start homebrew business

[oakj423]

Ok, I have been tossing around some numbers in my head all day. I’ve been thinking about starting a “business” of sorts. I am talking to someone now about the costs of the actual business license and crap but I wanted to throw some numbers at you guys.

Keep in mind, most of these numbers are rounded for easy math, don’t slam me too hard on them. Say I wanted to make $60,000/yr in profit. That means if it cost me $1/gal to produce and I sold it for $2/gal…$120,000 income - $60,000 in expenses = $60,000 profit. That also means I need to produce 60,000 gallons/yr.

If I drive 15,000/yr and get 15mpg then I use 1000 gallons per year. 60,000/1,000 means I need 60 customers like myself. Ideally, I would get a contract with this landscaping company nearby that has a fleet of about 20. To me, 60 customers seems reasonable.

As far as getting the waste and turning it into gold…60,000gallons a year is ~250 gallons a day (5 day week, 52 weeks a year). From what I’ve read about on here most restaurants go through about 15 gallons of oil a week. That means I need to pick up from about 80 places a week (16 a day). Based on the number of Chinese joints around here, that is very possible to do. If I picked up all of those in the morning and mixed in the afternoon, it seems like it would work to me. This would obviously be a 40 hour a week job, but it seems feasible to me.

I obviously wouldn’t dive right into with a full-blown 60,000 gallons a year, but I would start small and if business seemed to be picking up, quit my job a year later and give this a shot.

Sorry this is so long, but I wanted to explain all of my thoughts. What am I missing? Why is no one else doing this? Do my numbers seem close to accurate? Suggestions? Comments?
Thanks in advance!

[scottefontay]

I also have thought about this. First off, there is no way that you can do all of that yourself. You need help. Time and effort required to collect, test, sort, and store all that grease is a big consideration. Unless you have a space already there is rent, utilities, start up equipment... tha bottle neck isn't the processor, you can spit out 10,000+ gallons per week with a 300 gal processor working around the clock. The bottleneck is the washing, the methodology/procedure. Then you have to dry a large volume of fuel. Then you have to deliver or pay a delivery service. Road taxes will add a signifigant chunk of change to your final sale price. Not many private companys are going to pay much over regular fuel prices for biodiesel. People are doing it, but there is a reason they charge $3.50 per gallon.

[RickHredf250]

There are some regulatory IRS things to look into, not to mention if you are in the city limits, forget it. Having that much methanol will shut you down before you get started. Then there is liability insurance, fuel testing, dues to Biodiesel.org (to get cheaper fuel testing).
Depending on your state, permit fees for colecting WVO...
You need to really dig into it. A quick call to your state (or on line visit) Dept or Revenue may give you some insite.
Federal guid lines for tank containments... man it just never ends.
Do a search or two over at Biodiesel Info Pop, there has many discussions about it. Also there are several commercial producers posting over there.
Having said all that, best of luck with your venture!
Rick H

[Lee Haenschen]

If I knew someone here locally that sold Bio-diesel at $2.00 I would be all over it like flies on stink!

I run a landscape company locally with multiple diesel truck crews and not to mention diesel tractors,mowers etc... But finding someone to produce bio diesel in my area is difficult.

There is a company 40 minutes away that sells B-99 with the $1.00 per gallon tax break due to cutting it with 1% petro diesel. Its competitive to petro diesel prices (within 5-10 cents) The only trouble is everytime I want to get some B-99 I have to have him put it into race fuel jugs or something of that nature because the nozzle on his machine is made for fuel trucks and its around 2" ....my fuel hole is around 1-1/4" I have transfer fuel tanks not to mention in some of the work trucks but to drive 40 minutes away and have to fill up here with bio-D and then go across to his gas station and then top off with petro diesel to make the tax cut is sometimes a pain.

So after all that babling what I mean in a nut shell is if you can sell convenience to any construction/landscape company im sure they will go for it. To bad you don't live around me! I just flat out don't have the time to collect WVO, I have the equipment just not an ounce of time [img]/ubbthreads/images/graemlins/sick.gif[/img]

[Lee Haenschen]

Not to mention your numbers sound a little off....like in other posts there are expenses that you havent taken into consideration and there is just flat out things you will find out the hard way when you jump into it. But by all means press forward anything is possible if you put 110% into it. Goodluck [img]/ubbthreads/images/graemlins/biggrin.gif[/img]

[Charlie_M]

I think by the time you got all done you'd be looking at selling for about what others sell it for (just over $3 in my area). But hey you shouldn't let that stop you. First of all if you sell it that much cheaper than everybody else people will think there's something wrong with it. It's a reality of marketing... just seems to be how the human mind works when it comes time to buy something. If you could figure a way to sell at a 10 or 15% discount to what others sell for then you're in the ballpark from a profitability and marketing point of view.


In my area (san jose) the bd seller is required to have his customers join a "group". Some sellers charge a fee for this but my local guy doesn't (western states oil on 10th street). I'm sure there are a lot of regulatory things to consider, you might want to give these guys and e-mail:

http://www.biodiesel.org/

... they may have a starter kit or something, or at least in info packet to put you in touch with the right agencies.


Don't forget your rent, insurance, etc... (you can't sell it out of your garage at home) those are the hard part. Those are what business types refer to as the "fixed" costs. That means these costs are more or less fixed and have to be paid whether you sell anything or not. It looks like your analysis deals only with what business types refer to as the "variable" costs (consumables, etc...) which only have to be paid to replenish what you've sold. In a sense the variable costs are the easy part. When you make the commitment and look at the nut you have to come up with each month whether you sell anything or not... that's a bit freaky for most people. That's why most of us just get a regular job. Takes a lot of nerve to do what you're talking about. I wouldn't want to discourage that but at the same time I wouldn't want to see someone go into it and then get surprised. Best of luck man.

Charlie

[OMCUSNR]

As the others have mentioned, there are a whole slew of things to consider when going "commercial", but this [ QUOTE ]
...fuel testing, dues to Biodiesel.org (to get cheaper fuel testing)...

[/ QUOTE ] is the biggie.

Its the killer for a small producer. It costs in the $100,000's to get your fuel tested & speced for sale (retail or wholesale).

[oakj423]

well thanks for all of the input guys. i guess i'll see what my actual costs end up being and how much time i have, etc. if it seems like i can pick up a customer or two, maybe i'll give it a shot down the road. i'll keep you posted. thanks again.

[girlmark]

[ QUOTE ]
As the others have mentioned, there are a whole slew of things to consider when going "commercial", but this [ QUOTE ]
...fuel testing, dues to Biodiesel.org (to get cheaper fuel testing)...

[/ QUOTE ] is the biggie.

Its the killer for a small producer. It costs in the $100,000's to get your fuel tested & speced for sale (retail or wholesale).

[/ QUOTE ]

actually, this is incorrect.

The NBB membership costs for small producers are $2500 a year, not that much money.

This has nothing to do with ongoing fuel testing costs, it's connected to some legal rigamarole with how biodiesel came to be legal to sell in the USA
Basically, the NBB spent 2 million or somethign to prove to the feds that biodiesel isn't going to harm humans or the environment or cause cancer if mishandled (any new fuel or additive manufacturer/mfgrs association is supposed to go through this process), and the way the law works, they have a right to get their money back by charging any producers who come under their wing when it comes to registering as a producer with the feds.

You can also go spend the 2 million and be your own NBB (BYONBB??) but no one's done that yet, so the NBB is the only game in town when it comes to federal registration as a fuel producer.

IT's how the feds protect the competitiveness of the fuels/additives market- if somethign new is brought to the market and the initial testing costs of proving it's safe are high, they don't want to discourage a group like the NBB from taking the first step by making the first group pay all the money and all subsequent producers get a free ride.)

Mark

[rmr]

I called 6 local restaurants, they all had somebody who took their old oil, weren't interested in changing.
I would confirm your old oil supply before going to far.
Good luck, I like the idea, America really needs lots of this!

[OMCUSNR]

Thanks Mark.

I remember it from when NBB was new.

[girlmark]

Yep. Most people would prefer to not give money to the NBB over a technicality in the law, but the technicality is there for a reason even though I wish it weren't when it comes to biodiesel.

This is a really good thread for all those 'why does biodiesel cost so much at the pump' kinds of questions that come up on the forums. I'm bookmarking this one to refer other people to.

Mark

[Huff]

I'll bet "BIG OIL" has a say in it as well or passed some money around on capitol hill.

[scottefontay]

Its most likely that they (big oil) are the one that will control the biodiesel industry anyway. They have the money and infrastructure, they have to modify their business model though. For a long time, and probably still, Exxon Mobile (et al) was pretty much the leader in solar technology. Buy it, suppress it, and sell it when the oil runs out....