Are you about starting a natural gas distribution business? If YES, here is a complete sample natural gas distribution business plan template & feasibility report you can use for FREE.
Okay, so we have considered all the requirements for starting a natural gas distribution business. We also took it further by analyzing and drafting a sample natural gas distribution marketing plan template backed up by actionable guerrilla marketing ideas for natural gas distribution companies. So let’s proceed to the business planning section.
Table of Content
- Why Start a Natural Gas Distribution Business?
- Natural Gas Distribution Business Plan – Executive Summary
- Natural Gas Distribution Business Plan – SWOT Analysis
- Natural Gas Distribution Business Plan – MARKET ANALYSIS
- Natural Gas Distribution Business Plan – SALES AND MARKETING STRATEGY
- Natural Gas Distribution Business Plan – Publicity and Advertising Strategy
- Natural Gas Distribution Business Plan – Sustainability and Expansion Strategy
Why Start a Natural Gas Distribution Business?
It can be truly challenging starting any business, but one business which you can start with fewer challenges is the natural gas distribution business. A natural gas distribution business involves buying natural gas in wholesale from natural gas drilling and production companies and then distributing them to retailers.
A natural gas distribution business is profitable, and it is a very easy business to start despite the fact that it is capital intensive.
So, if you have decided to start a natural gas distribution business, then you should ensure that you carry out thorough feasibility studies and market survey. Business plan is yet another very important business document that you should not take for granted when launching your own business.
Below is a sample natural gas distribution company business plan template that can help you to successfully write your own with little or no hassle.
A Sample Natural Gas Distribution Business Plan Template
- Industry Overview
The natural gas distribution industry comprises of businesses that basically manage gas distribution systems consisting primarily of gas mains and meters that transport gas to end users. Other companies are gas marketers that buy gas directly from the well and sell it to a distribution system, while others still are gas brokers or agents that arrange for gas to be sold via distribution systems operated by other companies.
The Natural Gas Distribution industry has performed erratically over the past five years. Revenue declined significantly in 2012 in line with the shale gas boom, which resulted in a flood of domestic natural gas production. When combined with a shortage of pipeline infrastructure and export facilities, this triggered a collapse in natural gas prices.
The economic significance of natural gas has grown over the past decade, with manufacturers and electricity utilities relying increasingly on natural gas as an energy source due to declining prices. Over the five years to 2022, natural gas production is projected to slow, while infrastructure investments will boost pipeline and export capacity.
The Natural Gas Distribution industry is a thriving sector of the economy of the united states of America and the industry generates over 3 billion annually from more than 456 registered and licensed natural gas distribution companies scattered all around the country.
The industry is responsible for the employment of over 85,027 people. Experts project the natural gas distribution industry to grow at a 3.4 percent annual rate between 2012 and 2017. It might interest you to know that no natural gas distribution company can boast of having a lion share of the available market in the United States.
Please note that there are a number of barriers to entry into the Natural Gas Distribution industry. A major barrier to entry is posed by the large sums of capital and considerable expertise required to successfully establish an enterprise. Regulatory requirements at both the federal and state level, requiring industry specific expertise and knowledge of industry structure can deter would-be participants. In addition, entry into certain states’ natural gas distribution markets is limited to existing companies, at least for some categories of customer.
Some of the factors and incentives that encourage aspiring entrepreneurs to venture into the business is that the market is growing rapidly in the United States and it is not seasonal. That makes it easier for entrepreneurs who are interested in the business to come into the industry at any time they desire; the entry barriers might be high but any serious – minded entrepreneur can comfortably raise the startup capital even if it means collecting loans from the bank.
The Natural Gas Distribution industry is a profitable industry and it is open for any aspiring entrepreneur as long as you are able to obtain the required license and permits.
You can choose to start on a small scale natural gas distribution a as broker or agent that arranges for gas to be sold via distribution systems operated by other companies or you can choose to start on a large scale as a gas marketer that buy gas directly from the well and sell it to a distribution system with distribution networks spread across key cities all around the United States.
Natural Gas Distribution Business Plan – Executive Summary
Cole Lewis® Natural Gas Distribution Company, Inc. is a registered distribution company that will be involved in the distribution of natural gas to retailers. Our administrative office will be located in Trenton – New Jersey.
We are aware that there are several large and small natural gas distribution companies all around Trenton – New Jersey, which is why we spent time and resources to conduct our feasibility studies and market survey so as to offer much more than our competitors will be offering.
Beyond the distribution of natural gas from leading brands in the United States, our customer care is going to be second to none in the whole of Trenton – New Jersey and our deliveries will be timely and highly reliable. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they patronize our products.
We have a CRM software that will enable us manage a one on one relationship with our customers no matter how large our distribution network may grow to. We will ensure that we get our customers involved when making some business decisions that directly affect them.
Cole Lewis® Natural Gas Distribution Company, Inc. will at all times demonstrates her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.
Cole Lewis® Natural Gas Distribution Company, Inc. is a family business that is owned by Cole Lewis and his immediate family members. Cole Lewis has a B.Sc. in Business Administration, with over 8 years of hands-on experience in the retailing and distribution industry, working for some of the leading brands in the United States. Although the business is focusing on Trenton – New Jersey, but there is a plan to expand our distribution network all across the state of New – Jersey.
- Our Products and Services Offering
We are in the natural gas distribution industry to make profits and we will ensure that we do all that is permitted by the law in the United States to achieve our business aim and objectives. Our products and services offerings are listed below;
- Buying gas from a well and selling it to a distribution system
- Acting as gas brokers or agents that arrange for the sale of gas over gas distribution systems
- Transmitting and distributing to retailers
Our Vision Statement
Our vision is to become the leading brand in the natural gas distribution business in the whole of Trenton – New Jersey.
- Our Mission Statement
Our mission is to establish a natural gas distribution business that will distribute natural gas from top brands at affordable prices to retailers in Trenton and other cities in New Jersey where we intend marketing our product.
- Our Business Structure
Our intention of starting a natural gas distribution business is to build a standard natural gas distribution business in Trenton – New Jersey. We will ensure that we put the right structures in place that will support the kind of growth that we have in mind while setting up the business.
We will make sure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders. As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more.
In view of that, we have decided to hire qualified and competent hands to occupy the following positions that will be made available at Cole Lewis® Natural Gas Distribution Company, Inc.;
- Chief Executive Officer (Owner)
- Human Resources and Admin Manager
- Merchandise Manager
- Sales and Marketing Manager
- Information Technologist
- Customer Services Executive
- Drivers / Distributors
Roles and Responsibilities
Chief Executive Officer – CEO:
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
- Reports to the board
Admin and HR Manager
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Defines job positions for recruitment and managing interviewing process
- Carries out induction of new team members
- Accountable for training, evaluation and assessment of employees
- Responsible for arranging travel, meetings and appointments
- Oversees the smooth running of the daily office activities.
- Manages vendor relations, market visits, and the ongoing education and development of the organizations’ buying teams
- Responsible for the purchase of natural gas for the organization
- Responsible for planning sales, monitoring inventory, selecting the merchandise, and writing and pricing orders to vendors
Sales and Marketing Manager
- Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
- Models demographic information and analyze the volumes of transactional data generated by customer purchases
- Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
- Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
- Develops, executes and evaluates new plans for expanding sales
- Documents all customer contact and information
- Represents the company in strategic meetings
- Helps to increase sales and growth for the company
- Manages the organization’s website
- Handles eCommerce aspect of the business
- Responsible for installing and maintenance of computer software and hardware
- Manages logistics and supply chain software and Web servers
- Manages the organization’s CCTV
- Handles any other technological and IT related duties.
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides management with financial analyses, development budgets, and accounting reports
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the organization
- Serves as internal auditor for the organization
Client Service Executive
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products
- Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
- Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries.
Natural Gas Distribution Business Plan – SWOT Analysis
Our intention of starting out in Trenton is to test run the business for a period of 2 to 5 years to know if we will invest more money, expand the business and then distribute our products all around the state of New Jersey.
We are quite aware that there are several natural gas distribution companies all over Trenton, which is why we are following the due process of establishing a business. We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be equipped to confront our threats.
Cole Lewis® Natural Gas Distribution Company, Inc. employed the services of an expert HR and Business Analyst with bias in retailing and distribution to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.
This is the summary of the SWOT analysis that was conducted for Cole Lewis® Natural Gas Distribution Company, Inc.;
Our location, the business model we will be operating on (robust distribution network), varieties of payment options, products from top brands and our excellent customer service culture will definitely count as a strong strength for Cole Lewis® Natural Gas Distribution Company, Inc.
A major weakness that may count against us is the fact that we are a new natural gas distribution business and we don’t have the financial capacity to compete with leaders in the industry especially as it relates to economy of scales.
The fact that we are going to be operating our natural gas distribution business in Trenton – New Jersey provides us with unlimited opportunities to distribute of natural gas to a large number of retailers and businesses. We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they patronize our product; we are well positioned to take on the opportunities that will come our way.
Just like any other business, one of the major threats that we are likely going to face is economic downturn. Another threat that may likely confront us is the arrival of a similar business in same location where ours is located.
Natural Gas Distribution Business Plan – MARKET ANALYSIS
- Market Trends
Distribution of goods from wholesalers to retailers has been in existence for as long as humans started trading goods, but one thing is certain, the distribution industry is still evolving. The introduction of technology has indeed helped in reshaping the industry.
- Our Target Market
The natural gas distribution industry has a wide range of customers; a good number of households, hotels, caterers and manufacturing companies make use of natural gas and it is difficult to find people around who don’t.
In view of that, we have positioned our natural gas distribution company to service businesses in Trenton – New Jersey and every other location we will cover in New Jersey. We have conducted our market research and we have ideas of what our target market would be expecting from us.
We are in business to distribute natural gas to the following businesses;
- Manufacturing companies that make use gas powered turbines
- Gas retailers and middle men
A close study of the natural gas distribution industry reveals that the market has become much more intensely competitive over the last decade. As a matter of fact, you have to be highly creative, customer centric and proactive if you must survive in this industry. We are aware of the stiff competition and we are prepared to compete favorably with other leading natural gas distribution companies in Trenton – New Jersey.
One of our business goals is to make Cole Lewis® Natural Gas Distribution Company, Inc. a one stop natural gas distribution company. Our excellent customer service culture, timely and reliable delivery services, online presence, and various payment options will serve as a competitive advantage for us.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and objectives.
Natural Gas Distribution Business Plan – SALES AND MARKETING STRATEGY
- Sources of Income
Cole Lewis® Natural Gas Distribution Company, Inc. will generate income by offering the following services and products within the scope of the natural gas distribution industry in the United States of America. We will generate income for the business by;
- Buying gas from a well and selling it to a distribution system
- Acting as gas brokers or agents that arrange the sale of gas over gas distribution systems
One thing is certain when it comes to natural gas distribution business, if your business is centrally positioned coupled with effective and reliable distribution network, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Trenton – New Jersey and we are quite optimistic that we will meet our target of generating enough profits from the first six months of operation and grow the business and our clientele base.
We have been able to critically examine the natural gas distribution industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. Below are the sales projections for Cole Lewis® Natural Gas Distribution Company, Inc., it is based on the location of our business, and other factors as it relates to natural gas start – ups in the United States;
- First Fiscal Year: $440,000
- Second Fiscal Year: $750,000
- Third Fiscal Year: $1.5 million
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same products as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
Before choosing a location to launch Cole Lewis® Natural Gas Distribution Company, Inc., we conducted a thorough market survey and feasibility studies in order for us to be able to penetrate the available market. We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want.
We hired experts who have good understanding of the retailing and distribution industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Trenton – New Jersey.
In summary, Cole Lewis® Natural Gas Distribution Company, Inc. will adopt the following sales and marketing approach to win customers over;
- Introduce our business by sending introductory letters alongside our brochure to natural gas retailers and key stake holders in Trenton – New Jersey
- Position our signage/flexi banners at strategic places around Trenton – New Jersey
- Create a loyalty plan that will enable us reward our regular customers
Natural Gas Distribution Business Plan – Publicity and Advertising Strategy
Despite the fact that our natural gas distribution business is well structured and well located, we will still go ahead to intensify publicity for the business.
Cole Lewis® Natural Gas Distribution Company, Inc. has a long-term plan of opening distribution channels all around the state of New Jersey which is why we will deliberately build our brand to be well accepted in Trenton before venturing out.
As a matter of fact, our publicity and advertising strategy is not solely for winning customers over but to effectively communicate our brand. Here are the platforms we intend leveraging on to promote and advertise Cole Lewis® Natural Gas Distribution Company, Inc.;
- Place adverts on community based newspapers, radio and TV stations
- Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote our business.
- Ensure that our we position our banners and billboards in strategic positions all around Trenton – New Jersey
- Advertise our natural gas distribution business in our official website and employ strategies that will help us pull traffic to the site
- Brand all our official cars and ensure that all our staff wear our branded shirt or cap at regular intervals.
Our Pricing Strategy
Pricing is one of the key factors that gives leverage to distribution companies and retailers, it is normal for retailers to purchase products from distribution companies that they offer cheaper prices. We will work towards ensuring that all our natural gas is distributed at highly competitive prices compared to what is obtainable in the United States of America.
We also have plans in place to discount our goods once in a while and also to reward our loyal customers from time to time.
- Payment Options
The payment policy adopted by Cole Lewis® Natural Gas Distribution Company, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them. Here are the payment options that Cole Lewis® Natural Gas Distribution Company, Inc. will make available to her clients;
- Payment via bank transfer
- Payment via online bank transfer
- Payment via check
- Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our clients make payment for natural gas purchase without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for the purchase of our products.
- Startup Expenditure (Budget)
In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting a place, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers.
The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. This are the key areas where we will spend our startup capital;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services – $3,300.
- Marketing promotion expenses for the grand opening of Cole Lewis® Natural Gas Distribution Company, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant – $2,500.
- The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The cost for payment of rent for 12 months at $1.76 per square feet warehouse facility in the total amount of $105,600.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $150,000
- The cost for Start-up inventory (stocking with natural gas and cylinders et al) – $200,000
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost of purchase and installation of CCTVs – $5,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
- The cost of launching a website – $600
- Miscellaneous – $10,000
We would need an estimate of $1.5 million to successfully set up our natural gas distribution business in Trenton – New Jersey.
Generating Startup Capital for Cole Lewis® Natural Gas Distribution Company, Inc.
Cole Lewis® Natural Gas Distribution Company, Inc. is a private business that is solely owned and financed by Cole Lewis and his immediate family members. They do not intend to welcome any external business partner which is why he has decided to restrict the sourcing of the startup capital to 3 major sources.
These are the areas we intend generating our startup capital;
- Generate part of the startup capital from personal savings
- Source for soft loans from family members and friends
- Apply for loan from the bank
N.B: We have been able to generate about $500,000 (Personal savings $450,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $1 million from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.
Natural Gas Distribution Business Plan – Sustainability and Expansion Strategy
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all of these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our major goals of starting Cole Lewis® Natural Gas Distribution Company, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to distribute our natural gas a little bit cheaper than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.
Cole Lewis® Natural Gas Distribution Company, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Registration: Completed
- Opening of Corporate Bank Accounts: Completed
- Securing Point of Sales (POS) Machines: Completed
- Opening Mobile Money Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Leasing of warehouse facility and remodeling the facility: In Progress
- Conducting Feasibility Studies: Completed
- Generating capital from family members: Completed
- Applications for Loan from the bank: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: In Progress
- Recruitment of employees: In Progress
- Purchase of furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business both online and around the community: In Progress
- Health and Safety and Fire Safety Arrangement (License): Secured
- Establishing business relationship with natural gas well owners and production companies within and outside of the United States of America: In Progress
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