The Feed Resource Recovery
This paper will discuss the Issues and analyze the options and how to address them. Analysis of FEED Resource Recovery The Feed Resource Recovery concept is simple; to provide supermarket and restaurants with an onsite waste processing system that converts previously discarded food waste Into a source of renewable energy and organic fertilizer.
Having a great Idea Is Just the beginning, to take this to the market they will have many Issues to overcome.
Opportunities Issues Time is always an issue for new business, but in this industry it is a little more crucial because the industry is growing very fast. Many competitors with similar ideas can appear with more money overnight so it’s possible other solutions could arise cheaper than RE. There are a handful of new firms with anaerobic digestion technologies, but none of them target the same market with on-site products. Another issue is how long time will take the construction of the prototype. Entrepreneur Issues Shame seems honest and genuinely interested in doing the right thing but another issue is his network.
The case says he has strong personal networking, but It shows us that he cannot be supported at this early stage, construct and test the prototype, of the business. At least he could contact with Ryan Begin, the young engineer, but the problem Is the same. I think he could have planned better In this stage, because the nature of the industry being relatively new and that there are not people with Shame, Ryan was working in another industry. He has commitment to the project, buy Shame needed a person with more experience. Resources Issues Shame’s biggest problem was in the meeting with investor’s.
He could have been more convincing; he could be more prepared. For example a detailed financial plan would have been key to present in the meetings. I think the only way for Shame to convince investors is to produce a prototype. I think this is a requirement because Shame is not sure about his product. Other reason may be for the decision to give up part of the business to investors.
Clients are important for the successful of the business. Contact with WALTER was very important, but Shame could contact another client or market and next with more information for the investors.
Now, Shame must fund money to construct the prototype (first), and next he must decide about how to accept the investor’s conditions or search for alternative financing sources. Options to address the issues Why time is a problem for the early stage of the business? Because investors are eager and another product could appear on the market cheaper than RE. To address this issue Shame must be monitoring similar products, research about prototypes hat could be developed in a short time. I think the problem of time can be resolved with more information about the design of the product.
Developing a team is a key to any new project. Shame could contact another person who has more experience in this industry and take him on with the same conditions as Ryan. I think finding more experience could ultimately lead to producing cheaper prototype than RE. There are many options to get the money, the case propose is to raise the money through family and friends. This is very risky, not only for the time but also the risk o he project. The life of these people could become very complicated, and they will need to keep the business arrangements strictly about business.
The amount of money could be a problem if it’s not enough. Also, there are more alternatives for financing; for example, there are many centers of research and development with limited partnership. One issue that Shame must take a look at is the contract, but HTH could be addressed with a good lawyer. This loan is for a short to medium time frame and the amount is not so much, however it is enough for the early stage. I think Shame’s idea could be implemented in other markets like the agricultural industry.
They have a lot of cattle manure and corn.
Shame could enter a contract with them about the financing then test in the fields and bring them a discount whew the product was launched to market. I think is more feasible to do business with farms at this stage, because most retail options do not invest in this kind of project stage as they have smaller margins. When analyzing the data sheets, the projections shows that flow cash positive will e in the third year and net earnings of 14% in the fourth year, however the Investor requirement is two years.
But if the market is growing quickly, the return of investments could be reduced to least than two years and with that projection some Shame must decide about the status of ownership with the business, but if he can find another source of financing for this stage he must control the situation and close the contract with better conditions. Conclusion Shame has the opportunity to create a really good business, but he should be more prepared.
He really needs to develop a good team, and then analyze a new design for the prototype. The only place he cannot save money is in the cost of the components.
To found rise for this, he should search for organizations, Universities and angels investors, but must contact with good lawyer. As write before, Shame should analyze to do business into another market, like farms. I think the payback for that market is less than 2 years, because the fertilizer that RE will produce can be used for the farmer and the energy of course. Shame should look for new Clients, he must know bout their operations, demonstrate to clients that RE is not created for using in short time, instead it will be use for a long time that will be part of the business process and they will save money in their operations.
The other benefit is the marketing advertisement, which the client can be used to show that is using a renewable energy. The bottom line is that Shame should look for a good team, new market, and another source of financing, with better conditions than the investors mentioned in the case. As said by Jack Welch (2005); “Put the right people in place to rive the big aha forward, and continuously improve on your insights and execution. Now you’re playing the game to win”.
The projections are very attractive for everyone, so he must move fast.
One big risk is to give up part of the business to other people and this could potentially cause unwanted constrains and lead the company in a different direction.
