It was late April
1992 when Memorial University of Newfoundland business students Tom
Cooper and Ken Jerrett finished their exams for the term. Like
thousands of high school and post secondary students across the
province, Tom and Ken were looking forward to getting worthwhile
summer jobs to earn some money for the upcoming school year. A
summer job would also satisfy the work term component of the
business co-operative programme in which they were enrolled at
university. However, in the weeks leading up to the summer term,
they both realized that good jobs, actually any jobs, were scarce.
With the summer rapidly approaching, Ken and Tom looked at their
options. They could either continue looking for suitable jobs or
they could consider starting a summer business and as Tom said,
"Make our own fate." Being entrepreneurs at heart, the pair
seriously began to consider forming their own business venture in
Coming up with
the idea was not a problem. In previous office jobs Tom saw a large
amount of paper being shredded by staff. Despite being a
time-consuming task, shredding of discarded documents was necessary
because many of the papers, files and notes were confidential. From
his experience, Tom saw three problems that companies had with
disposing of confidential documents. First of all, having regular
employees shredding documents cost the employer time and money.
Secondly, Tom felt that offices
This case was prepared by Roger Power for the Atlantic
Entrepreneurial Institute as a basis for classroom discussion, and
is not meant to illustrate either effective or ineffective
Copyright © 1993, the Atlantic Entrepreneurial Institute.
Reproduction of this teaching note is allowed without permission for
educational purposes, but all such reproduction must acknowledge the
copyright. This permission does not include publication.
were reluctant to
send documents to the three other document disposal companies in the
city because they could be lost or stolen on transit to the disposal
site. Finally, offices which had their own shredding machine often
required access to additional machines during peak periods. Based on
these three issues, Tom saw an opportunity for a paper shredding
company to do things better.
the idea between themselves, Tom and Ken felt that a mobile document
shredding service would solve these problems. Having an outfit come
in to the office would enable a company to avoid using its employees
to handle shredding work. By offering on-site shredding, a more
secure service could be given because documents never left the
office (the paper shredding company could also complete the
shredding off-site if the company wished). As well, a mobile
shredding service would be able to quickly assist offices during
busy periods by supplying additional shredding capacity. Overall,
Tom and Ken believed that a mobile shredding service would be
providing a mobile paper shredding service had potential, they both
became very interested in pursuing the idea. After naming the
company "Pay-Per-Shred," they still felt that the opportunity needed
further investigation. Thus, they decided that it was time to do
some research into the paper shredding business before making a
time was short, Tom and Ken formed a partnership and began to work
on their business plan. They first had to decide on the main
questions that they wanted the business plan to answer. As Tom
remarked, "Asking the right questions is just as important as
finding the right answers." After some discussion, they agreed that
they needed to find answers to the following questions before they
could decide if they should start the business:
- What exactly is the service
which we are offering?
- Who are our potential
customers? Do they need our service?
- How do we let people know
about the service?
- What equipment do we need to
offer our service?
- What level of sales can we
expect? What are our expenses?
Armed with a
basic outline of a business plan (see Exhibit 1), they set out to
answer these questions. After three days they had gathered the
- The typical office employee
in Newfoundland produces 35 kilograms of paper per year. A
substantial percentage of this paper is considered
- The cost of theft of
sensitive documents from businesses and government in the United
States is estimated at $5 billion annually.
- A heavy-duty industrial
mobile shredder costs $2,700. This machine can shred standard
paper, computer paper, blueprints, spreadsheets and file folders
at a rate of 9,000 sheets per hour. Weighing 40 pounds or 18
kilograms, the shredder can be easily carried in a van or in the
trunk of a car.
- The only direct competitor
in the shredding business in St. John's is Nova Recycling. Two
other companies, Storall Limited and Sanicare Limited, provide
general document destruction services.
While it was a
start, they knew that these facts only scratched the surface. "We
need more, a lot more!" lamented Ken. Tom agreed and wondered where
they would get more information. Going into their first official
planning meeting each hoped that they could find the
- Discuss the advantages and
disadvantages of being a student with a summer
- Can you think of other
questions which the entrepreneurs will need answered to complete
their business plan?
- What are some information
sources which Tom and Ken can use to complete their business
- Should Tom and Ken ask for
advice from others in preparing their business plan?
Why or why not?
- Assuming that the business
is started, what choices do Tom and Ken have at the end of the
summer when it is time to return to class? Discuss.
Describe the situation and
indicate why it represents an opportunity.
Describe the proposed service
and highlight its unique features.
MARKET ANALYSIS AND
Get a "feel" for the situation.
Locate those who you will sell the service to and identify the
competition. Outline how you will get your target market to buy your
service. Estimate your sales.
Identify what equipment you
need and how you will deliver your service.
Describe your skills and
abilities as the operators of the business.
Calculate what you own, what
you owe and how much money the business will earn. State how much
capital you need to start the business and where you will get