Business Concept Document
Business Model
I, XXXX will be starting a fertilizer wholesale distribution business in Ottawa, Ontario under Ontario Entrepreneurship Program. I will be developing a wholesale business model where I will be making purchases from the Canadian fertilizer manufacturers and distributing it across Canada as well as focusing on developing Asian export markets where fertilizer requirements have considerable improved over the past few years. Markets like India has imported fertilizers worth more than CAD 9 billion last year that clearly highlights the potential of imported fertilizers in the market. I have more than 20 years of working in various chemical and bio chemical businesses across India and I am aware of the market expectations where my experience will substantially help the fertilizer industry to diversify the exports into markets like India, Pakistan and Bangladesh over the next five years. My plan is to make local procurement of fertilizers in bulk quantity and export them to various dealers in India through Letter of Credit Arrangements that will require substantial capital and therefore I will be making an investment of CAD 250,000 into inventory for ensuring bulk purchasing and make high level of sales in the potential export markets. I am currently working as whole-time director of Crop Life Science Limited, a Public Company that manufactures wide range of crop protection chemicals and wide range of related products since 2006 and thus this clearly highlights my experience in this industry.
I am also associated as director with Company A, public company incorporated in the year 2014 and engaged in the process of development and establishment of a modern and multipurpose plant for manufacturing various technical grades of insecticides, fungicides, herbicides and PGR.
I have identified three major manufacturers in Canada as we will be contracting with them to purchase the required fertilizer products suitable for Indian market and diversifying their export sales market. I will be purchasing from them and distributing it across Canada as well as export markets through making Ottawa as the head office for operational management. My experience of developing fertilizer business in India has helped me to develop skills and expertise in marketing fertilizers, developing brand presence, increasing export potential and developing a growing business model. My experience in working with fertilizers and related businesses since 2006 has helped me to understand market demand fulfilment and achieving customer expectations through improving product availability and product quality. I will be working on development of wholesale distribution where I will be supplying fertilizers from major players that will include Nutrien Ltd, CF Industries Holdings Inc., and Yara International ASA. The aim is to increase our customer reach and create long-term sustainable growth for the business.
We will be offering following products to our customers:
• Fertilizers
• Pesticides
• Nutrients
I have done research of Canadian fertilizers industry and have identified that the industry will remain steady over the next five years that will allow new entrants to develop innovative business models and creating growth opportunities for the industry. The current market has
multiple such wholesalers but most of them have developed distribution services across United States and not many have focused on growing beyond US. My aim is to open new horizons for Canadian fertilizer industry and creating efficient supply chain ensuring long-term development of the business.
I will be making an investment of CAD 400,000 in this business out of which approximately CAD 250,000 will be made in the procurement of inventory since my aim is to increase the size of manufacturing order and reduce the cost that will translate into lower price for the end users in India. I will be adding two jobs with this business that will include one marketing manager and one export sales manager. Marketing manager will be responsible for development and marketing of the products whereas export sales manager will be working with me in developing ties with export markets that will help improve growth and creating long-term development for the business.
Business Strategies
Increasing inventory turnover
My investment of CAD 250,000 into procurement of fertilizers that will help me to increase the distribution size through marketing fertilizer products across the global export markets. This will help increase product awareness as I will be heavily investing into marketing through hiring dedicated marketing as well as export sales manager. As I will be working towards increasing volume, I will be keeping margins on the lower side that will help me to increase volume and generate sales, thus increasing profit over the next three to five years.
Increasing product delivery areas
In the first year I will be working towards maintaining efficient production chain through performing accurate demand forecast, arranging timely orders, managing efficient shipment and ensuring operational efficiency for the business. In the second year
Operational Plan
Our operational plan consists of executing following operational strategies:
• Finalizing negotiations with following three manufacturers to develop long-term relations along with their contribution in developing fertilizers as per our need:
o Yara International ASA
o CF Industries Holdings Inc.
o Nutrien Ltd.
• Communicating with exporters, identifying their needs, sales capacity, product quality, partnership benefits and growth potential with them
• Finalizing sales agreements and targeting sales development in India, Pakistan, Bangladesh and other Asian countries
• Developing manufacturing plan with the manufacturers and ensuring timely availability of products
• Placing bulk order for onward distribution to export markets
Ownership percentage
I will be investment CAD 400,000 in this new business and will have 100% ownership in the business to fulfill the eligibility criteria for the PNP program.
Business Owner Manager Experience Only
I have more than twenty years of direct experience while managing my own fertilizer manufacturing business in India. I have developed this business from the start that included manufacturing of fertilizers, marketing of products, identifying wholesalers and retailers along with develop complete supply chain of the business. I will be transferring my skills in Canada and using my experience of more than twenty years in developing this advanced business model that will focus on creating growth for the Canadian fertilizers industry focusing on expanding the export markets of the country My responsibilities included the following:
• Administration & management of overall business through business Analysis and strategic planning.
• To assess the efficiency of the company's procedures and systems and initiate changes if they feel it is necessary.
• To look after the overall supply chain management of the company and to devote time towards the growth and development of the business across Canada as well as growing export markets
• To take care of all the compliances getting done within due time with proper due diligence of all the statutory and regulatory laws and legislations.
• To expand the business of the company globally through the best quality services in agro chemicals Industry etc.
• Analysis and planning for establishment of Project to be developed and established in the company.
• Management of budgeting and costing of the project development.
• To oversee the and assess the efficiency of the systems and procedures undertaken for development and establishment of the project and to suggest the changes when its required.
• To look after the overall work and processes running in the Company for the completion of the Project of the Company etc.
Market Research
I have performed secondary market research through various methods including reviewing the fertilizer market research report prepared by IBIS World. This has helped to understand the growing market in Canada, its export potential and how I can contribute towards further improving the market access and generating export sales for the Canadian economy.
Fertilizer is a globally traded good and the price of industry products is therefore closely connected to global prices, which themselves are subject to global supply and demand conditions. Over the five years to 2020, the industry has experienced volatility in the price of industry goods due to a demand and supply imbalance in response to rising global fertilizer supply. Along with comparably weaker demand for industry products, domestic prices have also been weak. Rising global supply has also cut into the industry's export opportunities, damaging demand from a key market. However, domestic agricultural output has provided a consistent source of demand for industry products, with seeded farm hectarage rising consistently between 2015 and 2019, helping to expand demand for industry products from downstream farms and the wholesale and retail networks that service them. However, global labour shortages as a result of the COVID-19 (coronavirus) pandemic, are expected to result in less seeded farm hectarage, which will likely lower demand for fertilizer products. Overall, IBISWorld expects industry revenue to decline an annualized 2.2% to $4.9 billion over the five years to 2020, including a forecast decline of 1.4% in 2020 alone. Over the past five years, the domestic price of fertilizer has been somewhat volatile, although less so than during previous reporting periods. The domestic price of fertilizer peaked in 2015 before declining 10.8% in 2016, and has since continued to fluctuate. Notably, the price of domestic fertilizer fell at a faster rate than the price of fertilizer in the United States over the past five years.
Critical market factor
Pricing of fertilizer
One of the most important things is the global reduction in the pricing of fertilizers. It is important to note that increasing price competition from domestic and imported products has extended the need to generate economies of scale to reduce price as compared to international competitors and provide greater price efficiency to the customers. I have been working in this industry for more than 20 years and it has helped me to understand pricing dynamics in international fertilizer trading business. I have developed a network of end customers in India that require imported fertilizers and other related products. My aim is to create synergies by cumulating orders from my network, providing manufacturer with economies of scale and creating competitive pricing that will help achieve long-term sustainable growth for the business.
Availability of products
Another critical factor in the manufacturing of fertilizer is the availability of production during the required season. It is important to note that Canada has around 70% local consumption of fertilizers and hence availability for export management is critical for growth of the business. We will be working towards creating synergies and aligning our product requirements in a way that extensive planning is performed in each stage of order fulfillment through comprehensive demand forecast, arranging export documentation and ensuring that order processing is
performed as per customer needs. This will help in increasing export sales and generating revenues for the Canadian fertilizers industry.
Target market
As per my research and my experience within the fertilizers industry the export sales in the Canadian fertilizer industry is primarily targeted towards United States with more than 98% share in the market. I will be diversifying this market by using my experience to focus on different global markets including emerging economies like India, Pakistan, Bangladesh and other Asian countries that are predominantly agriculture-based economies and have huge consumption of quality fertilizer products. Thus, it is important for long-term growth of Canadian fertilizer industry to diversify the market reach which I can work through my experience of working in Indian fertilizers industry and create new growth opportunities for the Canadian economy.
Current market trends
• Industry profit has been highly volatile due to declining fertilizer prices which needs to be addressed through diversifying the target market and creating greater opportunities for Canadian fertilizer manufacturing companies
• A difficult business landscape is expected to reduce the industry's trade deficit
• Industry participation has been increasing across Canada with manufacturing units in major business hubs. This is creating growth opportunities across the country. The growth needs to be further accelerated through diversifying target market, identifying new potential consumers and creating long-term growth for the industry.
• The industry will benefit from improvement in agricultural commodity prices
• International trade is expected to remain an integral component of the industry and postpandemic growth will accelerate international fertilizer trading
• Market share concentration is expected to shift in favor of larger participants where economies of scale can help in increasing the revenues
• Industry performance has fluctuated over the past five years in response to volatility in domestic fertilizer prices
Key sectors and/or significant economic benefits
Our business aim to develop key sector of chemical and bio chemical in Ontario by focusing on developing an organization that can create wholesale distribution of fertilizers and other related materials for local as well as export markets. I have more than twenty years of working experience in chemical industry where my company was involved in the manufacturing of crop protection chemicals and wide range of products including Insecticides, Fungicides, Herbicides, Micro Fertilizers, Plant Growth Regulators and Soil & Plant Health Products. Thus, my experience in this sector will help create long-term growth opportunities for the chemical and bio-chemical business in Canada. I believe that my I can help increase Canadian exports to Asian countries that are agriculture based economies and need such products for increasing their produce.
It is important to understand that Ontario has 21% of the total fertilizer establishments in Canada and thus our further contribution in the Canadian fertilizer industry can substantially help increase export sales in the industry and can help develop long-term sustainable growth for the businesses.
This is significant economic benefit where Canadian manufacturers can reach their target markets through our business as I have links and network of customers within the export market of India that can prove to be financially beneficial for the Canadian manufacturers where they can explore new option within global markets including India, Pakistan, Bangladesh etc. My aim is to create economic growth in Canada through concentrated steps and dedicated efforts that aim to increase market reach, increase regional sales of fertilizers and other chemicals and create long-term growth for the business.
I will be developing an online platform that will be linked with the products to be offered by my business. The items in our manufacturer’s inventory can be ordered through the ecommerce platform. If they are available in stock our distribution system and export manager will performing all steps needed for timely execution of export queries, communicating with manufacturers, aligning lead times and ensuring timely delivery to the customers. The model is innovative as we aim to create efficient export management through this platform that will enable manufacturers, distribution system and our head office in synchronization with each other for timely manufacturing and distribution of our products. This is significant economic benefit as it will improve technology across the fertilizer supply chian system in the country along with ensuring long-term growth for our business.
The investment of CAD 400,000 will also provide significant economic benefits to the Canadian economy by increasing investment, focusing on developing fertilizer distribution system and creating growth for increasing export sales in Canadian market.
The major expenditure will be in inventory where I will be developing my own private label for marketing and branding across Canada. The first year sales are expected to be around CAD 700K whereas the initial investment in inventory is expected to be around 25% of the yearly sales. The aim is to increase the sales volume, reducing margins and developing brand presence across Canada.
https://www.ic.gc.ca/app/scr/app/cis/performance/rev/41 411
The lowest sales value of the top quartile firms (as per Stats Canada) is CAD 791K and thus we aim to reach that level in our first year of operations through efficient
management of inventory, developing marketing strategy and creating strong customer base for the business.
Leasehold improvements CAD 10,000 I have identified an industrial location of 5597 sq ft for developing the warehousing capabilities of inventory and managing operations from Squamish. I will be investing CAD 20K in leasehold improvements by developing shelves and storage area for ensuring proper utilization of warehousing space.
http://squamishcommercialproperty.com/industrial-forlease-in-squamish.html/listing.c8031375-101-102-1091commercial-place-squamish-v8b-0a9.91632089#viewtop Office equipment CAD 10,000 I will be purchasing three computers and one photocopy machine for the office that will help in management of the work. I have planned to buy three MacBook Pro with MS. Office License along with Xerox photocopy machine for the office.
Marketing CAD 15,000
The first year will be vear challenging as I will have to develop entire marketing strategy, identifying target retailers, developing relationship with them, increasing brand recognition using social media marketing strategy and creating loyal customer base. I have set budgeted marketing expenditure amounting to CAD 25K that will help in developing entire marketing strategy and creating long-term growth for the business.
Salaries CAD 85,000 I will be hiring two personnel for the business that will include marketing manager and export sales manager. The budgeted expense of CAD 85,000 includes six months’ salary of these two jobs taken from the below website for the purpose of identifying potential investment needed in the business.
https://www.glassdoor.com/Salaries/ottawa-marketingmanager-salary-SRCH_IL.0,6_IM981_KO7,24.htm
https://www.glassdoor.com/Salary/Export-DevelopmentCanada-Marketing-Manager-Ottawa-SalariesEJI_IE28689.0,25_KO26,43_IL.44,50_IM981.htm
Rent CAD 18,000
I will be getting one office on rent for as the business model is to purchase from the manufacturer and sell it to the end customer. The rent of the office space is around CAD 3,000 per month including utilities and thus we have considered a total amount of 6 months as it will be considered as part of eligible investment. Following is the link of office that I expect to rent in Canada:
Accounting CAD 6,000
https://www.kijiji.ca/v-commercial-officespace/ottawa/work-your-way-in-a-private-office-forfive/1505799605?undefined
I will be hiring an accounting firm for management of books of accounts and preparation of tax statements. I have researched various firms with average cost of CAD 1,000 per month for management of accounts and filing of tax returns. Thus, CAD 6,000 is being considered as part of eligible investments.
Legal CAD 6,000 I will be hiring a legal firm for helping me establish this business in Canada including all required registrations. I have researched various firms with average cost of CAD 6,000 for such legal work. Thus, CAD 6,000 is being considered as part of eligible investments.
Total CAD 400,000
Job Assessment
I plan to add two full time jobs in the first year that will include Marketing Manager and Export Sales Manager. These two jobs will help develop customers across the globe for exporting fertilizers and other chemicals from our hub in Ontario that will help us connect with the local fertilizer manufacturers and link it with our contacts in India. This position will help us develop marketing strategy and execute our marketing activities that will increase brand presence across the globe and increase our sales locally as well as for export markets. I believe that having full time marketing manager will help create brand visibility that is important for competing in the market and developing relationship with farmers and other businesses
I will be hiring an export sales manager as well that will be responsible for identifying the export potential particularly in India, Pakistan, Bangladesh and other Asian countries that require high quality fertilizers and are agriculture-based economies. The export sales manager will be responsible for identifying export contacts, providing them sample fertilizer products, getting approvals and transforming export lead into export sales. We will be hiring two highly skilled individuals that will help develop our local as well as export sales and will increase jobs in Canada. My strategy is to create impact in Canadian fertilizers and chemical industry by helping manufacturers to increase export sales and create growth in the Canadian economy.
High-skilled jobs
I will be creating two high-skilled jobs in Ontario from the below mentioned two NOCs.
0124 Advertising, marketing and public relations managers
Marketing manager will be hired that will be responsible for executing our marketing strategy. I will be hiring marketing manager at average annual salary of CAD 90,000 per annum. The average salary has been taken from the below link as I will be setting up my business in Ottawa:
https://www.glassdoor.com/Salaries/ottawa-marketing-manager-salarySRCH_IL.0,6_IM981_KO7,24.htm
I believe that hiring experienced marketing manager will help develop this business from the scratch and will help create long-term growth opportunities for the business.
0601 - Corporate sales managers
I will be hiring export sales manager who will be managing export sales and thus is included in the NOC of 0601 Corporate sales managers for management of export sales. The salary to be paid will be around CAD 80,000 per annum which I have researched from the below link:
https://www.glassdoor.com/Salary/Export-Development-Canada-Marketing-Manager-OttawaSalaries-EJI_IE28689.0,25_KO26,43_IL.44,50_IM981.htm
I believe that hiring two high-skilled jobs will help increase employment in Canada along with positively contributing to the Canadian economy. The overall investment of CAD 400,000 in the initial year will help develop long-term business growth in the country and will help create sustainable growth over time.
Development region
I will be staring this venture in Squamish which is situated in Lower Mainland/ Southwest and thus will help develop this region in terms of growth in economy as well as creation of jobs to support local BC’s economy.
