Coal Mining Business Plan for Starting Your own Company
Do you want to start a coal mining business? Since coal has found tremendous uses in industries and power sectors, you won’t be at a loss if you start the coal mining business. The business includes extracting coal from the ground using modern mining, underground mining, contour mining, strip mining or any other technique.
The business, no doubt, requires a lot of manpower, skillset, technical equipment, and knowledge but the rate of return you can get from this business truly deserves all that.
Before taking an actual startup, you’re required to write a comprehensive business plan. To help you with that, we are providing a sample coal mine business plan for a startup named, David Miners.
2.1 The Business
David Miners will be a licensed and registered coal mining company that will extract coal from various regions. The company’s outlet, workshop, and main office will be located in Chicago, Illinois. David Cameron will be the owner and CEO of the company.
2.2 Management of Coal Mining Company
Since the coal mining business requires many people of different eligibility and skillset, costly equipment and a large area to work, it’s essential to have a proper organizational structure. If you include a detailed management plan in your coal mining business plan template, you can get relief for a long time.
To effectively manage the working of his company, David will hire a manager and will overlook all the things by himself too. For efficient running of all tasks, David will hire miners, technicians, software experts, mining engineers, coal processing specialists, and general assistants.
2.3 Customers of Coal Mining Company
Before researching on how to start coal business you must explore who’ll be your customers. Our customers will mostly be the power producers, chemical and pharmaceutical companies, cement manufacturers and steel manufacturers. Later in this mining company business plan, we’ll provide details about the groups of our target customers.
2.4 Business Target
Our target is to provide supreme-quality coal to our consumers and becoming a top choice for everyone. Moreover, our monetary goal is to earn a profit margin of $10k per month by the end of the first year.
3.1 Company Owner
David Cameron is a post-graduate in mining engineering from the Camborne School of Mines, England. David has worked with Alpha Natural Resources for two years and has gained considerable experience in the field.
3.2 Why the coal mining company is being started
David had always wished to start his own company. After acquiring his degree and experience in the mining field, he decided to opt for starting a mining company. And the answer to why David goes for just coal is based upon the tremendous uses of this fossil fuel. From making liquid fuel to manufacturing electricity and daily-life things coal has found several applications.
3.3 How the coal mining company will be started
In this coal mining business plan we’re providing all details of how David Miners will be started. In case you don’t know how to make your own coal, you can take help from this sample business plan mining free of cost.
David has decided to buy the tools and equipment needed for coal mining and hire the required staff one week before the launch so that they can be trained. Since miners will have to go for extracting coal from place to place so David will hire senior assistants to monitor their tasks.
A large space in Chicago will be acquired on rent and converted into the company’s office, outlet and workshop. The company will employ techniques such as mountain top removal and strip mining for surface and underground mining of coals. After extracting, coal will be processed in the workshop to be let for sale in the company’s store.
The detailed start-up requirements, start-up funding, start-up expenses, total assets, total funding required, total liabilities, total planned investment, total capital and liabilities as forecasted by experts, is given below:
|Stationery etc.||$63 000|
|Research and Development||$45 750|
|Expensed Equipment||$540 750|
|TOTAL START-UP EXPENSES||$1 050 300|
|Cash Required||$1 100 750|
|Start-up Inventory||$51 005|
|Other Current Assets||$202 500|
|Long-term Assets||$1 605 000|
|TOTAL ASSETS||$2 959 255|
|Total Requirements||$4 009 555|
|Start-up Expenses to Fund||$1 050 300|
|Start-up Assets to Fund||$2 959 255|
|TOTAL FUNDING REQUIRED||$4 009 555|
|Assets||$1 203 000|
|Non-cash Assets from Start-up||$1 039 550|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$1 450 750|
|Cash Balance on Starting Date||$1 987 575|
|TOTAL ASSETS||$5 680 875|
|Liabilities and Capital||$0|
|Liabilities||$1 780 490|
|Accounts Payable (Outstanding Bills)||$245 000|
|Other Current Liabilities (interest-free)||$156 000|
|TOTAL LIABILITIES||$2 181 490|
|Investor 1||$4 009 555|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1 490 000|
|Loss at Start-up (Start-up Expenses)||$2 009 385|
|TOTAL CAPITAL||$3 499 385|
|TOTAL CAPITAL AND LIABILITIES||$5 680 875|
|Total Funding||$4 009 555|
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If you want to start a coal mining business by owning a coal mine you will have to first decide the services and products, you’ll provide. It’s because your crew and technical equipment will be entirely dependent on that.
Including your products in your coal mine business plan is a better way to proceed. As it can help you in taking major decisions before the time of implementation.
David Miners will hire its own crew to extract coal from underground. The company will provide the following products to its customers.
- Bituminous & Sub-Bituminous Coal: We’ll provide bituminous and sub-bituminous coals that are mainly used in power industries to produce electricity.
- Metallurgical Coal: We’ll provide metallurgical coal that is primarily used in making steel.
- Anthracite: We’ll sell anthracite, highest quality coal used for residential and commercial purposes.
- Cannel Coal: We’ll also offer cannel coal used to produce luminous flames.
- Coke: Another major product of ours will be the coke, left-out residue of coal that has several uses.
- Coal Tar: We’ll also provide coal tar that is used to make perfumes, pesticides, dyes, etc.
- Other Residues: Other residues left after processing raw coal such as silica, coal gas will also be sold by us.
Marketing Analysis of Coal Mine
If you are thinking about owning a coal mine and selling coal products as your business, you must first carry out a detailed marketing analysis. Marketing analysis can help you in knowing the current status of similar businesses and ongoing trends in your target market. Moreover, it can help you explore what challenges you can face while working for your target market.
While doing market analysis, you will also come to know about the interests of your customer groups that can help you in coming up with something that is desired.
By studying this coal mining business plan sample, you can understand which things must be observed during marketing analysis. If you are not an expert at doing marketing analysis, then it is highly recommended to get this task done by some professionals.
5.1 Market Trends
Over 1500 coal mining companies are running in the United States, employing about 62,500 people. Though coal mining companies have collectively generated $30 billion in 2019, still IBISWorld has reported a decline rate for this business instead of a growth rate. But, if you enter this venture with full planning and efficient preparation and of course by selecting a market where there are fewer competitors, you won’t be at loss.
5.2 Marketing Segmentation
Target customers identified by David Miners are given here. Anyone looking for how to start coal business can benefit from here.
The detailed marketing segmentation of our target audience is as follows:
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5.2.1 Power Production Companies: The biggest consumer of our processed coal will be power production companies. As bituminous coal, sub-bituminous coal and anthracite are used as thermal coal to produce steam.
5.2.2 Steel Manufacturers: 70% of the steel manufactured uses coal. As coking coal is essential for steel manufacturing thus such companies will be a target group for us.
5.2.3 Cement Manufacturers: Another group of our target customers will comprise of cement industries as coal is mainly used as an energy source for cement production.
5.2.4 Chemical Companies & Medical Facilities: Several companies such as those producing shampoos, dyes, paints, etc. will be needing our products. Moreover, pharma industries and medical facilities will need coal as coal products are used in processes like Charcoal Hemoperfusion
5.2.5 Others: Individual buyers and other companies who require coal products will also be our target customers.
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|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|Power Production Companies||43%||2,300||8,560||12,450||38,390||14,350||9%|
|Steel & Cement Manufacturers||37%||7,450||2,300||2,395||21,879||21,630||8%|
|Chemical Companies & Medical Facilities||12%||6,200||4,350||2,350||10,835||17,400||8%|
5.3 Business Target
Clearly stating your business targets in your business plan coal mining company can help you in taking suitable measures to achieve them.
Business targets set by David Miners are given here:
- To generate a net profit margin of $10k per month by the end of the first year
- To maintain the amount of minimum cash balance
- To lower the wastage of resources by 15% every year by increasing work efficiency
- To increase our sales by 25% every three months
5.4 Product Pricing
Our prices are almost the same as our competitors. However, we’ll provide a 10% discount on our products for the first three months.
Marketing Strategy for Mining Company
Had the pleasure of working with Alex on a business plan for a new venture. The end result looks very professional. His communication is always prompt and he was very patient with my detailed requests. I would definitely work with this company in the future.
Developing marketing strategy for mining company is an extremely important step as it is the only thing that can help you get introduced with your customers. In your business plan for a major coal development company, you must clearly list the methods, you’ll adopt to reach out the groups of your target customers.
6.1 Competitive Analysis
Our biggest competitive advantage is that the market in which our products are demanded is really large. Though there are other already-established coal companies near us, still we hope to get customers as the need for coal is increasing with the passage of time. Moreover, David is already in contact with people who can need us for coal supply.
Secondly, we own the best equipment, highly qualified and skilled staff, who’re efficient in all the works from blowing a mountaintop to generate coal tar from coal.
Lastly, only we in the whole market provide online ordering and payment options. Through the services of our web-developers, we’ll enable our consumers to order us for delivering their desired products at the said time.
6.2 Sales Strategy
We will introduce our startup to the groups of our target customers by sending letters and brochures about us. We’ll ensure strong social media and web presence. Lastly, we’ll provide several discounts to encourage more and more customers to make a purchase.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
Our sales pattern is expected to increase with years. By analyzing our market segmentation strategy, our experts have forecasted the following sales on a yearly basis which are summarized in the column charts.
The detailed information about sales forecast, total unit sales, total sales is given in the following table:
|Unit Sales||Year 1||Year 2||Year 3|
|Bituminous, Sub Bituminous & Anthracite Coal||1,200||1,348||1,596|
|Metallurgical Coal & Cannel Coal||890||999||1,184|
|Coke & Coal Tar||980||1,101||1,303|
|TOTAL UNIT SALES||3,680||4,133||4,894|
|Unit Prices||Year 1||Year 2||Year 3|
|Bituminous, Sub Bituminous & Anthracite Coal||$1,320.00||$1,598.52||$1,861.20|
|Metallurgical Coal & Cannel Coal||$540.00||$653.94||$761.51|
|Coke & Coal Tar||$620.00||$750.82||$874.32|
|Bituminous, Sub Bituminous & Anthracite Coal||$1,584,000||$2,154,166||$2,970,475|
|Metallurgical Coal & Cannel Coal||$480,600||$653,593||$901,397|
|Coke & Coal Tar||$607,600||$826,307||$1,139,594|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Bituminous, Sub Bituminous & Anthracite Coal||$910.00||$1,001.00||$1,101.10|
|Metallurgical Coal & Cannel Coal||$410.00||$451.00||$496.10|
|Coke & Coal Tar||$340.00||$374.00||$411.40|
|Direct Cost of Sales|
|Bituminous, Sub Bituminous & Anthracite Coal||$1,201,200.00||$1,600,118.52||$2,049,367.32|
|Metallurgical Coal & Cannel Coal||$221,400.00||$294,926.94||$377,784.12|
|Coke & Coal Tar||$210,800.00||$280,806.68||$359,696.89|
|Subtotal Direct Cost of Sales||$1,824,760.00||$2,430,762.80||$3,113,373.94|
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7.1 Company Staff
David will be the owner and CEO of the company. To run his coal mining business he’ll hire the following people:
- 2 General Managers to manage overall operations
- 2 Accountants to maintain financial records
- 2 Mining Engineers to maintain coal extracting and processing processes
- 10 Field Employees to carry out major tasks
- 2 Senior Assistants to supervise various tasks
- 1 Sales and Marketing Officer to discover new ventures
- 1 Store Operator to operate display center
- 2 Technicians to maintain technical equipment
- 1 Web Developer to manage company’s sites
- 5 Cleaners to maintain the facility
- 2 Drivers to provide transport
- 1 Front Desk Officer to act as a receptionist
7.2 Average Salary of Employees
The following table shows the forecasted data about employees and their salaries for the next three years.
|Year 1||Year 2||Year 3|
|Sales & Marketing Officer||$30,000||$33,600||$45,000|
|Front Desk Officer||$28,000||$31,360||$42,000|
The only thing that can help you in setting smart, and attainable financial goals for your business is a financial plan. In your coal mining business plan, you must thoroughly analyze how can you achieve your monetary goals while balancing all the expenses of equipment, maintenance, staff salary, and workplace rent.
To do all that careful spending, budgeting of your hard-earned cash is required which is only possible when you have decided main things in the form of a financial plan. To give you an idea of how to write an effective financial plan, we’re providing here a sample financial plan of David Miners.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||10.00%||10.40%||11.00%|
|Long-term Interest Rate||11.00%||11.00%||11.00%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5240|
|Monthly Revenue Break-even||$165,740|
|Average Per-Unit Revenue||$285.00|
|Average Per-Unit Variable Cost||$0.76|
|Estimated Monthly Fixed Cost||$201,755|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$1,824,760||$2,430,763||$3,113,374|
|TOTAL COST OF SALES||$1,824,760||$2,430,763||$3,113,374|
|Gross Margin %||39.92%||41.15%||45.34%|
|Sales and Marketing and Other Expenses||$59,000||$61,950||$65,048|
|Total Operating Expenses||$870,500||$958,335||$1,193,944|
|Profit Before Interest and Taxes||$341,720||$375,892||$420,316|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$8,950||$10,740||$11,725|
|SUBTOTAL CASH FROM OPERATIONS||$45,900||$51,080||$55,799|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$45,900||$51,080||$55,799|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$310,950||$342,045||$376,250|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$340,950||$381,864||$412,550|
|Net Cash Flow||$120,500||$134,960||$145,805|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$220,560||$237,468||$273,677|
|TOTAL LONG-TERM ASSETS||$880||$510||$320|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$9,322||$10,000||$12,460|
|TOTAL LIABILITIES AND CAPITAL||$189,350||$264,100||$250,000|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||1.77%||2.04%||2.31%||26.54%|
|Total Current Assets||135.92%||149.60%||150.40%||54.60%|
|Percent of Sales|
|Selling, General & Administrative Expenses||74.33%||75.60%||76.10%||80.20%|
|Profit Before Interest and Taxes||26.33%||27.09%||30.05%||2.09%|
|Total Debt to Total Assets||2.45%||1.99%||0.37%||64.70%|
|Pre-tax Return on Net Worth||66.09%||70.04%||74.60%||4.10%|
|Pre-tax Return on Assets||63.98%||69.75%||72.59%||10.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||19.18%||22.10%||23.12%||N.A.|
|Return on Equity||46.04%||50.98%||54,89%||N.A.|
|Accounts Receivable Turnover||4.56||4.56||4.56||N.A.|
|Accounts Payable Turnover||13.85||14.67||16.01||N.A.|
|Total Asset Turnover||1.95||1.59||1.32||N.A.|
|Debt to Net Worth||0||-0.01||-0.02||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$130,982||$140,850||$160,900||N.A.|
|Assets to Sales||0.47||0.48||0.52||N.A.|
|Current Debt/Total Assets||5%||4%||1%||N.A.|
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