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How to Become a Utility Broker

by David Lipscomb

Energy is a commodity that never ceases to be required. Given the constant demand for utilities such as electricity, there's every reason to become a broker for these valuable services. Successful brokerages consistently get better rates for consumers. Getting involved with brokering utilities has the very real potential to create a solid and recurring income stream for you and your business.

Evaluate the competition in your area. Brokers might not offer anything other than superior pricing, such as analysis and auditing services. If you find gaps in a competing broker's services, plan to build these offerings into your business model. Since the oil and gas is the same from one supplier to the next, everything you offer is cost and service oriented.

Look into the requirements your state or municipality enforces for brokers. You'll need a business as well as a broker's license in some states.

Gather startup funding. Although you can use your own finances, tapping personal accounts for your initial funding, getting a small business loan or getting financed through your banking institution is a way to spread out your costs.

Consider franchising. Owners of fast food establishments, for example, understand that purchasing a piece of a franchise gains access to important -- and potentially costly -- infrastructure services that you don't have to engage in from scratch like independents. Examples of these services include marketing, contract negotiation, name recognition and generation of business, which all help get your organization moving forward. These things come at a cost in the form of franchise fees and royalties, where applicable.

Retain legal services. Although necessary for any business, the contract negotiation process you'll engage in with suppliers and consumers is often laden with fine print and details that can prove costly or crippling if you ignore them or don't understand them. It's smart to seek out proven firms that specialize in energy regulation and working with energy companies. Note that you can skip this step if you become a franchisee, since the company handles these issues.

Get in touch with local energy suppliers to begin discussions about offering your brokerage services. The more suppliers you have, the better, as this increases competition -- lowering prices to your customers as a result.

Begin providing energy to your clients. As a broker, you're responsible for ensuring that each of your clients receives the best possible prices for the product, as is apprised of -- and sold on -- any value-added services you provide. Understand that all shareholders -- including the state, your suppliers and clients -- must be aware of the standardized practices you implement to ensure the client is getting the best value for the dollar.

Tip

  • Think about brokering green and alternative energy solutions. Although less established, green companies often benefit from government grants. Additionally, this market has room for growth and tends to be less-saturated than markets for traditional energy sources.

About the Author

David Lipscomb is a professional writer and public relations practitioner. Lipscomb brings more than a decade of experience in the consumer electronics and advertising industries. Lipscomb holds a degree in public relations from Webster University.

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