Start a green energy business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your green energy business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a green energy business?
Green energy businesses are much like other commercial and residential services, in which sales and installs of products drive the business.
- Having a properly trained team and the right tools for the job are essential to success. You will also need a few trucks or vans and employee uniforms, decorated with your company name, to ready your team.
- Having a facility to operate out of is also necessary for smoother operations and long term growth.
- You will also incur fees and costs associated with insurance, licensing, and state and local fees.
- Incorporating your business and setting up a financial officer and business.
- Advertising and a website are also essential for driving business to your door.
What are the ongoing expenses for a green energy business?
Like most service-based businesses, payroll and insurance are some of the larger expenses. Maintenance of your fleet and equipment are also factors, as well as office materials and internet/phone service. If you are leasing or mortgaging, you can also factor in those costs.
Who is the target market?
Your target audience consists of homeowners looking to venture into energy alternatives, most likely in the 33-55 age range.
How does a green energy business make money?
Green energy businesses are profitable by selling green energy equipment and services. For example, a solar energy business can sell the panels and the installation and will retain a maintenance and service contract with the customer.
How much can you charge customers?
The costs for green energy will vary greatly between the type and scope of green energy captures you’re using. For the sake of information, let’s assume a homeowner wants to add solar panels to their roof to help offset their traditional energy usage. The average cost for the complete install is around $15,000.
How much profit can a green energy business make?
Green energy businesses are poised to fill a gap in the labor and manufacturing market, so a prepared business owner can quickly find themselves in a six-figure gross income bracket. Some solar panel sales reps are currently making nearly $100,000 annually, and solar panel installation companies are seeing profits exceeding $200,000 annually.
How can you make your business more profitable?
Besides the actual green energy products, consider selling and servicing related products and parts. Installs will make money, but services and repairs may end up being more profitable in the long run.
Consider working as an estimator for commercial and residential properties. Your knowledge could be used in an advisory position for large commercial jobs, residential jobs, or even federal jobs.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your green energy business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a 3D printing design business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Trademark & Copyright Protection
If you are developing a unique product, concept, brand, or design, it is prudent to protect your rights by registering for the appropriate trademarks and copyrights.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a green energy business
Green energy is traditional in the sense that everyone needs and uses energy daily, and it is also forward-thinking, as it is the alternative to traditional energy sources. Your advertising and marketing should mirror this duality.
- Appeal to customers’ common sense and desire to reduce energy costs while helping to create a greener world.
- Engage customers with print, television, and radio ads, as well as an interactive website and social media presence.
- Continually show the short and long term benefits of green energy solutions.
- If angling for a more commercial market, show your audience how an up-trending market will likely increase product costs, and how it is better to invest now rather than later.
How to keep customers coming back
Customer loyalty and retention often come with exceptional service after the sale, for a business such as this one. Making sure that your customers get what they need is what keeps them as your customers. Although the products you sell and install should always be of exceptional quality, regular maintenance ensures the customer has a trusted partner and that you have a valued client.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Green Energy Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
If you have worked for or around the industries of modern energy, you’ll inherently understand the challenges we face today. As a green energy business owner, you will wear many hats. From marketer and advertiser to sales and installs, you have to be well-versed on all fronts. Green Energy is a forward-thinking model for using alternatives to fuel our lives. Persons with experience in the sciences of energy and the business of managing and promoting new energy ideas can achieve great success.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a green energy business?
Many will agree that green energy is the future for all of us. But many will also disagree about how it will take place. One of the biggest challenges is helping people and businesses to see the long term benefits of adopting green energy practices and machines. Much of what occurs each day is conversations and meetings with potential clients to show the benefits and how green energy can integrate into their current systems. Additionally, sales and installs of green energy systems will also occur regularly.
What are some skills and experiences that will help you build a successful green energy business?
Green energy is starting to drive the next significant wave of industry and innovation. Green energy customers are more accepting than ever the need to move away from fossil fuels only. Green energy careers are poised to be the next oil or coal boom, as workers will be needed to keep up with the demand for this energy renaissance. Positioning yourself in this market will take a solid understanding of the engineering and science of various green energies, as well as a savvy business and finance mind.
Understanding supply and demand and having an engaging personality will also help, as you will often be the one explaining the process as much as you are selling the service. Finding a personal tone that conveys thorough knowledge of your products will help give your business the kind of energy needed to succeed.
What is the growth potential for a green energy business?
Green energy is an ever-evolving utility. The methods for collecting and storing energy are improving in both quality and cost-effectiveness. More and more traditional energy companies are feeling the shift, too, and they are looking to include greater green energy customer inclusions to their existing energy user base. With green energy technology and consumer desire both steadily increasing, the [growth potential] seems immense.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a green energy business?
Create a comprehensive business plan, especially for a business with such palpable growth potential. Having a plan of action is necessary to keep your focus when the business is in full swing. Short and long term goals help budget finances, as well.
Perform extensive market research for your particular business. What does the competition look like? What percentage of households are homeowners or renters, and how many are interested in the possibility of green energy options? Many surveys and relative income data will help you decide if your area is right for your business.
Remain at the forefront of your industry by reviewing new science and techniques and following market trends. Understanding your business from an owner and consumer standpoint garners success.
How and when to build a team
Most sales and service businesses will need at least a few teams to start. Training seminars and management are heavily front-loaded so that your team is ready on day one. You will also most likely need a few people in the office to take phone calls, process deliveries, sales receipts, work tickets, and company finances. Having a prepared team in place helps startups run smoother from the start.