Creating a Company Business Plan

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Business Plan -- Solar Panel

Connecticut Solar Energy (CSE) is located at 331 New London Turnpike in Glastonbury. The company is engaged in the business of solar panel installation. The operation will be a two-person partnership consisting of a certified solar panel installer and a business graduate.

The financing requirement to start Connecticut Solar Energy is approximately $50,000. The partners are putting up $20,000 of their own money to start the business, so the remaining financing that will be required is $40,000, given the expected losses until the company becomes profitable. The objective of this business plan is to secure the remaining financing necessary to start Connecticut Solar Energy.

The information contained in this business plan is strictly confidential. It is supplied in this report on the understanding that it will be held in confidence and will not be disclosed to any outside parties without prior written consent from both Paul Smith and Marcin Bakula.

Executive Summary

Connecticut Solar Energy is a company that installs solar panels and provides sales, consulting and service to retail customers in the greater Hartford area. The company is a partnership started by Paul Smith, a licensed installer of solar panels with five years' experience and business school graduate Marcin Bakula. Paul will handle the installation and consulting side of the business while Marcin will handle the marketing, sales, administrative and accounting functions.

The company requires $40,000 in startup financing. The two partners are going to contribute $10,000 each. The startup financing is necessary for the purchase of a truck and supplies, in addition to meeting operating requirements until the company is profitable. The breakeven point for revenue is $59,000 and this is expected to be reached by 2013, based on conservative revenue estimates.

Green energy is a significant trend is society today. The White House supports the development of America's solar panel industry. In Germany, government support has made that country the number one market in the world for solar panels, so similar initiatives in the United States are expected to propel strong growth. The industry already has strong growth, at 30% per year for the past fifteen years. This growth is expected to accelerate in the coming years as the result of government action, increasing fuel prices and greater availability of solar panel technology.

Connecticut Solar Energy plans to focus on the retail segment of the market, servicing homeowners and small businesses. The company intends to focus operations on Greater Hartford but is willing to service other areas of the state if need be, possibly also Springfield, MA. There are a number of competitors in the state, most of them small independent operators much like CSE. The industry's growth rate ensures that there is plenty of business for everybody without engaging in dangerous price competition.

The marketing program for CSE consists of a robust Internet site, signage at the office and on the truck, and a combination of flyers and ads in local newspapers. The objectives of this marketing program will be to increase brand awareness and to entice customers to contact the company. The website is expected to be the key component and will contain a wealth of information about solar panels so that it becomes the go-to site in the area for such information.

The company's business model calls for robust growth in the first three years, achieving profitability in 2013. As the growth rate continues, expansion may be possible by taking on more installers and saturating the local market. The business model calls for aggressive pricing on services, since they will be performed by the owners, and competitive pricing on product, as CSE has less pricing control over product.

The partners believe that the strong growth in the solar panel market gives them a tremendous opportunity. They envision that solar panels will eventually become standard on most homes in Connecticut and believe that by moving into this market and establishing the brand early, they will be able to capitalize on this growth for many years to come, building a powerful business over time that could expand throughout the Northeast.

Industry Analysis

The external environment for solar energy is very favorable. The industry has grown rapidly. In 1985, global solar panel installation was only 21 megawatts. In 2009, it was 7.3 gigawatts. This represented an increase of 6080 megawatts over 2008 levels (SolarBuzz.com, 2010). This growth has occurred as the result of a global trend towards green energy sources. There is increasing awareness both about the relative scarcity of fossil fuels and about the environmental, economic and even national security consequences of fossil fuel dependency. The oil spill in the Gulf of Mexico in April 2010 will only intensify the demand for alternative, non-polluting energy sources such as solar panels.

Nowhere is this shift in public consciousness regarding solar energy more important that in the White House. As President-elect, Barack Obama pledged to shift governmental energy consumption away from fossil fuels. This strategy is part of a broader plan that will bring new jobs in alternative energy. Solar panels, along with wind turbines, were singled out as areas of focus for new American job creation in alternative energy (Change.gov, 2009).

The impact of government policy on industry growth cannot be understated. In Germany, government programs to encourage small scale solar panel installation have made that market the largest in the world for installations. The U.S. market currently sits at 485 megawatts as of 2009. Demand for solar has grown approximately 30% per year for the past fifteen years. Strong growth continues to be projected for the next five years at least. The potential for growth is substantial, as solar energy currently meets just 0.01% of total global energy demand (SolarBuzz.com, 2010).

The Connecticut market is subject to a moderately intense level of competition. Most of the competitors are relatively small businesses not unlike CSE. Some of the competitors include Connecticut Solar Systems, Sunsearch Inc., the Alternative Energy Store, GoGreenSolar, CleanEdison, Akeena Solar, Solar Works Inc. Sunlight Solar Energy, Pure Point Energy, the Ross Solar Group, Waldo Renewable and Southern Exposures Inc. (USCity.net, no date).

The most prominent means of industry segmentation is by customer type. There are two main markets for solar panels in the Connecticut -- retail and institutional. The retail market consists of homes and small businesses. This market is focused on driving down energy costs. The cost of acquiring new customers in this market can be high, as promotion is required and the size of the contracts is generally small. The institutional market is focused on large businesses and government entities. As with the smaller markets, these customers are driven by a desire to lower total energy costs. They often require more complex systems, but the contract sizes are much larger than in the retail market.

The solar panel market in Connecticut is expected to boom in the next 2-3 years. Past growth rates are in the 30% per year range and this is not expected to change. Strong growth has been projected for the coming five years by industry analysts (SolarBuzz.com, 2010). In addition, strong government support for green energy is expected to create incentives for consumers and small businesses to switch to renewable sources of energy, of which solar is the most readily accessible to the retail consumer. Favorable policies from the White House are expected over the next few years to increase the pace of adoption of solar panels. In addition, the Connecticut Green Energy Fund is a state-level initiative that provides financial incentives for solar energy and can even provide panel installation work -- partnering with the Fund can help us to absorb some of this business.

Description of Venture

Connecticut Solar Energy is a marketer and installer of solar energy solutions. The company's primary business will be in solar panel installation. Secondary businesses will include the solar energy consulting and the sale (without installation) of solar energy supplies.

The primary supplier to CSE will be the manufacturers of solar panels. The leading producer of solar panels in the United States is SunPower. For solar inverters, OutBack and Mastervolt are the leading American suppliers. Suppliers of mounting systems include Direct Power & Water and UniRac. In the industry, the brand of cell is also considered to be important. We expect to work with the top manufacturers to deliver the best value to our customers. The top cell manufacturers are considered to be Sharp, Q-Cells and BP Solar (Environmental Leader, 2007).

Connecticut Solar Energy will offer a number of different services. The two main components of our service will be sales and installation. The sale component will involve marketing solar products to a wide variety of retail customers. These components may or may not require specialized installation, depending on the product. In general, however, we expect to market alongside the solar products our installation. Installation is considered to be a value-added service where we can offer superior performance to our competitors. CSE will also offer two other forms of service as well. These are the… [end of preview; READ MORE]

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