Starting a Recycling Business · recycling locations, grants, statewide public education and information, and administration of the program. What are the elements of the program?

StartingA Recycling

Business

jaberbac

Typewritten Text

Publication # DRRR-2011-020

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 �

A Guide to

2

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.


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.


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

�4 Chapter 3: Fulfilling State and Local Requirements

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.


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


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.


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.


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:


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,


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


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.


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 $_______________


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 $_______________


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


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.


A Guide to

TIMETABLE

Provideyourtimescheduleforsolicitingfunds,developingthesite,testingyouroperationsunderreal-worldconditionstoeliminateerrors,andstart-upoperations.

CONCLUSION

Summarizeyourbusinessgoalsandobjectives.Sendamessagetothereaderthatyouarecommittedtothesuccessofthebusiness.

Writingathoroughbusinessplanisnotaneasytask.Itisessentialthough,tothefuturesuccessofyourbusiness.


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


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

Documents

Starting a Recycling Business · recycling locations, grants, statewide public education and information, and administration of the program. What are the elements of the program?