Start a solar farm 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 solar farm 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 solar farm business?
Landowners should consider a number of factors when launching a solar farming business. You will need to gain permission from the local utility company to connect and run your solar project in parallel with the utility grid. The cost to gain permission to interconnect can run up to $30,000 in some states.
On a large scale, your solar farm should be a minimum of one megawatt — enough to supply energy to approximately 200 households. Installation costs for a one-megawatt farm typically total about $1 million. This includes land, solar equipment, office setup, payroll, and marketing.
For solar farmers with less start-up capital, leasing the land to a utility company is a more affordable option. The utility company you partner with pays the cost of installation and maintenance of the panels. While the profits are significantly lower with this option, so too are the initial expenses.
What are the ongoing expenses for a solar farm business?
Ongoing expenses for your solar farm include your mortgage, insurance, property taxes, licensing, and attorney and financial advisor fees. Those offering additional services beyond land leasing also must consider payroll costs, higher insurance expenses, travel costs, and continuing education fees.
Who is the target market?
It’s a common misconception that only utility companies require the services of solar farms. If you don’t want to lease your land to a utility company, consider approaching these other types of organizations:
- Financial institutions
- Manufacturers and distributors
- Blue chip companies
- Real estate developers and contractors
- Public works departments
- Sports facilities
- Television stations
How does a solar farm business make money?
The most effective way to make money is by leasing the land to a utility company. They pay you an annual lease payment in exchange for the use of your land — for an agreed upon period of time.
How much can you charge customers?
A number of factors will influence the lease rate your land can yield, including its size and quality as well as market demand and local land prices. On average, farms yield between $500 and $800 per acre per month.
How much profit can a solar farm business make?
If your 100-acre land lease yields $700 per acre per month, your solar farm could yield $840,000 in annual revenue.
How can you make your business more profitable?
Solar farm business owners seeking to boost their profitability should consider using their annual profits to buy additional land. Continuing education and the proper certifications also could help a business owner expand their services, making them more valuable to current and potential clients.
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 solar farm 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 an Solar Farm 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.
In addition, certain local licensing or regulatory requirements may apply. For more 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.
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 solar farm business
Solar farmers should proactively target potential clients with printed materials that outline the services they offer. They also should place ads in relevant online and print publications as well as maintain a strong social media presence to effectively spread the word about their business. Additionally, solar farm owners should consider attending local and international conventions, expos, and business fairs.
How to keep customers coming back
It’s always important to remember that word of mouth is your most valuable marketing tool. One angry customer, however, can cause cracks in the very foundation of your business. Prompt project bids, project installation, maintenance, and repair are critical to your business’ success.
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 Solar Farm 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?
The ideal solar farmer owns a plot of land — preferably 25 acres or more. That land must receive plenty of sunlight, have stable soil, and possess the necessary infrastructure to connect the farm to the utility grid. Leasing land to an energy company is perfect for landowners seeking guaranteed income. This also ensures the maintenance of the property so a landowner can pass it on for generations.
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 solar farm business?
After setup, a solar farm requires little work on your part. The utility company to which you lease the land will require full access to the property through a dedicated access road so its employees and construction crews may enter on an as-needed basis. Your role involves ensuring the land remains mowed and clean of debris. You also must maintain the fencing around your property to prevent wild animals and trespassers from entering.
What are some skills and experiences that will help you build a successful solar farm business?
What are some skills and experiences that will help you build a successful solar farm?
Utility workers will install and maintain the solar panels on your farm. You must only supply the land and possess basic negotiation skills to enter into a profitable lease agreement. A business background also would prove beneficial for farmers seeking significant long-term growth and expansion.
Solar farmers who wish to take a more hands-on approach will need to obtain the proper professional certifications. The North American Board of Certified Energy Practitioners® (NABCEP® ) and the Solar Energy Industries Association® (SEIA) are both excellent resources for farmers planning to install, maintain, and repair their farm’s solar panels.
What is the growth potential for a solar farm business?
The solar industry is expected to experience record growth in the next decade, offering significant profits for landowners. Farm owners looking to expand their businesses and increase profits need only invest in additional land that meets the criteria set by utility companies.
TRUiC's YouTube Channel
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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 solar farm business?
Carefully consider all your options. Learn the risks and anticipate the challenges you may face along the way. Before entering into a lease agreement, have a professional review all the documents to ensure you understand what’s expected from you and what insurance coverage you’ll need.
How and when to build a team
The level of support you require will depend on the scope of your business. Landowners who lease their land will need little more than the guidance of an attorney and a financial advisor.
Solar farmers installing their own panels or offering services to community members will need a much larger support team, including mechanical and/or electrical engineers with the proper certifications, an accountant, an attorney, and administrative staff. Because your team members must interact and consult with clients, they should possess strong interpersonal and communication skills.