Example Business idea: Compressed sawdust

Introduction

The cost of housing in most places around the world is very high that quite a good number of people cannot afford it. Construction materials have been seen to be the major contributors to the high housing costs as most of the artificial ones cannot be extracted or obtained from the environment readily. Consequently, construction materials factories such as cement and bricks companies have turned this to their advantage, knowing the ever-increasing demand to push the cost of acquiring these core commodities higher than many people can afford. The best solution to the housing problem is the adoption of sustainable construction materials that are readily available in the environment. Sawdust is the product of timber and wood processing where the fine materials are left, and in most places, they are considered waste, as their use has not been widely explored. However, these materials can be taken, mixed with an appropriate binder such as wood syrup gum, and compressed into appropriate models having desirable shapes and sizes to be installed to construct housing units. A fireproof resin can be applied on the surface to protect the panels against excessive heat from the fire and also reduce damage from water. This idea was conceptualized after watching the documentaries highlighting the challenges third world citizens face in terms of housing. Therefore, the idea was aimed at providing a reliable housing unit that is able to insulate against the high daytime and low night temperatures as well as torrential storms that hit these regions. The main objective was providing affordable housing alternatives to the people that would also be very durable and flexible.

Marketing

For any business to be successful, the products need to reach the customers or clients efficiently and also on time. This implies that the market of the product should be sufficient to ensure the company remains in business by making profits. By considering the Compressed Saw Dust (CSD) innovative construction material, the market is readily available in most places of the world. The greatest hindrance to people owning housing units especially in the third world countries is the high construction cost, which is triggered by the expensive construction materials such as cement, bricks, and fine aggregates. Research has determined that the construction materials account for more than 60% of project cost. Therefore, by coming up with innovative solutions to introduce sustainable and affordable building materials, many people would opt for them as they result in huge financial savings. Therefore, the market for CSD is readily available and is even larger in African and Latin American countries where the existing materials are very expensive.

The issue of unaffordable housing due to expensive construction materials is prevalent in almost 65% of the nations on earth. CSD provides an alternative, and this means many nations will adopt this technology due to its durability, ease of installation, and cost effective since it is made from materials that are readily available. Therefore, the market for this technology is spread throughout Australia and the rest of the world with great demand being in the third world countries, mostly African countries. In addition to this, there is a considerable potential also in the other developed countries as they strive to develop sustainable building materials that are environmentally friendly. In view of this, if the idea is implemented, there would be enough market to keep it in business.

Relative to the market potential and size of this innovative business idea capitalizing on sawdust to make sustainable construction materials, a very high volume is required to meet the demand. It is important to note that depending on the client’s needs, different shapes and sizes of CSD can be made from the sawdust faster and a considerably lower cost than purchasing conventional building materials. Due to this reason, it is expected that many clients will be lured and convinced with the idea and the result would be an increase in demand for the product exponentially. Moreover, their lightweight nature coupled with high longevity is another contributing factor that will increase the market size and volume of this product. That said, it is estimated that a demand of about 3,000 housing units annually will be needed to be constructed from this material and this makes it very profitable.

Most importantly, the market size is sufficiently large enough to ensure the idea of CSD remains in business all the time. As stated earlier, currently, there is a high demand for housing, but the cost of construction or purchasing a house that has already been constructed is too expensive for everyone to afford. The aim of this material is to provide better services such as heat insulation, soundproofing, and waterproofing compared to the other existing materials in the market, and this gives it an advantage to the potential customers. Also, the expected demand is about 3,000 housing units annually, which is considerably large enough to ensure that the business is running, expanding and in a profit-making streak while at the same time providing solutions to the problems the people are facing at the moment.

 

Finance

The fundamental aspect to be considered before implementation of the idea is the financial factors to ensure the investment does not fail due to losses incurred. In view of this, we shall assess the financial performance of the idea relative to cost, prices of the product per unit, and the profit estimates so that it can be determined whether it is worth investing money. There is unique and specialized machinery that are required to perform the batching, molding, and compression of the sawdust materials to form the panels. It is estimated that a single machine costs about $15,000 and in order to meet the market demand, about 12 machines will be required at the start.  The 800sqm industrial warehouse lease would cost about $160,000 per annum. Additionally, 5 crane trucks would be needed to deliver the product to clients, which are estimated at $150,000 each. Other considerable fixed costs include the skilled labor and other legal documents. Altogether, a capital of $1,250,000 is required to start the business.

A single panel of the CSD measures 1.5m x 2.5m x 0.10m in width, height, and thickness respectively. The market prices of this single unit if sold would be about $75 and to make a single housing unit, requires about 100 of them, making the total price for constructing a housing unit to be $7,500. This is quite a small cost of construction compared to the use of conventional bricks, which would cost about $80,000 for a single unit. Therefore, based on these cost and price estimates, for the 3,000 housing units that can be constructed using the materials, it will generate a total revenue of $22.5 million. However, other running costs such as the purchase of materials, equipment, and labor would cost about $6 million. This leaves a profit estimate of about $16.5 million annually, which is a considerable amount of income.

Conclusion

From the detailed explanation above, it is evident that there is a need to provide affordable housing units to middle and lower class people. In order to ensure this is done, affordable, environmentally friendly, and sustainable construction materials need to be devised. The Compressed Saw Dust is a good alternative as it is very sustainable, environmentally friendly, and affordable to most of the people. The market demand for this product is very high, and this will ensure that it always remains in business. Moreover, the cost of implementation is relatively low, yet the revenues generated are huge making it a worthy investment. Therefore, based on the consideration of marketing and financial aspects of the ideas, the group should take this idea as it is profitable and solves problems.