Do you Want to Start Solar Farm Business?
Are you planning on how to start a solar farm? This is a great business venture considering the increasing demand for solar energy in the recent times. Solar farms pool together resources to generate a large scale source of solar power energy which is then sold to both residential and commercial customers. Solar energy is now considered the most reliable energy source that is utilized for various uses. The business still has a lot of opportunities that are yet to be exploited and therefore, you can be assured of reaping good profits. However, the initial startup capital is high because of the technical infrastructure required. With a good business plan, you can be assured to quickly recoup your entire investment.
2.1 The Business
The solar farm will be registered under the name SolarStar Technologies and will be located in Forney, Texas approximately 25 miles from Dallas, Texas. The solar farm will be owned by Smith White who is a Renewable Energy Specialist with vast experience on how to start a solar power business. The business will be strategically located in a vast piece of land located on the outskirts of Forney.
2.2 Management Team
Smith White who’s the owner of SolarStar Technologies is an experienced Renewable Energy Specialist with extensive experience spanning two decades in solar energy technologies. Before starting the solar farm, Smith worked for numerous high profile renewable energy companies across the United States. On completion of the business set-up, Smith White intends to employ a team of staff to assist in day-to- day running of the solar farm.
2.3 Customer Focus
SolarStar Technologies has plans to set up the solar farm in a strategic location that ensures the farm is able to effectively meet the needs of its customers. The aim is to ensure customers access sufficient solar energy for various needs. When you build your own solar farm, you should think about how to improve the lives and businesses of your customers.
2.4 Business Target
SolarStar Technologies plans to offer various types of services for both domestic and commercial clients in need of a quality, reliable and affordable solar energy provider in Fortney and the surrounding areas.
3.1 Company Owner
Smith White is an experienced renewable energy specialist who has enjoyed a successful career life. He is a well-respected and known expert who has played a major role in improving the lives of various communities by utilizing renewable energy sources.
3.2 Aim of Starting the Business
With the increasing demand for solar energy, the available solar farms are unable to fully cater for the rising demand from both domestic and commercial customers. For this reason, Smith White thought it would be good to use his expertise and professional experience to set up his own solar farm and make a positive impact in the society.
3.3 How the Business will be Started
With industry experience spanning over twenty years, Mr. Smith has hands-on experience in solar energy infrastructure and technology. He is well versed with the technical aspect but on the other hand, has sought the advice of business setup experts to help him draw up a comprehensive solar power plant start up cost.
|Research and Development||$14,000|
|TOTAL START-UP EXPENSES||$70,000|
|Other Current Assets||$24,000|
|Start-up Expenses to Fund||$30,000|
|Start-up Assets to Fund||$27,000|
|TOTAL FUNDING REQUIRED||$0|
|Non-cash Assets from Start-up||$12,000|
|Cash Requirements from Start-up||$0|
|Additional Cash Raised||$50,000|
|Cash Balance on Starting Date||$25,000|
|Liabilities and Capital||$0|
|Accounts Payable (Outstanding Bills)||$0|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$160,000|
|Loss at Start-up (Start-up Expenses)||$50,000|
|TOTAL CAPITAL AND LIABILITIES||$40,000|
Services for Customers
SolarStar Technologies offers various types of services that cater for both commercial and domestic needs. When planning how to start a solar energy business, entrepreneurs need to think of a diversified service approach to boost customer satisfaction and increase revenue. In line with offering the best services to its clients, SolarStar Technologies intends to offer the following key services when all procedures of starting a solar power company have been completed and the solar farm has opened for business.
- Supply solar energy to domestic, commercial and industrial enterprises in need of clean, efficient and reliable solar energy
- Installation of solar panels, repair and maintenance services thanks to a qualified and reputable installation and quality assurance team
- Construction of CSP power plants, CSP tower power plants and CSP trough power plants using the latest environmentally friendly technologies
- Construction of Crystalline silicon solar and Thin-film solar power plants
- Consultation, energy analysis studies and designing of integrated solar system plans. This involves holding discussions with potential customers to determine their solar needs and recommend an appropriate solution.
Marketing Analysis of Solar Farm Business
The demand for solar energy is at an all-time high. SolarStar Technologies intends to fully benefit from the hype for solar energy to generate higher revenue streams. In this solar farm business plan, a detailed market analysis was carried out to better position the business to have a competitive advantage. The purpose of the market analysis is to find out the best approach to market the solar farm so as to reach out to potential customers. With more people becoming keen on enjoying the benefits of using solar technologies, there are plenty of opportunities for investors to tap.
5.1 Market Segmentation
In order to ensure business goals are met, SolarStar Technologies intends to offer a wide range of services in order to cater for different types of customers. Focus will be placed on offering quality services and deployment of the latest infrastructure and technologies to ensure this solar energy farm business plan realizes its intended purpose. With rapid technology development and favorable government policies on the use of solar energy, SolarStar Technologies knows the market is ready for new investors looking to offer diversified services that will be beneficial to local communities. Considering the favorable business environment, the business expects good profits. This small solar farm business plan has identified the following potential customers that need to be approached.
5.1.1 Individuals and Households
Statistics have indicated that the biggest consumers of solar energy are domestic consumers who account for a larger percentage of the total consumption. With the high cost of electricity, many households and individual users are opting for solar energy which is considered to be more affordable and highly reliable. The increased frequency of power outages has also contributed to many homes considering using solar as an alternative. In addition, the price of solar panels has drastically reduced thus attracting domestic consumers who don’t need to spend much investing in solar energy. In this solar farm business plan sample, a lot of emphasis is placed on reaching out to domestic consumers as they’re a lucrative customer segment for the SolarStar Technologies.
5.1.2 Corporate Organizations and Manufacturers
In a bid to reduce electricity costs, many companies are opting to embrace solar energy to lower business expenses with a view of increasing profits. Numerous government incentives including tax reliefs on solar energy have encouraged the uptake of commercial use of solar energy. In addition, most corporates are adopting a green approach which emphasizes on environmental conservation. As part of renewable energy efforts, many stakeholders have begun to focus on adopting policies that will allow companies to utilize solar energy to manage various business activities. With the kind of infrastructure SolarStar Technologies plans to roll out, the business has an excellent opportunity to increase its revenue channels.
5.1.3 Real Estate Developers
A lot of real estate developments are increasingly opting for solar energy since it’s a cost effective and environmental friendly option. To avoid depending on traditional electricity, many developers are investing heavily in solar infrastructure with the intention of using solar as a selling point for their properties. In a bid to cut down on electricity costs, the real estate property is now amongst the biggest consumers of solar energy. As the property industry continues to witness more developments, the biggest beneficiary will be SolarStar Technologies.
This solar farm business model incorporates educational institutions as one of key customer segments that SolarStar Technologies needs to reach out to. There are numerous educational institutions in Forney, and the solar farm has a good opportunity to market to the neighboring schools with an aim of supplying solar power. Because of the diverse nature of activities, schools are always in need of enough energy supply to be able to satisfy their needs.
|Potential Customers||Growth||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5||CAGR|
|Individual and households||35%||30,000||32,000||34,000||36,000||38,000||10.00%|
|Corporate organizations and manufacturers||30%||25,000||27,000||29,000||31,000||33,000||14.00%|
|Real estate developers||20%||20,000||22,000||24,000||26,000||28,000||12.00%|
5.2 Business Target
SolarStar Technologies has acquired a huge farm that will hold the infrastructure for the solar farm. Given the huge initial investment, this solar energy business plan is focused on coming up with a framework that will support business activities. The solar farm plans to leverage on the latest technologies and exemplary business practices to achieve its goals. The population in the city of Forney and its surroundings is the main target for the solar farm. With a good business plan for solar energy company in place, SolarStar Technologies hopes to achieve an annual sales growth of between 15-20%.
5.3 Product Pricing
SolarStar Technologies intends to come up with a comprehensive pricing structure that will guide how various services will be priced. Starting a solar energy business demands a lot of research especially how to effectively price different types of services.
In order for SolarStar Technologies to realize its objectives, Smith White has worked closely with experts to come up with a marketing strategy that will steer the path for business growth. When planning to start a solar farm business, it is important to have a strategy that will outline plans a solar farm will use to approach customers. The sales strategy for SolarStar Technologies is explained below.
6.1 Competitive Analysis
SolarStar Technologies intends to focus on a well-structured approach that will ensure provision of key services. Even though there are other solar farms in the region, SolarStar Technologies has crafted a unique business approach to identify potential customers and reach out to them effectively to boost revenue.
6.2 Sales Strategy
For SolarStar Technologies to achieve its goals, the following strategies have been identified to help the solar farm reach out to its customers. If you plan to start solar farm business, the following strategies will be of great help.
- Introduce the solar farm to the neighboring community by sending letters of introduction together with a brochure to all targeted customers such as households and individuals, corporate organization, schools and real estate developers.
- Be at the forefront of bidding for tenders and contracts from government and corporate organizations
- Advertise the solar farm in local media channels such as TV stations, newspapers, magazines and radio stations
- Advertise the SolarStar Technologies on local directories such as yellow pages
- Participate in both local and international expos, workshops and business exhibitions to market the solar farm
- Come up with different service packages and find a creative approach of customizing budgets to allow clients enjoy services depending on their budget.
- Ensure the quality of service delivery and consistency in professionalism is upheld at all times
- Use digital platforms such as Facebook, Twitter, Instagram to advertise the business
- Use direct marketing approaches to reach out to potential customers
- Encourage word of mouth marketing and referrals especially for loyal and happy clients
- Put signage at strategic locations in close proximity to the targeted customer areas
- Hire an external professional marketing company to help SolarStar Technologies reach out to as many potential customers as possible
- Organize road shows around the neighborhood to create awareness about the solar farm as well as the benefits of using solar energy
6.3 Sales Forecast
In order to successfully manage how to start solar business, SolarStar Technologies has come up with a sales forecast which will show how the solar farm will perform when it begins operations.
|Unit Sales||Year 1||Year 2||Year 3|
|Supply solar power to domestic, commercial & industrial entreprises||500,000||520,000||540,000|
|Installation of solar power, repair and installation||400,000||420,000||440,000|
|Construction of CSP power plants||300,000||320,000||340,000|
|Consultation and energy analysis||200,000||220,000||240,000|
|TOTAL UNIT SALES||1,400,000||1,480,000||1,560,000|
|Unit Prices||Year 1||Year 2||Year 3|
|Supply solar power to domestic, commercial & industrial entreprises||$400.00||$420.00||$440.00|
|Installation of solar power, repair and installation||$300.00||$320.00||$340.00|
|Construction of CSP power plants||$250.00||$270.00||$290.00|
|Consultation and energy analysis||$200.00||$220.00||$240.00|
|Supply solar power to domestic, commercial & industrial entreprises||$310,000||$340,000||$370,000|
|Installation of solar power, repair and installation||$200,000||$240,000||$280,000|
|Construction of CSP power plants||$150,000||$180,000||$210,000|
|Consultation and energy analysis||$100,000||$140,000||$180,000|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Supply solar power to domestic, commercial & industrial entreprises||$5.00||$4.00||$3.00|
|Installation of solar power, repair and installation||$4.00||$3.00||$2.00|
|Construction of CSP power plants||$3.00||$2.00||$1.00|
|Consultation and energy analysis||$2.00||$3.00||$4.00|
|Direct Cost of Sales|
|Supply solar power to domestic, commercial & industrial entreprises||$300,000||$320,000||$340,000|
|Installation of solar power, repair and installation||$250,000||$270,000||$290,000|
|Construction of CSP power plants||$200,000||$220,000||$240,000|
|Consultation and energy analysis||$150,000||$170,000||$190,000|
|Subtotal Direct Cost of Sales||$900,000||$980,000||$1,060,000|
SolarStar Technologies is keen on leveraging on the latest technologies and providing an efficient and reliable source of energy to both domestic and commercial consumers. Before starting a solar farm business, it is wise to put in place a personnel plan to manage solar farm operations.
7.1 Personnel Plan
SolarStar Technologies is owned by Smith White who will also be the Chief Executive Officer of the solar farm. Starting a solar business requires the following staff to be employed in the facility.
Chief Executive Officer (CEO)
Manager, Technical and Operations
2 Sales and Marketing Executives
2 Client Service Executive
10 Installation, Repair and Maintenance Engineers
2 Security Guards
Successful applicants will be trained in different areas of solar farm operations in order to prepare them to serve customers.
7.2 Average Salaries
SolarStar Technologies intends to pay members of staff the following salaries in the first three years of operation.
|Year 1||Year 2||Year 3|
|Chief Executive Officer (CEO)||$65,000||$70,000||$75,000|
|Manager of operations||$38,000||$40,000||$42,000|
|2 Sales and Marketing Executive||$50,000||$54,000||$58,000|
|2 Client Service Executive||$56,000||$60,000||$64,000|
|10 installation, repair and maintanence engieneers||$250,000||$270,000||$290,000|
|2 security guards||$45,000||$50,000||$55,000|
SolarStar Technologies has come up with a detailed financial plan that reflects the financial status of the solar farm. Successfully starting a solar farm depends on how well experts determine the financial aspects of the business. How to start your own solar company also depends on the source of capital. In this case, Smith White shall fund the business using his personal savings, and will be assisted by two investors. Additionally, extra funding will be secured from a loan to provide additional capital.
Below is the key financial data for SolarStar Technologies.
8.1 Important Assumptions
Financial forecast for SolarStar Technologies shall be based on the below assumptions.
|Year 1||Year 2||Year 3|
|Current Interest Rate||14.00%||16.00%||18.00%|
|Long-term Interest Rate||5.00%||5.00%||5.00%|
8.2 Brake-even Analysis
The Brake-even Analysis for SolarStar Technologies is illustrated in the graph below.
|Monthly Units Break-even||8000|
|Monthly Revenue Break-even||$250,000|
|Average Per-Unit Revenue||$210.00|
|Average Per-Unit Variable Cost||$3.00|
|Estimated Monthly Fixed Cost||$400,000|
8.3 Projected Profit and Loss
Profit and Loss information for the solar farm calculated on a monthly and annual basis is shown below.
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$100,000||$120,000||$140,000|
|TOTAL COST OF SALES||$920,000||$960,000||$1,000,000|
|Gross Margin %||65.00%||70.00%||75.00%|
|Sales and Marketing and Other Expenses||$6,000||$8,000||$10,000|
|Total Operating Expenses||$320,000||$350,000||$380,000|
|Profit Before Interest and Taxes||$100,000||$130,000||$160,000|
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
Profit and Loss Analysis for SolarStar Technologies is shown below.
8.4 Projected Cash Flow
Below is a summary of subtotal cash spent, subtotal cash spent on operations, subtotal cash from operations, subtotal cash received and pro forma cash flow.
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$10,000||$14,000||$18,000|
|SUBTOTAL CASH FROM OPERATIONS||$110,000||$134,000||$158,000|
|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||$80,000||$85,000||$90,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$33,000||$41,000||$49,000|
|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|
|SUBTOTAL CASH SPENT||$33,000||$41,000||$490,000|
|Net Cash Flow||$15,000||$18,000||$21,000|
8.5 Projected Balance Sheet
Below is a Projected Balance Sheet for SolarStar Technologies that shows assets, liabilities, capital, long term assets and current liabilities.
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$5,000||$5,000||$5,000|
|TOTAL CURRENT ASSETS||$302,000||$348,000||$391,000|
|TOTAL LONG-TERM ASSETS||$4,000||$3,000||$2,000|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$20,000||$24,000||$28,000|
|TOTAL LIABILITIES AND CAPITAL||$210,000||$230,000||$270,000|
8.6 Business Ratios
The following is the Ratio Analysis, Business Ratios and Business Net Worth.
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||4.00%||3.50%||2.20%||28.00%|
|Total Current Assets||100.00%||120.00%||130.00%||56.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||65.00%||80.00%||65.00%||55.00%|
|Profit Before Interest and Taxes||25.00%||28.00%||31.00%||2.50%|
|Total Debt to Total Assets||5.05%||3.00%||1.80%||65.00%|
|Pre-tax Return on Net Worth||70.00%||80.00%||90.00%||3.00%|
|Pre-tax Return on Assets||65.00%||60.00%||70.00%||10.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||18.00%||22.00%||24.00%||N.A.|
|Return on Equity||55.00%||60.00%||65.00%||N.A.|
|Accounts Receivable Turnover||6||8||10||N.A.|
|Accounts Payable Turnover||12||15.2||18||N.A.|
|Total Asset Turnover||2.8||2.6||2.4||N.A.|
|Debt to Net Worth||0||-0.07||-0.04||N.A.|
|Current Liab. to Liab.||0||0||0||N.A.|
|Net Working Capital||$300,000||$330,000||$360,000||N.A.|
|Assets to Sales||1.45||1.48||0.35||N.A.|
|Current Debt/Total Assets||8%||5%||3%||N.A.|
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