Newven Business Plan

NewVen Ltd

Summary Business Plan

Sagar Raisoni

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NewVen’s Business plan

Executive summary

NewVen is an Oxford based company, which plans to sell, install and maintain photovoltaic cells. Photovoltaic’s is a method of generating electrical power by converting solar energy into usable current electricity using semiconductors that exhibit the photovoltaic effect. Photovoltaic’s method employs solar panels on the roof or on the walls of the house, which are composed of a number of cells containing a photovoltaic cell.

The UK is setting itself a mandatory target of ensuring that 15% of our energy consumption comes from renewable sources by 2020, there has never been a better time to invest in micro generation. (On the brink of a bright future,2010)

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http://www.bettergeneration.com/the-feed-in-tariff-is-kick-starting-a-solar-boom2100608.html

PricewaterhouseCoopers released an analysis of the solar PV markets across Europe and emphasizing the UK market. PwC claims that there will be substantial increase in the installation of Solar PV in the next ten years, but there are a number of obstacles to overcome. In order to captivate this potential growth, individual firms and government must focus on the five big barriers: consumer awareness, upfront funding, and consistency of policy, access to capital and UK skills shortage. The above graph explains the rise of PV if all the five barriers are overcome. (Better generation Ltd, 2009) There are three types of PV commonly used in UK- Môn crystalline, Polycrystalline and Amorphous with and efficiency of 12-15%, 10-13% and 3-6%.

Company’s Mission

NewVen—Energy Conservation Consultancy—A commercial enterprise, which not only saves money but also, saves energy for an efficient use in future.

Financial table

| |Year | | | |
|Item |2012 |2013 |2014 |2015 |
|Total number of consulting jobs in the year/region |200 |240 |288 |345.6 |
|Total number of installation jobs in the year/region |40,000 |75,200 |100,016 |124,020 |
|Number of consulting jobs |2 |7 |14 |35 |
|Number of installation jobs |90 |169 |225 |279 |
|Number of maintenance jobs |45 |85 |113 |140 |
|Average fee per consulting project |£20,000 |£19,800 |£19,602 |£19,406 |
|Average fee per installation project |£10,000 |£9,800 |£9,604 |£9,412 |
|Average maintenance fee per project |£1,000 |£1,000 |£1,000 |£1,000 |
|Total Income (turnover) |£985,000 |£1,885,320 |£2,556,033 |£3,436,539 |
|Costs: | | | | |
|Cost of sales and other commissions |£394,000 |£754,128 |£1,022,413 |£1,374,616 |
|Staffing costs/consulting |£4,500 |£16,200 |£32,400 |£77,760 |
|Staffing costs/installation |£90,000 |£169,200 |£225,036 |£279,045 |
|Staffing costs/maintenance |£3,600 |£6,768 |£9,001 |£11,162 |
|Bank loan repayments for equipment |£14,400 |£15,120 |£15,876 |£16,670 |
|Total Overheads and other costs |£506,500 |£961,416 |£1,304,726 |£1,759,252 |
|Operating profits (before tax) |£478,500 |£923,904 |£1,251,306 |£1,677,287 |
|Net profits (after 21%) |£378,015 |£729,884 |£988,532 |£1,325,057 |

Financial description

The income of NewVen is based on the number of consulting, installing and maintenance jobs for the next four years. This cash budget is probably a very good business plan as it leads to an estimate net profit of £378,015 in the first year and goes on increasing to £1,325,057in the fourth year. The turnover in the first year is estimated to be £985,000 while it goes on increasing to£3,436,539, a growth of more than 300% over a period of four years. The turnover is largely contributed by the installation jobs, which is estimated to 90 jobs in the first year and increases to 279 in the fourth year. As the numbers of jobs are increasing each year, hence the costs associated to sales and staffing will also increase.

The staffing cost for consulting is £4,500 in the first year while it goes on increasing to £77,760 in the fourth year. The installation cost is £90,000 for the first year while it increases to £279,045 in the fourth year with installation of 25 units/year at 25,000/year wage. Similarly the staffing cost for maintenance is £3,600 while it increases to £11,162 with maintenance of 250 units/year at 20,000/year wage. The company is having a net profit of over 300% over the four-year period. These profits will help NewVen to expand it business not just in UK but also globally and it can even invest in new technologies.

Technology and market opportunity

Property business is growing in the UK and it is important to save energy at the same time. New and existing developments are looking towards a sustainable property in order to conserve energy and reduce the business costs. This growing development would flourish the company and increase the demand for energy conservation consultants.

However the biggest hurdle for the growth of the company is the governmental and environmental policy. The government wants to see this new venture as the mainstream energy, offering consumers affordable, and cost effective low carbon energy products. The government introduced Feed in Tariff on the April the 1st 2010. (http://www.fitariffs.co.uk/eligible/) The introduction of these tariffs was a significant decision into the UK renewable market. These tariffs were a crucial decision to the UK renewable market, with the potential to unlock a vast number of small-scale businesses, companies and individual dwellings. Since the introduction of the Feed in Tariffs, Solar PV has shown a strong installation capacity at the domestic level. (Micro generation strategy, 2011) Solar PV prices have begun to fall, which is a promising development for the UK market (Micro generation strategy, 2011).

The government’s policy for zero carbon emission is that to all new homes, which will be built from 2016 will have a zero standard carbon and all the non-domestic buildings will be built to zero carbon standard from 2019. (Micro generation strategy, 2011). The UK government is also offering many subsidies for the companies and individuals who are opting for PV, subsidies such as fixed payment per kilowatt hour generated, guaranteed payment etc. Moreover if you generate more than what you use and you sell it to national grid you get paid for it. With so many incentives offered NewVen ltd has a promising future and this is a very good business opportunity.

As this is a growing market, NewVen will face some difficulties from local retailers and other similar companies that offer installation and maintenance of PV however, the company’s good relations with architects, designers and technicians, who dominate the construction sector, will help gain them new jobs and opportunities. By keeping the profit margins low and by offering prompt maintenance service, the company will encourage developers and attract more clients. NewVen will also have a policy stating that individuals or small businesses who cannot afford to pay the installation cost upfront, the company can pay for them and in turn the feed in tariffs should be assigned to the company for a certain period of time in order to recover their upfront cost. With these marketing strategies the company is surely going to flourish.

Commercial Argument

Energy is becoming expensive day by day. It has become very important to save energy and, it may be in any form. Energy conservation helps in reducing business cost, individual costs, helps you save on bills and make the environment friendlier.

The introduction of the Feed in Tariffs was a crucial decision to the UK renewable market. This opened opportunities to many small-scale business, companies and individuals. This created many job opportunities, business and the government offered many incentives and subsidies. But, the government recently revised the incentives and subsidies and this will impact the small-scale business and individuals. A report by guardian recently claimed that slashing the Feed in Tariffs will ‘Kill the UK solar industry stone dead’ (http://www.guardian.co.uk/environment/2011/oct/31/feed-in-tariff-cuts-industry?newsfeed=true). The tariff paid to the householders falls from 43.3p per kWh of solar electricity to jus 21p under the new proposals. DECC admitted that there had been three times more solar installations than it predicted since the start of scheme in April 2010. Hence, the revision on the rates would have impacts on the market. However, Energy saving trust claims that these proposals are still under consultations and it is not final yet. (http://www.guardian.co.uk/environment/2011/oct/28/solar-subsidies-cut-half). Hence, the government policies plays a fiscal role for the UK renewable market and is the key barrier to the market.

Another important thing is that the government, the micro generation industry and construction sector will need to continue to work together to encourage innovation, improve efficiency and drive down costs. Countries like USA, Germany and many other European countries top the list for PV and solar energy. The global PV is forecasted to reach up to 30GW in 2014.

Conclusion

NewVen is needed to fulfill these new upcoming demands and it would increase revenue by increasing customer base. The idea of setting up NewVen as an ‘Energy Conservation Consultancy’ which consults, installs and maintains your PV, and with good marketing strategies will not only help achieve governments idea of zero carbon homes and lead to a sustainable development but also be a fruitful business.

References

• PricewaterhouseCooper, (May 2010), On the brink of a bright future?

• Better Generation Ltd. (2009), The green energy blog http://www.bettergeneration.com/the-feed-in-tariff-is-kick-starting-a-solar-boom2100608.html

• Feed in Tariffs Ltd. http://www.fitariffs.co.uk/eligible/

• Micro generation strategy, 2011 Ch 3, Department of Energy and climate change (DECC)

• Department of Energy and Climate Change http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspx

• Solar subsidies to be cut by half (2011), The Guardian http://www.guardian.co.uk/environment/2011/oct/28/solar-subsidies-cut-half

• Feed in Tariffs Cuts ‘Will kill Solar Industry Stone Dead’ (2011), The Guardian http://www.guardian.co.uk/environment/2011/oct/31/feed-in-tariff-cuts-industry?newsfeed=true

• Better Generation Ltd, (2009)

References: • PricewaterhouseCooper, (May 2010), On the brink of a bright future? • Better Generation Ltd. (2009), The green energy blog http://www.bettergeneration.com/the-feed-in-tariff-is-kick-starting-a-solar-boom2100608.html • Feed in Tariffs Ltd. http://www.fitariffs.co.uk/eligible/ • Micro generation strategy, 2011 Ch 3, Department of Energy and climate change (DECC) • Department of Energy and Climate Change http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspx • Solar subsidies to be cut by half (2011), The Guardian http://www.guardian.co.uk/environment/2011/oct/28/solar-subsidies-cut-half • Feed in Tariffs Cuts ‘Will kill Solar Industry Stone Dead’ (2011), The Guardian http://www.guardian.co.uk/environment/2011/oct/31/feed-in-tariff-cuts-industry?newsfeed=true • Better Generation Ltd, (2009)