Starting an energy brokerage firm takes market research and a careful business plan. Entrepreneur magazine reports that instability in traditional energy sources creates an opportunity for small businesses to grow within the energy sector.
Before getting started, you must know the size of the territory in which you'll compete as well as your competitors. You must also decide if you want to go it alone or franchise.
Items you will need
- Business license
- State and municipal tax information
- Telecommunications capacity
- Ability to enter into contracts
- Website or other means of account management
Research the requirements to start an energy brokerage in your area, the regulation status of electricity in your municipality, and who competes in your area. Energy deregulation refers to legislation permitting the energy market to regulate its own prices as opposed to having a government agency police the market. Energy brokers operating in electricity markets in which you will not compete could also be good sources of industry information.
Consider franchising your energy brokerage instead of going it alone. Companies like Energy Brokers USA offer turn-key franchising packages which include everything from a customized website to business leads and earning potential for the life of the customer's account.
License your business. Once you decide whether to operate an independent company or become part of a franchise, you will need to register your business with local government for taxation and licensing purposes. For instance, the Massachusetts Department of Public Utilities keeps an online database of all competitive energy suppliers and licensed commercial brokers.
Getting Your Business Off the Ground
Call specific energy suppliers and arrange a contract that settles the terms under which they will supply your company with electricity. An energy brokerage franchise will take care of these contacts for you, though an independent energy brokerage will need to negotiate its own contracts. NewsBatch is a good resource for specifics regarding brokering deals in order to provide energy, including how to approach a supplier, the terms of a contract as well as any volume restrictions.
Contact potential commercial customers in your area whose needs your new company could serve. New account leads could be supplied by your franchiser if you choose to go in that direction. However, should you decide to operate independently, you will need to hunt your own leads. Energy Brokers USA advises building a client base with long-term potential and who will use a significant volume of electricity.
Supply electricity to your new clients. Remember, though, that you are the broker. Once a business is your client, it is your responsibility to supply the client with electricity at the lowest cost based on your list of suppliers. Many franchisers will have this infrastructure in place for you as part of your deal, though you will have to pay franchising fees and other royalties for this privilege. If you operate independently, you will need to standardize how your energy brokerage will supply power to your clients. One idea, such as that implemented by Energy Brokers USA, is to use a website which automatically synchronizes your client's account to the most efficient provider.
This can be a very difficult process wrought with unforeseen challenges and fees. Be certain to thoroughly research every facet of energy brokering before establishing your small business, whether it is a franchise or an independent venture.
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