After reading the business plan below (for commercialized drip…
Question Answered step-by-step After reading the business plan below (for commercialized drip… After reading the business plan below (for commercialized drip irrigation), develop a complete, comprehensive plan that breaks down the key players of your proposed management team, how committed those key players are, and how you plan to attract any other talent you will need for this project. Overall, describe the ideal management team you would develop to pursue your venture. (What are the critical players you need immediately?) Business Plan Parts – Interim Assignment (Commercialized Drip Irrigation) Customer Discovery to Date Our potential customers asked us two types of questions when pitching our business idea: financial and non-financial questions. These questions forced us to seriously evaluate our business model and assess if it met a fundamental need for the customer that could not be easily replicated by competitors. Below are questions we received and our solutions/learning points to these questions. Colonel (retired) Todd Phinney, Co-Owner of Gordon-Phinney Farms in Rochelle, GA.: “You mentioned burying the drip irrigation system in the fields. Can we drive vehicles over it? Can we turn water on and off within different segments of the fields? How long will the system last and will it have to be dug up before replanting?” Mr. Glenn Welch, Owner of Welch Farms in Gilroy, CA.: “The water crisis is a major issue and I want to conserve water. However, will this increase my product’s yield? What are the sustainment costs for this? Is there an opportunity for the government to subsidize installation costs?” Mr. Todd Mangiaracina, Owner of Fresh Produce Farms, Sacramento California: “How much money will be saved with this irrigation method versus standard irrigation?” Fundamentally, the lesson we took from this is that our customers are primarily concerned with financial benefits and that we need to put a special effort into differentiating our product from potential competitors. Therefore, we improved our drip irrigation system in the following ways: Differentiation: We recognize the linchpin of our competitiveness is our central control box and control nodes that sense the soil’s conditions and control the irrigation system. We redesigned our system to present data in an easy to understand manner while simultaneously giving farmers greater control over the system.Sustainability: We revisited the irrigation line design to guarantee that the lines can be dug once and not have to be dug up again. The piping is made of material that will allow it to last for many years in the ground, allows heavy vehicles to drive over it, and will not be damaged by harrowing.Financial Benefits: The irrigation system allows up to 75% water savings and just as importantly can be controlled via cell phone or laptop. This allows the farmer to check each field’s condition and adjust the control box and control nodes’ water outputs to gain the desired soil state. This decreases water usage, increases crop yield, and provides a farmer significant labor efficiencies. Business Plan Part 1 – The Executive Summary Our country is in a severe drought. Areas across the world continue to have issues attaining clean and fresh water. While there are many different options for this solution, a simple strategy is to reduce and reuse water where fitting. Our product, Dripping Edge, has been developed to help conserve water through irrigation in agriculture. It is estimated that California’s agricultural industry alone is worth $47.1 billion. If farmers do not find a way to reduce their water usage they will soon find that it is not financially sustainable to continue farming. It requires on average 967,000 gallons of water to irrigate one acre of California farmland, adjusting for the averages in what crop is being produced, the environmental conditions, and rotation of crops for the season. By using a drip irrigation system, the same conditions would take roughly 250,000 gallons, resulting in a roughly 75% increase in water efficiency. We have several innovations that help bring agriculture and technology together with the goal of saving water. Our company has switch boxes developed that will track water usage and dryness in the fields that can be utilized through bluetooth. This innovation is better than an alternative timing system that will water crops around the clock. Through our company’s product, we have the resources to track when crops need water and when they do not to help eliminate waste and access water. This technology can make great strides and save water not just for us, but future generations. Business Plan Part 2 – Production (Ross Weller)Twenty-first century farming has a barbaric look. Farmers utilize crude instruments, far away laboratories, or the natural feel of their hands to determine soil saturation levels. Dripping Edge, through current state and future explorations, strives to change the way farmers work their crops. Not only through helping water consumption across the nation but also improving crop yields while lowering costs. Dripping Edge poses a critical solution to a difficult issue. Our system of drip irrigation systems is posed to change the way farmers operate and take the tedious task of watering out of their hands for good. Our system, consisting of a few critical parts has two stages: an initial low-investment of distributor-bought materials and a three-to-five-year plan of expanding production in house to safeguard Dripping Edge’s vital components. The Product and CostsDripping Edge’s first product, designed to serve customers for the first 3 years of our business, comprises 7 pieces, all of which are originally sourced from external sources. Of those 7 pieces, 4 will continue to be store-bought as the business grows as capital expenditures are not realistic for-profit building or cost savings. The other 3, our controllers, drip nozzles, and pressure monitors, will be brought in house after our third year to prevent competitors gaining access to our product and building a larger barrier to entry. Our initial Dripping Edge product consists of six-thousand feet of drip irrigation piping and its support assets. An initial investment of $13,500 will support farmers across the nation with over a mile of efficient drip irrigation. That cost is broken into the following parts:ExpenseQty NeededPrice PerTotalController13100 per$3100Piping 4″ (main)20052 per 10 feet$1040Distribution block1200 per$200Piping ¾” (individual)600070.29 per 250 ft$1686Drip Nozzles6000.30 per$1800Pressure monitors6059.00 per$3540Water Pump12200 each$2200 Grand Total$13,566 The largest burdens a farmer would encounter when putting in one of these drip irrigation systems are the controller and water pump. These two critical parts are one-time fixed costs and can handle nearly unlimited irrigation. Our team expects a standard 5-horsepower water pump can adequately supply a farm of over 25 individuals, 6000-foot dripping runs. While a 5-horsepower pump cannot supply enough water at one point, drip irrigation systems can run around the clock and each cycle of a 6000-foot run would take approximately 45 to 60 minutes each, depending on current soil saturation levels. With installing our system underground, a few issues could arise, all of which our team has addressed. Construction of our product will utilize schedule 40 piping which as of today’s research, is planned to last over 100 years of subterranean exposure. Additionally, through the installation below plow-grade depths, and utilizing schedule 40 piping, farmers can continue driving machinery over the product without risk. Therefore, all our products will be a reasonable long-term investment for our customers. Future BusinessExpansion of our product would require additional investment in only the remaining 5 parts: Distribution blocks, ¾” individual line piping, drip nozzles, and pressure monitors. Assuming additional lines would utilize the existing main 4″ piping and distribution blocks, each additional line would only require individual piping, drip nozzles, and pressure monitors, leading to additional costs of $1.17 per foot of irrigation. Compared to the leading competitor in the market, whose startup costs range from $100,000 – $200,000 for overhead center-pivot irrigation systems, which only see approximately a 60% efficiency rate, our drip irrigation system is a clearly better-alternate product.Going forward, Dripping Edge is going to invest in our production facility by $6.5 million to create the control boxes in-house. This control unit will be the brains behind the entire operation and allow for rapid, offsite changes to the flow rate of our system from the user’s phone. Additionally, our team will utilize factories in either Mexico or Vietnam to produce the pressure sensors and drip nozzles our system requires. The pressure sensors will continually monitor soil saturation levels (at 100-foot intervals), allowing real-time data for farmers to tailor watering plans to upcoming weather conditions, different soil or seed types, or the maturation stage of the seeds. When combined with the variable drip-rate nozzles (which are controlled by line pressure), farmers will be able to technologically adapt their plans to create the best crops while wasting minimal water and ultimately help the environment.Dripping Edge’s current plans show a forecasted 65% cost of goods sold using pre-existing parts. With the research of market costs, we’ve identified the ability to bring down costs by 10% on our end through bulk orders of the drip nozzles, control units, and piping. After our third year of business and through our capital expenditures, Dripping Edge will see costs consisting of:ExpenseQty NeededPrice PerTotalController12500 per$2500Piping (main)20044 per 10 feet$880Distribution block1200 per$200Piping (individual)600064.59 per 250 ft$1550Drip Nozzles6000.24 per$1440Pressure monitors6039.00 per$2340Water Pump12200 each$2200 Grand Total$11,110 Drastic improvements in our insourced materials off the controller, drip nozzles, and pressure monitors are able to bring down costs of a 6000-foot model by over $2,000, making each foot increment to $0.88 utilizing the same methodology as above. As the company continues forward, additional implementations such as variable cutoffs, colored piping to aid in identification, and better data collection will be possible. All in all, our company has created a partial solution to the over-watering actions by our country’s farmers. While the initial investment of this technology is costly at over $13,000 for 6000 feet of piping, the savings from water and other types of infrastructure far outweigh the costs. Business Plan Part 3 – MarketingIntroduction:The global drip irrigation market was valued at $5.5 billion dollars in 2021 and is expected to reach a CAGR of about 11% over the next few years to arrive at just over $9 billion by 2026. The dire need to reduce water usage while increasing productivity is causing commercialized drip irrigation systems to gain popularity not only in the West, but across the globe. Since drip irrigation allows water to flow directly to a plant’s root, the system uses significantly less resources such as arable land, water, and labor. For farmers and laborers in the agriculture industry, this means their time and energy can be better spent on other aspects of the business in order to efficiently move their product life cycle along.Target Audience:Roughly one billion tons of food is lost on farms every year. As a result, we believe that our product will be widely sought out as a means to mitigate water scarcity and other environmental issues that are undermining crop-loss prevention strategies. As mentioned in our initial business plan, our target audience includes farmers and other residential users, but could also include industry investors, drip irrigation systems and component manufacturers, and non-profit organizations as our product matures.Marketing and Distribution:Our commercialized drip irrigation system consists of three parts sold as a convenient, no-hassle kit: a control box, the underground piping, and the drip system. During the beginning stages of development, our product will be manufactured with basic store-bought materials, and then evolve to commercial-grade systems designed to, quite literally, weather every storm. Rain or shine, our product will lead the market.Our focus is to create industry-based content and advertise/promote the commercialized drip irrigation system by partnering up with celebrities, influencers, farming enthusiasts, and investors. Running targeted campaigns, raffles, and community-wide events ensures that we connect with our target demographic and build strong relationships with potential customers and investors. As operational agricultural practices become more important, our brand awareness, and hopefully our product adoption, will soar.Figure 1 provides a PESTEL analysis describing the macro-environmental factors that impact the agricultural farming industry. Figure 1: PESTEL AnalysisThe PESTEL analysis in Figure 1 helps us identify, analyze, and address important issues surrounding operational agricultural practices and the need to significantly reduce water usage. PoliticalPossible government subsidies due to the drastically reduced use of natural resources.EconomicRise and fall in the size of the farming industry. SocialConsumer trends towards Corporate Social Responsibility and environmental factors serve as a primary driving force.TechnologicalProgramming and automation with the drip irrigation system reduce human capital needs.EnvironmentalThis is one of the major considerations. Our product will appeal to those who care for the environment and safeguard natural resources. Corporate Social Responsibility is a large factor in business success today.LegalPermitting and agricultural regulation must be considered. SWOT Analysis:While the concept of drip irrigation has gained more popularity, some companies experience reluctance to switch since the initial investment can be quite high. Furthermore, it must also be noted that while drip irrigation seems like a promising alternative, it has just as many disadvantages:High maintenance costsDifficult to troubleshootRequires constant monitoringProne to cloggingMay require filtersProne to sun damage The SWOT Analysis shown in Figure 2 expands on the advantages and disadvantages of drip irrigation. Figure 2: SWOT AnalysisStrengths • The increase in demand and price of food has significantly increased interest in drip irrigation methods. • After installation, drip irrigation uses approximately 30% – 50% less water than other methods.Weaknesses • Drip irrigation calls for a high initial investment, which may deter potential customers from switching their system. • The Covid pandemic has had a global impact on water conservation efforts, causing many to adjust their water-saving sustainable practices.Opportunities • Since the demand for drip irrigation is being driven largely by the government, many farmers feel incentivized to implement such methods. • Furthermore, because the price of water will continue to increase over the next few years, drip irrigation is gaining more appeal. Threats • A high level of competition is evident, since drip irrigation could be a lucrative alternative to more traditional methods of irrigation that are still in use today. • Installing a drip irrigation system to successfully provide water to different crops will require research and trial and error. Business Entrepreneurship GEB 5114 Share QuestionEmailCopy link Comments (0)
