Creating any new business from scratch is no easy task. Below are a few quick tips to help you get your solar business started. Here’s ten steps to launching your business in 3 to 6 months.
Are you planning to sell to residential or commercial customers? Or both? Do you plan to both sell and install projects? And will you have your installation crews in-house or outsourced? All of such basic questions are crucial to plan clearly as you set up your business.
A residential installation can be priced anywhere from $15,000 to $50,000, depending on the size and type of panels installed. For companies that only sell and install panels to residential customers who pay all at once, you can see profits of $5,000 to $10,000 per job.
The key to any successful business is to have an excellent team committed to the vision and ready to execute and build from zero. The initial months and quarters for any new solar business can be difficult. Due to lack of external financing and irregular sales and collections cycles. So having a solid team ready to grow quickly is crucial.
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your solar panel business is sued. Whether you keep your installation crews in house or outsourced, this impacts your liabilities as a business significantly.
As for any new business, in order to register for taxes you will need to apply for an EIN. It’s easy and free! Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits. A solar panel installation business would need to create a services agreement. Which should outline the parameters of installation, the price, and the expectations of the client. A solar panel business is often run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). Also get Business Insurance to protect your company’s financial wellbeing in the event of a covered loss.
Using dedicated business banking and credit accounts is essential for personal asset protection. Besides being a requirement when applying for business loans.
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing. Develop a detailed financial plan for your first year with achievable revenue and P&L targets based on available capital and resources.
What cities or areas will you sell into? Solar installation is a local business; spreading coverage out to too many areas at once hurts your profits, and adds execution risk. Every customer who has solar installation needs site visits for permits and inspections, and various installation milestones, so geographic territories are key to success.
Most businesses have a sales or operations leader that can close the initial customers and execute such contracts. Thereafter, you will need a team to scale the business.
“A minimum of 5 homes per month is necessary to sustain a start-up organization and getting to 5-10 closings per month within the first 6 months of business is crucial for a successful launch.” -Deep Chakraborty, CEO of Enact Systems
A strong brand will help your business stand out from competitors. When registering a business name, we recommend researching your business name by checking the following: your state’s business records, federal and state trademark records, social media platforms, and web domain availability. Some popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify. Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. And best to integrate your website to your CRM system for efficient messaging and customer service
Most companies use a Customer Relationship Management (CRM) tool to keep tasks and contacts organized, and for solar sales, it is also used as a Design and Project Management Software. Soft costs for Solar businesses are high. Over 50% of the installed cost of a US solar project is non-hardware costs. Hence solar software platform(s) well integrated with your processes is crucial for a successful team outcome.
The global trend is for solar companies to adopt end-to-end solar platforms that are fully integrated and track the entire customer journey. All the steps – from the point of first customer lead capture, to developing their proposal, closing their contract and delivering the project, can now be managed on single software platforms like ENACT SYSTEMS. Another option is to use multiple software tools for different needs, for example Helioscope for design and Salesforce for CRM, which is not only more expensive as an approach, but also more time consuming to set up.
Hundreds of Solar Panel OEMs, (manufacturers that specialize in making specific products on behalf of brands) and dozens of Inverter, Battery Storage, or Racking options are available. You need to plan well on partnering with the right OEMs. Examples of top Solar Panel OEMs include Hanwha QCells, Jinko Solar and TRINA Solar; top inverter options include SolarEdge and Enphase, and top residential rooftop racking options include IronRidge, Unirac, and more.
Also, for the initial years you might be best suited to procure all your hardware from well-established distributors that can support your entire logistics needs. Some top US solar distributors include CED Greentech and WESCO, and they also provide extended terms for payment easing your working capital needs.
Residential Solar projects are warrantied for 10+ years of workmanship in California and most other states, backed by the licensed solar installer. Residential customers investing thousands of dollars upfront require good support and service to ensure they have a good experience as they save their way towards payback/cost recovery in 5-7 years. While solar systems are maintenance free, annual check-ups are recommended.
Moreover, as customers’ energy needs change over time e.g. buying an EV or change in electric rates, they might need to upgrade the solar array or add energy storage. A good solar business keeps customers happy to win all follow-on business, and also win referrals from such happy customers.
Note: This blog was originally published in February 2021. It was updated October 25, 2024 to reflect recent information. If you have any questions, please contact us.
The solar industry is growing, and its sun is still just starting to rise. Solar power continues to lead the way when it comes to renewable energy — and arguably energy in general. According to SEIA data, in the first half of 2024, 45% of all new electric capacity added to the US grid was from solar.
Likewise, solar installation professionals is among the fastest growing professions in the United States. The trade is projected to enjoy a 22 percent growth rate between 2022-2032, and the 2022 median income was $45,230 per year.
This data represents a promising prospect for contractors looking to cut their teeth in this exciting business. If you’re wondering what it takes to start your own solar business, this post is for you.
Of course, there’s much more to solar installation than slapping up panels: there’s general contracting, roofing, metal fabrication, sales, repair and maintenance, consultation, landscape design, and so much more.
The best place to start a new solar business is between the cracks of large, over-saturated markets. Find out what solar professionals are doing in your area by checking in with local SEIA chapters and chambers of commerce, and conducting internet searches. It’s highly likely that even if your market is saturated with traditional solar businesses, you can find a niche that only you can fill.
Becoming an expert means more than knowing your product. It requires having your finger on the pulse of the various rebates and incentives available, an important differentiator for companies looking to get ahead of the pack. Businesses that do the research to save their customers time and money have a leg up when it comes to getting the contracts.
Starting a solar business doesn’t necessarily mean you’ll need a crew up on roofs installing panels. If sales is your thing, there are many businesses that focus on just that.
These companies do all the work of selling solar systems: getting leads, qualifying them, doing in-home or virtual consultations, and getting the customer to sign. Once a customer has signed on, these organizations then work with a contractor that takes care of the rest of the installation process.
With the recent improvements in solar sales software, it’s easier than ever to stand out from the crowd. Click through this Tourial to see how Aurora’s reimagined Sales Mode can help you sell with confidence and close more sales.
Solar installers are usually the most saturated business in the market. If you’re wondering how to start a solar installation business, you might want to start at the basics: Roofing. If you’re a roofer, solar installation could be a great option to add to your business. The solar and roofing industries are starting to converge, and for good reason. Solar panels and roofs have about the same lifespan (approximately 25 years), and savvy roofers are realizing the one-two punch of installing a new roof and solar system simultaneously. Whether you’re a roofing contractor or solar installer, there’s a lot of overlap between the two, and plenty of untapped market opportunities for incorporating roofing and solar into your business plan.
Before we move on, let’s take a quick look at how a PV system works to get a better idea of how you can make money building one.
Solar panels convert the energy of the sun into electricity through a process called the photovoltaic effect. When a photon hits a photovoltaic (PV) device, its energy knocks electrons in the material. These electrons begin to flow, producing an electric current.
At a high level, the process of how solar panels works involves three primary steps:
The photovoltaic process occurs at the solar cell level. Solar panels are composed of multiple cells, and PV systems are a series of solar panels wired together (called “stringing”) to provide appropriate voltage to the system’s inverter.
After a PV system is installed, there’s nothing standing between a customer and cheap, green energy.
Not every state requires solar licensing, but some do. Keep in mind that if you’re planning on working outside of your home state, you’ll need licenses for any state you want to work in. For states requiring licenses, you’ll often need a plumbing or electrician license, or both. Some states require a specialized solar contractor license.
Check here to check on what type of licensing you may need in your state, region, or municipality.
Even if you don’t need a license to operate in your area, earning a solar certification is a great idea. Solar certifications are an important way to promote customer confidence, putting you ahead of the average uncertified business.
Certification can also lead to more income, with certified solar professionals earning an average of $11,000 more annually. Getting certified may also allow you to operate in more than one municipality or state, increasing your competitiveness.
The North American Board of Certified Energy Practitioners (NABCEP) voluntary certifications provide national standards for PV professionals, certifying they have the skills, experience, and competency to set themselves apart. NABCEP’s certifications include:
You’ve nailed down your niche, identified solar certifications and licenses, and are ready to make the jump. Let’s take a dive into how to start a solar business from the ground up, starting with the legal stuff first.
An LLC, or limited liability company, is a business structure set up by state statute. LLCs provide several benefits, including liability protection, flexible structure, and tax advantages. They provide the same limited liability as a corporation but are much cheaper and easier to form and operate.
In most states, getting an LLC entails choosing a name, selecting members (which can include just you), creating articles of organization and operating agreements, and getting an EIN (employer identification number). You’ll then need to obtain any seller’s permits and licensing required by your state. Check your state’s LLC requirements for more information.
The right insurance coverage is essential to mitigate potential risks and liabilities. Every contracting business must meet general insurance requirements, but there are a few considerations specific to the solar industry. Here’s your solar business insurance checklist:
Most contractor general liability insurances provide a minimum of $500,000 coverage. Keep track of your inventory, equipment, and properties, and get the right insurance that would cover the worst-case scenario. Do yourself a favor and get the right insurance before you even land your first contract. Click here for an in-depth look into the right solar business insurance.
Salespeople are the backbone of most solar businesses. Regardless of your niche, chances are that someone on your team is making at least part of their paycheck knocking on doors and making phone calls.
When seeking out a salesperson, here are three elements to consider when vetting your candidate pool:
It’s crucial that you foster a culture of customer satisfaction in all of your employees, but salespeople in particular. They are usually the folks leading your conversion process and are often the face of your business.
If an in-house sales team isn’t feasible, there are several options available for sales outsourcing. Many businesses exist that specialize in outsourcing solar sales for installers, consultants, and retailers.
Start out with nothing but the best right from the gate. Find team members that are NABCEP certified (see above). If your team isn’t certified, give them the time and resources to do so.
Make sure your salespeople, installers, marketing team, and others know the ins and outs of your product. Give everybody on your team the time and resources to learn about your product and services.
Your dream team doesn’t have to be all employees. Network with other solar experts outside of your niche. They will become invaluable sources of help and referrals if you keep at it.
Solar salespeople are usually paid by commission. Commission payouts are usually paid as a percentage of the total contract price or as a cut of the base contract price.
Commissions have various pros and cons. On one hand, they can motivate your teams to work hard. On the other hand, commissions may encourage your salespeople to sell more than a customer needs, take on cost-prohibitive projects, and inflate project costs above market rates.
Read more on common commission structures in the solar sales industry today.
There are many barriers when it comes to getting a solar business off the ground. Here are three common ones that can be easily solved with the right solar software.
It’s all too easy to under- or over-engineer a solar system. Incorrect or inefficient designs are a surefire way to sink your business. Aurora Solar’s sophisticated solar design software uses technology like LIDAR-based shade analysis and AI-assisted 3D modeling to give you a pixel perfect design almost instantly — without a truck roll.
Click the image to learn more about Design Mode.Customers are often wary of providing their electricity bills. Just a few days can mean the difference between landing a new customer and losing them, so make this process as seamless as possible for your customers.
Most electric customers receive a bill in the mail every month. If they don’t, they can likely access it online from their utility. Either way, Aurora can provide a forecast of year-round energy usage from just one month’s bill — taking into account factors like weather, HVAC, and more.
Take this opportunity to remind your customer that making efficiency upgrades in the home could drastically improve energy efficiency.
And don’t forget to study up on the net metering rules for your state. Being able to sell excess power back to the grid can be a huge selling point for solar installations.
Flawed designs can lead you straight back to the drawing board. If a solar design isn’t compliant with state or local regulations, your plans will be rejected. Collecting and reporting permit-related project data constitutes up to 8% of soft costs associated with solar, owed largely to mistakes and regulatory bottlenecks.
Aurora’s Plan Sets Service expedites your post-sales permitting process. It’s also a great tool for new businesses looking to scale without the growing pains and backlogs of permitting — Aurora can handle any growing volume of plan sets you need.
See how it works in the Tourial below.
Starting a solar business takes research, investment, time, and leadership. But, it can be worth the effort, providing a great career in a growing and fulfilling industry.
When you do start your business, make sure you have a software solution that sets you up for success. Schedule a free demo today to see how Aurora can help you get started in the solar industry.