Table of Content
Do you want to start solar energy business plan?
Are you interested in starting a solar energy business? In this age of renewable energy, this might be one of the best business to start. And the best part is its simplicity. You don’t need a degree or professional training to start a solar energy business. Just the basic know-how is enough.
Whatever the business may be, you will need the help of best business consultants. They will guide you in making a solar power plant feasibility study report. This is a very important step when you want to learn how to start a solar panel business. Here, we have shown how to write a small solar farm business plan.
Executive Summary
2.1 The Business
Sun Rise Energies will be a solar energy business started by Ben Stark. It will provide all solar energy related services in and around Chicago. This business will provide various services such as procurement and installation of solar energy panels, maintenance and supply.
2.2 Management of Solar Energy Business
When you are starting solar panel business, you will need a good solar farm business plan first and foremost. You can take help from professional business planning firms for this. Alternatively, you can also refer to this document when you are learning how to start solar company.
In solar farm business plan, you should include all the technical, financial and management details related to your solar panels franchise.
2.3 Customers of Solar Energy Business
Since everyone is joining the green energy bandwagon, our customers will not just be limited to one domain. Our customer base will include work places as well as residential areas. However, our recurring customers will be:
- Residential Towns
- Small/ Large Businesses
- Educational Facilities
- Individual Residences
2.4 Business Target
The man aim of our business is to be the primary suppliers of solar panels for business. We want to become the most reliable and authentic source of all solar energy related services that our clients need.
The financial targets that we want to meet in the first three years of our launch are shown below:
Company Summary
3.1 Company Owner
Ben Stark will be the owner of Sun Rise Energies. Stark completed his technical training under the guidance of an industry giant a few years ago. And then he proceeded to work up to a managerial position in a home-appliance business.
But he wanted to pursue his goal of starting a business in solar energy. And so he left his job to start this venture.
3.2 Why the solar energy business is being started
Being in the appliances industry, Ben was already aware of and interested in the rise of the renewable energy services. He saw that despite the popularity, there was still a lot of demand of solar energy ventures. And so, he started looking how to start an energy company to apply his own knowledge of the industry.
3.3 How the solar energy business will be started
Step1: Plan Everything
One of the foundational steps in starting a solar energy business is developing a business plan on solar energy. This acts as the basis for the success of your business. So getting this step right is crucial. You can take help from solar energy business plan pdf pdf samples from the internet. Or you can ask solar farm business plan experts for advice. You can also look through this document to learn about everything you need to have in a strong business plan.
Step2: Define the Brand
The second step is to make your brand stand out from its competition in the industry. You have to refine and market your values, services and exceptional policies in this step to gain competitive advantage.
Step3: Establish Your Corporate Office
In order to start up his business, Ben decided to rent out a shop in a commercial building. He will talk to his supplier for all the relevant equipment and furniture required for the store.
Step4: Establish a Web Presence
Setting up an online presence is just as important as a physical store in our digital age. Ben knew this and decided to create a simple website where people can look through the store’s services and products and even order them. Ben has also decided to create social media pages for his store to get greater reach.
Step5: Promote and Market
The final step is to create a marketing plan and execute it to its completion.
Start-up Expenses | |
Legal | $112,200 |
Consultants | $0 |
Insurance | $23,000 |
Rent | $25,000 |
Research and Development | $10,000 |
Expensed Equipment | $56,000 |
Signs | $3,400 |
TOTAL START-UP EXPENSES | $229,600 |
Start-up Assets | $266,000 |
Cash Required | $279,000 |
Start-up Inventory | $39,000 |
Other Current Assets | $240,000 |
Long-term Assets | $287,000 |
TOTAL ASSETS | $1,111,000 |
Total Requirements | $1,340,600 |
START-UP FUNDING | |
Start-up Expenses to Fund | $229,600 |
Start-up Assets to Fund | $1,111,000 |
TOTAL FUNDING REQUIRED | $1,340,600 |
Assets | |
Non-cash Assets from Start-up | $1,416,000 |
Cash Requirements from Start-up | $285,000 |
Additional Cash Raised | $50,000 |
Cash Balance on Starting Date | $35,000 |
TOTAL ASSETS | $1,786,000 |
Liabilities and Capital | |
Liabilities | $18,000 |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $48,000 |
Other Current Liabilities (interest-free) | $0 |
TOTAL LIABILITIES | $66,000 |
Capital | |
Planned Investment | $1,340,600 |
Investor 1 | $0 |
Investor 2 | $0 |
Other | $0 |
Additional Investment Requirement | $0 |
TOTAL PLANNED INVESTMENT | $1,340,600 |
Loss at Start-up (Start-up Expenses) | $379,400 |
TOTAL CAPITAL | $1,720,000 |
TOTAL CAPITAL AND LIABILITIES | $1,786,000 |
Total Funding | $1,340,600 |
Services of Solar Energy Business
Before you start any business, you need to find your customer base. Figuring out your customers helps in the development of your solar farm business plan. And same is the case for solar system business plan.
As Ben wanted to offer not just products but also services in his business, so his solar energy plan business plan can be used as a reference for any type of solar farm business plan. You can use this solar energy business plan doc to understand what you should write in your plans.
Before we get into the details of how to get into solar business, let’s take a look at the services Sun Rise Energies will provide:
- Sale of Solar Equipment
We will sell all basic solar energy equipment that is listed below. And our customers will be able to seamlessly shift to using renewable energy sources.
- Solar Panels
- Solar Inverters
- Solar Power Batteries
- Solar Powered Appliances (fans, bulbs, toasters, water bottles etc.)
- Solar Power Bank
- Solar Powered Watch
- Product Installation
As a part of our versatile business plan solar energy company, we will also provide services related to installation and user guidance of solar energy products. We will provide:
- Solar Panel Installation
- Solar Invertor Setup
- Solar System Use Training
- Maintenance of Products
We will also provide maintenance of solar energy products. This will extend to products that were not necessarily installed by us.
- Consultancy
Our last service will be consultancy regarding energy related goals of our customer and how to attain them in their homes or workplaces.
Marketing Analysis of Solar Energy Business
Learning how to open a solar panel installation business involves a lot of research. You need to know about both your customers and competitors in detail. You can do this by conducting a thorough market analysis as part of your solar energy farm business plan. You should also include price analysis and expected financial goals in your solar business proposal.
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If you don’t understand all the details related to marketing analysis, then you can just take a look at a solar business plan template like this one for guidance. For starting a solar power company, we have included some information gained from market research in this solar installation business plan.
5.1 Market Trends
According to SEIA’s solar industry research data, the solar industry received more than $25 billion private investment in just 2020. And according to Allied Market Research, the solar energy market was valued around $52 billion in 2018. And as the demand for shifting to solar energy increases, the market value is expected to rise to around $220 billion by 2026. The global warming scares have everyone shifting to green energy as fast as they can. And solar energy is the biggest contributor in this shift.
5.2 Marketing Segmentation
The potential customers of Sun Rise Energies will be:
Business plan for investors
5.2.1 Residential Suburbs
Our customer base will primarily be made of people living in the surrounding residential towns and suburbs. As the focus on shifting to cleaner sources of energy increase, more and more residential towns will need our services regularly.
5.2.2 Small/ Large Businesses
Our second biggest clients will be small and large businesses. Solar energy is not only cleaner but after the initial investment, it’s much cheaper than the usual sources. Therefore, more and more businesses want these services and the will be our regular customer as well.
5.2.3 Educational Facilities
Our third group of clients will be educational facilities looking to shift to greener energy sources. They are expected to regularly avail our maintenance services.
5.2.4 City Residences
Lastly, city residencies or houses are also expected to be our recurring customers as most people are taking baby steps towards shifting to renewable energy sources.
Market Analysis | |||||||
Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
Residential Suburbs | 27% | 21,000 | 25,200 | 30,240 | 36,288 | 43,546 | 10.00% |
Businesses | 26% | 18,000 | 21,600 | 25,920 | 31,104 | 37,325 | 10.00% |
Educational Facilities | 24% | 16,500 | 19,800 | 23,760 | 28,512 | 34,214 | 10.00% |
City Residences | 23% | 12,400 | 14,880 | 17,856 | 21,427 | 25,713 | 11.00% |
Total | 100% | 67,900 | 81,480 | 97,776 | 117,331 | 140,797 | 10% |
5.3 Business Target
- To become the biggest suppliers of solar energy services throughout Chicago
- To increase our range of services over time
- To attain a profit of about $40k per month by the end of second year
- To receive certifications regarding solar energy services
- To achieve and keep customer satisfaction above 95%.
5.4 Product Pricing
Our charges will be very reasonable as compared to competitive prices. And our services will also ensure maximum customer satisfaction.
Marketing Strategy of Solar Energy Business
You cannot gain attention and success in a crowded industry by selling goods and services alone. You need a strong competitive advantage when you want to start a solar farm business.
There are many good solar business ideas in the industry. You need to carry out detailed marketing analysis and identify your strengths.
You can look at solar farm business plan samples to learn how to start a power company. You can even use this information for starting a paintball business because at the end of the day, the broad details are the same.
6.1 Competitive Analysis
- We will have excellent 24/7 customer support to help clients with all their problems and queries.
- Our customers can easily contact us through a physical store visit or through our online platforms such as website and social media.
- We will offer the latest technology and products to keep our customers up-to-date.
6.2 Sales Strategy
- We will offer 10% discount to first-time customers.
- We will also offer a 15-20% discount for our recurring customers.
- We will use Google ads, Social Media, and Posters for advertisement.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
Sales Forecast | |||
Unit Sales | Year 1 | Year 2 | Year 3 |
Solar Equipment | 987 | 1,046 | 1,109 |
Product Installation | 876 | 929 | 984 |
Maintenance | 568 | 602 | 638 |
Consultancy | 432 | 458 | 485 |
TOTAL UNIT SALES | 2,863 | 3,035 | 3,217 |
Unit Prices | Year 1 | Year 2 | Year 3 |
Solar Equipment | $1,200.00 | $1,392.00 | $1,614.72 |
Product Installation | $1,250.00 | $1,450.00 | $1,682.00 |
Maintenance | $1,350.00 | $1,566.00 | $1,816.56 |
Consultancy | $2,250.00 | $2,610.00 | $3,027.60 |
Sales | |||
Solar Equipment | $1,184,400.00 | $1,456,338.24 | $1,790,713.50 |
Product Installation | $1,095,000.00 | $1,346,412.00 | $1,655,548.20 |
Maintenance | $766,800.00 | $942,857.28 | $1,159,337.31 |
Consultancy | $972,000.00 | $1,195,171.20 | $1,469,582.51 |
TOTAL SALES | $4,018,200.00 | $4,940,778.72 | $6,075,181.51 |
Direct Unit Costs | Year 1 | Year 2 | Year 3 |
Solar Equipment | $800.00 | $880.00 | $924.00 |
Product Installation | $900.00 | $990.00 | $1,039.50 |
Maintenance | $750.00 | $825.00 | $866.25 |
Consultancy | $1,250.00 | $1,375.00 | $1,443.75 |
Direct Cost of Sales | |||
Solar Equipment | $789,600.00 | $920,673.60 | $1,024,709.72 |
Product Installation | $788,400.00 | $919,274.40 | $1,023,152.41 |
Maintenance | $426,000.00 | $496,716.00 | $552,844.91 |
Consultancy | $540,000.00 | $629,640.00 | $700,789.32 |
Subtotal Direct Cost of Sales | $2,544,000.00 | $2,966,304.00 | $3,301,496.35 |
Personnel plan of Solar Energy Business
Note
The success of a business is greatly dependent on the customer experience. Customers subscribe to a business when they feel welcome and taken care of. Since employees are responsible for this interaction, so figuring out an employee criterion is important when you want to start a solar panel company.
These criteria will be essential for your solar farm business plan. Or even a business plan template for summer camp for that matter.
7.1 Company Staff
- 1 Co Manager to help in overall operations
- 3 Installation Engineers
- 2 Solar Energy Installation Assistants
- 2 Customer Services Representatives
- 1 Website Developer
- 1 Social Media and Website Manager
- 3 Solar Energy Experts/Consultants
7.2 Average Salary of Employees
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Manager | $40,000 | $44,000 | $48,400 |
Installation Engineers | $125,000 | $137,500 | $151,250 |
Installation Assistants | $70,000 | $77,000 | $84,700 |
Customer Service Reps | $25,000 | $27,500 | $30,250 |
Web Developer | $15,000 | $16,500 | $18,150 |
Social and Web Manager | $25,000 | $27,500 | $30,250 |
Solar Experts/ Consultants | $30,000 | $33,000 | $36,300 |
Total Salaries | $330,000 | $363,000 | $399,300 |
Financial Plan of Solar Energy Business
Starting a business is not just selling products, it involves a great deal of planning. A part of this planning is business plan on solar energy. Or a plan related to the specific business such as coal mining business plan.
To ensure the success and financial stability of your business, you need to perform a detailed financial analysis. This will help you reduce solar energy startup cost. And it will be a part of the solar farm business plan as well. This is important to plans for any and all businesses such as biofuel business plan.
Here we’re providing the thorough financial plan developed for Sun Rise Energies. So that you can understand the financial side of the business.
8.1 Important Assumptions
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 8.12% | 8.20% | 8.26% |
Long-term Interest Rate | 8.40% | 8.44% | 8.47% |
Tax Rate | 24.03% | 24.21% | 24.60% |
Other | 0 | 0 | 0 |
8.2 Break-even Analysis
Break-Even Analysis | |
Monthly Units Break-even | 5340 |
Monthly Revenue Break-even | $132,500 |
Assumptions: | |
Average Per-Unit Revenue | $231.00 |
Average Per-Unit Variable Cost | $0.62 |
Estimated Monthly Fixed Cost | $163,800 |
8.3 Projected Profit and Loss
Pro Forma Profit And Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $4,018,200 | $4,940,779 | $6,075,182 |
Direct Cost of Sales | $2,544,000 | $2,966,304 | $3,301,496 |
Other | $0 | $0 | $0 |
TOTAL COST OF SALES | $2,544,000 | $2,966,304 | $3,301,496 |
Gross Margin | $1,474,200 | $1,974,475 | $2,773,685 |
Gross Margin % | 36.69% | 39.96% | 45.66% |
Expenses | |||
Payroll | $330,000 | $363,000 | $399,300 |
Sales and Marketing and Other Expenses | $145,000 | $148,000 | $156,000 |
Depreciation | $2,300 | $2,350 | $2,500 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $2,900 | $3,000 | $3,100 |
Insurance | $2,100 | $2,100 | $2,100 |
Rent | $2,900 | $3,000 | $3,200 |
Payroll Taxes | $24,000 | $25,000 | $27,000 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $509,200 | $546,450 | $593,200 |
Profit Before Interest and Taxes | $965,000 | $1,428,025 | $2,180,485 |
EBITDA | $965,000 | $1,428,025 | $2,180,485 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $193,000 | $285,605 | $436,097 |
Net Profit | $772,000 | $1,142,420 | $1,744,388 |
Net Profit/Sales | 19.21% | 23.12% | 28.71% |
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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 Sales | $51,000 | $55,080 | $59,486 |
Cash from Receivables | $22,000 | $23,760 | $25,661 |
SUBTOTAL CASH FROM OPERATIONS | $73,000 | $79,570 | $85,936 |
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 | $74,000 | $79,000 | $85,000 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $42,000 | $42,000 | $45,000 |
Bill Payments | $27,000 | $28,000 | $31,000 |
SUBTOTAL SPENT ON OPERATIONS | $69,000 | $70,000 | $76,000 |
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 |
Dividends | $0 | $0 | $0 |
SUBTOTAL CASH SPENT | $69,000 | $74,520 | $80,482 |
Net Cash Flow | $21,000 | $23,000 | $25,000 |
Cash Balance | $27,000 | $30,000 | $33,000 |
8.5 Projected Balance Sheet
Pro Forma Balance Sheet | |||
Assets | Year 1 | Year 2 | Year 3 |
Current Assets | |||
Cash | $275,000 | $308,000 | $338,800 |
Accounts Receivable | $24,000 | $26,880 | $30,213 |
Inventory | $4,300 | $4,816 | $4,900 |
Other Current Assets | $1,000 | $1,000 | $1,000 |
TOTAL CURRENT ASSETS | $282,000 | $315,840 | $355,004 |
Long-term Assets | |||
Long-term Assets | $10,000 | $10,000 | $10,000 |
Accumulated Depreciation | $19,400 | $21,728 | $24,444 |
TOTAL LONG-TERM ASSETS | $24,400 | $27,328 | $30,744 |
TOTAL ASSETS | $294,000 | $329,280 | $370,440 |
Liabilities and Capital | Year 4 | Year 5 | Year 6 |
Current Liabilities | |||
Accounts Payable | $18,700 | $20,944 | $23,541 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
SUBTOTAL CURRENT LIABILITIES | $19,000 | $21,280 | $23,919 |
Long-term Liabilities | $0 | $0 | $0 |
TOTAL LIABILITIES | $15,000 | $16,800 | $18,883 |
Paid-in Capital | $30,000 | $30,000 | $31,000 |
Retained Earnings | $53,000 | $57,770 | $63,547 |
Earnings | $193,400 | $210,806 | $231,887 |
TOTAL CAPITAL | $285,000 | $310,650 | $341,715 |
TOTAL LIABILITIES AND CAPITAL | $300,000 | $329,280 | $370,440 |
Net Worth | $293,400 | $319,806 | $351,787 |
8.6 Business Ratios
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
Sales Growth | 7.25% | 8.03% | 8.90% | 3.00% |
Percent of Total Assets | ||||
Accounts Receivable | 9.21% | 10.20% | 11.31% | 9.80% |
Inventory | 5.39% | 5.97% | 6.62% | 9.90% |
Other Current Assets | 2.11% | 2.34% | 2.59% | 2.40% |
Total Current Assets | 149.80% | 151.00% | 152.00% | 158.00% |
Long-term Assets | 11.55% | 11.60% | 11.64% | 12.00% |
TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 4.90% | 4.94% | 4.98% | 4.34% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
Total Liabilities | 7.59% | 7.65% | 7.72% | 7.38% |
NET WORTH | 100.45% | 101.25% | 102.19% | 110.00% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 94.60% | 97.15% | 99.87% | 99.00% |
Selling, General & Administrative Expenses | 93.56% | 96.09% | 98.78% | 97.80% |
Advertising Expenses | 1.52% | 1.56% | 1.60% | 1.40% |
Profit Before Interest and Taxes | 41.50% | 42.62% | 43.81% | 33.90% |
Main Ratios | ||||
Current | 34 | 35 | 36 | 32 |
Quick | 33 | 33.8 | 34.645 | 33 |
Total Debt to Total Assets | 0.18% | 0.18% | 0.17% | 0.40% |
Pre-tax Return on Net Worth | 74.08% | 74.89% | 75.00% | 75.00% |
Pre-tax Return on Assets | 96.30% | 101.12% | 106.17% | 111.30% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 33.56% | 34.60% | 35.67% | N.A. |
Return on Equity | 55.80% | 57.53% | 59.31% | N.A. |
Activity Ratios | ||||
Accounts Receivable Turnover | 7.7 | 7.8 | 7.8 | N.A. |
Collection Days | 100 | 100 | 100 | N.A. |
Inventory Turnover | 32.4 | 34.02 | 35 | N.A. |
Accounts Payable Turnover | 15.6 | 16 | 16.3 | N.A. |
Payment Days | 27 | 27 | 27 | N.A. |
Total Asset Turnover | 2.5 | 2.5 | 2.6 | N.A. |
Debt Ratios | ||||
Debt to Net Worth | -0.04 | -0.03 | -0.04 | N.A. |
Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
Liquidity Ratios | ||||
Net Working Capital | $244,000 | $257,664 | $272,093 | N.A. |
Interest Coverage | 0 | 0 | 0 | N.A. |
Additional Ratios | ||||
Assets to Sales | 0.85 | 0.87 | 0.89 | N.A. |
Current Debt/Total Assets | 1% | 0% | 0% | N.A. |
Acid Test | 29 | 29.12 | 29.16 | N.A. |
Sales/Net Worth | 2.1 | 2.2 | 2.2 | N.A. |
Dividend Payout | 0 | 0 | 0 | N.A. |
FAQ
- Is solar energy business profitable?
Is solar panel business profitable? The answer is a huge YES. Solar energy business is in great demand with the world today that wants to shift its energy sources.
- How do I start a solar energy business?
You can start your business by researching industry niches and looking at a business plan solar farm. They will give you a good idea of how you can use your resources to start a solar farm and reduce start up cost of solar energy business.
- How much does it cost to start a solar company?
The capital and resources you need to start energy company depends on the size and location of your business. You can use your own savings to start it or look for loans to finance your venture.
- Is solar energy a good business?
Solar energy business gives a great return on investment(ROI). With the innovations causing a decrease in equipment with all the government incentives, you can already see the profit.
Download Solar Energy Company Business Plan Sample in pdf
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