How to Start a Profitable Solar Panel Business

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All too often when we wonder what we are going to do with the advent of rising electricity and fuel prices, we look toward the sources of energy we currently have at our disposal.

The traditional sources, such as coal and oil, still exist but are depleting fast. Options like tidal, and wind are not suitable for all areas and would be variable in their production. 

Alternates such as Nuclear can provide copious amounts of energy, but by nature are very deadly, and can potentially create horrifying catastrophes when handled without care.

However, there is one option that is available to everyone in the entire world. All they would need to do is look up, and smile. 

It is the Sun. For this, you may wonder, how can I tap into a source which is available for everyone, and make money off of it too? It is simple! Start your own solar Panel business!

But wait! Is it as easy as it seems? Yes, it is fast becoming easier and easier to have solar panels installed in not just your home, but in others too.

The market value of the Solar PV Panels in 2022 is currently estimated to be USD 157.75 Billion and is expected to grow upward towards USD 286.64 Billion in the next eight years. This means two things.

The average growth rate for the business is expected to be on average 7.8% for the next eight years. Secondly, you can have your chance to have a piece of the pie as well!

How to Start a Profitable Solar Panel Business

Alex Savy, Co-Founder, and Editor-in-Chief of Comfynorth, a Canadian review website, says:

“The owner of a successful solar panel business will have a strong understanding of marketing and will use it to its maximum potential, thereby creating new contracts for their new company and brand.” 

They will have strong personnel skills, taking the time to choose technicians who have a good reputation and all of the necessary licenses and training. 

Alex says “If you have strong managerial skills, you will be able to keep the crews occupied, complete the works on schedule as promised, and keep payroll costs under control.

As the solar business is still in its infant stages, it is essential for them to keep up with the latest technological developments.”

So, continue reading, as we dive right into the lucrative opportunity that is the Solar Panel Business and show you how you too can make the most of this.

Research is key

Before you dive right into the market, it is important to understand where the market is going with the existing product.

Research is key

For that, it is important to spend time understanding the business models being used by the existing market leaders and your competitors and try to figure out where the cracks exist through which you would be able to capitalize on your opportunity.

Similarly, research is not just knowing your product, inside and out. It is about how the external factors are affecting the business.

Knowing how the rebates and the incentives work alongside your business will help you go with the flow and ensure that you are able to take decisions faster than your competitors, and the impending results can guide you towards making informed decisions. 

If you are able to financially incentivize not just yourself but your customers. You would be able to save them their money and time, and in turn, make them your loyal customers overall.

Eric McGee, Senior Network Engineer at TRG Datacenters shares “Companies that put in the effort to conduct research in order to save their clients both time and money are the ones who wind up winning the contracts.

It is necessary to conduct research, make investments, spend time, and have strong leadership before starting a solar business

However, if you put in the work, it could pay off in the form of a rewarding career in a sector that is both growing and profitable.”

Target market

While it seems that every person who does not have their solar panels installed is a potential customer, it is important to create different segments which would be able to invest in the product.

Target market

They can include, but are not limited to:

  • Independent Homeowners
  • Manufacturers Including Factories and Bases of Operations
  • Schools / Colleges / Universities
  • Retailers (both large and small)
  • Hospitals and NGOs – Having electricity as a backup there can be crucial, as it can become a matter of life and death if there are no or inadequate levels of electricity there.

Solar energy is now accessible to the vast majority of homeowners who have a clear roofline because of the rapid advancement of solar technology.

In order to determine their target audience, solar businesses should look into small and large organizations that are integrating solar into their energy initiatives and may be ready to invest in sizeable rooftop or field farms.

These companies may be ready to invest in solar energy” said Kenny Kline, President & Financial Lead at BarBend.

Types of solar business

It's not necessary that you would be taking part in a solar panel installation business, with a full team from day one to help you.

Types of solar business

There are various variants that are a part of the business, such as getting the right leads, ensuring that they are qualified for the solar panel’s installation, providing real-life or even consultations, and ensuring they are able to lock in the customer for signing the deal. 

Once the customer has signed the deal, they can easily connect with a third-party contractor to ensure they would be able to deal with the final installation process. 

When embarking on your journey to start a solar panel business, it's essential to partner with a top solar company to ensure expertise, quality, and success in the renewable energy industry. 

They can help with the after-sales service as well, ensuring that the customer is able to go through you their entire process, even when some of the work you have done is outsourced. 

There are three types of services you would be able to offer:

A. Specialized installation services:

When working under this model, you shall not be stocking any solar panels of your own. However, you will partner yourself with companies that do stock and sell these panels, so you are able to provide your solar panel installation services. The method is cost-effective, and you would get the experience required within this industry.

B. Product sales:

In this method, the process will be reversed, as you would be the one who will be stocking up the solar panels and will be on the lookout for installation service providers. This would help you focus on the sales side of things and would not need to complicate yourself until you are ready to expand and grow in the future. Once a significant amount of revenue starts pouring in, then the team can begin to grow and can move towards the third type of service option.

Matt Weidle, business development manager of Buyer’s Guide adds “If you want to start a solar business, it does not always mean that you will need a team to go up on rooftops and install panels. There are a lot of companies out there whose sole purpose is to make sales, so if that's your expertise, look into those. These businesses take care of every aspect of the solar system sales process, from gathering leads to qualifying those leads, conducting in-person or online consultations, and securing the customer's signature. After an individual has become a paying member of one of these groups, the next steps of the installation procedure are handled through collaboration with a third-party contractor.”

C. All-inclusive:

Not only will you be working towards stocking and selling the solar panels, but you would be able to use your own customer services and team members to install the product and provide the customer with the after-sales services, which can include auxiliary services such as a) consultation b) Repair and c) maintenance. These services are not meant for generating much revenue, but they can help to maintain the customers and build brand loyalty.

Two for one deal: Solar installers

It is not necessary that the solar business has to be a unique business in itself. It would be interesting to combine the use of solar panels with the existing infrastructure of the house

Better yet, through the use of solar installers, they would be able to make the most of it. 

For the new or under-construction houses, the use of the solar installers and their panels would be useful as these two industries have started to converge together.

Since the lifespan of the two is similar, it would make sense to install a new roof through solar installers

Not only would it give your business a new addition to offer to the clients, but it would also be helpful to them overall, as it would help them to reduce their electricity costs over time.

Solar certifications and licenses

You would need to find out whether you would need a license or a certificate in order to run your solar panel business.

Solar certifications and licenses

Since the business is similar to that of house construction and modification, it would be necessary to confirm if a license of being a plumber or an electrician would be sufficient.

On the other hand, having a certification under your belt for solar operations would always be useful, as they would be able to place you ahead of the curve against those businesses which are uncertified. 

According to research, those who are certified professionals are able to earn $11,000 more than their non-certified counterparts annually. Each country should have its own certifications for providing national standards for Photovoltaic (PV) Professionals.

If they do not, they can always affiliate themselves through certification of other countries, such as the North American Board of Certified Energy Practitioners (NABCEP).

Veronica Miller, Digital Marketing & Growth Director at VPNoverview says “There are certain states that require solar licenses, but others do not.

Keep in mind that if you intend to work in states other than the one in which you currently reside, you will need to obtain the required licenses for those states.

In states where licenses are necessary, you will often require a license to practice plumbing or electrical work, or both, depending on the state. In certain states, a specific license as a solar contractor is required.”

Formation of a legal entity and register for taxes

As with any business, it is important to have a business structure for your organization, as it would help to further instill confidence within the corporation.

While these are simple steps and would be expected to be followed by anyone who is willing to start their own corporation, it is still surprising how many still either forget or intentionally ignore this particular step

While they get to run away without doing this, it comes back to create problems for them once the business starts to grow.

Mark Valderrama, Founder and CEO of Aquarium Store Depot, a water aquarium business, over 6 years ago says “LLCs offer a number of advantages, including flexible structure, favorable tax benefits, and liability protection

They have the same limited liability as a corporate but are far less expensive and simpler to set up and run.”

What are the costs you are willing to incur?

A person who is willing to enter this business should know that this business is a capital-intensive start-up, as you would need anything between USD 50,000 to USD 150,000 to begin

What are the costs you are willing to incur

Most of the money mentioned gets invested in buying the right equipment, a business truck, the business’s insurance, and the market. However, there are many other costs that pile on top of one another to raise the cost significantly. 

To give an overview of the costs incurred in starting a solar business, we interviewed Brady McAninch, Founder & Chief Executive Officer (CEO) of HM-Attorneys via email to get his insights.

He said “To get your first shipments of panels that can be placed in a home or company, you will need to make a considerable investment first. This investment may be in the form of cash or other assets.

If you are interested in purchasing a franchise, you should know that most companies require a minimum investment of between $100,000 and $350,000 merely to have access to their designated territory.

If you don't have a franchise, you should plan on making an initial investment of up to $500,000 so that you may complete the first round of installations, market your business, and hire a team within the first year of operation.”

The Photo below shows an estimate of the kind of costs which would need to be considered when starting up a business:

Abdul Saboor, a Full Stack Developer at The Stock Dork adds “You will be responsible for marketing, ordering panels from a distributor for each work, and paying the energy supplier on behalf of leased customer accounts.

Other responsibilities include managing payroll. It is highly likely that you will need dedicated office space, delivery vehicles, and continuing training in order to keep your licenses valid.

In addition to this, you will require hefty coverage under your business insurance policy.”

If you're considering how to start a solar panel business, partnering with a reputable home service provider in Campbell can be a strategic move. It offers comprehensive solar solutions and expert installation services to help kickstart your venture successfully.

Remember the potential problems

While you did your research, it is important to become aware of the potential pitfalls and problems which are faced by all those who begin their journey to create a profitable Solar panel business.

As with the previous point, not only should you be aware of the High initial investment required to start such a business, but also:

  • Lack of Product Differentiation: Since the purpose of the Solar Panels is quite standard, as well as their cost in terms of production, it leaves little room for you to use your creativity and ingenuity to attract customers with the base product. Hence, you would have to find alternative ways through which you would be able to attract customers. Some of the ideas can be:
  • Changing the shape of the Solar Panels
  • Hiding them in Plain sight
  • Specific Panels for smaller products such as cooking, Radio, and so on.
  • No Switching Costs: Since there are no switching costs, it is easy for the customers to switch from one company to another. However, there are ways through which a customer can stay on with your company i.e., adding small monthly subscription services which would allow the customer to obtain additional services, such as cleaning, maintenance, repairs, and even the latest updates and trends on Solar Panels, Solar Energy and even sustainability. Similarly, by improving your after-sales services dramatically, the customer would not want to lose out on a quality organization.
  • Learning and Experience: While this article will aim to provide you with all the necessary guidelines on how you can run your solar panel business as smoothly as possible, it is difficult to assume that every step taken would be perfect. Hence, you would need to learn how the entire installation business works as well as at least a few months of hands-on experience. The sooner you are able to obtain these, the faster you would be able to win a new client.

Conclusion

The world is growing at an exponential rate, and with the traditional means of energy resources struggling to keep up with the demand, the business of solar can only grow bright. 

It may be a slow start, but by keeping an eye on the market, and ensuring that you are able to consider and follow the steps lined up above, there is a great likelihood that you would be able to start minting money over the course of the business. 

With the technology, which is continuously becoming efficient, it makes sense that you will be able to make greater opportunities fly towards you which would help you make your solar panel business successful.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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