Verdant Innovatives- Projections
Short-Term Timeline (Next 24 months):
With funding and support, Verdant Innovatives will enter into a revenue generating state and follow our 24-month timeline to establish marketing strategies, conduct sales, and develop production, manufacturing, and installation facilities. This short-term operational timeline can be seen below.
Revenue Stage 1: Beginning in January 2021, Verdant Innovatives will use the design updates from the MPV wind turbine to finish developing a commercial build turbine with control systems to maximize efficiency and ensure device safety. We will construct the turbine, conduct real world testing, and perform our first sale using our mock sale roadmap by June 2021. Funds will be used in this First Stage to purchase turbine build materials and manufacturing tools.
Revenue Stage 2: We will concurrently use word-of-mouth and pamphlet marketing strategies to identify five additional early adopters and conduct five sales by October 2021. After the first six sales, we’ll gather data on commercial turbine performance as well as customer feedback, and by February 2022, we will make any necessary design changes to improve the turbine and develop a second iteration of the commercial turbine design. Funds will be used during Stage Two to purchase turbine build parts, equipment, and storage space as we scale up production. Funds will also be allocated towards marketing and Research and Development as we iterate the turbine design.
Revenue Stage 3: From June-December 2022, we will conduct a second round of fundraising to raise $1 million. Funding will be allocated towards marketing the product as well as establishing partnerships with manufacturing companies and installation contractors. With these measures in place, we will expand our location of operations to outside of the DC-Maryland-Virginia (DMV) region. Throughout 2022, Verdant Innovatives projects 20 sales of the second iteration commercial wind turbine.
Long-Term Timeline (3-5 years):
Our main long-term goal is to introduce our turbines to additional customer segments which will result in a significant generation of revenue. Our new segments will include:
Businesses with more significant energy requirements than houses. As energy demands will vary on a case-by-case basis, contracts will be developed to handle the customer’s requirements. We anticipate higher profit margins from these large-scale projects;
Government projects through SBIR and STTR programs where we can partner with government agencies and universities to work on specialized projects. Revenue generation will be in the form of grant awards as we pursue these projects;
Social entrepreneurship avenues, where we pursue grants to provide our turbines to the 40% of the world where energy infrastructure is underdeveloped and our turbines can help provide power for rudimentary energy systems.
This will be achieved by substantially scaling up production, creating successful marketing campaigns and customer acquisition pipelines, establishing permanent design, construction, and assembly facilities as well as a well-developed apparatus responsible for turbine installations.
Over the next 3-5 years, your funding and support will allow us to scale production and substantially increase the number of units we sell, resulting in an optimistic projection of $2,655,000 in profit from the 450 sales achieved in our business-to-customer segment and the 180 sales achieved in our business-to-business segment in 2025.
Profits and Sales:
Verdant Innovatives has a very strict revenue and expense structure shown in the Financial Proforma, seen below. With funding, we expect to produce and sell 5 units within the first year in 2021. We believe this is a fair assumption, as Verdant Innovatives has a finished prototype, and a commercial design ready to produce. At a price of $2,500.00 for a regular Business-to-Customer unit, our first year of revenue is an estimated $12,500. Conversely, costs for the first year will equate to $14,250. However, over the next four years, Verdant Innovatives will operate at an estimated profit of -$8,500, $138,750, $592,625, and $1,741,250 for 2022, 2023, 2024, and 2025, respectively. Costs include fixed expenses, such as salaries, research and development, marketing, storage, and equipment; and variable expenses, such as raw materials, production and assembly, transit and installation, permits and grid connection, and maintenance, that will increase on a per unit basis.
In the start of production and sales, Verdant Innovatives will target residential homeowners and sell regular sized turbines to this customer segment. However, by 2023, Verdant Innovatives expects to begin selling a larger-scale Business-to-Business turbine at a higher gross margin, thus improving profits. Our larger turbines will be sold at a higher mark-up price of $8,500, while our regular residential turbines will be sold at a price of $2,500. Conversely, our estimated variable expenses for each will be $1,250 and $1,500, respectively. We expect to sell 5 residential turbines in the year 2021, 20 units in the year 2022, 50 units in the year 2023, 175 units in the year 2024, and 450 in the year 2025. Supplementarily, Verdant Innovatives expects to sell 18 larger-scale turbines to businesses in 2023, 60 units in 2024, and 180 units in 2025.
Verdant Innovatives made a few cost assumptions when projecting the fixed expenses for the venture over the next five years. Firstly, it was assumed that salaries would increase as the venture progressed in order to account for any additional members or employees being added to the team. Secondly, it was assumed that research and development expenditure would be highest in 2022 to account for the production of our second iteration of turbine that will have an improved design. Thirdly, it was assumed that the marketing budget would continue to climb to increase exposure and to begin advertising to businesses with our larger-scale turbine. Fourthly, it was assumed that our storage and facility expenses would increase to account for an increase in production and inventory. Finally, tooling and equipment remained relatively flat as we will add to our equipment at a steady rate and do not expect a fast depreciation of existing tools and equipment.
Verdant Innovatives assumed two different variable expense breakdowns for our regular business-to-customer turbines and our large-scale business-to-business turbines. The cost per unit will be $200 for grid connection, $100 for associated permits, $50 for installation, and $100 for production and assembly for both types of turbines. However, the major differentiating factor for the two types of turbines will be raw material. Verdant Innovatives expects the business-to-business turbines to have a raw material cost of $1,050, and the business-to-customer turbines to have the raw material cost of $825.