james madison university: business plan - energy.gov€¦ · business overview madison wind...
TRANSCRIPT
![Page 1: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/1.jpg)
Madison Wind Solutions LLC (MWS)
James Madison University
National Collegiate Wind Competition
Business Plan13 Team
Chris Cleveland -shy‐ Management -shy‐ 2014
Michael Daddio -shy‐ Finance -shy‐ 2014
Scott Beatty13 -shy‐ Economics -shy‐ 2014
William Romov -shy‐ Finance -shy‐ 2015
Nolan Morris -shy‐ Economics -shy‐ 2014
Jonathan Nichols -shy‐ Integrated Science and Technology -shy‐ 2015
Sponsors
Department of Energy
Virginia State Energy Office
Virginia Center for Wind Energy
James Madison University
1
I Executive Summary
Madison Wind is the name of James Madison Universityrsquos team for the Department of Energyrsquos
Collegiate Wind13 Competition The team consists of 30 students from the College of Business
Engineering and Integrated Science and Technology departments The students were divided into five
sub teams the rotor team the electronics and13 gearing team the business plan13 team the market issues
team and the support13 team Together students along with faculty advisors worked toward the April
18th portfolio delivery deadline13 and the13 May 5-shy‐813 presentation component The13 non-shy‐profit Madison
Wind Solutions LLC spawned as a result of the business teamrsquos efforts to create a proposal to distribute
the prototype wind turbine to those living in energy poverty
Madison Wind Solutions LLC exists as a non-shy‐profit to13 bring clean sustainable energy to13 communities
which currently lack a reliable electricity source This is accomplished by selling wind turbines to local
communities13 and entrepreneurs13 who can use the turbines to provide power13 to cell phone charging
stations light fixtures radios cooling units13 and other small electronics13 that require small amounts13 of
power This non-shy‐profit is designed13 as a startup13 that carries out the design assembly and13 distribution13 of
portable small-shy‐scale wind turbines13 throughout rural sections13 of Kenya Energy poverty remains13 a
2
significant problem across13 Kenya even though individuals13 own various13 electric13 technologies13 such as13
lighting cell13 phones and cooling systems but lack the necessary electrical power to13 consistently and13
reliably power13 such itemsi Due to the lack of a developed electric grid across much of the country13
small-shy‐scale renewable energy will succeed by providing energy relief to meet the needs13 of millions of
individualsii
II Business Overview
Madison Wind Solutionsrsquo non-shy‐profit business model is a solution13 to13 the problem of energy poverty in13
underdeveloped13 countries Our primary activities are research design assembly and13 distribution13 of
small wind turbine technology in13 departments worldwide The Unites States headquarters will house the
engineering13 department which will continue13 to innovate13 and develop cost efficient strategies The wind
turbine components will be manufactured in India The Kenya13 branch will assemble13 the13 turbines at the13
distribution13 location13 under the supervision13 of the sales representative and13 Kenyan13 distributor and13
handle all customer service before and13 after the transaction The vision of Madison Wind Solutions is to
increase the standard13 of living of individuals living in13 energy-shy‐impoverished communities by promoting
sustainable and economically-shy‐feasible wind energy resources The value of Madison Wind Solutions is
derived13 from the social benefits of community building and13 increased standard of living Madison Wind
Solutions intends to meet triple13 bottom line13 objectives by improving the13 quality of life13 for people13 in rural
Kenya13 through providing sustainable13 energy solutions that are13 available13 and affordable13 to those13 in need
III13 Market Opportunity
Madison Wind Solutions LLC aims to relieve energy poverty The World Energy Outlook 2013 estimates
that13 13 million people are without13 energy globally and 26 million are restricted to biomassiii Rural
communities13 in Kenya primarily13 use biomass for electricity which13 is highly inefficient and13 degrades the
environment with harmful emissions and deforestationiv The objective is to provide product that will
3
decrease the number of Kenyan13 citizens living in13 energy poverty by providing an13 affordable clean
renewable and long term source of13 energy
Kenya13 also has poor electrical grid infrastructure With 70 of the13 population living in rural areas the13
strong majority are without reliable grid accessv The primary demand for energy is from devices that
have a low energy outputvi The wind turbine classified as ldquosmallrdquo electricity output unit will be able
to help alleviate the shortage in supply of13 rural electricity generation Specifically research suggests a
high13 demand13 for energy for the13 purposes of cell-shy‐phone charging and13 efficient lighting apparatuses
Furthermore charged phones provide13 an opportunity for emergency medical assistance Madison
Wind Solutions LLC aims to provide wind turbines that will meet this demandvii survey in13 2009
showed that four million mobile phone subscribers13 existed in Kenya from a population of 67 million
people The survey also13 conveys how rural household13 subscriptions outweigh13 the electricity supply
indicating that this market is ripe for penetration The same survey illustrates that usage in13 rural areas
closely13 resembled usage in urban areas comprising roughly 50 of13 the marketviii In Kenya the use of
mobile phones has been supported by the growth of the mobile banking industry Companies like M-shy‐
Pesa allow Kenyans to make13 monetary transactions directly from their phones The industry
experienced substantial growth in the13 past five13 years with 43 of Kenyarsquos gross domestic product being13
transferred through this networkix Unfortunately13 economic growth is countered by energy deficiency
inherent to the region13 The turbine has the potential13 ability to power a cell13 phone charging station such
as power strip facilitating financial transactions
In order for success an obvious and essential element13 must13 be present wind The majority of Africa13 is
without wind energy production due to poor wind availability inland Thankfully Kenya13 is located on the
coast which enables13 relatively13 consistent and sufficient wind speeds13 for a small scale turbine Wind
resources are greatest13 around the North Kenyan rural community of13 Marsabit which will be the initial
location13 Data reveals that wind speeds are on average higher during the summer dry season when
4
hydro13 is o the downswing cloud13 cover13 and nighttime hours13 when solar panels are no longer
generating13 energy13 from the13 sun these13 characteristics of Kenyarsquos climate13 gives13 MWS a competitive
advantagex Turbine installation will13 provide complimentary electricity to offset the intermittence of
current alternative energy production Another advantage to13 the market regards Kenyarsquos government
actively seeking renewable13 energy infrastructure13 to replace13 poor electricity sources such as biomassxi
Hopefully the Kenyan government will see the parallel between13 the product and13 the countryrsquos goals
leading to legal13 and financial13 support through possible grants and subsidies13 It should also be noted that
Kenya13 has very lenient laws regarding13 foreign investmentxii This open economy is intended to stimulate
growth in order13 for13 Kenya to achieve the plans set13 out13 in their13 Vision 2030 long-shy‐term plan
The presence of energy poverty in Kenya13 is two sided coin On one side there is a strong market
opportunity for a small portable turbine On the other side there13 is little13 wealth within the13 community13
to afford such a devicexiii In order to ensure the target market is able to acquire our product13 a financing
structure must be put in place Several barriers exist that must be13 addressed First and foremost the13
average13 citizen living13 in the13 rural areas of Kenya13 cannot afford to buy $20 turbine This is due13 to both
the difference in scale between Kenyan and US economies and the non-shy‐monetary nature of rural
Kenyarsquos economy To solve this problem we will charge a price for the product that is below the cost of
production
First Madison Wind Solutions will apply for non-shy‐profit status This will be advantageous in that it will
allow the13 acquisition of grants to fund operations With the help of charitable grants turbines13 will be
sold to the public below production costxiv The target price per turbine will be $20 or about Kenyan
Shilling 17000
Even with this subsidized price the non-shy‐monetary nature of the rural Kenya economy will need to be
addressed Currently many communities have13 Community Based Organizations or CBOs that oversee13
lending operations of this typexv Purchasers of our turbines will be13 required to make13 an initial down
5
payment which13 will be a designated13 portion13 of the total turbine cost The customer will then be
required to make installments over13 a period of13 time that13 are a fair13 percentage of13 the turbines cost The
reason for13 the variability in payments is due to the fact13 that13 many Kenyans living in rural areas practice
subsistence farming and13 sell what produce is left after their own13 consumption13 needs are met In fact
the agriculture industry employs seventy-shy‐five percent13 of13 the13 populationxvi This uncertain source of
income combined with the seasonality of crops will13 cause the cash flow from our borrowers to be
unstable At some points of the year such13 as during the coffee harvest in13 October through13 December
cash flows13 will be greater than in months with less crop activityxvii In the end with the help of the CBOsrsquo
supervision and the relationship of13 our13 sales representatives with the client we will rely on the
individual13 desire of the client to repay their loan13 This structure was decided to be the best method
after speaking with Dr Justin Henriques who has implemented similar project in13 Kenya with13 solar
panels successfully
Some13 charitable13 grants may come from federal13 and state government sources13 in order to make up the
difference between13 our operating costs and13 program revenues
IIIa Customer Relationships
The turbine will reach two kinds of users (1) an entrepreneur using the13 wind turbine13 to charge13 small
electronic devices like13 cell phones and LEDs for fee13 and (2) communities who will be13 the13 end user
Utilizing an entire community to pool funds multiple people can benefit13 from a decreased selling price
to afford immediate access to a turbine and the various electronic powering function
Madison Wind Solutions hopes to build long term relationships with the customers to ensure prosperity
and expansion of operations By employing native Kenyans as the sales representatives there is an13
effort to establish stronger more13 direct links with end consumers through networking Ideally the13
entrepreneurs investing13 in the13 product will develop innovative13 purposes for the13 turbines and13 share
these ideas with the company to allow stronger13 marketing across various industries These individuals
6
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 2: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/2.jpg)
I Executive Summary
Madison Wind is the name of James Madison Universityrsquos team for the Department of Energyrsquos
Collegiate Wind13 Competition The team consists of 30 students from the College of Business
Engineering and Integrated Science and Technology departments The students were divided into five
sub teams the rotor team the electronics and13 gearing team the business plan13 team the market issues
team and the support13 team Together students along with faculty advisors worked toward the April
18th portfolio delivery deadline13 and the13 May 5-shy‐813 presentation component The13 non-shy‐profit Madison
Wind Solutions LLC spawned as a result of the business teamrsquos efforts to create a proposal to distribute
the prototype wind turbine to those living in energy poverty
Madison Wind Solutions LLC exists as a non-shy‐profit to13 bring clean sustainable energy to13 communities
which currently lack a reliable electricity source This is accomplished by selling wind turbines to local
communities13 and entrepreneurs13 who can use the turbines to provide power13 to cell phone charging
stations light fixtures radios cooling units13 and other small electronics13 that require small amounts13 of
power This non-shy‐profit is designed13 as a startup13 that carries out the design assembly and13 distribution13 of
portable small-shy‐scale wind turbines13 throughout rural sections13 of Kenya Energy poverty remains13 a
2
significant problem across13 Kenya even though individuals13 own various13 electric13 technologies13 such as13
lighting cell13 phones and cooling systems but lack the necessary electrical power to13 consistently and13
reliably power13 such itemsi Due to the lack of a developed electric grid across much of the country13
small-shy‐scale renewable energy will succeed by providing energy relief to meet the needs13 of millions of
individualsii
II Business Overview
Madison Wind Solutionsrsquo non-shy‐profit business model is a solution13 to13 the problem of energy poverty in13
underdeveloped13 countries Our primary activities are research design assembly and13 distribution13 of
small wind turbine technology in13 departments worldwide The Unites States headquarters will house the
engineering13 department which will continue13 to innovate13 and develop cost efficient strategies The wind
turbine components will be manufactured in India The Kenya13 branch will assemble13 the13 turbines at the13
distribution13 location13 under the supervision13 of the sales representative and13 Kenyan13 distributor and13
handle all customer service before and13 after the transaction The vision of Madison Wind Solutions is to
increase the standard13 of living of individuals living in13 energy-shy‐impoverished communities by promoting
sustainable and economically-shy‐feasible wind energy resources The value of Madison Wind Solutions is
derived13 from the social benefits of community building and13 increased standard of living Madison Wind
Solutions intends to meet triple13 bottom line13 objectives by improving the13 quality of life13 for people13 in rural
Kenya13 through providing sustainable13 energy solutions that are13 available13 and affordable13 to those13 in need
III13 Market Opportunity
Madison Wind Solutions LLC aims to relieve energy poverty The World Energy Outlook 2013 estimates
that13 13 million people are without13 energy globally and 26 million are restricted to biomassiii Rural
communities13 in Kenya primarily13 use biomass for electricity which13 is highly inefficient and13 degrades the
environment with harmful emissions and deforestationiv The objective is to provide product that will
3
decrease the number of Kenyan13 citizens living in13 energy poverty by providing an13 affordable clean
renewable and long term source of13 energy
Kenya13 also has poor electrical grid infrastructure With 70 of the13 population living in rural areas the13
strong majority are without reliable grid accessv The primary demand for energy is from devices that
have a low energy outputvi The wind turbine classified as ldquosmallrdquo electricity output unit will be able
to help alleviate the shortage in supply of13 rural electricity generation Specifically research suggests a
high13 demand13 for energy for the13 purposes of cell-shy‐phone charging and13 efficient lighting apparatuses
Furthermore charged phones provide13 an opportunity for emergency medical assistance Madison
Wind Solutions LLC aims to provide wind turbines that will meet this demandvii survey in13 2009
showed that four million mobile phone subscribers13 existed in Kenya from a population of 67 million
people The survey also13 conveys how rural household13 subscriptions outweigh13 the electricity supply
indicating that this market is ripe for penetration The same survey illustrates that usage in13 rural areas
closely13 resembled usage in urban areas comprising roughly 50 of13 the marketviii In Kenya the use of
mobile phones has been supported by the growth of the mobile banking industry Companies like M-shy‐
Pesa allow Kenyans to make13 monetary transactions directly from their phones The industry
experienced substantial growth in the13 past five13 years with 43 of Kenyarsquos gross domestic product being13
transferred through this networkix Unfortunately13 economic growth is countered by energy deficiency
inherent to the region13 The turbine has the potential13 ability to power a cell13 phone charging station such
as power strip facilitating financial transactions
In order for success an obvious and essential element13 must13 be present wind The majority of Africa13 is
without wind energy production due to poor wind availability inland Thankfully Kenya13 is located on the
coast which enables13 relatively13 consistent and sufficient wind speeds13 for a small scale turbine Wind
resources are greatest13 around the North Kenyan rural community of13 Marsabit which will be the initial
location13 Data reveals that wind speeds are on average higher during the summer dry season when
4
hydro13 is o the downswing cloud13 cover13 and nighttime hours13 when solar panels are no longer
generating13 energy13 from the13 sun these13 characteristics of Kenyarsquos climate13 gives13 MWS a competitive
advantagex Turbine installation will13 provide complimentary electricity to offset the intermittence of
current alternative energy production Another advantage to13 the market regards Kenyarsquos government
actively seeking renewable13 energy infrastructure13 to replace13 poor electricity sources such as biomassxi
Hopefully the Kenyan government will see the parallel between13 the product and13 the countryrsquos goals
leading to legal13 and financial13 support through possible grants and subsidies13 It should also be noted that
Kenya13 has very lenient laws regarding13 foreign investmentxii This open economy is intended to stimulate
growth in order13 for13 Kenya to achieve the plans set13 out13 in their13 Vision 2030 long-shy‐term plan
The presence of energy poverty in Kenya13 is two sided coin On one side there is a strong market
opportunity for a small portable turbine On the other side there13 is little13 wealth within the13 community13
to afford such a devicexiii In order to ensure the target market is able to acquire our product13 a financing
structure must be put in place Several barriers exist that must be13 addressed First and foremost the13
average13 citizen living13 in the13 rural areas of Kenya13 cannot afford to buy $20 turbine This is due13 to both
the difference in scale between Kenyan and US economies and the non-shy‐monetary nature of rural
Kenyarsquos economy To solve this problem we will charge a price for the product that is below the cost of
production
First Madison Wind Solutions will apply for non-shy‐profit status This will be advantageous in that it will
allow the13 acquisition of grants to fund operations With the help of charitable grants turbines13 will be
sold to the public below production costxiv The target price per turbine will be $20 or about Kenyan
Shilling 17000
Even with this subsidized price the non-shy‐monetary nature of the rural Kenya economy will need to be
addressed Currently many communities have13 Community Based Organizations or CBOs that oversee13
lending operations of this typexv Purchasers of our turbines will be13 required to make13 an initial down
5
payment which13 will be a designated13 portion13 of the total turbine cost The customer will then be
required to make installments over13 a period of13 time that13 are a fair13 percentage of13 the turbines cost The
reason for13 the variability in payments is due to the fact13 that13 many Kenyans living in rural areas practice
subsistence farming and13 sell what produce is left after their own13 consumption13 needs are met In fact
the agriculture industry employs seventy-shy‐five percent13 of13 the13 populationxvi This uncertain source of
income combined with the seasonality of crops will13 cause the cash flow from our borrowers to be
unstable At some points of the year such13 as during the coffee harvest in13 October through13 December
cash flows13 will be greater than in months with less crop activityxvii In the end with the help of the CBOsrsquo
supervision and the relationship of13 our13 sales representatives with the client we will rely on the
individual13 desire of the client to repay their loan13 This structure was decided to be the best method
after speaking with Dr Justin Henriques who has implemented similar project in13 Kenya with13 solar
panels successfully
Some13 charitable13 grants may come from federal13 and state government sources13 in order to make up the
difference between13 our operating costs and13 program revenues
IIIa Customer Relationships
The turbine will reach two kinds of users (1) an entrepreneur using the13 wind turbine13 to charge13 small
electronic devices like13 cell phones and LEDs for fee13 and (2) communities who will be13 the13 end user
Utilizing an entire community to pool funds multiple people can benefit13 from a decreased selling price
to afford immediate access to a turbine and the various electronic powering function
Madison Wind Solutions hopes to build long term relationships with the customers to ensure prosperity
and expansion of operations By employing native Kenyans as the sales representatives there is an13
effort to establish stronger more13 direct links with end consumers through networking Ideally the13
entrepreneurs investing13 in the13 product will develop innovative13 purposes for the13 turbines and13 share
these ideas with the company to allow stronger13 marketing across various industries These individuals
6
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 3: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/3.jpg)
significant problem across13 Kenya even though individuals13 own various13 electric13 technologies13 such as13
lighting cell13 phones and cooling systems but lack the necessary electrical power to13 consistently and13
reliably power13 such itemsi Due to the lack of a developed electric grid across much of the country13
small-shy‐scale renewable energy will succeed by providing energy relief to meet the needs13 of millions of
individualsii
II Business Overview
Madison Wind Solutionsrsquo non-shy‐profit business model is a solution13 to13 the problem of energy poverty in13
underdeveloped13 countries Our primary activities are research design assembly and13 distribution13 of
small wind turbine technology in13 departments worldwide The Unites States headquarters will house the
engineering13 department which will continue13 to innovate13 and develop cost efficient strategies The wind
turbine components will be manufactured in India The Kenya13 branch will assemble13 the13 turbines at the13
distribution13 location13 under the supervision13 of the sales representative and13 Kenyan13 distributor and13
handle all customer service before and13 after the transaction The vision of Madison Wind Solutions is to
increase the standard13 of living of individuals living in13 energy-shy‐impoverished communities by promoting
sustainable and economically-shy‐feasible wind energy resources The value of Madison Wind Solutions is
derived13 from the social benefits of community building and13 increased standard of living Madison Wind
Solutions intends to meet triple13 bottom line13 objectives by improving the13 quality of life13 for people13 in rural
Kenya13 through providing sustainable13 energy solutions that are13 available13 and affordable13 to those13 in need
III13 Market Opportunity
Madison Wind Solutions LLC aims to relieve energy poverty The World Energy Outlook 2013 estimates
that13 13 million people are without13 energy globally and 26 million are restricted to biomassiii Rural
communities13 in Kenya primarily13 use biomass for electricity which13 is highly inefficient and13 degrades the
environment with harmful emissions and deforestationiv The objective is to provide product that will
3
decrease the number of Kenyan13 citizens living in13 energy poverty by providing an13 affordable clean
renewable and long term source of13 energy
Kenya13 also has poor electrical grid infrastructure With 70 of the13 population living in rural areas the13
strong majority are without reliable grid accessv The primary demand for energy is from devices that
have a low energy outputvi The wind turbine classified as ldquosmallrdquo electricity output unit will be able
to help alleviate the shortage in supply of13 rural electricity generation Specifically research suggests a
high13 demand13 for energy for the13 purposes of cell-shy‐phone charging and13 efficient lighting apparatuses
Furthermore charged phones provide13 an opportunity for emergency medical assistance Madison
Wind Solutions LLC aims to provide wind turbines that will meet this demandvii survey in13 2009
showed that four million mobile phone subscribers13 existed in Kenya from a population of 67 million
people The survey also13 conveys how rural household13 subscriptions outweigh13 the electricity supply
indicating that this market is ripe for penetration The same survey illustrates that usage in13 rural areas
closely13 resembled usage in urban areas comprising roughly 50 of13 the marketviii In Kenya the use of
mobile phones has been supported by the growth of the mobile banking industry Companies like M-shy‐
Pesa allow Kenyans to make13 monetary transactions directly from their phones The industry
experienced substantial growth in the13 past five13 years with 43 of Kenyarsquos gross domestic product being13
transferred through this networkix Unfortunately13 economic growth is countered by energy deficiency
inherent to the region13 The turbine has the potential13 ability to power a cell13 phone charging station such
as power strip facilitating financial transactions
In order for success an obvious and essential element13 must13 be present wind The majority of Africa13 is
without wind energy production due to poor wind availability inland Thankfully Kenya13 is located on the
coast which enables13 relatively13 consistent and sufficient wind speeds13 for a small scale turbine Wind
resources are greatest13 around the North Kenyan rural community of13 Marsabit which will be the initial
location13 Data reveals that wind speeds are on average higher during the summer dry season when
4
hydro13 is o the downswing cloud13 cover13 and nighttime hours13 when solar panels are no longer
generating13 energy13 from the13 sun these13 characteristics of Kenyarsquos climate13 gives13 MWS a competitive
advantagex Turbine installation will13 provide complimentary electricity to offset the intermittence of
current alternative energy production Another advantage to13 the market regards Kenyarsquos government
actively seeking renewable13 energy infrastructure13 to replace13 poor electricity sources such as biomassxi
Hopefully the Kenyan government will see the parallel between13 the product and13 the countryrsquos goals
leading to legal13 and financial13 support through possible grants and subsidies13 It should also be noted that
Kenya13 has very lenient laws regarding13 foreign investmentxii This open economy is intended to stimulate
growth in order13 for13 Kenya to achieve the plans set13 out13 in their13 Vision 2030 long-shy‐term plan
The presence of energy poverty in Kenya13 is two sided coin On one side there is a strong market
opportunity for a small portable turbine On the other side there13 is little13 wealth within the13 community13
to afford such a devicexiii In order to ensure the target market is able to acquire our product13 a financing
structure must be put in place Several barriers exist that must be13 addressed First and foremost the13
average13 citizen living13 in the13 rural areas of Kenya13 cannot afford to buy $20 turbine This is due13 to both
the difference in scale between Kenyan and US economies and the non-shy‐monetary nature of rural
Kenyarsquos economy To solve this problem we will charge a price for the product that is below the cost of
production
First Madison Wind Solutions will apply for non-shy‐profit status This will be advantageous in that it will
allow the13 acquisition of grants to fund operations With the help of charitable grants turbines13 will be
sold to the public below production costxiv The target price per turbine will be $20 or about Kenyan
Shilling 17000
Even with this subsidized price the non-shy‐monetary nature of the rural Kenya economy will need to be
addressed Currently many communities have13 Community Based Organizations or CBOs that oversee13
lending operations of this typexv Purchasers of our turbines will be13 required to make13 an initial down
5
payment which13 will be a designated13 portion13 of the total turbine cost The customer will then be
required to make installments over13 a period of13 time that13 are a fair13 percentage of13 the turbines cost The
reason for13 the variability in payments is due to the fact13 that13 many Kenyans living in rural areas practice
subsistence farming and13 sell what produce is left after their own13 consumption13 needs are met In fact
the agriculture industry employs seventy-shy‐five percent13 of13 the13 populationxvi This uncertain source of
income combined with the seasonality of crops will13 cause the cash flow from our borrowers to be
unstable At some points of the year such13 as during the coffee harvest in13 October through13 December
cash flows13 will be greater than in months with less crop activityxvii In the end with the help of the CBOsrsquo
supervision and the relationship of13 our13 sales representatives with the client we will rely on the
individual13 desire of the client to repay their loan13 This structure was decided to be the best method
after speaking with Dr Justin Henriques who has implemented similar project in13 Kenya with13 solar
panels successfully
Some13 charitable13 grants may come from federal13 and state government sources13 in order to make up the
difference between13 our operating costs and13 program revenues
IIIa Customer Relationships
The turbine will reach two kinds of users (1) an entrepreneur using the13 wind turbine13 to charge13 small
electronic devices like13 cell phones and LEDs for fee13 and (2) communities who will be13 the13 end user
Utilizing an entire community to pool funds multiple people can benefit13 from a decreased selling price
to afford immediate access to a turbine and the various electronic powering function
Madison Wind Solutions hopes to build long term relationships with the customers to ensure prosperity
and expansion of operations By employing native Kenyans as the sales representatives there is an13
effort to establish stronger more13 direct links with end consumers through networking Ideally the13
entrepreneurs investing13 in the13 product will develop innovative13 purposes for the13 turbines and13 share
these ideas with the company to allow stronger13 marketing across various industries These individuals
6
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 4: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/4.jpg)
decrease the number of Kenyan13 citizens living in13 energy poverty by providing an13 affordable clean
renewable and long term source of13 energy
Kenya13 also has poor electrical grid infrastructure With 70 of the13 population living in rural areas the13
strong majority are without reliable grid accessv The primary demand for energy is from devices that
have a low energy outputvi The wind turbine classified as ldquosmallrdquo electricity output unit will be able
to help alleviate the shortage in supply of13 rural electricity generation Specifically research suggests a
high13 demand13 for energy for the13 purposes of cell-shy‐phone charging and13 efficient lighting apparatuses
Furthermore charged phones provide13 an opportunity for emergency medical assistance Madison
Wind Solutions LLC aims to provide wind turbines that will meet this demandvii survey in13 2009
showed that four million mobile phone subscribers13 existed in Kenya from a population of 67 million
people The survey also13 conveys how rural household13 subscriptions outweigh13 the electricity supply
indicating that this market is ripe for penetration The same survey illustrates that usage in13 rural areas
closely13 resembled usage in urban areas comprising roughly 50 of13 the marketviii In Kenya the use of
mobile phones has been supported by the growth of the mobile banking industry Companies like M-shy‐
Pesa allow Kenyans to make13 monetary transactions directly from their phones The industry
experienced substantial growth in the13 past five13 years with 43 of Kenyarsquos gross domestic product being13
transferred through this networkix Unfortunately13 economic growth is countered by energy deficiency
inherent to the region13 The turbine has the potential13 ability to power a cell13 phone charging station such
as power strip facilitating financial transactions
In order for success an obvious and essential element13 must13 be present wind The majority of Africa13 is
without wind energy production due to poor wind availability inland Thankfully Kenya13 is located on the
coast which enables13 relatively13 consistent and sufficient wind speeds13 for a small scale turbine Wind
resources are greatest13 around the North Kenyan rural community of13 Marsabit which will be the initial
location13 Data reveals that wind speeds are on average higher during the summer dry season when
4
hydro13 is o the downswing cloud13 cover13 and nighttime hours13 when solar panels are no longer
generating13 energy13 from the13 sun these13 characteristics of Kenyarsquos climate13 gives13 MWS a competitive
advantagex Turbine installation will13 provide complimentary electricity to offset the intermittence of
current alternative energy production Another advantage to13 the market regards Kenyarsquos government
actively seeking renewable13 energy infrastructure13 to replace13 poor electricity sources such as biomassxi
Hopefully the Kenyan government will see the parallel between13 the product and13 the countryrsquos goals
leading to legal13 and financial13 support through possible grants and subsidies13 It should also be noted that
Kenya13 has very lenient laws regarding13 foreign investmentxii This open economy is intended to stimulate
growth in order13 for13 Kenya to achieve the plans set13 out13 in their13 Vision 2030 long-shy‐term plan
The presence of energy poverty in Kenya13 is two sided coin On one side there is a strong market
opportunity for a small portable turbine On the other side there13 is little13 wealth within the13 community13
to afford such a devicexiii In order to ensure the target market is able to acquire our product13 a financing
structure must be put in place Several barriers exist that must be13 addressed First and foremost the13
average13 citizen living13 in the13 rural areas of Kenya13 cannot afford to buy $20 turbine This is due13 to both
the difference in scale between Kenyan and US economies and the non-shy‐monetary nature of rural
Kenyarsquos economy To solve this problem we will charge a price for the product that is below the cost of
production
First Madison Wind Solutions will apply for non-shy‐profit status This will be advantageous in that it will
allow the13 acquisition of grants to fund operations With the help of charitable grants turbines13 will be
sold to the public below production costxiv The target price per turbine will be $20 or about Kenyan
Shilling 17000
Even with this subsidized price the non-shy‐monetary nature of the rural Kenya economy will need to be
addressed Currently many communities have13 Community Based Organizations or CBOs that oversee13
lending operations of this typexv Purchasers of our turbines will be13 required to make13 an initial down
5
payment which13 will be a designated13 portion13 of the total turbine cost The customer will then be
required to make installments over13 a period of13 time that13 are a fair13 percentage of13 the turbines cost The
reason for13 the variability in payments is due to the fact13 that13 many Kenyans living in rural areas practice
subsistence farming and13 sell what produce is left after their own13 consumption13 needs are met In fact
the agriculture industry employs seventy-shy‐five percent13 of13 the13 populationxvi This uncertain source of
income combined with the seasonality of crops will13 cause the cash flow from our borrowers to be
unstable At some points of the year such13 as during the coffee harvest in13 October through13 December
cash flows13 will be greater than in months with less crop activityxvii In the end with the help of the CBOsrsquo
supervision and the relationship of13 our13 sales representatives with the client we will rely on the
individual13 desire of the client to repay their loan13 This structure was decided to be the best method
after speaking with Dr Justin Henriques who has implemented similar project in13 Kenya with13 solar
panels successfully
Some13 charitable13 grants may come from federal13 and state government sources13 in order to make up the
difference between13 our operating costs and13 program revenues
IIIa Customer Relationships
The turbine will reach two kinds of users (1) an entrepreneur using the13 wind turbine13 to charge13 small
electronic devices like13 cell phones and LEDs for fee13 and (2) communities who will be13 the13 end user
Utilizing an entire community to pool funds multiple people can benefit13 from a decreased selling price
to afford immediate access to a turbine and the various electronic powering function
Madison Wind Solutions hopes to build long term relationships with the customers to ensure prosperity
and expansion of operations By employing native Kenyans as the sales representatives there is an13
effort to establish stronger more13 direct links with end consumers through networking Ideally the13
entrepreneurs investing13 in the13 product will develop innovative13 purposes for the13 turbines and13 share
these ideas with the company to allow stronger13 marketing across various industries These individuals
6
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 5: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/5.jpg)
hydro13 is o the downswing cloud13 cover13 and nighttime hours13 when solar panels are no longer
generating13 energy13 from the13 sun these13 characteristics of Kenyarsquos climate13 gives13 MWS a competitive
advantagex Turbine installation will13 provide complimentary electricity to offset the intermittence of
current alternative energy production Another advantage to13 the market regards Kenyarsquos government
actively seeking renewable13 energy infrastructure13 to replace13 poor electricity sources such as biomassxi
Hopefully the Kenyan government will see the parallel between13 the product and13 the countryrsquos goals
leading to legal13 and financial13 support through possible grants and subsidies13 It should also be noted that
Kenya13 has very lenient laws regarding13 foreign investmentxii This open economy is intended to stimulate
growth in order13 for13 Kenya to achieve the plans set13 out13 in their13 Vision 2030 long-shy‐term plan
The presence of energy poverty in Kenya13 is two sided coin On one side there is a strong market
opportunity for a small portable turbine On the other side there13 is little13 wealth within the13 community13
to afford such a devicexiii In order to ensure the target market is able to acquire our product13 a financing
structure must be put in place Several barriers exist that must be13 addressed First and foremost the13
average13 citizen living13 in the13 rural areas of Kenya13 cannot afford to buy $20 turbine This is due13 to both
the difference in scale between Kenyan and US economies and the non-shy‐monetary nature of rural
Kenyarsquos economy To solve this problem we will charge a price for the product that is below the cost of
production
First Madison Wind Solutions will apply for non-shy‐profit status This will be advantageous in that it will
allow the13 acquisition of grants to fund operations With the help of charitable grants turbines13 will be
sold to the public below production costxiv The target price per turbine will be $20 or about Kenyan
Shilling 17000
Even with this subsidized price the non-shy‐monetary nature of the rural Kenya economy will need to be
addressed Currently many communities have13 Community Based Organizations or CBOs that oversee13
lending operations of this typexv Purchasers of our turbines will be13 required to make13 an initial down
5
payment which13 will be a designated13 portion13 of the total turbine cost The customer will then be
required to make installments over13 a period of13 time that13 are a fair13 percentage of13 the turbines cost The
reason for13 the variability in payments is due to the fact13 that13 many Kenyans living in rural areas practice
subsistence farming and13 sell what produce is left after their own13 consumption13 needs are met In fact
the agriculture industry employs seventy-shy‐five percent13 of13 the13 populationxvi This uncertain source of
income combined with the seasonality of crops will13 cause the cash flow from our borrowers to be
unstable At some points of the year such13 as during the coffee harvest in13 October through13 December
cash flows13 will be greater than in months with less crop activityxvii In the end with the help of the CBOsrsquo
supervision and the relationship of13 our13 sales representatives with the client we will rely on the
individual13 desire of the client to repay their loan13 This structure was decided to be the best method
after speaking with Dr Justin Henriques who has implemented similar project in13 Kenya with13 solar
panels successfully
Some13 charitable13 grants may come from federal13 and state government sources13 in order to make up the
difference between13 our operating costs and13 program revenues
IIIa Customer Relationships
The turbine will reach two kinds of users (1) an entrepreneur using the13 wind turbine13 to charge13 small
electronic devices like13 cell phones and LEDs for fee13 and (2) communities who will be13 the13 end user
Utilizing an entire community to pool funds multiple people can benefit13 from a decreased selling price
to afford immediate access to a turbine and the various electronic powering function
Madison Wind Solutions hopes to build long term relationships with the customers to ensure prosperity
and expansion of operations By employing native Kenyans as the sales representatives there is an13
effort to establish stronger more13 direct links with end consumers through networking Ideally the13
entrepreneurs investing13 in the13 product will develop innovative13 purposes for the13 turbines and13 share
these ideas with the company to allow stronger13 marketing across various industries These individuals
6
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 6: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/6.jpg)
payment which13 will be a designated13 portion13 of the total turbine cost The customer will then be
required to make installments over13 a period of13 time that13 are a fair13 percentage of13 the turbines cost The
reason for13 the variability in payments is due to the fact13 that13 many Kenyans living in rural areas practice
subsistence farming and13 sell what produce is left after their own13 consumption13 needs are met In fact
the agriculture industry employs seventy-shy‐five percent13 of13 the13 populationxvi This uncertain source of
income combined with the seasonality of crops will13 cause the cash flow from our borrowers to be
unstable At some points of the year such13 as during the coffee harvest in13 October through13 December
cash flows13 will be greater than in months with less crop activityxvii In the end with the help of the CBOsrsquo
supervision and the relationship of13 our13 sales representatives with the client we will rely on the
individual13 desire of the client to repay their loan13 This structure was decided to be the best method
after speaking with Dr Justin Henriques who has implemented similar project in13 Kenya with13 solar
panels successfully
Some13 charitable13 grants may come from federal13 and state government sources13 in order to make up the
difference between13 our operating costs and13 program revenues
IIIa Customer Relationships
The turbine will reach two kinds of users (1) an entrepreneur using the13 wind turbine13 to charge13 small
electronic devices like13 cell phones and LEDs for fee13 and (2) communities who will be13 the13 end user
Utilizing an entire community to pool funds multiple people can benefit13 from a decreased selling price
to afford immediate access to a turbine and the various electronic powering function
Madison Wind Solutions hopes to build long term relationships with the customers to ensure prosperity
and expansion of operations By employing native Kenyans as the sales representatives there is an13
effort to establish stronger more13 direct links with end consumers through networking Ideally the13
entrepreneurs investing13 in the13 product will develop innovative13 purposes for the13 turbines and13 share
these ideas with the company to allow stronger13 marketing across various industries These individuals
6
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 7: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/7.jpg)
will also be more inclined to purchase future products or recommend the products to others through
word-shy‐of-shy‐mouth marketing This enhances the need for strong13 relationship as Madison Wind Solutions
LLC looks to grow rapidly13 in the early13 stages These entrepreneurs will be a key13 part of the overall
marketing plan consisting of direct selling word of mouth and a small advertising campaign in places
we think there are potentially untapped markets
IV Management Team
Madison Wind solutions will team up with the Virginia Center for Wind Energy to help the US based
operations especially early o in13 the operation Due to13 our connections with13 JMU and the Center13 for13
Wind Energy we will be able to use their space for general operations and logistics as well as the high
bay for research13 and13 development purposes There are many reputable people with13 extensive
knowledge on the subject of wind energy13 who will be able to help us as we move forward and begin to
develop13 more brand13 offerings and13 expand13 into13 new geographic markets
IVa Staffing
In order to prosper as a competitor in the small13 wind energy market Madison Wind Solutions will13 work
with a Board of Advisors who meet in the13 Center for Wind Energy and assist in decision making Thus
the company will need a president13 as well as an international operations manager The president will be
the point13 of13 contact13 for13 the communications between the Board of Advisors and the13 International
Operations Manager The ideal candidate for the presidential position will have relevant managerial
experience preferably within the13 renewable13 energy industry to contribute13 valuable13 ideas to expand
operations
The international13 operations manager will13 oversee the staff that operates overseas including but not
limited to13 the warehouse manager sales staff and a technician All of these employees will answer
directly to13 the international operations manager The manager will then report to the13 president and
provide status reports o business operations
7
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 8: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/8.jpg)
There is the potential for communication disconnects between the different divisions of this small
international13 organization13 Management plans to address this issue13 through careful employee13 selection
and training leading to clearly defined communication channels which will13 be sustainable between
continents The training will include technical development in Microsoft SharePoint or a similar product
to make sure that13 documentation amongst13 divisions is organized and easily transferable
Madison Wind Solutions will utilize a board of advisors who meets in the Center for Wind energy
to ensure that13 operations are beneficial in every regard of13 the business The board will13 comprise of
individuals that provide advice from a professional13 and experienced background13 The advisors will have
experience13 with international small-shy‐scale renewable energy operations in order to help guide the
presidentrsquos decisions to13 develop13 a strong presence in energy impoverished areas Se organizational
chart (Appendix13 4)
V Production Development and Operations
Madison Wind Solutions will conduct business overseas manufacturing will take place in
Mumbai India Assembly and distribution will13 take place in Nairobi Kenya and marketing and
installation will13 begin in Marsabit Kenya13 The US headquarters will13 host RampD because of their close
proximity to13 resources and13 technical ability available in13 the Center for Wind13 Energy The availability of13
this technical expertise will be crucial in developing new product13 offerings
Manufacturing will13 be done through our partner Elite Tools and Equipments in India See
procurement process (Appendix 5) India offers a strategic location13 for our manufacturing to13 be
outsourced13 because of its prominence as one of the worldrsquos most developed13 and13 least costly countries
inxviiito manufacture Additionally13 India is located in a geographically beneficial13 area relative to both
the current13 and potential end users Shipping to Kenya will be handled by Tudor13 International Freight13
Limited who will deliver our products directly13 to Nairobi by13 cargo freightxix The choice to ship by boat is
not only cost effective but also13 helps minimize the carbon13 footprint of our product In13 India the
8
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 9: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/9.jpg)
manufacturing includes components such as turbine blades nacelles hubs electronics tails and all
other critical13 components13 The actual13 assembly will13 be done in Kenya and then properly distributed
amongst prospective13 buyers
Assembly will occur at Madison13 Wind13 Solutionrsquos Nairobi office and13 warehouse Turbines will be fully
assembled packaged and sold as individual13 products along with accessories such as LED light strands
and usb ports The13 sales force13 will also be13 located in this office Once13 assembly is completed by the13
technician wind turbines are moved along to distribution The distribution effort13 relies o native Kenyan13
sales13 representatives13 with contacts13 in urban suburban and rural areas See sales13 diagram (Appendix 6)
Our most valuable partnership will be with the manufacturer of our parts Their attention to quality
standards13 will be essential in making13 the Stimangu product therefore making13 the business successful
This partnership will have to be managed closely by the board of advisors to make sure that the
transference of13 products and payments runs smoothly and does not13 give them a reason to dissolve the
partnership
It is important to note that the turbine being produced and sold for the purposes of the business plan
Stimangu will be13 slightly different than the13 turbine13 actually produced by the13 engineering team The13
current nacelle and gearbox13 are13 oversized for the13 size13 of the13 turbine13 blades This enables the13 blades to
be scaled13 u easily allowing the turbine to13 be far more efficient when13 converting wind13 resources into13
electricity The13 difference13 in cost is minor due13 to the13 blade13 materials being inexpensive
The most significant risks associated with production and distribution of our products would be lack of
quality from our suppliers as well as limited13 time for our sales representatives to13 make sales to13
communities The issue of lacking in quality was assessed before we made our decision We looked at
quality control measures such13 as Six Sigma and13 other quality control standards and13 decided13 o Elite
Tools and Equipments because of their size and quality control measures Although they do not follow
9
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 10: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/10.jpg)
Six Sigma Elite13 Tools and Equipment is reputable13 dealer who should be13 able13 to efficiently produce13 the13
parts we need13 for the turbines
The second most pressing risk we face is limited time for Sales of our products by sales representatives
Sales representatives are13 limited in their time13 available13 to build relationships with customers The13 time13
involved in one sale includes the time spent traveling to the communities building relationships making
the sale and finalizing any paperwork before the technician13 can13 come and13 install the actual turbine
Because our business is based13 around13 bettering communities we hope to13 have many customers come
to us therefore greatly reducing the time required in making a sale This was the case for13 Dr Justin
Henriques and13 his colleagues in13 their objective to13 reduce energy poverty through13 the distribution13 and13
sales13 of small scale solar panels
The technical specifications describe five-shy‐bladed13 rotor with13 a diameter of 40 centimeters It is an13
upwind horizontal-shy‐axis turbine13 (HAWT) with easily replaceable13 components The13 five-shy‐blade design13 was
selected due to use of a 501 gearbox ratio Using a high-shy‐ratio gearbox was necessary due to the high
rotations per13 minute requirements necessary to produce the desired power from the generator The
system incorporates13 an external box containing the majority of electrical components This13 box also
serves13 as13 a user interface Further design specifications13 can be found in the design report
Va Impact Analyses
Economic development
Madison Wind Solutions LLCrsquos wind turbine provides electricity that will combat the social costs of
energy poverty in Kenya The13 electricity generated by the13 turbine13 will be13 used to power lights and
communication technologies Additional lighting in a school13 can allow children to study for longer hours
into the night resulting in increased investment in their futures13 The increased education of the
population13 is a primary factor for further economic development Furthermore additional lighting
10
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 11: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/11.jpg)
provided13 by the wind13 turbine will allow Kenyan13 businesses to13 operate during nighttime hours thus
increasing economic productivityxx
In addition providing electricity will13 increase the reliability of Kenyan citizenrsquos access to communication
technologies These technologies include mobile phones and13 radios Having the ability to13 charge a
mobile phone will increase economic productivity through mobile business transactions mobile
banking and13 emergency phone service The opportunity cost of a rural mobile phone owner having to13
walk to an urban center to charge hisher phone will be foregone and the time saved could instead be
used13 for more economically productive activities Moreover having the ability to13 power a radio13 will
increase marketing opportunities throughout13 Kenya
Community involvement
Madison Wind Solutions LLC will use direct marketing strategies in order to introduce the turbine to
communities Workshops13 will be developed to educate people within communities13 about how the
turbine works and why13 it is valuable The goal of these workshops will not be to sell the turbines
directly but instead13 to13 educate them about the benefits in13 order for them to13 value it enough13 to13 want to13
purchase it These workshops will include overviews of how the turbine can make13 electricity
demonstrations of the turbine and13 potential applications within13 their community In13 addition13 to13 the
workshops Madison Wind Solutions LLC plans to offer technical certifications to people who
demonstrate competency working with13 the turbine These technical certifications will not only provide
citizens13 with a form of social capital but will instill a sense of pride that may13 lead to future
opportunities
Environmental Practices
According to13 Lighting Africa 735 of Kenyan13 households13 use kerosene13 as their main lighting13 fuelxxi
Incomplete combustion of kerosene fuel13 produces greenhouse gases and poses environmental13 health
hazards ldquoSimple kerosene lamps used13 in13 regions with13 limited13 or n access to13 electricity are now
11
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 12: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/12.jpg)
understood13 to13 be a significant global13 source of atmospheric black carbon (BC) a strong climate
warmerrdquoxxii In addition smoke from the lamps can cause adverse respiratory effects such as
xxiiituberculosis
Electricity produced by a wind turbine would reduce the number of respiratory diseases caused by
kerosenexxiv Wind turbine generated electricity produces no carbon emissions or greenhouse gases
thus reducing negative climate externalities and decreasing the carbon footprint13 of13 the end13 user
VII FINANCIAL ANALYSIS
Five13 years of pro-shy‐forma statements were created and can be found in Appendix 1 through 3 with
financial assumptions It is key when reviewing the financial13 statements to note that Madison Wind
Solutions is non-shy‐profit13 enterprise Because of this the income statement contains ldquoprogram
revenuesrdquo and ldquoprogram expensesrdquo These are revenues and expenses directly associated with non-shy‐
profit operations Net income is stated as ldquoChange in net assetsrdquo which is consistently13 zero due to
grants being13 used to cover operational losses Certain assumptions have13 been made13 to determine13 the13
viability13 of the turbine that are also stated in the appendix In year one $8000 of program revenues is
estimated requiring13 approximately $13400013 in contributions to reach break-shy‐even In this year two
hundred13 turbines will be installed Following year one two13 additional sales representatives are hired13 to13
increase turbine salesinstallation to 500 unitsyear13 By year five program revenues reach an estimated
$88000 requiring $15200013 in contributions It is assumed that there will13 be an unlimited demand for
the energy producing turbines
12
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 13: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/13.jpg)
Appendices
Appendix 113 Pro Forma Income Statement
Pro Forma Income Statement Revenues Year 1 Year 2 Year 3 Year 4 Year 5 Program Revenues $8000 $28000 $48000 $68000 $88000 Contributions $13217308 $211327 $187327 $167327 $147327 Expenses Program expenses (130173) (234327) (234327) (234327) (234327) General and Admin expenses (10000) (5000) (1000) (1000) (1000) Change in Net Assets $ - $ - $ - $ - $ -
Appendix 213 Pro Forma Balance Sheet
Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5
Cash (106763) (305231) (479699) (634167) (768635) Accounts Receivable 32000 104000 156000 188000 200000 Inventory 0 0 0 0 0
Total Current Assets $(74763) $(201231) $(323699) $(446167) $(568635) Net Fixed Assets 18000 17000 16000 15000 14000
Total Assets $(56763) $(184231) $(307699) $(431167) $(554635)
Accounts Payable 4333 16000 27667 39333 51000 Accruals 2192 5269 8346 11423 14500 Current Liabilities $6526 $21269 $36013 $50756 $65500 Long-term Debt 0 0 0 - 0 Common Stock 35000 35000 35000 35000 35000 Temporarily Restricted Assets (98288) (240500) (378712) (516923) (655135)
Total Liabilities amp Net Assets $(56763) $(184231) $(307699) $(431167) $(554635)
13
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 14: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/14.jpg)
Appendix 313 Pro Forma Statement of Cash Flows
Pro Forma Statement of Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5
Cash flows from operating activities Cash receipts from customers $8000 $28000 $48000 $68000 $88000 Contributions $132173 $211327 $187327 $167327 $147327 Cash paid to suppliers (51667) (128333) (128333) (128333) (128333) Cash paid to employees (52885) (72115) (72115) (72115) (72115) Expenses (SGA credit card etc) (32288) (19288) (15288) (15288) (15288)
Net cash flows from operating activities $3333 $19590 $19590 $19590 $19590
Cash flow from investing activities Capital expenditure $(11000) - - - - Proceeds from the sale of equipment - - - - -Net cash flows from investing activities $(11000) $ - $ - $ - $ -
Cash flow from financing Owner Investment $35000 $0 $0 $0 $0 Net cash flows from investing activities $35000 $0 $0 $0 $0
Net cash flow $27333 $19590 $19590 $19590 $19590
14
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 15: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/15.jpg)
Appendix 4 Organizational Chart
15
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 16: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/16.jpg)
Appendix 5 Procurement Process Activity Diagram
16
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 17: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/17.jpg)
Appendix 6 Sales Process Activity Diagram
17
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 18: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/18.jpg)
Appendix 7 Porters 5 Forces
Force ThreatPower level
Reasoning
Threat of New Entrants
High Low product costs Low switching costs Low capital requirements
Threat of Substitutes
High Many energy sources (solar) Highly Differentiated product (lowers threat)
Bargaining Power of Suppliers
MediumHigh We compose small part of total business Difficult to find substitutes Low threat of forward integration
Bargaining Power of Customers
Low Differentiated product Small number of choices Many complimentary products
Intensity of Rivalry
Medium Few large companies dominate small scale energy industry 70 of turbines at this scale made in US (further from our market) Many New customer segments currently emerging
Appendix 8
Madison Wind Solutions LLC
TABLE OF CONTENTS
I EXECUTIVE13 SUMMARY 3
II BUSINESS OVERVIEW 4
III MARKET OPPORTUNITY 4
IIIa Customer Relationships 6
IV MANAGEMENT TEAM 7
IVa Staffing 7
V Production Development and Operations 8
Va Impact Analyses 10
VI FINANCIAL ANALYSIS 12
VII APPENDICES 15
18
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 19: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/19.jpg)
Appendix 9
Financial Assumptions
1 The cost of materials and the cost of labor per turbine is estimated to be $28 and $10
respectively113 2
2 Demand is assumed to be unlimited Because of this demand inventory13 at the end of each year
is zero
3 A inventory of 200 turbines in13 year one followed13 by 500 turbines per year for four years with13 a
zero percent defect rate is13 assumed
4 Rent in13 Kenya is assumed13 to13 be $8000 annually3
5 SGampA expenses are13 assumed to be13 minimal given the13 small amount of expenses indirectly
related to the non-shy‐profit program These expenses decrease after year one
6 Salaries Wages and Benefits is comprised of $2500013 per International Operations Manager
$1500013 per Technician and $1000013 per sales representative4
7 Depreciation of office equipment is assumed to be straightline at 20 per year
8 Taxes are estimated to be 10 of Salaries Wages and Benefits due to non-shy‐profit status relieving
Madison Wind Solutions of other tax obligations
9 In year one an initial13 investment from administrators in the US of $35000 is assumed
10 Each year 20 of the turbine price is assumed as program revenues
11 It is assumed that no13 debt will be incurred
12 To cover operational losses it is assumed that charitable grants will be given to offset
operational costs
1 httpdrop-shy‐kickercomwp-shy‐contentuploads201402XXXX_Inj_MOld_Cost_Estimationpdf 2 Chougule 20053 httpkaptichlouisblogspotcom201107office-shy‐space-shy‐price-shy‐comparison-shy‐inhtml4 httpwwwpayscalecomresearchKECountry=KenyaSalaryby_Degree
19
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-
![Page 20: James Madison University: Business Plan - Energy.gov€¦ · Business Overview Madison Wind Solutions’nonNprofit business model is a solutiontothe problem of energy poverty in underdevelopedcountries](https://reader034.vdocuments.us/reader034/viewer/2022051807/60082551f3c82213643868c4/html5/thumbnails/20.jpg)
13 It is assumed that although program expenses would be paid in full13 each year program
revenues will be acquired on an installment13 basis
14 In year one ten percent of the turbine price will13 be paid as a down payment followed by a ten
percent installment Each year following it is assumed that two payments of ten percent will be
made
i httpwwwcsudporgenergy-shy‐documentaryii httpwwwcsudporgenergy-shy‐documentaryiii httpwwwworldenergyoutlookorgresourcesenergydevelopmentiv httpwwwsepsskzpfonddieretbiomasshtmlv httpwwwgeniorgglobalenergylibrarynational_energy_gridkenyaindexshtmlvi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfvii httpwwwnytimescom20101225scienceearth25fossilhtmlpagewanted=allamp_r=0viii httpejournalsebscocomDirectaspAccessToken=95XI5IX8XZIQ9JJPU9UIEP1J9PD18114DMampShow=Objectix httpwwwsafaricomcokepersonalm-shy‐pesanchi-shy‐na-shy‐safaricom-shy‐m-shy‐pesax httpsprofilesuonbiackecoludhefilesvol2_paper_4pdfxi httpsustainabledevelopmentunorgcontentdocumentsnepadkarekezipdfxii httpwwwkpmgcomAfricaenKPMG-shy‐in-shy‐AfricaDocumentsKenyapdfxiii httpwwwruralpovertyportalorgcountrystatisticstagskenyaxiv httpwwwakdnorg13 httpwwwizumiorg13 httpwwwibmcomibmresponsibilityinitiativesgrant_programsshtmlxv httpwwwmafanikiocomaboutaspxvi httpfeedthefuturegovcountrykenyaxvii httpwwwgrumpymulecoukcoffee-shy‐tourcoffee-shy‐from-shy‐seed-shy‐to-shy‐cupcoffee-shy‐harvests-shy‐and-shy‐seasonsxviii httpwwwdeloittecomviewen_USusIndustriesProcess-shy‐Industrial-shy‐Productsmanufacturing-shy‐competitivenessmfg-shy‐competitiveness-shy‐indexindexhtmhttparticleseconomictimesindiatimescom2012-shy‐03-shy‐15news31197245_1_manufacturing-shy‐sector-shy‐industrial-shy‐statistics-shy‐bricshttpwwwblsgovflsindiahtmxix httpwwwtudorfreightcomcontinentsafricakenyaaspxxx httpwwwcnncom2010LIVING0211cnnheroeswadongoxxi httplightingafricaorgwp-shy‐contentuploadsbsk-shy‐pdf-shy‐manager45_LA-shy‐MarketIntelNote_KenyanHouseholdFuelUse-shy‐Dec2012pdfxxiihttpwwwbrookingsedu~mediaresearchfilespapers201304climate20change20clean20energy20 development20hultman04_climate_change_clean_energy_development_hultmanpdfxxiii httpeuropepmcorgarticlesPMC2854735xxiv httpwwwncbinlmnihgovpmcarticlesPMC3664014
20
- Cover Page
- I Executive Summary
- II Business Overview
- III Market Opportunity
- IIIa Customer Relationships
- IV Management Team
- IVa Staffing
- V Production Development and Operations
- Va Impact Analyses
- VII Financial Analysis
- Appendix 1
- Appendix 2
- Appendix 3
- Appendix 4
- Appendix 5
- Appendix 6
- Appendix 7
- Appendix 8
- Appendix 9
-