The goal of setting up a green energy company is to provide a reliable fossil fuel alternative to customers – alternatives like solar energy, wind energy and hydroelectric energy. This post discusses how to set up a green energy company.
The fact is, starting a green energy business goes beyond just registering with the required authorities. You need to understand the chops and onions of your business. You must have your strategies planned out. In addition, all legal steps must be kept in place.
With that said, here are 9 important steps you should take if you want to set up a successful green energy business.
- Step 1: Create a Detailed Business Plan
- What is involved in Setting Up a Green Energy Company?
- How Much Will You Spend To set up a Green Energy Business?
- Who are your target audience?
- How Does A Green Energy Company Make Profit?
- How much do green energy companies charge?
- How Much Profit Can You Make?
- How Can You Scale Your Profits?
- Naming your business
- Step 2: Create A Legal Entity
- Step 3 – Enroll for tax
- Step 4: Set Up A Business Bank Account. Get A Credit Card.
- Step 5 – Create Business Accounting
- Step 6 – Get Required Licenses And Permits
- Step 7 – Get An Insurance
- Step 8: Branding
- Step 9 – Create A Business Website
- Bottom line
Step 1: Create a Detailed Business Plan
As an entrepreneur, you need a business plan. A solid plan that maps out the most important aspects of your business. Your business plan must answer questions like:
How much will it cost to set up a green energy company?
- Who are the potential target market?
- How much will you charge customers?
- What is a suitable name for your business?
Let’s expand on these questions:
What is involved in Setting Up a Green Energy Company?
Like a typical renewable energy business, sales and installs drive a green energy company.
A professionally trained team plus the right tools make up a successful green business.
You may also need a truck, van and some branded employee uniforms to start with.
You need facilities. Facilities that facilitate a smooth operation and future growth.
Insurance cost, licensing cost, local/states fees.
You need advertising media like a website to drive online traffic to your business.
How Much Will You Spend To set up a Green Energy Business?
Like a typical service-based business, insurance will take the largest part of your business expense. You have to maintain your fleets. You have to monitor your equipment. Not forgetting office materials (including internet and phone service)
You may also need to factor in the cost of mortgaging and leasing (if you have one)
Who are your target audience?
Your target audience are predominantly homeowners venturing into a renewable energy resource. Mostly within the 35-55 years age range.
How Does A Green Energy Company Make Profit?
These companies sell green energy equipment for a living. Most times, they sell their services too (consultancy, maintenance, etc)
For example, some companies sell solar panels, offer installation service, and offer a retainer maintenance package. All in the customer’s interest!
How much do green energy companies charge?
Simply put, cost varies and depends on the type of green energy product or service offered. For example, a customer who wants to install solar panels in their home as a replacement to the conventional energy source may spend around $15,000 for full installation.
How Much Profit Can You Make?
Green energy businesses provides dual services of selling a
and service so it’s a little easier for a Serious business owner to average 6 figures. I’ve seen a Sales rep for a solar panel brand making over $100,00 annually. Some solar installation companies make up to $200,000 annually on profits.
How Can You Scale Your Profits?
While it’s fine to sell green energy products only, you’re equally leaving money on the table if you’re not doing the extras of selling/servicing related parts and products. You’ll make money with installs. But you’ll make more money with services and repairs.
Consider working as an estimator for residential and commercial houses. You could make more money using your expertise to provide the required advice for residential, commercial, or federal customers.
Naming your business
While naming your green energy business seems easy, it can also be challenging. If you currently have no idea, there are several business name generators online to assist with naming your business.
If you plan to operate a sole proprietorship, consider using a business name instead of a personal name which may sound unprofessional.
Before you register a business name (you want something unique, right?) properly research to avoid duplicate naming. You can Check:
The business record of your state
Trademark records (state and federal level)
Website domain availability
Try to purchase your domain name before it’s taken by someone else.
Step 2: Create A Legal Entity
Sole proprietorship, limited liability company, partnership, and corporation are the most popularly practiced business structure type.
A legal business entity like the LLC protects business owners from being held liable if the business is sued.
Starting an LLC is in two ways: either you start on your own by paying the required LLC cost. Or, hire an LLC service to do the groundwork, at an extra fee.
Step 3 – Enroll for tax
You know that already: it’s mandatory to register for different state and federal taxes before your business can be open to the general public.
To apply for a tax, you’ll need an EIN. It’s free. It’s easy too.
Visit the IRS website to apply for EIN. Send them a Fax or a mail.
Step 4: Set Up A Business Bank Account. Get A Credit Card.
Having a business bank account and a dedicated credit card is a surefire way of protecting your assets.
It’s inadvisable to mix your business and personal account. Because they’ll be affected if your business is sued. It’s called “piercing your corporate veil.”
In addition, building your business credit can open more opportunities for better credit scores that can be used to further finance your business.
Opening a business account separate your personal from your business account (important for the protection of personal assets)
What”s more, accounting and tax filing also becomes easier.
Step 5 – Create Business Accounting
Keep track of your business expenses. Monitor all your sources of income. Doing this will help you stay abreast of the financial condition of your company. Plus, it also eases your tax filing process.
Step 6 – Get Required Licenses And Permits
You might be liable to a heavy fine or even a total business shut down if you don’t acquire all required licenses. All required permits.
What are the licensing requirements at the local and state level?
You’ll need a certain state’s license and permit to run a green energy business.
Most businesses will need a sales tax for the product or service they offer.
If you need additional info about local permits and licenses:
Research your town and city requirements
Step 7 – Get An Insurance
Just like a permit and license, you also need to get your business insured to run legally and safely. Business insurance keeps your business protected in case of a financial loss.
Insurance policies are available in different types. Each with its own risk. If you don’t have enough knowledge of how each policy works, start with liability insurance. It’s the most ideal coverage for a typical small business. Therefore, it’s a nice place to start with.
Workers compensation insurance is another great policy for small businesses. If you plan to employ some staff, your state might require you to go for this insurance policy type.
Step 8: Branding
Your brand defines your company. It’s how the public perceives your business. Branding helps businesses stand out among competitors.
Design a professional, catchy logo. You can learn how to design a logo. Or, you can hire a professional designer to do the job.
Promoting And Marketing Your Green Business
Green energy is traditional. Everyone uses energy daily. It’s a reliable alternative to the conventional energy source. Market your business around this duality.
Your marketing should meet customers at their pain point. Your marketing should revolve around lowering their energy cost.
Engage your customers. Create print, radio, TV ads, including a responsive website.
Consistently educate customers on the benefit of going green.
Step 9 – Create A Business Website
Once you’ve defined your brand and created a nice logo. Next is to get a website.
While it’s important to have a website, many people are stuck on the fact that they have no prior experience. However, that’s so 1990. Web technology has seen huge advancement over the decades and creating a website is no rocket science anymore.
With that said, here’s why your business needs a website immediately.
All legit businesses have a website. It doesn’t matter the size of your business – an online presence is important.
Your business page on Facebook or LinkedIn does not replace your website.
Web builders like Godaddy have helped create a seamless web building experience for business owners.
You don’t necessarily need a web designer or a web developer to create a decent website.
Required Skills And Experience To Grow A Successful Green Energy Business
Green energy customers are beginning to understand the need to ditch fossil fuels. Green energy is set to experience the next oil boom. So the service of more workers will be needed.
Gaining authority in this industry will require a solid understanding of how green energies works, including a little bit of finance and business management.
You need to have a clear cut of the demand/supply relationship. You also need an engaging personality.
Setting up a green energy business goes beyond just registering with the required authorities. You need to understand the chops and onions of your business. Follow the above steps to set up your Green energy company.