Executive Summary
The green solar energy (GSE) Company located in Aïn El Hadjel, Algeria, is a sole proprietorship type of business that will deal with Pawame solar products’ supply. The company is highly providing quality at affordable prices, thus lighting sub-Saharan Africa. A unique pricing strategy and product strategy will be crucial to ensure a competitive advantage. Green Solar Energy (GSE) will be owned and managed by Mike Kenta. Mike will be the company’s overall person, leading three technicians who will be involved in selling and installing Pawame solar products to the clients. The main communication modes adopted are downward, upward, and lateral communication. The financial projections made assert that GSE will be profitable in its first year of operation. The company will break even by selling five hundred and thirty-nine units.
Company Description
The green solar energy Company located in Aïn El Hadjel, Algeria, is a sole proprietorship type of business managed and owned by Mike Kenta. Twin (2019), opines that an only proprietorship business is simple to start due to less government involvement. The company will hire three employees who will double up as technicians and sellers. The company intends to take a three-year loan to enable its expansion and its profitability in the first year of operations.
As the name suggests, Green Solar Energy provides solar panels to the community at affordable prices. We are highly focused on the importation and supply of highly environmental friendly solar panels (Pawame). Our services range from selling, transportation, and installation of Pawame solar panels to the customers. Green Solar Energy is the sole provider of solar panels in the region gives us a competitive advantage. The company has also invested in technicians to install the panels at very affordable costs, therefore, enjoying a significant market share.
Solar panels are a renewable source of energy as compared to other sources of energy. Countries in sub-Saharan Africa have low rates of electrification. According to Energypedia (2019), low electrification rates results in high costs of electricity connection. Therefore, many people in this area cannot afford electricity, thus solely relying on Pawame solar panels for lighting, radio, and television.
The company is centrally located in the Aïn El Hadjel region, with over 23,000 people. This is the market that we will be targeting to sell and install the Pawame solar panels. The Green Solar Energy company will have a unique logo; the company’s colours consist of green, yellow, and white. These are our intellectual property rights, which must be protected against copycats in the market.
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Industry Analysis
Green Solar Energy (GSE) will focus on the region’s local market, small enterprises such as barbershops and homes. The most considerable emphasis is on individuals and businesses in need of solar energy. With four employees, the first one year will be vital for establishing our credibility to light the whole of sub-Saharan Africa. Market research has revealed the right market niche for solar energy, given which the company will leverage this to gain an advantage in the sub-Saharan market. Within the target market, there is only one company bringing solar energy to sub-Saharan homes.
Target Market definition
Given the current product offering, GSE’s target market is a group of individuals, businesses, and homes within the region that require solar energy for lighting, watching and domestic purposes. In terms of demographics, GSE will target all homes with any family size of all gender and religion, businesses generating revenue above $120 per month, and boarding schools within the region. Geographically, the area has a population of close to 23,000 who solely depends on non-renewable sources of energy. Behaviorally, our product is designed to meet the tastes and preferences of the final consumers as well as class consciousness and the combination of quality and affordable pricing. GSE has packaged its product in a way that attracts customers easily. Many customers want a radio, television, lighting bulbs, and solar panel. Our unique pricing method will be crucial to the success within the target market.
Competition
Algeria experiences high radiations, making it one of the biggest solar energy markets in Africa (Mordor Intelligence, 2019). The solar energy industry in the country is estimated to be close to 60%. As a result, many companies have come up to tap this enormous market. Demand for Solar energy is expected to increase to meet the high costs of electricity.
The most prominent market players in the country’s solar energy industry consist of Solaria Energie, ENR engineering services, Larbessolaire, and Groupe climate’ eco – Algérie. However, in the entire town of Aïn El Hadjel, GSE is the only one in operation. So with the projected demand for solar energy to increase, the GSE will sale a good number of Solar panels to become the fastest-growing company in the region.
Marketing Strategy
Our marketing strategy’s objectives are to generate sales, increase brand awareness, and communicate value tour customers. Product strategy will be significant in gaining a competitive advantage. Instead of selling only a solar panel with for lighting only, GSE has seen a gap that must be filled. We will adopt a complete solar panel package that will consist of a solar panel, rechargeable battery, bulbs with connectivity cables, and Solar enabled Radio and TVs. The current providers have only concentrated on providing lighting to rural homes.
GSE will adopt a unique proposition selling, where pricing is tailored to the consumers giving us a competitive advantage over potential arrivals in the market. The customers are only required to pay the deposit for the solar panel package and pay the rest in instalments that fit each client. In addition to this, location is also crucial in enabling the company to have a competitive edge. Moreover, technicians who can install the solar panels will reduce the burden on the customer to know about solar panel installation, thus increasing customer satisfaction.
Our promotion strategy will be a mixture of online and traditional marketing campaigns. Face to face marketing will be essential to communicate the product’s value to customers since it will entail testing and demonstration. GSE will also use its website for marketing purposes. The site will have the GSE address with all the social media pages. Online marketing will be crucial to penetrating suburban markets.
Organizational Plan
Organizational Matrix
Green Solar is a sole proprietorship business implying that all decisions originate from the owner, Mike Kenta. The company will use downward, upward, and lateral communications. The manager will give instructions to the technicians who will give back feedback to the owner. Technicians will communicate with each other in a horizontal mode. The owner will act as the Human resource person and will, therefore, define jobs, duties, and responsibilities for everyone working under him.
Our mission is to provide high quality and affordable solar products to consumers who require renewable energy sources. Green Solar Energy’s vision is lighting a sustainable sub-Saharan nation.
Company Goals and Objectives
- To provide high-quality solar energy products to the Algerian community at lower prices
- To gain a reasonable market share in the Algerian solar energy market and GSE to be recognized in the market.
- To ensure customer satisfaction by communicating value to the customers through a word of mouth marketing strategy.
- To realize the constant growth of sales throughout the operation period.
Planning, Measurement, and Evaluation Schemes
Green Solar seeks to provide high-quality solar products to customers at affordable pricing. The company will set up metrics for ensuring customer satisfaction. Every customer needs to light his/her home, and we exist to their needs. Lastly, the clients always need reassurance that the product will meet their needs. With the provided framework, technicians will be responsible for providing timely, quality, and affordable solutions in their best training level.
Rewarding
The technicians will be rewarded in a way that matches their skills and targets achieved. The full-time technicians will be eligible for health insurance cover, holidays, and sick leaves. Contracts will be renewed on a timely basis.
Selection Criteria
During the hiring process, the best candidates selected should demonstrate professional skills for installing solar panels. They must also describe a strong people relationship, and management abilities, established must meet the requirements of being highly skilled professionals, with equally strong technical and people management skills. Under circumstances where more than two applicants are compared and meet the selection process’s needs, the best-qualified candidate will be selected.
Training
All the technicians will be allowed to attend two pieces of training per year. One of the training will be conducted in-house while the other will be off the job. This will be essential in improving the technical and people skills that will be entitled to attend at least one-off job training to enhance their customer-related skills.
Financial Plan
Critical assumptions to consider are; the clients’ base will fluctuate in the case of economic slowdown, the interest rate on long term loans is assumed to be 10%, and the tax rate is expected to be 30%.
Three-year Income Statement
| Three Year Income Statement for Green Solar | |||
| First Year | Second Year | Third Year | |
| Sales from Solar equipment | $200,000 | $500,000 | $750,000 |
| COGS | $40,000 | $50,000 | $60,000 |
| Gross Profit | $160,000 | $450,000 | $690,000 |
| Expenses | |||
| Salary | $70,000 | $100,000 | $120,000 |
| Expenses from Marketing | $10,000 | $16,000 | $32,000 |
| Insuring our products against losses | $1,200 | $1,200 | $1,200 |
| Developing and hosting GSE website | $5,000 | $500 | $500 |
| Communication | $200 | $2,400 | $2,400 |
| Travelling | $8,960 | $15,200 | $25,400 |
| Recurrent bills | $18,000 | $18,000 | $18,000 |
| Total Expenses | $113,360 | $153,300 | $199,500 |
| Profit | $46,640 | $296,700 | $490,500 |
| Tax (30%) | ($13,992) | ($89,010) | ($147,150) |
| Net Profit | $32,648 | $207,690 | $343,350 |
Green Solar Energy Company is very profitable throughout the first to third year. The company is able to meet its obligations and expenses.
Three Years projected Cash Flow Statement
| Pro Forma Cashflow | |||
| First Year | Second Year | Third Year | |
| Operating Cash | |||
| Inflows | $200,000 | $500,000 | $750,000 |
| Expenses to enable operations | First Year | Second Year | Third Year |
| Salary Expenses | $70,000 | $100,000 | $120,000 |
| Expenditures | $110,803 | $142,513 | $163,305 |
| Total Outflows | $189,803 | $242,513 | $283,305 |
| Other Cash Expenses | |||
| Long term loan repayment | $10,000 | $10,000 | $10,000 |
| Used Cash | $199,803 | $252,513 | $293,305 |
| Net Cash Flow | $197 | $247,487 | $456,695 |
The cash flow tells the entrepreneur where money went, helps to create focus on developing additional cash and information in the cash flow provides a key indicator of the Company’s value.
End of First-year Balance Sheet
| Balance Sheet for the First Year | Amount |
| Assets | |
| Current Assets(CA) | |
| Cash at Bank | $50,000 |
| Inventory | $6,500 |
| Total Assets | $56,482 |
| Current Liabilities(CL) | |
| Accounts to be paid | $12,783 |
| Short term loans
Long term Loans |
$12,661
$100,000 |
| Total Liabilities | $125,444 |
| Paid in Capital | $23,000 |
| Retained Earnings | ($3,025) |
| Earnings | $14,064 |
| Total Capital | $34,039 |
| Total Liabilities and Capital | $56,482 |
| Net Worth | $34,039 |
The balance sheet is used by the entrepreneur to determine the financial position of the company at the end of the year
Break-Even Analysis
| FC | $70,000 |
| VC (Per Unit) | $70.00 |
| SP (Per Unit) | $200 |
| Unit Increments (for X-axis display) | 100 |
| Break Even (Units) | $538.46 |
| Break Even ($) | $107,692.31 |
The BEP was arrived at by estimating fixed costs to be $70,000 and Variable price per unit of $70
During the first year, the company will use equity financing (personal finances) rather than debt financing, adapted in the second year. This is because; debt financing is hard to raise, especially when the company is still small. A lot of guarantees will be required to secure debt financing.
Assumptions and Limitations
The first assumption made in this business plan is that GSE will have a significant customer base, fluctuating during the economic slowdown period. Secondly, it is assumed that the business will turn into profitability in the first year of its operation. These assumptions have been made from the projected income statements. The company will record a profit after tax of $32,368 during the first year of the process from the projected income statement.
One of the most significant limitations that may affect the profitability of the business is the language barrier. We cannot fully satisfy the customers when we do not understand them. However, we will employ local technicians from the area to enable bridge this communication gap.
References;
- Energypedia. (2019). Affordability of Grid Electricity – energypedia.info. Retrieved 29 November 2019, from https://energypedia.info/wiki/Affordability_of_Grid_Electricity
- Mordor Intelligence. (2019). Algeria Solar Energy Market Size, Growth, Forecasts (2019 – 2024). Retrieved 29 November 2019, from https://mordorintelligence.com:81/industry-reports/algeria-solar-energy-market
- TWIN, A. (2019). Sole Proprietorship: What You Should Know. Retrieved 29 November 2019, from https://www.investopedia.com/terms/s/soleproprietorship.asp
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