How to Start a Green Energy Business

Start a green energy business by following these 10 steps:

1. Plan your Green Energy Business
2. Form your Green Energy Business into a Legal Entity
3. Register your Green Energy Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Green Energy Business
6. Get the Necessary Permits & Licenses for your Green Energy Business
7. Get Green Energy Business Insurance
8. Define your Green Energy Business Brand
9. Create your Green Energy Business Website
10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

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

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

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.

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.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

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.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

Learn more about trademark and copyright protection

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.

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.

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.

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.