Green business is undoubtedly one of the biggest topics in business, economics and politics right now.Â Understandably, it has brought along both a lot of hype and skepticism.Â There are plenty of reasons why both points need to be considered.Â Entrepreneurs considering starting a business related to green energy need to fully understand the opportunities and threats before making their decision.
One of the reasons green business is such a hot topic is that it may be necessary to sustain an economic recovery plan.Â Most analysts are trying to forecast when the recovery will be possible.Â As natural resources become increasingly scarce, it becomes more difficult to refuel the industrial initiatives necessary for a real turnaround to be possible.Â Also, after the BP disaster it is possible (but not certain) that offshore drilling may lose favor in the near future.Â Even a temporary shift in social perception may have a profound long-term effect if it inspires immediate change.
Whether we favor change or not, we may need to accept that green business is going to be essential to rebuild the global economy.Â It might even be necessary for our society to function at all.
Consumers who choose to support the green movement are typically more concerned for the environment than the recovery plan.Â This has helped create a growing market for green products.Â Many consumers now insist on purchasing products that have a green label on them.Â Outrage at the disaster in the Gulf is likely to cause even more panic and consumer sensitivity (although this particular concern is likely to last only while it remains a major current event).
Green Bubble Coming?
There seems to be little doubt that green business is necessary to make the changes we need to be successful.Â However, the hype may have gone overboard and we may be headed for a "green bubble."Â At the end of the 20th Century, the dot-com bubble cost investors and entrepreneurs hundreds of millions of dollars.Â While the information revolution was a wonderful transformation for managing business and reaching consumers, too many businesspeople got carried away in hype which ended up ruining them later.Â Green business will arguably have an even more profound effect on our society, but we may be repeating history as we jump into it headfirst.Â Businesses are often ready to jump onto the green wagon without researching the market and the opportunities therein.
I recently discussed one of the concerns with entrepreneurs trying to enter the wind energy industry. Â On the surface, creating a wind farm sounds like a great idea.Â It produces renewable energy and provides an income source with few operating costs beyond maintenance.
Fantasy vs. Reality
In a fictitious world, entrepreneurs can easily set up a wind farm on any vacant piece of land and begin making money.Â Unfortunately, there are very few sites in the United States that have wind speeds high enough to be feasible for harvesting wind energy for commercial applications.Â If wind energy is recognized as a huge opportunity, most of these sites will probably be bought out by larger companies trying to secure the market.Â If entrepreneurs are planning on getting in on this market, they should move fast before their opportunity is gone.
Green business obviously provides a unique opportunity that smart entrepreneurs can take advantage of.Â The only advice I can give is to approach it just like any other when you are creating a startup.Â Don't let your head get carried away with hype like everyone else does anytime we head into an economic bubble.Â Do your research to fully understand the trends associated with it before you invest all your time and money in a project that may not yield the outcome you are looking for.
Kalen Smith is the founder of Engineer-a-Business, a provider of business-to-business services and informational products for developing technology businesses.Â Read more about Kalen here.