10 Key Steps When Starting a Solar Business

July 6, 2022

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.

1. Plan Your Solar Business

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.

2. Form Your Team

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.

3. Register Your Solar Business; get necessary permits and insurance

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.

4. Set-up Business Banking and Develop a Financial Plan

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.

5. Set-up your Sales and Execution Plan

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

7. Define Your Business Brand; plan your marketing strategy

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

8. Select Your Company’s Solar CRM

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.

9. Develop Vendor Relationships; procurement & logistics plans

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.

10. Get Your Team Trained Well for Customer Service

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.