WHERE DREAMS COME HOME
Our wind generator helps real estate owners by reducing costs and increasing reliability through a clean energy alternative.
Overview
This page covers the 3 last sections (key activities, costs, and resources) necessary for the validated business plan model, as well as the unit economics diagram and summary of our findings.
Unit Economics Diagram and Key Costs
Unit Economics Diagram​
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Key Costs
For our unit economics is based on a few assumptions. Our numbers are based on an average single family home that is $1,600 square feet and utilizes 877 kWh per month. The SOMA hybrid energy generator is predicted to generate 1073 kWh per month, generating 196 extra kWh at a price of $.1325 would generate about $25 dollars extra in energy per month. Our other revenue source is taking a portion of their cost savings which we are estimating would be about 20% of their electricity bill. With an average electricity bill being $116 at 877 kWh per month, we would be generating about $25 per month per customer in cost savings. We are expecting to utilize salespeople to generate our sales. To start, we would like to hire 3 sales people that are paid a 10% commission and expected to sell 3 generators on average per month. We estimated our installation cost based on similar costs for solar panel installation services and our COGS based on the fact that our inventor is planning on using “off the shelf” parts to produce this product. Annual maintenance would be required which the customer would need to pay for. Maintenance would be another source of revenue and is, again, based on similar costs of maintenance for solar panels.
Key Activities and Resources
Key Activities
Currently Soma is compiling as much research on the solar and wind generation market as possible. This data includes customer validation, competition, and current technologies. Our next steps moving forward will set the tone for how we will bring our vision of reliable free energy for everyone to life. The first milestone involves establishing dimensions and proof of concept with a CFD model. Then our team will build a prototype that furthers our proof of concept. Finally before we can take our product to market we need to secure a patent that protects our intellectual property.
What is CFD? Computational Fluid Dynamics (CFD) is the branch of CAE that simulates fluid motion and heat transfer using numerical approaches. CFD software can analyze a range of problems related to laminar and turbulent flows, incompressible and compressible fluids, multiphase flows and more. This technology would allow us to test multiple iterations of prototypes using software first to determine the exact dimensions that work the most efficiently with wind flow. However this step would require an engineer with expertise with computational fluid dynamics and a fair amount of time to test all of the data. To be specific our inventor believes that this step would take
approximately 9 months. However after we nail down the exact requirements for our prototype we eliminate a lot of the risk associated working with such a brand new technology.
After we finish our CFD model we will be able to create our prototype or prototypes for testing in a real world environment. This will be our most exciting step because we will be bringing our vision of the most reliable and most efficient alternative
energy source to life. The step requires us to source affordable materials to construct a low lying tower and our modular wind turbines. During this step we will also need to find a manufacturer with the appropriate equipment available to build prototypes and our
specific parts. Once we source the materials and the manufacturer and we are able to build the prototype we will dedicate our time to testing our invention in the field. After this phase we will eliminate nearly all the risk associated with working with a new technology.
Finally, after we have proof of concept and viable product, we are willing to bring to market we will need to secure a patent in order to maintain a sustainable competitive advantage. Prices for patents in the U.S. can cost upwards to $16,000 for more complex technologies such as ours. We hope to raise money for the patent and prototypes through business competitions. Once we are able to take our product to market we will seek funding to build a direct sales team and fund inventory appropriate to tackle our beach head market.
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Key Resources
Physical resources such as the materials, parts, and manufacturing space needed for creating the prototypes will be capital intensive. If we want to save costs, we can rent out the manufacturing space and office space to best prepare for our second milestone.
SOMA still needs to file and receive our intellectual property patent giving SOMA protection on our technology.
Human resources are mainly the people on our team for now. We have an experienced inventor and we are searching for a mechanical engineer that best fits with the modeling process. These two will create the models and build out prototypes and receive proof of concept. Our business team of five has people with diverse backgrounds that will continue to raise money, pivot our business model, and continue to grow the company until reaching our exit strategy goals. If necessary, our inventor and engineer might need a small team of capable individuals to help finish the first milestone. Through fundraising, we hope to build relationships with mentors that will help us on our path when needed.
Financial resources will originally come from competing at business plan pitch competitions to raise money for our early-stage seed money. Then, we will “go fundraising” with angel rounds and if commercial property management groups are interested in purchasing SOMA for their buildings, we will use a pre-order crowd-funding model for them.
Summary
Our customer interviews have been important in allowing us to learn how alternative energy is currently solving the needs of homeowners, as well as the areas where we could differentiate ourselves from competitors. Our initial opportunity idea was to target skyscrapers, warehouses, and other large real estate owners, with the idea being that these types of real estate owners pay large amounts of money on energy annually and could benefit from a supplemental energy source. We quickly learned, however, that these real estate owners need validation, and would be unwilling to switch to an energy provider that has not been tested on the market, regardless of the potential cost savings.
We have since switched to a more homeowner focused approach. From what we’ve learned in expert and customer interviews, there is a major problem faced by the alternative energy industry of both customer knowledge and geographic location. On the customer knowledge end of things, homeowners tend to be either unaware/unsure of the benefits that an alternative energy provider could bring them, or have misconceptions about alternative energy providers. On the geographic location side of things, there is a massive disparity in regards to the amount of benefit solar and wind energy can bring in different locations. In some places, such as the Gobi desert, people are able to fully rely on solar without the use of any traditional energy source.
Our current business model intends to hone in on both of these issues, both in making sure that cost savings are clear and visible, and that we pinpoint an appropriate geographic location. Ideally, we intend to partner with an established energy company who would be able to provide both manufacturing support as well as lend SOMA a sense of credibility surrounding the generator. Generators will be sold to homeowners (through a sales force) and installed by a maintenance team, and will need maintenance done every 5-10 years. Maintenance will be covered by a fix fee paid for on the customer side, and generators will cost around 15,000 dollars.
SOMA