The thought of preparing a business plan for the first time can be very intimidating. There are many “moving parts,” and it’s easy to get lost in the details.

The task becomes much easier if you think of your plan in terms of four essential cornerstones that serve as the foundation of all business plans: Opportunity, Solution, Execution, and Outcomes.

Pretty much anything that goes into a business plan falls into one of these four categories:

1. Opportunity: Every successful business exploits an opportunity. Opportunities arise from “problems” that customers are willing to spend money to solve: they want to stay in touch with friends (Facebook and Twitter); they want to eat a tasty Italian meal (Olive Garden); they want to better manage their enterprise data (Oracle); they want to commute to work in a fun but fuel-efficient vehicle (MINI Cooper); they want to get and stay fit and trim (LA Fitness). The Opportunity portion of your business plan delves into the nature of the problem: who experiences the pain; the severity of the pain; the trends affecting the source of pain; how people are currently addressing the pain (both substitutes and competitors); and how much people are willing to spend to alleviate the pain. Broadly speaking, the Opportunity is a description and analysis of your potential market.
2. Solution: This is your brilliant idea. Exactly what are you introducing into the marketplace that takes advantage of the opportunity you’ve identified? How does it work, and how does it solve the problem? What are the features and benefits? How will you price it and position it in the market? Have you patented it? How does it stack up against competing solutions to the problem? A lot of first-time entrepreneurs think that a brilliant solution is the most important ingredient in building a successful business, but it’s only one of many important elements.
3. Execution: Execution – the hard task of turning ideas into products that people will buy – is what separates successful entrepreneurs from dreamers. What is your plan for completing the development of your product and getting it ready to market? How will you generate awareness and close sales? How do you manufacture and distribute it? What kind of facilities will you need? What kind of management team will your company require? What does the product cost to manufacture? How will you make money? How will you overcome the regulatory hurdles? What types of business partnerships will you need to forge? What could go wrong, and what can you do to mitigate the risks? How will you carve out a profitable niche and keep competitors at bay? What kinds of variable and fixed expenses will you incur to make this happen? How much investment capital will you need to pull this off?
4. Outcomes: This is your vision of the future outcomes if things go according to plan. How much of your product will you sell each year over the next five years? How will the inevitable changes in markets, consumer behaviors, and competitive offerings affect outcomes? How much cash and profit will your company generate? What will your balance sheet look like in five years? Can you get there without running out of cash? If your company becomes successful, what are the viable ways for your investors to cash out?

Use these cornerstones to organize your thoughts.

When you sit down to start working on a business plan, grab four blank sheets of paper and write the words Opportunity, Solution, Execution, and Outcomes across the top.

Now, start brainstorming. Get as many ideas down as possible. Don’t worry about structuring things into a business plan yet. If one of your sheets looks empty compared to the others, then you have more work to do.

When you’re done, put these sheets of paper away for a few days. When you’re ready, go back and look for a powerful, compelling story line that links the four sheets together. Next, go through each sheet and cross off the items that don’t support the story line.

A business plan, regardless of your target audience, is essentially a narrative that ties these four cornerstones together. Thus, by going through this simple process, you’ve half way to having a well-conceived first draft of your business plan!

P.S. As you work your way through your plan, watch out for the common mistakes described in our article, Why Business Plans Don’t Get Funded.

Do you have comments or suggestions for improving on this methodology? Let us know and add your thoughts below!

The golf swing is a tricky thing to master. There are countless moving parts that all have to work together in flawless unison, all in the span of a split second.

A flaw in any part of the swing can produce erratic results.

The trouble is, finding and fixing the flaw can seem like an incredible task. It’s humanly impossible to remember – and then do– exactly what’s supposed to happen at every moment of your swing.

So golfers have turned to “swing thoughts” – simple ideas that allow you to focus on one aspect of the swing. Good swing thoughts cause a chain reaction of proper technique, so one thought can influence the dynamics of your entire swing. Golf legend Arnold Palmer’s top swing thought was “keep your head steady,” and this thought alone has transformed the games of countless beginning players.

You can apply the swing thought concept to your entrepreneurial venture as well, and I think it will have a similarly transformative effect. Here’s one you can try:

The concept of “cash flow positive” simply means that there is more money coming in than there is going out. If you pass every major decision through this lens, you’ll be doing just about everything you need to do to build a successful venture.

For example, here are the outcomes encouraged by this one simple swing thought:

• Rapid development of a product that the market needs
• Identification of paying customers
• Careful attention to expenses
• Recruitment of team members who contribute to positive cash flow
• Pursuit of a realistic financing strategy involving equity, debt, and other capital sources

Write “Become cash flow positive” on a Post-It note and stick it somewhere you’ll see it a few times a day.

Every time you see it, take 30 seconds to think about whether or not your actions are consistent with the swing thought.

I think you’ll be pleased with how a simple swing thought can bring all aspects of your game together.

Do you have any favorite “Swing Thoughts” you’d like to share with your fellow entrepreneurs? Post them here!

In the New York Times of February 23 Janet Yellen, President of the Federal Reserve Bank of San Francisco, is quoted as predicting a slow drop in the U.S. unemployment rate, now 9.7 percent, to 9.25 percent by the end of this year and 8.0 percent by the end of 2011. This is pretty anemic in view of her forecast of 3.5% GDP growth this year and 4.5% next year, a robust performance for a mature economy, though she attributes much of this growth to reduction in inventories rather than growth in sales. Ms. Yellen doesn’t foresee a return to peak economic performance and a corresponding drop in unemployment until 2013. The cause, she says, is clear: an increase in business efficiency and labor productivity, which she says, “is here to stay.”

One has to assume that Ms. Yellen’s prediction of stubbornly high unemployment takes account of Wednesday’s probable passage by the Senate of the $15 billion jobs creation package, which its supporters say will create tens of thousands of new jobs by providing an exemption from payroll taxes to employers who hire people who have been out of work for six months or more, as well as a $1,000 tax credit if those people remain employed for at least a year.

This development follows President Obama’s spirited defense last week of the stimulus package, which he claims has saved or created as many as two million jobs. Never mind any possible flaws in the calculation, and never mind that it is private business, not government, that creates jobs in the private sector. Let’s accept the President’s assertion that the stimulus package, which the Congressional Budget Office now estimates has cost $862 billion, has accomplished what he says. That works out to $431,000 per job created or saved, or about 10 years’ wages for the average employee. That’s a lot of money to save or create a job that could disappear as soon as the incentives expire.

Tax incentives to create jobs generally don’t work. In the late 1980s and early 1990s I helped the government of Botswana design incentives policies to attract foreign direct investment and create new jobs. Botswana’s incentives were as generous as they come: for qualified investments the government would pay 100% of a company’s wage bill in the first year of operation, declining in 20% increments over the following four years. The program initially was a great success, creating over 10,000 new jobs in garment production, automobile assembly, and other light manufacturing. The only problem was that most of these jobs disappeared as the incentives expired, creating a new set of social and economic disruptions. In the late 1990s, after one of the biggest beneficiary companies collapsed, the government realized the cost of the incentives had far outweighed any calculable benefits and scrapped the program entirely. Many other countries have had similar experiences.

By their very nature, incentives of this kind distort business decisions. Investment and employment decisions taken primarily for reasons of government grants or tax breaks instead of a sound business case may generate some short-term benefits, but at the cost of long-term competitiveness. Few people in the Obama Administration have any business experience, so they fail to grasp what is intuitively obvious to most businessmen.

It is impossible to save jobs in declining industries, and attempts to do so typically condemn those industries to a more complete demise. A hundred years ago, some 40 percent of the U.S. work force farmed for a living. Mechanization of agriculture, improved soil and crop management, better roads, and refrigeration changed everything. Today, less than two percent of the population works on the farm, but that small number of farmers produces far more food and feeds many more people at a far lower cost. Efforts to support farmers through subsidies, price supports, and tax incentives have done nothing to increase or even maintain agricultural employment, though they have enriched many large agro-industrial corporations.

Largely as a result of the past 30 years of innovation and investment in information technology, our economy is undergoing a similar shift now, in which manufacturing requires fewer and fewer people to produce more, higher-value goods. For the most part, this is a good thing. If productivity doesn’t increase, neither can wages and living standards.

I have seen garment factories with over a thousand sewing machine operators under a single roof, but these facilities are in Haiti and the Dominican Republic and China, and no incentives will ever bring these jobs back to the United States. My great-grandparents worked in the sweatshops of New York’s Lower East Side, but those jobs went, first to South Carolina, and later to other countries, but they were replaced by better, higher-paying occupations. It can be an otherworldly experience to visit a modern factory, in which a handful of workers with digital controls can run a vast production flow. Any attempt to increase the number of employees with tax credits and other incentives would find few takers, but to the extent that it succeeded it would make these plants less competitive and put the entire enterprise at risk.

This is not an argument for the government to do nothing at all. The Oklahoma sod-busters who moved to California during the Great Depression and the Dust Bowl eventually found jobs in higher-value agriculture and emerging industries like aerospace, without much government assistance but not without wrenching dislocations and horrible suffering. No one wants to see a 21st century repeat of The Grapes of Wrath. So what should government do?

The first thing is to remove some of the huge barriers to investment and employment in existing Federal laws. Writing in his blog, Mickey Kaus, hardly a Rush Limbaugh conservative, points to the Davis-Bacon Act, which requires workers hired on Federally-funded contracts to be paid the “prevailing wage” in the relevant county as determined by the Federal government. One of the centerpieces of the stimulus package was funding for “weatherization” of homes, but since it was launched the program has weatherized only 22,000 houses, largely because the Feds spent most of 2009 trying to establish the prevailing wage for weatherization work in more than 3,000 U.S. counties.

Davis-Bacon has been around since the 1930s, and was introduced to “stabilize” the construction industry by protecting white northern workers from being undercut by cheaper black migrants from the South. The Obama Administration is now presiding over a big expansion in the scope of Davis-Bacon to many additional jobs not previously covered. Moreover, the “prevailing wage” is set not in reference to actual wages as reported by the Labor Department’s Bureau of Labor Statistics but by its Wages and Hours Division, which uses a formula based on what the prevailing wage would be if all applicable jobs were unionized. According to some studies, this adds 22 percent to the actual prevailing wage. Kaus reports that the city of Portsmouth, New Hampshire turned down stimulus package money for construction of a new water treatment plant because the application of Davis-Bacon would have added $2.3 million to its $17.3 million cost. Ideally, Davis-Bacon would be repealed entirely, but with a President and a Democratic majority in both houses of Congress, who depend on labor union support, the likelihood of this happening is nil.

There are plenty of other examples of wrong-headed policies, including one of the highest corporate tax rates in the world, which is so riddled with special tax breaks and loopholes as to make a mockery of any claim to transparency and fairness. Many countries have found that a lower tax rate combined with elimination of most special exemptions generates more revenue with fewer distortions. Another example is the Obama Administration’s determination to impose taxes on overseas operations of U.S. corporations even before profits are remitted, which no other country does. Unfortunately, in the current political environment and under the current administration, neither of these anti-competitive policies stands any real chance of reform.

Finally, there is the “vision thing.” Barack Obama came to power promising a new approach to policy and politics, but in almost everything he has done he has proven himself a thoroughly conventional politician. His approach to technological change and its effect on the composition of industry is to award grants to companies trying to develop batteries for electric cars, while at the same time he has spent over a hundred billion dollars of taxpayers’ money to preserve jobs, wages, and benefits at GM and Chrysler. In an industry that has to cut its production capacity by at least a third just to survive, this makes no sense at all.

What we need instead is a set of policies that can help workers dislocated by technological transformation, globalization, and other fundamental changes to adapt to the requirements of the new economy. Rather than spend huge sums on vain efforts to preserve jobs destined to vanish, some fraction of that money could be spent on helping workers find new jobs and acquire the skills needed to succeed in them. Instead of trying, as the U.S. and some European countries do, to use incentives and penalties to prevent companies from shedding jobs, we should instead focus on the redundant workers themselves, as most Scandinavian countries and the Netherlands do. In Denmark, when two large meat packing plants closed with a loss of over 1,500 jobs, the national “workbusters” program shifted into gear, providing about €400,000 in assistance to complement financial contributions by the former employer, to detect vacant jobs and new job opportunities and to promote the laid-off workers to potential new employers. The company, with government assistance, published a leaflet, which it sent to 500 companies in the region, outlining the skills and ambitions of the former employees and providing information on the program and other employers’ experiences with it. Within 10 months, 98 percent of them had found new jobs, at a cost of around $350 per person.

When the Swedish energy company Vattenfall retrenched some 450 workers the company, with government support, set up an internal support organization to which each of the employees was reassigned to “work” full-time on finding new employment. Each person was assessed and assigned a tutor to develop a plan for training for a new trade or for self-employment or to pursue additional education. The company published a job journal on the company’s intranet to help workers find new jobs within the company, while all new internal recruitment requests had to go through the redundancy pool to identify a possible match. The program also topped up the salaries, at least temporarily, of those workers who accepted lower-paid jobs within or outside the company. The cost? About $20 million, or $50,000 per worker. A lot of money to be sure, but much less than the $400,000 in the Obama stimulus package.

These are not panaceas, and may not be applicable in all cases. But they are indicative of a flexible and innovative approach to unemployment that takes into account structural changes in the national and global economy and seeks sustainable solutions instead of quick fixes. Some may argue that the American system of government makes this kind of approach exceptionally hard, but even now President Obama may still have enough political capital to get something done. If he took on Davis-Bacon he would achieve the kind of bipartisanship he claims to want. But that would take extraordinary political courage and leadership of a kind the President so far has not exhibited.

What does this mean for investors? It does not mean that industries like steel and cars and textiles are in terminal decline or that investors should shun them. Some companies will still make money supplying clothes and cars to a growing global population of consumers. It just means that GM, Chrysler, and others may not be among them. More disturbingly, since it is a long time since what was good for General Motors was good for America, countries that fail to recognize and respond appropriately to these fundamental techno-economic shifts will fall behind those that do. In the U.S., this means that if we keep on the present course, over the long term our productivity will stagnate, causing domestic prosperity to decline. It has happened before. Argentina a hundred years ago was one of the richest countries in the world. It would be wise to consider these trends as we look at new investment opportunities at home and abroad.

The March 4, 2010 issue of The Wall Street Journal had an article written by Emily Maltby titled A Plea for Direct Lending to Companies.  In the piece, Ms. Maltby discusses the pros and cons of the SBA passing over the banks and becoming a direct lender to small businesses itself.  Clearly there are pros and cons but the general conclusion is that the SBA does not have the infrastructure in terms of systems, trained lenders, etc. to become a direct lender and in any case, does not want to compete with the very banks that have joined the SBA’s programs.  President Obama even suggested that “creating a direct lending system would make a massive bureaucracy.”

So, what is the problem here?  If the SBA is willing to provide as much as a 90% guarantee, shouldn’t the banks be eager to lend when their ultimate source of repayment is Uncle Sam?

Karen Mills, the Administrator of the SBA suggests that perhaps the problem is not entirely the fault of the banks.  Indeed, she suggests that in many instances, the problem lies with the small businesses being unable to provide a satisfactory loan package to the bank that it can understand and lend against.  She is quoted in the article as saying, “we can get them bankable by helping them with their package.”  Says Ms. Maltby, Mills is “referring to the owners’ business plans and other necessary application materials required by lenders.”

It’s at this point that I sat up and said, “Hey, that’s what we do at Cayenne.”  We have the staff, the expertise and the experience to help small business owners prepare to go to an SBA participating bank with a complete, well documented loan package.  In fact, we already do it all the time.

Note to small business owners: You don’t have to do this by yourself.  There are plenty of resources right here at Cayenne that you can use to get your loan package prepared and prepared right the first time.

I know some really smart people who refuse to get on LinkedIn, Facebook, and Twitter. Sometimes, they cite paranoid-sounding privacy concerns. Other times, they say “social media is a passing fad,” or that social media somehow isn’t relevant to them, or that social media is a waste of time. I don’t think they realize that, almost overnight, social media has become as mainstream as cell phones and horseless carriages. These Luddites need to open their eyes and take stock of the new tools at their disposal. Maybe this video will open some eyes.

If your objective is to someday sell your company for the highest possible price, you would be well served by building reliable systems that can sustain the growth of the business.

A solid management team is the first value driver to focus on when you are preparing your business exit. In addition to building a strong management team, it is important to build reliable operating systems that can sustain the growth of the business. The second value driver then is the development and documentation of business systems that either generate recurring revenue from an established and growing customer base or create financial efficiencies. For most businesses, this includes all of the core processes that generate revenue or control expenses. These systems may include processes related to production or service delivery, but also may include people-related processes such as a succession planning or a performance management approach.

If the value of your business drops significantly when you walk out the door, you’ve got work to do. Look at your business from a buyer’s perspective. If you leave shortly after a sale, what remains? If the answer is top management and highly efficient business systems, you can be more confident that you will be able to get top dollar for your business.

In addition to the business systems related to revenue and expense, some systems are related to customers, such as tracking systems, and the delivery of your products and services such as distribution systems. The documentation of these systems is important to ensuring that quality and consistency can be maintained after the sale. They also signal to the buyer that elements critical to the successful transition of a business are in place. Some examples of items worthy of documentation are:

• Financial control systems and accounting policies.
• Policies to ensure compliance with legal and regulatory matters, especially those related to employer/employee relationships and safety.
• Data management and information systems that tie the company together.

There are several business systems, which, once in place, enhance business value whether you plan to sell your business now or decide to keep it. These systems include:

• Human capital management including: recruitment, selection, hiring, and retention; performance management; training and development; compensation and benefits.
• Production including product or service quality control and improvement.
• Product or service research and development.
• Inventory and fixed asset control.
• Sales, marketing, and communications.
• Procurement including the selection and maintenance of vendor relationships.

Obviously, appropriate systems and procedures vary depending on the nature of a business, but at a minimum, those resources and activities necessary for the effective operation of the business should be documented. After you have built reliable systems designed to sustain the growth of the business, the next value driver to focus on is establishing a diversified customer base.

Are value drivers important to an early stage company? Absolutely. Think of an equity investor as you would a buyer for the business. The same value drivers will resonate. VCs will look first at the caliber of the management team. A great business idea is doomed to failure without the right team. Other value drives such as well documented systems, a solid cash flow growth plan, a diverse customer base, and risk management initiatives will make your business more desirable. Consider developing a Venture Value Scorecard to track your progress as you grow the value of your business.

If you have any questions about increasing the value of your business prior to your exit, please contact us to discuss your particular situation. We can help guide you through the process of identifying the current value drivers in your business and creating a road map for increasing value to meet your overall growth and exit objectives. Rick Tifone is a Certified Exit Planner (CExP) and a member of BEI’s Network of Exit Planning Professionals™. Send questions to rick@caycon.com or visit Cayenne Consulting, LLC at http://www.caycon.com/exit-planning.php.

Life is full of lessons; we get new ones every day. I learned many of my lessons many years after the teaching event. In other words, I learned my lessons too late to help myself, and only after deep reflection on past events. I have a lot of these, as I am past retirement age.

We started a company in 1978 to sell Enterprise Resource Planning (ERP) software to manufacturing companies, with implementation and training services as our value add. At the time, the transition from service bureaus to mini-computers had just begun, and we intended to take advantage of the trend. A typical sale in those days was a bundled package of hardware, software, and professional services. Before we started operations, we had executed a reseller agreement with Digital Equipment Corporation (DEC) for hardware, and licensed a complete set of accounting software from Mini Computer Business Applications (MCBA). We could not find manufacturing software that met our needs, so we became a software development firm as well, and built a development staff soon after startup.

As with any startup, nothing was more valuable than a sales prospect. We directed our marketing entirely at manufacturers. From time-to-time, DEC would refer a distribution prospect to us. We sold several of these and developed the distribution functionality they needed. This digression did not dilute our efforts, since manufacturers needed the additional distribution functionally as well.

About two years after we began operations, a big opportunity — or temptation, depending on your point of view — arrived. Our DEC salesperson called and asked if we would take a lead in the vending industry. While a vending company is a distributor, they have routes that serve mini retail stores (a.k.a., vending machines). They require unique software. We had a meeting with the prospect and found that he also had friendly relationships with vending companies in other cities. We took the plunge, sold the prospect, and developed the software. We quickly got other vending customers and became a presence in the vending software business. We spun the business off, and the company is still in business today. Sounds like a success story, right?

The manufacturing software company also grew rapidly, making the Inc. 500 list in ’84 and ’85. It acquired venture capital in ’88 went public in ’94. Finally, after 21 years of operations, a European ERP company acquired it in ’99 during the great ERP consolidation. Sounds like a success, right?

Here’s where the hindsight comes in.

The lost opportunity was in the manufacturing software company. If the vending customers had been manufacturing companies, our manufacturing customer base would have been almost 40% larger. We could have invested more in the manufacturing software earlier, resulting in increased competitiveness, and consequently, even more customers. The manufacturing software company would have gone public at a higher valuation. The vending software opportunity, even though it became a new business, was a diversion that decreased total value.

Increasing product lines or expanding into new markets is a temptation that is difficult to resist. I have spoken with many entrepreneurs who were trying to do too much. I cannot remember any that were trying to do too little. Focus has to be on the minimum number of products and the minimum number of markets that still enable you to attain your financial goals. Anything else can create diversions that increase risk and reduce your overall financial success.

As a business plan consultant for both non-profit and for-profit startups, I find that non-profit founders, like for-profit entrepreneurs, are looking for experienced help in crafting their business plans. They see the value in strengthening their strategies for fundraising, board development, operations, and marketing before presenting to partners and funders. If you are an aspiring non-profit founder, it is vital that you understand four key differences between for-profit and non-profit plans.

1. Your non-profit must sell to TWO separate markets:

One market is your customers/clients/constituents who receive services and the second is your organization’s funders and funding partners. These are generally two very separate groups (those in need and those with the means to give) and each requires a  distinct marketing strategy to reach them. While flyers and good street presence may be all that is needed to reach your clients, an internet presence and networking may be what is needed to reach your funders. The first marketing strategy is generally covered in a ‘Marketing Plan’ section and the second in a ‘Fundraising Plan’ section.

2. Your non-profit plan must include ‘Outcomes and Evaluation’:

Your non-profit’s results are much more difficult to measure and explain than a for-profit company’s. Growth in the size of your budget is less relevant than the extent to which your organization fulfills its charitable mission. Your challenge is to find specific, quantifiable ways to measure this mission fulfillment through related indicators. For example, a charter school may seek to increase its students eventual college enrollment rates, but must settle for measuring improvements in test scores for many years until it graduates its first class.  Your non-profit plan must demonstrate what the key metrics are and the specific target numbers (‘Outcomes’), as well as the plan for when and how those metrics will be measured by your organization or by others (‘Evaluation’). This section of the plan will be in addition to a full financial rundown.

3. Increased importance of your Board:

Your non-profit’s Board of Directors is not only an advisory body, but a group that is legally responsible for the activities of the non-profit. Therefore, your plan must demonstrate that the organization either has a diverse, skilled, independent and well-connected Board or that you have a specific plan for how to develop one. The early recruitment of qualified and active Board members can also provide invaluable feedback on the plan itself.

4. Your non-profit business plan will need customization for each audience:

Foundations and government agencies all have their own specific proposal templates and application forms, requiring you to customize your non-profit’s basic business plan. For-profit funders, on the other hand, will often accept the standard format business plan. This doesn’t mean it isn’t important to create a strong and well-structured non-profit plan to begin with – it just means that you must be prepared to cut, paste, and revise pieces of that plan to meet each funder’s requirements.

Remember to launch your non-profit with the seriousness of a business, while understanding how your plan must differ from that of a business. If you do, your chances of success will improve significantly.

Did you ever hear about the entrepreneur who, upon returning from a quick lunch, finds his angel investor sitting in his office? The angel greets him with the question, “Where have you been?” Upon hearing the answer, the angel responds, “I don’t see how you have time for lunch given the fact that last months sales were 3.5% below budget.”

Don’t laugh, it happens more than you think.

Obviously this isn’t exactly what you were expecting when you took your angel’s money. In addition to your angel’s money, you expected him or her to provide advice, contacts, and support, but not unwarranted sarcasm and criticism.

So how do you ensure that your relationship with your angel meets your expectations and your angel’s expectations in a positive and productive way?

The answer is really quite simple: In addition to the legal agreement that covers the exchange of shares for cash, you need a written or unwritten agreement that carefully and thoughtfully sets forth the terms and conditions of your working relationship. Issues to be covered might include:

• Detailed discussion of the contributions you expect from your angel;
• A very clear understanding of how you intend to run the business;
• Type and frequency of shareholder reports;
• Most appropriate forms of communications; and
• How and when the angel might expect repayments or distributions.

If you and your angel are unable to mutually agree on any of the above points as well as other expectations specific to your business, then do not take their money. Find an angel that you can harmoniously live with. It will be more pleasant, productive, and profitable for all concerned.

If you have some stories about dealing with difficult angels, or if you have some tips to share, please leave a comment below!

This fall, I had the opportunity to participate in the public comment review for the Massachusetts Department of Energy Resources (DOER) new Solar REC program. Over all, the Commonwealth has done a great job trying to keep solar development growing. Programs like Commonwealth Solar provided large rebates to commercial and residential solar projects. In fact, Commonwealth Solar was so successful that funding was in short supply late last year.

So the dilemma that the Commonwealth faced was how to keep solar installations growing and demand strong without it costing real dollars to the Commonwealth and ultimately the taxpayers.

Dwayne Breger and his team at DOER invested countless hours this past fall and early winter reviewing programs previously implemented in other states, and developing a unique program that should help maintain growth over the next decade.

The details of the program are available at MA Solar Credit Clearinghouse.

Briefly the new program does the following:

1. It establishes a specific Renewable Portfolio Standard that generators must fulfill with solar energy. In 2010 the Solar RPS is 25MW.
2. It tries, through various economic mechanisms, to establish a relative constant price for S-RECs. By trying to stabilize REC prices, DOER hopes to provide banks and other lending organizations with a reasonable certain, and therefore, financeable revenue stream that project developers can use to obtain financing.
3. Municipal Light Districts are eligible for the program. This is a big change, because it allows towns like Norwood, Wellesley, Concord, and others …. that were not eligible for RET program because they were not members of the trust …. to generate and sell Solar RECs which will in turn help finance projects in those towns.

All in all, kudos to DOER, for grabbing the bull by the horns and getting what looks an exciting program quickly into the marketplace.