How to Start an Alternative Energy Company

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Alternative-energy entrepreneurs have a big market to serve.
Alternative-energy entrepreneurs have a big market to serve. (Image: alternative energy machine image by David Levinson from Fotolia.com)

Start-up alternative energy companies have a large market to serve. According to Entrepreneur magazine, the sales volume at one Massachusetts-based alternative energy company has increased over 200 percent a year in the last few years. Such a demand for alternative fuels creates a lucrative opportunity for small business to take on energy-sector behemoths. The benefits are nearly limitless: decreasing the negative effects on the planet, tax credits and a lifestyle pioneering tomorrow's energy sources, not to mention a ready customer base. And Entrepreneur magazine isn't alone; Inc. magazine and Politico also rally behind green-energy start-ups.

Things You'll Need

  • Funding and licensing
  • Borrowing power
  • Business model
  • Niche within the market
  • Marketable product
  • Customer base

Know Your Sector

Identify what market need you can most readily satisfy. Do this by analyzing your capital assets, borrowing power, available time and the clientele most prevalent in your area. Kits that convert a diesel engine to run on vegetable oil might be more popular in farm country than in a metropolitan area because of the number of farmers, for instance.

Research all of your options. Entrepreneur magazine cites Justin Carven, who owns an alternative-energy small business, as saying companies like his can pop up overnight, though the same article also quotes a manufacturing expert who advises that entrepreneurs find their niches and build flexible companies which will respond accordingly as the energy market shifts. Small businesses should diversify their marketing and selling sources to ensure their share of the market.

Draft a business plan and get licensed with the government. Once you've decided if your alternative-energy company will create green energy with turbines or if it will make diesel engines cleaner, it is time to make your operation legal and to begin planning its operations and future successes. Don't forget to check for grants and tax credits, as many non-profit and governmental organizations are willing to support the alternative-energy market. Inc. magazine identifies millions of dollars in federal money for alternative energy start-ups.

Initial Operations

Secure your financing, licenses and infrastructure. Once everything is in place--or guaranteed to be in place via a contract or other binding legal document--hone your business plan to include the nuances of your specific alternative-energy company--wind, solar, bio-diesel, battery-powered cars. There will also be unexpected challenges to which you will need to adapt. Your business plan must be flexible, practical and actionable; you should stick to it at all times, but don't be afraid to improvise.

Market your company to potential customers, who could range from corporations and government agencies to private citizens and mom-and-pop style firms. You may also operate a franchise of an existing business, which could take care of some of your marketing needs.

Politco reports that current alternative-energy firms are lobbying the United States Capitol to increase support of the sector, and that legislation currently in congress would create an "electric vehicle infrastructure" which would promote the sale of such vehicles. As you go about marketing your firm, no matter the clientele or your particular niche, look for opportunities to capitalize on existing demand for your service.

Stay abreast of all situations within your niche--it's the only way to not get left behind. C-Net reports that several green technology start-ups have went bankrupt trying to directly compete with sector behemoths by offering a similar product. Instead, C-Net recommends taking on the larger firms by commercializing a smaller technology or by drastically restructuring their company's business model to work more productively.

Maintain your business connections, including clients and suppliers, by not being out of touch with them. Know their needs and expectations of you and your firm, then do your best to honor them. Look for opportunities to work leaner, more efficient and more productively to keep your new business in operation.

Tips & Warnings

  • Calculated risk is nearly no risk at all. Be sure to know exactly what you are doing and how you will operate your business before you sink any money into it. Exhaustively research your product and the market for your niche.

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