How to start your own micro-CHP company.

 
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In case you were looking for a new project, here is a quick guide to starting your own micro-combined heat and power (micro-CHP) product company.

  • Choose a market position and related customer proposition and your USP - it’s always best to start with the target customer in mind.

  • Pick a name: the title “micro-CHP” has no traction in the wider public awareness so you are free to name your product anything; but keep in mind the market position you are aiming for. Names like the Japanese ‘Ene-farm’ are inspirational (to the Japanese), or a name like ‘Vitovalor’ reflects the sophistication of the product, and the name calls out to those respective target markets.  

  • Pick a category of product: Replacement, add-on or supplemental. Does the mCHP replace the entire heating system, is added to it as an efficiency boost, or does it supplement the heating system by heating one particular area of a building?

  • Pick a technology type: engine or fuel cell and ether heat-controlled or electricity-controlled.

  • Design a product to suit your customer.

  • Make an engineering sample of that product.

  • It is rare for a company to both manufacture a micro-CHP unit and to sell it, there is just too much work to do if you do both, so; 

    • (if you want to manufacture) Partner with another company for selling to the public

    • (if you want to be in sales) Partner with another company to manufacture the product but remember that you need some sort of protection on your product

  • Finalise your product design and prepare the relevant documentation.

  • Get a design final product (or very very near final design) safety tested for compliance and then efficiency tested by an independent third party. Put the results on your documentation.

  • Attract specialist installers to provide installation and maintenance services for end-customers and to provide a sales channel. You will need to start a training program for these installers (or you could hire some employees).

  • Start a maintenance parts business to supply parts to your maintenance teams and to collect market fault data.

  • Start a customer service team to provide support (depending on your position in the business chain either public facing or sales company facing).

  • Run a limited sales period for 1 year where you field-test your product with early adopters in your customer segment. This provides learning for your chosen installers and product feedback on the unit.  

  • Integrate learning from the field trials and make changes. Take out of any legacy units in the field and start scaling-up your selling plans.

  • Pray you don’t run out of money because at this point you have come quite far and it still might be a while before you turn a profit.

From experience, the most dangerous pitfalls are not enough focus on the final product quality and the slow rise of sales. Lots of companies in the past have failed to launch because the product isn’t ‘ready’ and a flawed product either by poor initial design or due to problems during manufacture will not impress early customers, and you won’t get the word of mouth sales you desperately need. However, even with a great product you need to spend a lot of money upfront and sales will be slow to rise, so keep a tight-grip on your spending otherwise it will all go to waste. My final tip is the most important and that is;

  • Get some help from others; because nobody should try and do all of the above by themselves and advice can guide you away from repeating past mistakes.    

It’s not that complicated, honest.

It’s not that complicated, honest.