Product Feasibility and Strategy
Solar panel installation companies have already been proven in the market. Many companies have found success in the country particularly in California and the Northwest. There are a few companies in the same vicinity as SI Co that offer solar panel installation. Among them is G2 Power Technologies LLC based in St. Louis Mo. The company offers a variety of solar options. G2’s services include consulting, analysis, advice, and installation for residential as well as commercial properties (http://www.g2power.com). Solar Night Industries, Inc. is based in St. Louis Mo. as well. The company provides residential and commercial energy plans to customers through its website (http://www.solarnightidustries.com). MidAmerica Solar, also in St. Louis, offers solar panels and installation. They do not warehouse any equipment and as a result they require a four to six week lead-time before filling an order or starting a job (http://www.midamericasolar.com).
SI Co will enter the market by providing bid analysis and installations in the residential market and small commercial market. SI Co will be the only solar panel installation company in the Madison County, Illinois area. It will specialize in solar photovoltaic panels used to convert solar power to electricity. SI Co will provide the photovoltaic solar panels and install them on residential homes in the Madison county area. The company’s niche market consists of homeowners who are building a new home or purchasing a new home that costs $300,000 or more and who make an above average income. SI Co will sell a service that its customers want. Customers are becoming increasingly aware of the savings that can be enjoyed by utilizing solar power. The worldwide market for solar energy doubled last year, to $33 billion, and analysts expect revenues to grow 33% a year for the foreseeable future (Fortune, Nov.10 2008). SI Co will provide its customers the ability to experience long-term savings through quality installed solar products. It will also offer the secondary benefit of providing a product that benefits the environment in which we live through the use of renewable energy. SI Co’s customers will have the benefit of knowing that they have contributed to a cleaner and more eco-friendly world.
SI Co will differentiate its service from other solar installers through its first mover advantage in the Madison County area, as well as its service excellence, which demonstrates the company’s commitment toward total customer satisfaction. To provide this level of service, SI Co will rely on a team of friendly, helpful and highly qualified technicians. Through their familiarity with the local IBEW union, the owners of the company will be able to hand select electricians with whom they are familiar and who exemplify this commitment to excellence. Whenever possible the owner’s son and husband will complete the work. Combined they have 40 years of experience as licensed electricians. This will provide them a competitive advantage in the market. The owners will also provide a phone service from their Dorsey Illinois location that will be answered by a friendly person during business hours. The company will also follow-up all installations with a thank you letter to the client’s home.
SI Co will charge its customers $75.00 per hour to install the solar panels. This rate is commensurate with that charged by union electrical workers in the conventional electrical market. SI Co will charge $9.00 per watt for solar panels and any necessary converters or batteries.
The typical solar panel that will be used for SI Co’s installations is the Sunwize SW Series Solar Module. SunWize Solar Modules deliver top-quality performance for all photovoltaic applications including rural electrification, water pumping, telemetry, communications, and general battery charging. SunWize modules can be used in single-module and multiple-module installations. Each module consists of 36 solar cells connected in series (except the SW90C which is 48 cells in series), providing maximum charging power. The glass surface is impact resistant and allows maximum light transmission. Single crystalline solar cells are encapsulated and bonded to the glass in multiple layers of ethylene vinyl acetate (EVA) and laminated with a white Tedlar™ backing insuring long life in severe environmental conditions. A weather resistant junction box accommodates all wiring methods including moisture-tight strain relief connectors and electrical conduit. Bypass diodes insure reliable operation. Anodized aluminum tubular frames add strength and durability to the modules (http://www.midamericasolar.com). For pricing of various Sunwize systems and the prices that will be subsequently charged by SI Co, see Appendix 4.
If customers prefer a particular model of solar module other than Sunwize, SI Co will be able to accommodate the request. Additional models of solar panels available from Advanced Solar Solutions include Sharp, Sanyo, BP, Evergreen, Shell, Photowatt, Uni-solar, Astropower, and ASE Americas.
There are many financial incentives available for those wishing to install renewable energy alternatives. In fiscal year 2007, the U.S. Department of Energy, “Energy Efficiency and Renewable Energy” awarded $574 million in financial assistance. (http://www/.eere.energy.gov.). As part of the bailout package, Congress extended the 30% investment tax credits for clean energy (Fortune, Nov.10 2008). A personal tax credit is available from the Federal government to residents installing photovoltaics. The amount available is 30% of the total cost of the project. After January 1, 2009, there is no maximum limit placed on the incentive. (http://www.dsireusa.org)
There are also several rebates and incentives offered in the state of Illinois for those using solar power. The focus of the Solar Energy Rebate Program, through the State’s Renewable Energy Resources Program, is to encourage utilization of small-scale solar energy systems in Illinois. Through this program the Department offers rebate awards up to 30 percent of eligible system costs with a maximum incentive of $10,000 for the purchase and installation of a solar photovoltaic or solar thermal energy system under $50,000 in total cost. Similarly the Solar Energy Incentive Program may provide up to 30 percent of eligible project costs per project for solar thermal, an incentive of $3.00 per watt of installed photovoltaic capacity that targets LEED Silver, Gold, or Platinum certification, and up to $3.25 per watt of installed photovoltaic capacity for an innovative installation. (http://www.illinoisbiz.biz).
Channels of Distribution
SI Co will operate from its main office in Dorsey, Illinois. It will serve Madison County, Illinois. Madison County is an area of approximately 725 square miles, containing about 265,303 in 2006 (up 2.5% from 2000). 19.2 % of the population has a Bachelors degree or greater. Medium household income in 2006 was 45,326. (http://www.census.gov).
The solar panels will be purchased from Advanced Energy Solutions Group Inc. (http://www.advancedenergysolution.com) on an as needed basis. Advanced Energy Solutions is a distributor of nearly every high quality brand of solar electric or photovoltaic module. When an order is placed with Advanced, it is usually shipped out the next day through UPS. This will allow SI Co the ability to begin work on a solar project with minimal lead-time. Orders may be placed by phone, mail, or on-line. Shipping time is minimized by using Advanced since they keep over 100 modules in stock in their West Coast distribution center and over 500 modules in stock in their East Coast distribution center. Local companies providing solar panels do not maintain inventory in stock and would therefore create an unacceptable lag time in SI Co’s service.
All shipments from Advanced are insured and all merchandise is guaranteed. Conveniently for SI Co, Advanced also maintains an office in Pomona, Illinois where clients can call for technical information. SI Co may utilize this resource at no extra charge. Aur Beck, who owns Advanced Energy Solutions, operates from the southern Illinois location. Beck routinely installs solar panels in the area and will provide on the job training at each installation. Due to SI Co’s relative close proximity to Advanced, it can use this important resource to keep abreast of the latest trends in solar installation technology. See Appendix 6 for contact information on Advanced Energy Solutions.
Promotions and Advertising
SI Co will advertise its service in a variety of ways which will include a company website, advertisement in phonebook, yard signs, magnetic truck signs, brochures, and referrals from the supplier.
A key component to SI Co’s marketing success will be its website. This site will provide customers with details about the company and contact information. Gap Tech Solutions (http://www.gaptechsolutiononline.com) offers quality web design and maintenance at reasonable rates. SI Co will secure the dot com, dot org, and dot net domains for $16.00 each per year. This will assure that no one else will use the SI Co brand name in the future. Gap Tech Solutions will construct a site that is ideal for SI Co’s needs. It will include four main pages, two sub pages, two email addresses, one event calendar, and one contact page complete with the first year of web hosting for $329.00. This price will also include one custom component, which SI Co will use for a submission form. Potential customers will fill out the submission form prior to obtaining their estimate. The submission form will provide SI Co with information necessary to begin a customer estimate such as customer needs, size of home, etc.
The website will cost $180 per year after the first year. This includes unlimited support, one cosmetic change per year, and all of the necessary training on design and content management SI Co will need to grow the business. For breakdown of costs for promotions and advertising refer to Appendix 5.
Furthermore, when SI Co’s target customers pick up the phone book to begin the search for a solar installation company, the company needs to have a presence. Hometown phonebook (http://www.hometownphonebook.com) will place a one-inch advertisement listing in any one of its Madison County phonebooks under the category of “Solar Energy” for $400.00 per year. Additional books would cost $200.00 per year additional. Due to the location of SI Co’s target market, the Edwardsville book should feature the initial listing. It will capture the Maryville and Glen Carbon market as well. An additional listing in the Troy/Highland book is recommended. While the median household income in the U.S. is $51,476 and the median household income in Madison County in 2007 is $51,910, the median household incomes of Edwardsville, Maryville, and Glen Carbon are $63,631, $75,149, and $69,783 respectively. The median income in Troy was $67,132. (http://www.muninetguide.com).
As the business grows, larger full color ads with illustration and detailed information can be added for only $1000.00 per year.
To promote the business further, SI Co will utilize yard signs advertising the company name and phone number. With the customer’s permission, these signs will be placed in the yards of the homes having solar panel installation for the duration of the job. Magnetic signs will also be attached to the side panels of the SI Co trucks to promote the business as the trucks are on the road. Brochures will be made featuring the company name and logo as well as important facts about cost savings that can be had by using solar energy. Business cards will be printed as well.
Another advantage of using Advanced Energy Solutions as a supplier is that they will in turn promote SI Co’s business. When a customer calls Advanced inquiring about solar technology installation in the Madison County Area, they will refer SI Co for the job. This may prove to be one of SI Co’s most valuable promotional tools.
Industry Analysis Operations Plan