Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their solar farm business. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a solar farm business plan step-by-step so you can create your plan today.
What is a Solar Farm Business Plan?
A business plan provides a snapshot of your solar farm business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan for a Solar Farm
If you’re looking to start a solar farm, or grow your existing solar farms, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your solar farms in order to improve your chances of success. Your solar farm business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Solar Farms
With regards to funding, the main sources of funding for a solar farms are personal savings, credit cards, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a solar energy farm business.
The second most common form of funding for a solar farms is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a solar farms. They might consider funding a solar farms company with a locations across the country, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.
How to Write a Business Plan for a Solar Farm
Your business plan should include 10 sections as follows:
Executive Summary
Your executive summary provides an introduction to your solar farm business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the type of solar farms you are operating and the status; for example, are you a startup, do you have an existing solar farms that you would like to grow, or are you operating a network of solar farms?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the solar energy industry. Discuss the type of solar farms you are running. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.
Company Analysis
In your company analysis, you will detail the type of solar farms you are running.
For example, you might operate one of the following types:
- Crystalline Silicon Power Plant: this type of solar farms uses Crystalline Silicon PV technology.
- Thin-Film Solar Power Plant: this type of solar farms uses cadmium telluride (CdTe) solar panels.
In addition to explaining the type of solar farms you operate, the Company Analysis section of your business plan needs to provide background on the solar farm business.
Include answers to question such as:
- When and why did you start the solar farm business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, number of new attractions, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry or market analysis, you need to provide an overview of the solar energy industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the solar energy industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies industry trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the market analysis section:
- How big is the solar farms industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your solar farms service. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your solar energy business plan must detail the customers you serve and/or expect to serve.
These are the main customers for the industry: Solar Power Utilities, and Federal Government.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of solar farms you operate. Clearly, commercial utilities would want different products and services, and would respond to different marketing tactics than government entities.
Try to break out your target market in terms of their location, and their wants and needs. With regards to location, include a discussion of the demand for solar energy for utilities’ renewable power portfolio standards. Because most solar farms primarily serve customers living in their same region, such information is usually available on local or county government websites.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your solar farm business faces and then focus on the latter.
Direct competitors are other solar farms projects.
Indirect competitors are other options customers may use that aren’t direct competitors. This includes traditional energy suppliers, other alternative energy providers, and other power plant contractors, such as fossil fuel and other renewable energy power plant contractors. You need to mention such competition to show you understand that not all energy needs will be met by a solar farms.
With regards to direct competition, you want to detail the other solar farms with which you compete. Most likely, your direct competitors will be solar farms located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What types of renewable energy technology do they use?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you use cutting-edge solar technologies?
- Will you provide options or automations that your competitors don’t offer?
- Will you make it easier or faster for customers to engage your services?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a solar farm business plan, your marketing plan should include the following:
Product: in the product section you should reiterate the type of solar farms that you documented in your Company Analysis. Then, detail the specific services you will be offering.
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.
Place: Place refers to the location of your solar farms. Document your location and mention how the location will impact your success. For example, is your solar farms located in a high-sunlight exposure area, or in a desert, etc. Discuss how your location might allow you to serve a greater volume of customers.
Promotions: the final part of your solar farms marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Advertising in trade magazines
- Attending trade shows
- Attending networking events
- Joining local organizations
Operations Plan
While the earlier sections of your solar energy business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your solar farms, such as researching and writing grants, maintaining solar panels, staying abreast of new technology developments, processing paperwork, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign your 100th contract, or when you hope to reach $X in sales. It could also be when you expect to purchase additional solar panels, or when you expect to launch a new solar farm location.
Management Team
To demonstrate your solar farms’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in renewable energy or in power generation. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in renewable energy and/or successfully running small businesses.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $1,000,000 on building out your solar farms, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $1,000,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a solar farms business:
- Location build-out including design fees, construction, etc.
- Cost of equipment
- Payroll or salaries paid to staff
- Business and liability insurance
- Taxes and permits
- Legal expenses
Appendix
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your solar farm design blueprint or location lease.
Summary
Putting together a business plan for your solar farms company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the solar farm industry, your competition and your potential customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful solar farms.
Solar Farm Business Plan FAQs
What Is the Easiest Way to Complete My Solar Farm Business Plan?
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Solar Farm Business Plan.
What Is the Goal of a Business Plan's Executive Summary?
The goal of your executive summary is to quickly engage the reader. Explain to them the type of solar farms you are operating and the status; for example, are you a startup, do you have an existing solar farms that you would like to grow, or are you operating a network of solar farms?
Finish Your Solar Farms Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your Solar Farms business plan?
With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!
Click here to finish your Solar Farms business plan today.
OR, Let Us Develop Your Plan For You
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
Click here to see how Growthink’s professional business plan consultants can create your business plan for you.
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