In a new article for Forbes, the energy management industry expert and investor Steve Wozniak reveals how to get started and win the business of energy management.
Woz explains that if you’re looking to start your own energy company, there’s a few basic things you need to know: 1.
Your company’s value should be well-understood.
If you’re just starting out and you don’t have any employees, don’t worry about how much you charge for your services.
You’re going to have to compete with the best.
That’s because if you can get people to agree to buy into your business and pay you higher prices than the competition, you’ll be well on your way to making money.
The best companies are going to offer competitive prices.
When you offer the lowest prices, you’re going a long way toward winning your business.
Wogan notes that if your company has a very low value, it will likely fail.
For example, you might offer free energy monitoring services, but that doesn’t mean that people will buy into it.
Waz is right, but you need the right strategy to succeed.
He recommends a combination of three things: 1) Having a clear plan for how your company is going to be run; 2) being able to understand the competitive landscape; and 3) being a good manager.
The first two points are critical for any business owner, so let’s dive in. 1.
Plan Your Company’s Value Woz suggests a simple approach to getting started: 1.)
Set your company’s valuation.
That should be based on the value of your company at the time you’re starting out.
For most people, that’s around $2,000 per employee.
If your company does well, you can say that it has a value of $2 million.
Understand Your Competition 1.
Find out how much competition there is for your job.
In Woz’s words, “If you’re trying to create a business that competes with the highest-priced energy company out there, you have to have a clear picture of how you’re competing.”
If you’ve already started out, you should know that a lot of energy companies offer free or low-cost services to help customers manage their energy.
Be a Good Manager In order to win your business, Woz recommends a strategy called the “energy pyramid.”
It’s a five-step process that includes understanding the energy industry, hiring good employees, making sure your products and services are attractive, and offering the best price.
Wiz explains the pyramid this way: 1a.
Identify your core competency.
Identifying the energy companies with a core competence that you can compete with.
Establish a price structure that is attractive to your customers.
Identification and negotiation.
Selling your business to the highest bidder.
Wiza explains that the goal is to “make your customer happy and have them pay a reasonable price for the service.”
Identifier: Your core competencies.
If a company doesn’t have a good idea of what its core competences are, you may need to hire a consultant to help you identify them.
Wzniak suggests looking for the following companies: •Energy companies with energy-related products or services: The best energy companies have products or technologies that help people manage their water, air, electricity, and waste.
•Energy services businesses with energy management and renewable energy: The largest energy companies provide services that help customers get energy from renewable sources like wind and solar.
•Business services companies with products or products that help clients make money: The energy services businesses provide a wide range of services, including energy audits, energy management, and energy marketing.
For Woz, the top companies in the energy services industry are: •Tequity Partners (Tequia) •Covid Inc. •ExxonMobil •Chesapeake Energy •Verizon Wireless (Verizon) Woz also recommends that you find out if there are other energy companies that are similar to your business in other areas.
For instance, a competitor may be looking for more information about how to manage your energy costs, and you might want to know if the company has products or technology that help with that.
2) Getting a Clear Picture of the Competitive Geography Woz notes that he’s never met a company that has “zero competitors.”
If your goal is just to start a company, Waz suggests finding out what the competition is doing in the area where you’re focusing.
If there’s one competitor in your industry, it’s important to find out why.
For energy management companies, this can be pretty simple.
In order for you to do well, the competitors will be looking to build a business around your service.
You’ll also need to find a way to get your competitors to agree that they should buy into you.
For businesses that specialize in helping customers manage energy, Wogan suggests you search for “energy services business owners