsibilities,accountability,andjobdescriptions.Describethelocallaborpoolfortherequiredlevelofskillyouwillneed.
MARKETING PLAN
Amarketingplanhasthreesections.First,analyzethemarketforthematerialsyouintendtocollect.Identifybuyersforeachkindofmaterial,theanticipatedvolumeofmaterialstheywillaccept,andcontractualarrangements.Discussthelong-rangedependabilityofbuyersandmarkettrendsformaterials.Second,describethesourcesofrecyclablematerials(privatecitizens,organizations,professionals,etc.).Projectyourmaterialvolumewithsupportingdocumentation.Makealong-rangerevenueforecastbasedonvolumesandpricing.Third,describethemethodsyouplantousetopromoteyourrecyclingbusiness.Describeadvertisingandpromotionalbudgets.Explainthemediayouintendtousetoreachyourtargetaudience.
OPERATIONS
Identifytheequipment,facilitiesandpeoplenecessarytorunyourbusiness.Describedailyoperationsofthebusiness,includingreceiptofrecyclablematerials,materialshandling,processingrequirements,transportofmaterials,accounting/clericalfunctionsandmaintenance.
FINANCIAL MANAGEMENT
Thisisthemostcriticalpartofyourbusinessplan.Youwillestablishvitalschedulesthatwillguidethefinancialhealthofthebusiness.Yourplanshouldincludeprojectedstart-upcosts,expectedprofitorreturnoninvestmentforthefirstyear,aprojectedincomestatementandbalancesheetfortwoyears,andmonthlycashflowstatementfor12months.
RECORDS
Describerecordstobekept,assignmentofresponsibilitiesforkeepingthem,andusesforrecordskept.Categoriestobecoveredinrecordkeepinginclude:
• Receiptsandlogs
• Dailysummaries
• Shippingreports
• Financialrecordsincludingincome
LONG-RANGE PLANNING
Describeyourplanforfuturegrowthoractivitycontingentuponcurrentyear’ssuccessinmeetingobjectives.Outlineoptionsforallcontingenciesforthenextthreetofiveyears.
Department of Conservation-Division of Recycling 29
A Guide to
TIMETABLE
Provideyourtimescheduleforsolicitingfunds,developingthesite,testingyouroperationsunderreal-worldconditionstoeliminateerrors,andstart-upoperations.
CONCLUSION
Summarizeyourbusinessgoalsandobjectives.Sendamessagetothereaderthatyouarecommittedtothesuccessofthebusiness.
Writingathoroughbusinessplanisnotaneasytask.Itisessentialthough,tothefuturesuccessofyourbusiness.
30 Chapter 4: Planning the Business
Chapter 5
Resources
Government Agencies
Numerousresourcesareavailabletoassistanewrecyclingbusiness.Thissectionprovideslistsofgovernmentcontacts,recyclingassociations,relevantrecyclingpublications,andorganizationsthatassistsmallbusinesses.Foramoredetailedresourcelisting,readtheResourceDirectorysectionofSMALLBUSINESSSUCCESS,apublicationjointlysponsoredbySBA,thePacificBellDirectory,andSCORE.Thisveryusefulandthoroughresourcelistcoversorganizations,associations,books,articles,magazines,andvideotapesrelatedtosmallbusinesses.ItisavailableatSBAoffices,orbycalling(800)827-5722.Don’tforgettotalkwithpeopleintherecyclingfield.Activerecyclingbusinesspeoplewillbeabletoprovideyouwithinvaluableadviceandinformation.
• Department of Conservation Division of Recycling 801KStreet Sacramento,CA95814 www.conservation.ca.gov
Certification Services Branch CertificationSection,MS15-59 (916) 324-8598
800 Information Phone 1-800-RECYCLE (In California only)
• California Integrated Waste Management Board 1001IStreet Sacramento,CA95814www.ciwmb.ca.gov
Planning and Assistance (916) 341-6500
Public Affairs/Education (916) 341-6300
• Secretary of State Business Program Division150011thStreetSacramento,CA95814(916) 653-0721 www.ss.ca.gov
• Employment Development Department 800CapitolMall Sacramento,CA95814 (916) 653-0707 www.edd.ca.gov
• Franchise Tax Board 9645ButterfieldWay Sacramento,CA95827 (800) 852-5711 www.ftb.ca.gov
• Attorney General Registry of Charitable Trusts 1300IStreet,11thFloorP.O.Box903447Sacramento,CA94203-4470(916) 445-2021http://caag.state.ca.us/charities
• California Capital Small Business Development Corporation 926JStreet,Suite1500 Sacramento,CA95814 (916) 442-1729
• Internal Revenue Service (IRS) 4330WattAvenue NorthHighlands,CA95660 (800) 829-1040 www.irs.gov
TheIRShasseveralpublicationsofinteresttonewbusinesses.OrderIRSpublication583“InformationforBusinessTaxpayers”andPublication334“TaxGuideforSmallBusinesses”formoreinformationontaxesandbusinesses.OrderFormSS-4toobtainaTax
Department of Conservation-Division of Recycling 3�
A Guide to
orEmployeridentificationnumberforyourbusinessandIRSPublication15ifyouhaveemployees.
Recycling Associations
Thesegroupshavebeenassembledbyprofessionalrecyclerstoservetheircommunitieswithpracticalinformationaboutrecycling.Theycanbeverygoodsourcesofrecyclingdata.
• California Resource Recovery Assoc. Box162789 Sacramento,CA95816 (916) 441-2772 www.crra.com
• Northern California Recycling Assoc. P.O.Box5581 Berkeley,CA94705 (510) 562-4991www.ncrarecycles.org
Recycling Publications
Thesepublicationsmaybeavailableatalocallibrary.Theycanbeusefulsourcesofinformationonallaspectsofrecycling.
BioCycle JGPress,Inc. 419StateAvenue Emmaus,PA18049 (610) 967-4135 www.jgpress.com publishedmonthly
Fibre Market NewsGIEPublishers4012BridgeAvenueCleveland,OH44113(216) 961-4130www.recycle.net/recycle/pub/rs000268.htmlpublishedweekly
Plastics Recycling UpdateP.O.Box42270Portland,OR97242-0270(503) 233-1305www.recycle.net/recycle/pub/rs000271.htmlpublished11timesperyear
Recycling Today GIEPublishers 4012BridgeAvenue Cleveland,OH44113-3399 (800) 456-0707 www.recyclingtoday.com publishedmonthly
Resource Recycling P.O.Box42270 Portland,OR97242-0270 (503) 233-1305 www.resource-recycling.com publishedmonthly
Scrap 1325GStreet,NWSuite1000 Washington,DC20005-3104 (202) 662-8540 www.scrap.org publishedbimonthly
32 Chapter 5: Resources
Waste Age POBox12914OverlandPark,KS66282-2914 (800) 441-0294 www.wasteage.com publishedmonthly
Assistance for Small Businesses
TheU.S.SmallBusinessAdministration(SBA)isasmall,independentFederalagency,createdbyCongressin1953toassist,counsel,andchampionsmallbusiness.ThemissionofSBA,simplyput,istohelppeoplegetintobusinessandstayinbusiness.OfficesarelocatedthroughoutCalifornia.
Regional Office455MarketStreet,Suite2200SanFrancisco,CA94105-2445(415) 744-1996www.sba.gov
550West“C”Street,Suite550SanDiego,CA92101-3540(619) 557-7250FAX (619) 557-5894
660JStreet,Suite215Sacramento,CA95814(916) 498-6410FAX(916) 498-6422
330N.BrandBoulevard,Suite1200Glendale,CA91203-2304(818) 522-3210FAX (818) 552-3260
2719NorthAirFresnoDrive,Suite200Fresno,CA93727-1547(559) 487-5791FAX(559) 487-5154
200WestSantaAnaBoulevard,Suite700SantaAna,CA92701(714) 550-7420FAX(714) 550-0191
455MarketStreet,6thFloorSanFrancisco,CA94105-2420(415) 744-6820FAX(415) 744-6812
Information available through the SBA includes:
• DirectoryofBusinessDevelopmentPublicationscanbeobtainedbycontactingyourlocalSBAoffice.Over100publicationsareavailable,mostforlessthan$2each.
• ServiceCorpsofRetiredExecutives(SCORE)providesfreeandconfidentialcounseling.ThereisnochargeforSCOREservices.Itscounselorsarevolunteerswithhands-onexperienceinthebusinessworld.ContactyourlocalSBAofficeforthelocationofthenearestcounselingcenter.SCOREalsooffersworkshopsthroughouttheyear.
• Small Business Development Centers
Refertolistbelowforyourregionaldevelopmentcenters.LocaldevelopmentcentersadministeramenuofFederalandstateloanandloanguaranteeprogramsavailabletobusinesses.
Butte College Small Business Development Center(Chico) (530) 895-9017
Cascade Small Business Development Center(Redding) (530) 225-2770
Central California Small Business Development Center(Fresno) (800) 974-0664
Department of Conservation-Division of Recycling 33
Visalia Small Business Development Center (Visalia) (559) 625-3051
Central Coast Small Business Development Center (Aptos) (831) 479-6136
Contra Costa Small Business Development Center (Concord) (925) 646-5377
East Bay Small Business Development Center (Oakland) (510) 893-4114
Fremont Small Business Development Center (Fremont) (510) 505-9725
Eastern Los Angeles County Small Business Development Center (Pomona) (909) 629-2247
Glendale Small Business Development Center(Glendale) (818) 552-3254
South Central Small Business Development Center(Los Angeles) (213) 473-5111
Commerce Small Business Development Center (Commerce) (323) 887-9627
Export Small Business Development Center (El Segundo) (310) 606-0166
Export Small Business Development Center Satellite Center (Ventura) (805) 644-6191
Gavilan College Small Business Development Center (Gilroy) (408) 847-0373
Greater Sacramento Small Business Development Center (Sacramento) (916) 563-32610
Inland Empire Small Business Development Center(Riverside) (800) 750-2353
High Desert Small Business Development Center(Victorville) (760) 951-1592
Coachella Valley Small Business Development Center (Palm Springs) (760) 864-1311
Inland Empire Business Incubator (San Bernardino) (909) 382-0065
Napa Valley College Small Business Development Center (Napa) (707) 253-3210
North Coast Small Business Development Center(Eureka) (707) 445-9720
North Coast Small Business Development Center Administrative Office (Crescent City) (707) 464-2168
North Los Angeles Small Business Development Center (Van Nuys) (818) 907-9922
Gold Coast Small Business Development Center (Ventura) (805) 658-2688
Northeast Valley Small Business Development Center (Pacoima) (818) 834-9860
North San Diego County Small Business Development Center (Oceanside) (760) 754-6575
Orange County Small Business Development Center (Santa Ana) (714) 647-5200
34 Chapter 5: Resources
A Guide to
Redwood Empire Small Business Development Center (Santa Rosa) (707) 524-1770
West Company Small Business Development Center(Ukiah) (707) 468-3553
West Company Coast Office (Fort Bragg) (707) 964-7571
San Francisco Small Business Development Center(San Francisco) (415) 744-8427
San Joaquin Delta College Small Business Development Center (Stockton) (209) 943-5089
Alpine Chamber of Commerce Visitor Authority(Markleeville) (530) 694-2475
Amador Small Business Development Center (Jackson) (209) 223-0351
Calaveras County Economic Development Company (San Andreas) (209) 754-1834
Sierra College Small Business Development Center(Auburn) (530) 885-5488
Silicon Valley Small Business Development Center (Sunnyvale) (408) 736-0679
Solano County Small Business Development Center (Suisun) (707) 864-8025
Vallejo Campus Small Business Development Center(Vallejo) (707) 644-5551
South Central Coast Small Business Development Center(San Luis Obispo) (805) 549-0401
Department of Conservation-Division of Recycling
Southwest Los Angeles County Small Business Development Center(Torrance) (310) 787-6466
Westside Small Business Development Center(Santa Monica) (310) 398-8883
Southwestern College Small Business Development & International Trade Center(Chula Vista) (619) 482-6391
Imperial Valley Small Business Development Center(El Centro) (760) 312-9800
Venture Point Tech Coast Small Business Development Center(Irvine) (949) 794-7244
Valley Sierra Small Business Development Center (Modesto) (209) 521-6177
Valley Sierra Small Business Development Center - Merced Satellite(Merced) (800) 323-2623
Weill Institute Small Business Development Center(Bakersfield) (661) 322-5881
Yuba College Small Business Development Center (Marysville) (530) 749-0153
Lake County Satellite Small Business Development Center(Lakeport) (707) 263-0330
• TheCaliforniaSmallBusinessDevelopmentCenter(SBDC)ProgramissponsoredbytheCaliforniaTradeandCommerceAgency.SBDCsprovidecomprehensiveservicestosmallbusinesses.EachlocalSBDCusesavarietyofresourcestocounselandtrainsmallbusinessownersandmanagersinfinancial,marketing,production,organizational,engineering,technical,andothermanagement
35
A Guide to
topics.Assistanceisavailabletohelpdevelopfeasibilitystudies,businessplans,cashflowanalysis,andfinancialstatements.Bothone-on-oneandgroupcounselingareofferedatnocosttothesmallbusiness.Seminarsandspecializedtrainingareavailableforanominalfee.Call (916)324-5068forthecenternearesttoyou.
• TheCaliforniaSmallBusinessAssociation(CSBA)wascreatedtogivesmallbusinessownersavoiceinstategovernment.CSBA’sHELP-LINE, (800)350-CSBA,providesresourceinformationforsmallbusinesses.Thesystemiseasilyaccessiblewithatouch-tonetelephonefromyourhomeoroffice.TheHELP-LINEtopicsinclude:
• Startingabusiness
• Financingresources
• Managementandtechnicalassistance
• Stateandlocalprogramsimpactingsmallbusiness
• Federalsmallbusinessprograms
• Regulatoryandtaxconsiderations
The CSBA is located at: POBox661235LosAngeles,CA90066(310) 642-0838 www.csba.com
• Localchambersofcommerceareagoodsourceoflocalbusinessnews,adviceandsupport,demographic/economicdata,specialseminarsandprogramsforsmallbusiness,andrepresentationofthebusinesscommunitybeforegovernmententities.TheChambercanusuallyprovidestatisticsonsuchfactorsasmarketcharacteristics,laborforce,localfacilities,transportation,andtrafficthatcanhelpinbusinesslocationdecisions.TheStateChamberhasdesignedthefollowingstart-upkitsfornewbusinesses:
• Businessstart-upkitforsoleproprietors/partnerships(18formswitheasyinstructions)
• Businessstart-upkitforcorporations(27formstoincorporateyourbusiness)
• Employer’skits
36 Chapter 5: ResourcesDOR 9/07