Plotting a Path to Success:

1
Plotting a Path to Success

• The FirstStar Experience

Kay Stevens Nebraska State Recycling Association
2
Planning essential!

• To succeed, a recycled product business must
  focus on the long-term goal of building local and
  regional manufacturing capacity to absorb
  recyclables and transform them into value-added
  products.
• This is an attainable goal that requires a
  number of baby steps

3
SUPPLY

• Survey collectors/processors
• Gather data
• Ten years of price history
• Volume / tonnage by commodity and source
• Transportation (cost, availability)
• Seek alliances
• For-profit
• Non-profit
• Local / regional government agencies
• Establish your geographic location
• Based on distances from sources to markets

4
END PRODUCTS

• Do Market Analysis
• Identify and develop products
• Research standards and specifications
• Measure demand
• Evaluate competition
• Look for / find a niche
• Improve on existing product and/or services
• Estimate return on investment
• cost of production vs. viable pricing

5
Financial Management Structure

• Develop business plan, based on
• Market research
• Real cost
• Real revenues
• Organize management team
• Determine corporate structure / culture
• Recruit knowledgeable experts mentors
• Collaborate broadly
• Public private support groups
• Identify potential grant sources (beware of
  strings)
• Identify venture capital (beware of strings)
• Develop lender relationships (comparison shop)

6
Technology

• Research ALL equipment
• Never go with first sales pitch you hear. The
  second bite is as good as the first. - Dale
  Gubbels
• Base purchasing decisions on your market analysis
• Breakthrough technology sounds great, but risks
  are greater, too.
• There are NO magic machines

7
Unintended Consequences of Success

• Rise of the ankle-biters, direct and non-direct
  competitors
• Beware territorial retribution
• Understand regulatory disconnect
• Regulators as grant administrators conflict of
  interest. (Many grants are funded by landfill
  surcharges which will decrease if disposal volume
  is successfully reduced)

8
Pithy truths

• Recycling market development is not for sissies,
  wimps, the faint-hearted or the overly
  anal-retentive
• Walk softly and carry a great big calculator!
• That which succeeds in one particular set of
  circumstances could easily fail under different
  circumstances and vice versa
• Failure can be traced to omissions

9
FirstStar Fiber Milestones

• 1996 NET 12,000
• Supply analysis, promote concept and seek
  partners
• 1997 NE DEQ 100,000
• Engineering concept
• Based on supply analysis, inflated numbers from
  engineers, pulp vs. end product
• 1998 NET 500,000
• Market research, feasibility study and processing
  capacity
• 1999 NET 2 (million over three years)
• 1 converting line, organize ONI (Outlook
  Nebraska Inc.)
• 2000 Ankle biters at full throttle
• Move to western Sarpy County

10
FirstStar Fiber Milestones II

• 2002 Second converting line
• Move to Omaha Inner City location
• Doubled capacity
• NOW
• 3500 tpm throughput, from raw materials to
  finished products
• 30 employees
• 15 million annual revenue
• Served 45 rural communities
• 3 Years from now (goals)
• 40-50 employees
• 8500 tpm or 50 sold out of a 16,000 tpm mill
• 45 million /- revenues

Kicking butt with Kick Butt