Do's and Donít's - tips & suggestions, mistakes to be avoided
Next Steps for an Entrepreneur Keen on Exploring the Alternative Energy Industry
- Tips & Suggestions
- Mistakes to be Avoided
Objective: The goal of this chapter is to provide specific tips and guidance for entrepreneurs keen on taking the next steps into the alternative energy industry.
Tips & Suggestions
Calculate the Risks
Alternative energy can be both a rewarding and a difficult area to start a business in. Make sure you have a good understanding of what is going on in the field itself, what are the competing technologies and the risks you are taking.
Evaluate Your Strengths
Evaluate yourself and your talents – are you someone who would like to run a manufacturing factory? Are you someone who would like to do sales and marketing? Or are you someone with more creative and design skills? Each of these different skill sets could have different opportunities in the alternative energy industry that are just right for them.
Understand Local Requirements & Mandates Better
Understand your local, regional and country-specific renewable energy mandates and incentives. Talking of incentives, there are a number of government subsidies and contracts are helping to boost the alternative energy market. Your knowledge of these incentives will help you get the vital financial jumpstart.
While many alternative energy companies stand to benefit from higher oil prices just like specific oil companies, depending on high oil prices alone for your business success is risky, because as the years 2008 & 2009 have shown, oil pricestheir success depends more on regulatory changes, subsidies and a global recognition of the need for alternative energy solutions.
Understand the Value Chain & Key Industry Segments
Each alternative energy source comprises a complex value chain, constituting a number of sub-segments. It is desirable that you acquire an understanding of all these sub-segments and the opportunities that they represent. For instance, you don't necessarily have to develop a new alternative energy source or technology to succeed in this market. In addition to new sources of energy, conservation technologies are to have a great impact. If you can figure out a creative way to conserve current energy use, you have an excellent business idea!
Understand Key Success Factors
While the renewable energy industry is more exciting than many other businesses, business success in this industry requires factors and efforts similar to those for other businesses. Understand the market needs, the industry structure and competition well before finalizing your investment decisions.
Today, information is available at the touch of a button. Spend a day bookmarking the important portals, blogs and news sites that discuss about the domain you wish to explore / invest. Using technologies such as RSS and news alerts, you can keep in touch with the industry at no cost and time. You can make use of the resources we have provided in the Web Resources chapter in this context.
Get Your Funding
While many early-day startups have been entirely self-funded, the industry has changed since they started. Startups now are more likely to need an outside funding source. This is true especially if your product or idea needs a good amount of R&D. While looking for funding, look for investors who are knowledgeable about the alternative energy market.
New alternative energy sources are being tested and older solutions are undergoing improvement. What is a hot source today could be old news in a year. The entrepreneurs who do well will be the ones who are best able to adapt to new trends and demands. Thus, it makes sense to ensure that that the core competencies you provide [are] broad enough and can change as the technology needs to change.
Meet the Industry
Contact the nearest association for the concerned industry. We have given the list of associations for each of the top 5 alt energy domains for the top 10 countries In addition, have a face-to-face meeting with someone from the industry / niche that you are keen on. Please remember that this is a must. There is no substitute to getting to know the real-life picture from someone who has already been there, done that.
Partnerships & Associations
Partnerships and joint ventures are critical – Depending on what sort of a business or opportunity you would like to focus on, you might have to form associations and partnerships. If you wish to explore new areas in renewable energy (say, some cutting edge technology in biofuels or wave energy), associations and partnerships with universities are almost a must.
- It might be a good idea to take up a job or moonlight for a while in alt energy before you plunge into it
- Types of moonlighting jobs you can do
- Installing solar panels
- Helping companies out with their alt energy / env related product
- Helping companies manage stalls at exhibitions
- Help authors write books on alt energy / environment
- Help alt energy related associations nearby in their activities
- Start a blog on alt energy / env and keep at it
- You will learn a lot, get a lot of contacts and more at no expense (give links to places online from where details on alt energy exhibitions can be had)
Use the Internet as Your Aid
- Join the most relevant forums for your interest (give a list of top forums)
- Keep yourself updated by reading the latest in your area of interest (give a list of top news sites)
- Visit the high quality blogs for your interest area regularly and interact (and form an acquaintance) with the blog owner as well as with other frequent visitors to the blog. These casual acquaintances are far more powerful than you might think.
- Join groups online on online networking sites such as Facebook
- Use professional networks such as LinkedIn to connect to alternative energy industry professionals
Mistakes to be Avoided
Don‘t Blindly Believe in the Hype
Please do not believe in all the hype you read about alternative energy. While there are many segments in alternative and renewable energy industry that are growing at phenomenal rates year on year, and while this industry is possibly the most important industry of our time, please appreciate that like any other business, the business fundamentals need to be strong for a company to make sustainable profits.
Understand the Timeframes of Opportunities
Many aspects of alternative energy sources are in their initial stages. So it is important to understand the timeframes in which these sources could get commercialized and will facilitate profitable business. For instance, while hydrogenbased fuel cells are expected to have significant potential in future, it is not clear by what timeframe these technologies will reach the market as they are still in research stage. Compare that to technologies such as solar and wind which already are supplying power in various parts of the world.
Learn from Others‘ Mistakes
The last few years have seen a number of companies in renewable energies come up with breakthrough ideas, as well as an equal number of companies fail. An entrepreneur starting now thus has the chance of learning from the experiences and mistakes of these companies.
Do A SWOT Analysis of Opportunities
Always do a SWOT (Strength – Weaknesses – Opportunities – Threats ) analysis of the market / opportunity you are exploring. Such an analysis, when done with enough care brings out the positives and negatives very clearly.
Don‘t Spread Your Efforts If You Have Limited Resources
Most product related ideas in alt energy will be capital intensive – unless you plan to manufacture something in your backyard and sell it in your local market. Hence, if you are planning to invest only limited resources, please ensure that you choose an opportunity that fits your budget. It will be best if this is a niche opportunity which requires relatively less marketing dollars. Once you have chosen your niche, make sure you have a laser focus on the niche so that your limited resources are spent on the most important activities.
Never Start Your Business without Discussing with Related Companies in the
You will be surprised how much insights you can gather by just spending a couple of hours with a person who works in the industry you wish to explore. Please ensure that you do have discussions with such people before you invest / venture into an opportunity. In addition, ensure that you discuss with not just one type of business in your industry, but a range of related businesses. For instance, if you plan to start a biofuel refinery, talk not only to other existing biofuel refineries but also to the feedstock suppliers as well as distributors of biofuels to get inputs from many points in the business value chain.
Don‘t Start without Doing a Formal Market & Industry Research
Do market research before you get in. Even if you plan to put in only a small investment, do at least the basic research – competition, sustainability, uniqueness of your idea/concept, likely profit margins for your product, size of market (today and in future).
Remember that public and governmental policies play a big role both in educating and expanding the market as well as in ensuring the market players behave according to some mandates prepared by the government. So please be aware of the government‘s incentives, policies and moves before you take any concrete steps.