Green Business Opportunities: Recovery Through Retrofit 

Slide 1: Green Business Opportunities

This training tutorial is about expanding green business opportunities and increasing energy savings by making homes more energy efficient. 

Welcome to the training program, Green Business Opportunities: A Small Business Guide. This program is championed by the Small Business Administration’s Office of Entrepreneurship Education, in collaboration with the Departments of Energy and Labor, the Environmental Protection Agency and other agencies participating in the White House Council on Environmental Quality’s Recovery Through Retrofit initiative.

Office of Entrepreneurship Education

August 2010

Slide 2: Introduction

In October 2009, the White House Council on Environmental Quality announced a plan for increasing business opportunities, creating green jobs, and boosting energy savings by retrofitting homes for energy efficiency.  This call to action or national strategy is defined in the initiative, Recovery Through Retrofit. 

The initiative offers:

 opportunities for homeowners to save money on energy costs through home improvements, and

 opportunities for job creation and business development in home energy retrofit industries.

Recovery Through Retrofit is a blueprint for helping American families reduce carbon emissions, build a healthier environment and create green jobs – jobs that that will become a cornerstone of the 21st century.

Slide 3: Objectives

This training exercise has three key objectives.

One: to provide an overview of the Recovery Through Retrofit initiative. 

Two: to outline core business principles required of any new, repurposed or existing firm desiring to support energy retrofits. 

And three: to identify available resources and other assistance that support the Recovery Through Retrofit initiative.

Slide 4: Recovery Through Retrofit (RTR)

There are almost 130 million homes in this country.  Combined, they generate more than 20 percent of our nation’s carbon dioxide emissions, making them a significant contributor to climate change. 

Retrofitting, with existing techniques and technologies, can reduce home energy use by up to 40 percent per home and lower associated greenhouse gas emissions by up to 160 million metric tons annually by the year 2020. 

Further, home energy retrofits have the potential to reduce home energy bills by $21 billion annually, paying for themselves over time. 89% of retrofit work in America is performed by small businesses.

The bottom line, retrofitting America’s homes will save money, reduce the nation’s carbon footprint and provide business opportunities that grow the economy and create jobs.

Slide 5: RTR National Strategy

The Recovery Through Retrofit program is framed by three key strategic elements.

Provide American homeowners with straightforward and reliable home energy retrofit information,

Reduce high upfront costs and make it easy for homeowners to finance home energy retrofits, and

Mobilize a well trained national energy retrofit workforce and expand good, green job and business opportunities to all American workers.

Slide 6: RTR National Strategy – Element 1

The first element in the Recovery Through Retrofit National Strategy is to provide American homeowners with straightforward and reliable home energy retrofit information.  This involves developing an energy performance label for homes, such as ENERGY STAR and developing a national home energy performance measure.  Importantly, this measure will make it easier for consumers to understand how much they can save by retrofitting their home.

Slide 7: RTR National Strategy – Element 2

Element number two is to reduce high upfront costs and make it easy for homeowners to borrow money for home energy retrofits.  This involves improving the availability and ease of energy efficient mortgages, expanding state revolving funds for retrofits, and supporting municipal energy financing options such as incorporating the costs of energy retrofitting into a property’s tax bill – thereby attaching the costs and savings of retrofitting to the property, not the individual.

Slide 8: RTR National Strategy – Element 3

Lastly, element three is to mobilize a well trained national energy retrofit workforce and expand good, green job and business opportunities for all American workers. This involves creating a uniform set of national standards to qualify what is meant by energy efficiency and to certify retrofit workers and industry training providers.

This training program represents a preliminary step in helping new and existing entrepreneurs understand and engage in the recovery through retrofit program.

Slide 9: Starting, Repurposing or Expanding a Retrofit Business

Retrofitting homes across the country creates business opportunities, as well. 

Opportunities are available for new, repurposed and existing small businesses who are ready and able to help homeowners make their homes more energy efficient. 

This guide is intended to educate entrepreneurs who want to help homeowners become more energy efficient and to provide basic business training to new and existing businesses.

Slide 10: Reality Check…

Ok, so let’s look at the business aspects of starting and running a small business, specifically a retrofit business. 

With any business venture, you have to be committed, passionate, capable and prepared.  In addition, you need a business plan that clearly demonstrates the potential for success. 

Starting a small business is not for everyone.  How do you know if it’s for you?

SBA has prepared an assessment tool to help you make that determination.  The automated tool asks a series of questions and takes only a few minutes to complete, but it will help you determine your readiness for starting and running a business.

After you complete this training exercise, and at your convenience, re-visit this page and click on the link to SBA’s Readiness Assessment Tool.

Slide 11: The Rules

            Starting a business, any kind of business should follow five key business principles or rules.  These rules apply to all business ventures, regardless of size.  They are:

            One, find a need and fill it – you can’t succeed in business without solving a problem or filling a need that someone is willing to pay for. 

            Two, develop a business plan.  This is critical.

            Three, understand the numbers.  You need to understand the financial costs and be able to interpret the financial performance of your business.  Most importantly, you need to be able to generate a profit.

            Four, apply incredible customer service.  And five, learn from others and keep learning.

            Each of these important rules will be discussed further in this training program.

Slide 12: Rule 1 – Find a Need and Fill it

            It’s almost impossible to succeed in business unless you are solving a problem or filling a need that someone else is willing to pay for.  This is important.

            You may have the coolest idea or what you think is the best product, but if it isn’t something someone is willing to pay for – you are destined to fail before you begin.  Rule number one, find “gaps” or customer needs and figure out what you can do to fill them.  Remember, you must be able to make a profit and out-perform your competition. 

            The good thing…….. The retrofit program will create significant consumer demand for home retrofit services and products.  How you fill that need can shape the success of your business.

Slide 13: Rule 2 – Develop a Business Plan

            Rule number two, develop a written business plan. 

            You need a business plan to succeed.  Hope is not a strategy, and neither is luck.

            You need a clear, thought-out path to follow.  A business plan is a blueprint that helps you to determine overall business feasibility, evaluate projects and directions, outline and assess business operations, and raise money.

            Importantly, the plan can be used to formulate ideas on how a business should be operated.  It’s an opportunity to test ideas and concepts – before going live.  It’s much better to test something on paper, than to find out when its too late that you took the wrong approach.

            In addition, if you want to borrow money from a bank or private lender – you will need a business plan. 

            If you decide to serve homeowners in the retrofit space, your business plan should clearly describe what, how, when, where, how much and why retrofit activities will benefit the business.

Slide 14: Automated Business Plan Template

Business planning is not an exact science.  However, there are a number of components that should be in your plan.  Weaved together, they represent the living fabric of your business plan.

For your convenience, included here is a link to SBA’s automated business plan template.  The template is designed to help you easily build a plan, by walking you through the key components of a business plan. 

At the end of the automated program, you will be able to generate and save a formatted business plan which can later be further modified or presented as a final product. 

After completing this program, come back to this page and use the automated tool to develop your plan.

Slide 15: Rule 3 – Understand the Numbers

            Rule number three, understand the numbers.

            For a business to be successful, income must exceed expenses on a regular basis.  Simply put, you have to be able to make a profit – if a business is to be viable.  This is a fundamental principle – and one that can not be over-looked.  Financial statements are generally used to understand the financial performance of a business. 

            Many people are intimidated by financial statements, but you shouldn’t be.

Slide 16: Essential Financial Statement Elements

The financial performance of any business is measured by the interrelationships among six essential elements.  These elements compose the financial statements and are: revenue, expenses, profits (or losses), assets, liabilities and net worth.  A business will prosper or fail based on the owner’s effectiveness in understanding, planning and controlling these components.

Slide 17: Accounting Statements

The accounting statements that illustrate and measure the six financial elements are the balance sheet and income statement.  The cash flow statement is a monthly spread of incoming and outgoing cash.  

            In this training program, we will describe several key financial statements including, start-up costs, balance sheet, income and cash-flow statements.

Slide 18: Estimate Start-up Costs

            The fundamental financial projection for any new business – is the estimate of start-up costs.  These costs are generally defined as -- initial fixed costs, plus projected monthly expenses for the first 3 to 6 months.

            When you are ready and at your convenience, click on the hyperlink to view a template that can help you determine your business start-up costs.

Slide 19: Balance Sheet

            The balance sheet represents the basic accounting equation: assets minus liabilities, equals net worth.  A balance sheet is made up of assets (which are items of value), liabilities (which are debts), and net worth.  The balance sheet provides a measure of a business’s value at a particular point in time. 

            At your convenience, use the hyperlink to view an automated Balance Sheet Template.  Use the template to build a projected balance sheet for your business.

Slide 20: Income Statement

            The income statement is a measure of how a business has performed over a specific period of time, usually six months or one year.  It measures all income, or revenue, minus all expenses to arrive at the amount of profit or loss generated by the business for the period. 

            The income statement is also called a profit and loss statement or an income and expense statement.

            Click on the hyperlink to view an automated Income Statement Template.  Again, use the template – when you are ready – to compose a projected income statement for your business.

Slide 21: Cash Flow Statement

            A cash flow statement is used to monitor and project incoming and outgoing cash, typically on a monthly basis.  It helps you determine how much cash your business has on hand at any point in time.  If your business has a negative cash position, it means that at a given point in time you have more money going out than coming in and you will probably not be able to pay your bills. 

            The cash flow statement is a valuable tool to monitor and project the financial performance of your company. When you are ready, come back to this page and click on the hyperlink to build a Cash Flow statement for your business.

Slide 22: Rule 4 - Incredible Customer Service

            Rule number four, provide incredible customer service.  You can’t succeed in business without customers.

            So….., it makes good sense to make sure that every interaction with a customer is a good one.  Always apply the

            “golden rule” – that is, treat customers the way you would like to be treated. 

            If you really want to be successful, “wow” your customers with incredible service.  They will keep coming back and they will probably tell others about your business.

Slide 23: Rule 5 - Learn from Others & Keep Learning

            Rule number five, learn from others and keep learning.  This is critical, especially as it relates to business knowledge.

            Profit from the experience and wisdom of others.  The key -- however -- is to keep learning. The SBA offers many resources to help you start and grow a successful business.  Reach out to them and benefit.

There are more than 900 Small Business Development Center locations around the country.  SBDC’s provide management assistance to current and prospective small business owners. 

SCORE is a powerful source of free and confidential small business advice to help build your business.  SCORE counselors are mentors that can help the business. 

Women’s Business Centers assist women by helping them to start and run successful businesses.

And, SBA has 68 district offices located throughout the country to help you start and grow your business. 

            Keep in mind, these resources can offer valuable business knowledge and information, and they can assist you in obtaining financing for your business.

            At your convenience, click on these resources to learn more and access their assistance.

Slide 24: Operational Aspects

            Ok… so we’ve reviewed the five key business rules. 

            The next step is to consider key operational components of starting and running a business.  For the purposes of this introductory training exercise, the following operational components will be discussed: business licenses and permits and the legal forms of ownership.

Slide 25: Business Licenses & Permits

            Many prospective entrepreneurs struggle with finding information about what licenses and permits are required for the specific business they want to start. 

            This is really a simple thing to do.  After completing this program and at your convenience, revisit this page and click on the hyperlink.  The link will take you to “Business.gov” – a comprehensive Website managed by the SBA, but developed in cooperation with multiple government agencies.  

            Click on “Business Law” and then “Obtain Licenses & Permits.”  Enter your zip code and select the type of business you plan to start.  You will be directed to industry specific information and guidance about licenses and permits required by your state and local government. 

            This application is a great tool for a new business.

Slide 26: Legal Forms of Ownership

            The legal aspects of starting a business are complicated and are not intended to be fully discussed in this training exercise.  Oftentimes it is prudent to seek appropriate counsel on matters of this nature.

            There are five basic legal ownership forms.  They are: Sole Proprietorship; General Partnership; Corporation; Sub Chapter S Corporation; and, Limited Liability Corporation. Most new small businesses starting out are initially formed as sole proprietorships.  A sole proprietorship is a simple, informal structure that is inexpensive to form.

            Use the hyperlinks here to learn more about each of these legal forms.

Slide 27: Selling to the Customer

Once the business foundation is established the focus should turn to the customer.  That is, what customer needs can the business satisfy and how can the business be competitive?

Helping customers retrofit their homes to be more energy efficient is what this training exercise is about.  As such, satisfying customer needs means understanding and addressing common home energy problems.  It is also means developing a business strategy for the future and understanding the value of home performance standards, like Home Performance with Energy Star.

Slide 28: Common Home Energy Problems

Helping homeowners become energy efficient is an expansive field.  Some examples of common home energy problems include:

 High energy bills,

 Mold, mildew, or musty odors,

 Damp basement,

 Cold floors in winter,

 Drafty floors,

 Moisture on windows,

 Significant differences in room temperatures,

 And old, inefficient windows and equipment.

Slide 29: Small Business Energy Strategies

Conducting a home energy audit is generally the first step in making a home more efficient.

Providing home energy audits is a growing field and one example of how some small firms are using new strategies to diversifying services to their customers. 

Click on the hyperlink to learn more about small business energy strategies for the future.

Slide 30: Home Performance with Energy Star

A drafty home, rooms that are too hot or too cold, and high energy bills are all common issues for homeowners. A quality installation of a new heating or air conditioning system, replacement windows, or adding more insulation may fix part of the problem. But the way to better results is through an integrated "whole-house" approach that looks at the entire house as a system.

Home Performance with ENERGY STAR, is a national program offered by the Environmental Protection Agency and the Department of Energy.   The program features a comprehensive, whole-house approach to improving energy efficiency and home comfort, while helping to protect the environment.

Contractors can participate in locally-sponsored Home Performance with ENERGY STAR programs.  These specially-trained contractors evaluate home energy performance using state-of-the-art equipment and recommend comprehensive improvements that will yield the best results.

Learn how your business can participate in Energy Star programs.

Slide 31: Contractor Assistance Guides

Much material is available to help contractors better serve customers who want to retrofit their homes to be more energy efficient. 

Use the hyperlinks here to benefit from valuable contractor guides.

Slide 32: RTR Supporting Agencies & Resources

The White House Council on Environmental Quality, the CEQ is coordinating the Recovery Through Retrofit initiative.   It is a government-wide, collaborative effort, with many federal departments and agencies supporting the initiative.

Use these hyperlinks at your convenience to learn more about what each of these organizations is doing to support “Recovery Through Retrofit.”

Slide 33: Next Steps

    Now that you have completed this training exercise, take the next steps.  Put what you have learned into action.  This is the most important part of this tutorial.

    Step 1)  Prepare a draft business plan outlining how your business will support the national retrofit initiative. It doesn’t have to be perfect, long or complete. 

    Step 2)  Discuss your draft plan and any questions you have with a business mentor, coach, academic advisor, SBA representative or other seasoned business advisor.

    Step 3)  Use the information you receive to improve your plan and perhaps test your business ideas.

Slide 34: Have a Question?

            This course has covered a great deal of material.  And, there is much to learn and understand about starting and running a business to support the national retrofit initiative.   

            If you have questions about starting a business, contact SBA or one of our resource partners.  We will help you.  Use the 800 number or referenced hyperlinks to contact us directly. 

            Thank you for participating in this program.

Slide 35: Conclusion

Thank you for your participation in this training program.  We hope it was helpful and we wish you success in the future.

If you completed the entire course, you are entitled to a certificate of completion from the SBA.  Click on the print button to receive your certificate.