For Organizations and Social Entrepreneurs
First Three Years
Like most start-ups, a PPESCO entity will—in its beginning years—lose money as it establishes itself and creates a stream of self-supporting revenue. With the goal of accelerating a new PPESCO’s path to self-sufficiency and growth, the following snapshot indicates what to expect in each of the first three years.
Year 1: Design and Prepare
Following a limited-scope feasibility study that explores the viability of the concept, the PPESCO sponsoring or parent organization can incubate the PPESCO within its offices, and dedicate internal staff to researching and designing the opportunity.
- Team. Director-level leadership in the parent organization works with selected internal staff to build the case, gain buy-in from the Board of Directors and management, and lay the groundwork for internal and external funding. The parent organization should use external consultants to fill experience gaps, and should recruit a permanent PPESCO General Manager as soon as the business is deemed stable enough to warrant dedicated staff. The more quickly these steps are completed, the greater the likelihood of the PPESCO’s success.
- Operations. The PPESCO begins to reach out to its network to identify prospective clients and projects, and to scope likely portfolios from these possible projects. The PPESCO also should search for imminent building upgrade opportunities, while laying the groundwork and networks for project financing.
To avoid long sales cycles, emerging PPESCOs should work quickly to obtain early revenue streams by connecting with and adding value to already-planned construction projects. Concurrent with this work, the PPESCO can move through the longer cycles of cultivating PPESCO-led prospects. Internal organization / staff should be preparing the entity for hiring new management and leadership.
- Financial. In addition to using existing committed and available staff, office, and supplies from the parent organization, the PPESCO should expect to spend approximately $50,000 in Year 1 to research and develop the PPESCO opportunity. To secure sufficient funding to cover Year 2 staff costs and expenses, the PPESCO should plan to provide start-up capital (via debt and / or equity) for both continued operations and projects, to partially (in addition to earned revenue from project fees) support losses in early years.
- Research. The PPESCO needs to identify paths to sales in their target regions or market sectors. It also needs to conduct pre-sales information-sharing with building owners and capital sources in the targeted markets. This will make it possible to understand how best to craft the PPESCO’s message and its offer to the client. Research should also help the PPESCO understand ESCO business practice, its growth and market trends, and its economics. And finally, research can be used to locate partners that will help the PPESCO grow.
Sales and marketing. Other than creating a professional web presence and brand identity, a PPESCO should avoid spending money on traditional marketing and advertising. Instead, it should use social media, live and online networking, and other methods (as described in the Marketing section) to increase brand awareness and prospects for building improvement projects.
First prospects can be found through existing networks, which can be especially useful in locating possible projects in which the PPESCO could catalyze much deeper savings and better energy performance than would otherwise occur in a conventional building project. In other words, if not for the PPESCO, those deeper savings would not be achieved.
- Back office. It is cost-effective for the sponsoring or parent organization to provide space and services to the start-up.
Year 2: Hire, Launch, and Engage
- Team. Hire the new General Manager (GM), either from within the parent organization or from outside the organization. The primary responsibility of the GM will be to develop the market for the PPESCO and manage the business.
- Operations. The PPESCO should build standards, practices, procedures, systems, contracts, and other tools that will avoid re-inventing the wheel for each new PPESCO client. Using web-based tools such as customer relationship management software, the PPESCO can empower the team to find and cultivate more prospects. Developing external partnerships that deliver and manage funding, clients, contractors, consultants, and partners is also appropriate during this period.
- Financial. The sponsoring organization should plan to commit a meaningful amount of internal funding (optimally as debt) to provide early capital, and to invite external capital sources to match that commitment. Parent organizations should expect to spend a meaningful amount of resources on legal, travel, and consulting expenses, as well.
Year 3: Scale and Self-sustainability
- Team. Subject to existing and anticipated opportunity flow, the PPESCO can now enhance the team in marketing and sales, operations and finance, and administration.
- Operations. The GM should consider automation—for example, web-based client self-service for content and lead development—so that plans for scaling can be created and assessed.
- Financial. The PPESCO can now work with private, public, and nonprofit sector partners to secure reliable institutional sources of capital for project financing.
Marketing and sales. With multiple projects under way, marketing should showcase project case studies that tell stories relevant to each sector served and make the case for PPESCO’s competency and results. Case studies can help attract new capital, as well as new projects and partners.
Concurrently, professional papers, fact sheets, e-mail newsletters, social media, and other digital communication will enhance the PPESCO organization’s selling infrastructure. This is also likely to earn media attention. Further, a PPESCO should increase its profile and presence at the federal and state levels, to support policies that facilitate the work of PPESCOs.
- Back office. Assuming the sponsor organization is still supporting the PPESCO, the PPESCO should be alert to prioritizing its administrative needs and costs to be sure the services are cost-effective.