From Co-op to Monopoly to Reality A case study presented by Jason Burroughs
Who We Are Single member LLC (used to be 3) Licensed Oil Hauler (used to be renderer) Biodiesel Wholesaler and Retailer We have our oil tolled into biodiesel
Where we came from Started out as non-profit coop in 2005, presented here in 2006, 2007, and 2008 Discovered that non-profit status limited our ability to work with vendors and customers Had little success organizing resources to work cooperatively Formed LLC immediately after returning from 2006 conference
Two Big Trucks
Business Basics Initial funding (<$5000) by partners Moved from a salvage yard to my back yard to mini-storage to real warehouse Bought used tanks and truck from Craigslist Obtained licenses and insurance over time $500k per year in revenue (100k gal B100 and 40k gal vegetable oil), $150k in debt Took over for our only competitor, paid too much
Rendering License Required to collect oil for commercial use in Texas Regulated by Meat Safety Assurance $750 - $300 plus strict requirements Lost license when moving, now working on again
Motor Fuels Tax License Required to sell motor fuels at wholesale level, including bulk deliveries Texas definition of biodiesel technically includes WVO just lost this! $30,000 bond, very difficult to get
IRS Registration Initial filing (Form 637) was rejected Re-filed and finally registered as a blender IRS gave conflicting info about tax liability of WVO as a fuel, now we know better Now have M and AL and AM registration Blend biodiesel (on paper) Use/sell vegetable oil in vehicles and boilers Use/sell glycerin and sludge in boilers
Texas Environmental Issues Texas Commission on Environmental Quality (Texas version of CARB) says biodiesel is bad for the environment State regulations vs federal create catch-22 situation for blender s credit Just won important battle, and may get decision reversed
Reporting Monthly sales report to state for TCEQ Quarterly blending report to state for taxes Quarterly sales tax reporting to state Quarterly excise tax and credits to IRS Quarterly RIN reports to EPA Yearly RIN reports and attest (audit)
Time Management 40+ hours in addition to my day job One part time employee (had 6 people) One night per month open to public Oil collection 1-2 days per week
Collecting 8000 gallons per month (175 sources) Went from 12v pump and 55 gallon drums to 250 gallon sucker trailer to 750 gallon trash pump system to 2000 gallon vacuum truck Using Biodiesel Control Center (www.biodieselsoftware.com) to manage our customer base
Selling 6000 gallons of B100 per month One retail location (down from 5) Additional pump at our warehouse Home delivery in totes Fleet customers (including Willie Nelson)
Selling WVO Used to sell 3000 per month, way down retail pump at our warehouse plus pump at retail outlet Home delivery in totes Occasional travelers passing through Demand has dropped precipitously
Software Development Wrote web app for our own use Tried to go open source but couldn t find enough external resources Simple database evolved into full featured software to manage customers, leads, routes, work orders Working to patent and offer to grease haulers and biodiesel producers www.biodieselsoftware.com (Biodiesel Control Center
Cavitation Experiment Built small scale cavitation system for $1000 Made fuel that passed glycerin spec at room temperature, single pass, 150psi Researcher working on academic paper with University of Texas Might consider offering plans online or selling orifice plates as add-ons to existing processors
Things not to do
Things not to do Buy used tanks on Craigslist without finding out if they are UL Listed
Lessons Learned Buy the right equipment to do the job Plan to go through 2-3 generations of equipment before settling on one Always do dangerous tasks with two people Waste oil collection is a dirty, smelly job
Future Prospects Get rendering license to allow us to take street grease and fake render it Get an SBA loan to hire a salesperson Merge with biodiesel producer Full compliance with fire codes, safety practices, other regulations Avoid going out of business
Q & A Questions? Comments? Suggestions? www.dieselgreenfuels.com jason@dieselgreenfuels.com