- Country: Australia
- Industry: Construction, Engineering, Architecture
- Stage: Expansion/Growth
- Years in operations: 1
- Investment size: $500,000 / min. $150,000
- ROI: 30% in 1 years
- Type of investment: Debt, Equity
Long term contracts in Sydney for removal of building waste and contaminated soils. The Sydney market is booming at present with no signs of it slowing over the next 10y
My businesses primary function is to transport and dispose of construction and demolition waste cheaper than it can be obtained in Sydney.
For example the landfills in Sydney charge between $180 to $330 per tonne to dispose of construction and demolition waste (C&D) depending on regular volumes or one-off jobs. Though careful planning and negotiations I can do it for $98 per tonne. The market is happy with a 10% discount i.e. 1000 tonnes @ $180 is $180,000 gross. If we offer the client a price of $162 they save $18 per tonne x 1000, $18,000 extra profit.
I have been negotiating terms with 3 major players in Sydney to take over 5,000 tonnes per week on 12 month contracts. Along with the majors we have many smaller COD customers that we charge $210 per tonne.
Further to the above we also do Government contracts where they need to dispose of contaminated soil. In Sydney its $165 to $210 per tonne on large volumes just for the tip fees, then transport and labour on top say $185 to $230 per tonne standard. As mentioned we do it for $98 per tonne so there is plenty of room for negotiation.
We are based in Sydney with exclusive use of existing rail heads close to the CBD on 10,000 sq. m including large sheds offices and drop off facilities.
When it comes to disposing of waste in Sydney the choices are few and the prices are exorbitant.
Our solutions are very well received and with no marketing we keep being approached with more business. Management and costs are run very lean with a focus on subcontracting out nearly all sectors of the business. This reduces our exposure to risk and keeps our capital expenditure to a minimum.
The total capacity for our current operations is over 10,000 tonnes per week which is achievable over the next 12 months.
Some of our subcontractors have expressed interest in working with us on yearly contracts as we have an abundance of regular work, week in, week out.
It is possible to increase margins with long term subcontractor agreements.
We can beat all of our competitors on price and volume.
We charter our own rail locomotives which gives us a competitive edge.
Rationale for the deal
Expansion, just finished a government contract and have another one to start as soon as possible.
Use of financing
Financing to cover transport costs for rail which is a 2 week invoice cycle most of our clients pay 45 days end of month.
Opportunity for the investor
A percentage of the business with ongoing contracts both government and private companies including one of the biggest in the waste game globally.
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