Business planning can sometimes be done less in depth and less expensive than a full feasibility study. 50% of all businesses fail and close to 99% never get off the ground. Business Plans answer all the tough questions before you start the business thus improving the chances of success exponentially. They are also a minimum requirement for lenders and investors of all types.
Startup Propane Business
An operating oil delivery company wanted to start a propane gas division. Their business goals were to create a new revenue stream and to increase customer retention by providing their oil customers with the gas they needed for cooking, hot water heaters, pools, fire places, etc.
Capacity Consulting Inc. was engaged to conduct a full feasibility analysis to determine if the new venture would ultimately be successful. There was a large up-front investment needed to buy tanks, trucks, training, certification and product. They couldn’t do it if it took too long to break even. Of course if the financials made sense, they would use the results of the study to help them get a loan.
We started from scratch with a demographic study to determine how many potential customers were in their service area We then did a full SWOT analysis, identified their ideal customer, did a competition analysis and determined their expected market share. Pro forma financial statements were done and indicated a breakeven of 18 months and a huge increase in profit in year 4 when customer count started to justify payrolls.
Armed with peace of mind, the owner decided to go forward. Capacity created a business plan to provide them a step by step map to success and a strategic marketing plan with messaging and advertising needed to meet the projections. All materials were presented to the bank that readily increased the company’s line of credit based on the in depth materials provided.
18 months later, the propane company has reached break even and is hitting all revenue benchmarks exactly as planned. Their success and outstanding service reputation has gotten them some unexpected attention recently from a couple VERY large commercial accounts.
“After nearly 70 years and three generations in the petroleum industry, I made the decision to expand my company’s services and looked to start marketing propane gas to my customers. I understood that this endeavor would be costly with huge upfront costs to bear. Before I spent a dime, I engaged Capacity Consulting to work up a pro forma and analysis to determine the feasibility of this venture. I am pleased to say that it has been nearly four years since we started our propane division and we have surpassed every self-imposed benchmark and actually out-performed the original study! Capacity Consulting’s “tool box” was instrumental in giving me the confidence to lead my team into the future.” Eli Van Etten – Vice President VEO Energy Systems A Div. of Van Etten Oil Co., Inc., Vice President Hudson valley Oil Heat Council, & Board of Directors Empire State Petroleum Association