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Feasibility Studies and Business Planning Plan for your Success!

Feasibility Studies and Business Planning Plan for your Success!. North Dakota Corn Utilization Council Value Added Summit December 18, 2013 Kyle Althoff Equinox LLC www.equinox8.com. Plan for your Business Success. “By failing to prepare, you are preparing to fail.” ― Benjamin Franklin

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Feasibility Studies and Business Planning Plan for your Success!

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  1. Feasibility Studies and Business PlanningPlan for your Success! North Dakota Corn Utilization Council Value Added Summit December 18, 2013 Kyle Althoff Equinox LLC www.equinox8.com

  2. Plan for your Business Success “By failing to prepare, you are preparing to fail.” ― Benjamin Franklin “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” ― Abraham Lincoln

  3. Plan for your Business Success • Set goals and objectives that meet your needs, as well as fit the needs for those that will be your “partner” in this adventure • Investors • Debt providers • Employees • Joint venture, strategic partners • Marketers, suppliers • Create a plan for your development and operations • Update your plan - continuously evaluate and modify your business plan as markets change and new information arises

  4. ImprovingThe Odds Of Success Idea, Wish, or Value Proposition Cost? Objective? Process 1. Pre-Feasibility Explore the Opportunity Commitment 2. Market Feasibility Is it Possible? 3. Business Feasibility Is it Practical? Expense 4. Business Plan Plan to Execute Time 5. Focused Execution Execute the Plan! Business Success!

  5. Positioning Within the Value Chain Market Drivers Risk Management Consumer Trends Consolidation & Integration Globalization Technology Biotechnology Policy Grain Supply Chain Livestock Production Slaughter & Processing Foreign Consumer Feed Mill Foreign Markets Farm Mgmt & Agronomy Machinery & Equipment Wholesale Retail Foodservice Grain Processor Food Manufacturer Local Elevator Genetics Companies Seed Retail Grower Industrial Terminal Elevator Domestic Consumer Chemical Companies Fertilizer & Petroleum Supplier Biofuels Brokers & Grain Co.

  6. Road Map

  7. Business Models: Representations of Reality What is the Value of a Model? • Breeds Creativity & Interaction: • experiment, test, create, tear down, recreate, stimulate, react & communicate • Helps Develop Deeper Understanding of Concepts and Process • Allows for Quick Decision Making • Governs Repeatable Actions • Educates in Context • Supports Creation of Other Models

  8. Example of a Business Development Path • Business formation • Conduct a feasibility study • Develop a business plan • Fund initial development • Proceed with preliminary work, permits, siting, research • Raise balance of equity • Negotiate marketing agreements, utility agreements, sales contracts, JV/partnerships • Obtain debt financing/financial close • Hire a project construction manager, management team, employees • Begin construction, startup, operations

  9. The 5 C’s - What does it take to Attract Financing? • Character: Management • Capacity: Repayment ability • Capital: Financial condition • Collateral: Quality and value • Conditions: Purpose, amount and requirements • External • Internal

  10. The Three M’s – Be able to Demonstrate • Management • Management/Leadership Team • Board Direction • Operations • Markets • Inputs • Outputs • Money • Cash flow available • Debt Payments • Dividend Payments • Tax Payments • Future Capital Expenditures

  11. Why Businesses Fail • Poor management • Undercapitalized • Operations do not perform to specifications or original plans • Business is not competitive with other projects • Structural changes in the market • Increased price of raw materials • Lower sales price for products

  12. Successful Businesses • Mitigate feedstock supply & price risk • Early biofuel plants were farmer owned with corn delivery contracts • Strong management team with industry experience • Engage reputable partners • Sales agreements/ off take, feedstock suppliers • Technology providers • Contractors, construction, design/build companies • Well capitalized – typically 40% minimum equity • In a commodity market – you must focus on being a Low cost producer and/or differentiate your product/process to improve the returns

  13. Feasibility Studies and Business PlanningPlan for your Success! North Dakota Corn Utilization Council Value Added Summit December 18, 2013 Kyle Althoff Equinox LLC www.equinox8.com

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