As the U.S. government pushes for increased energy-efficient policies amid unprecedented climate change, now might be a great time to start a solar panel business. In fact, the solar industry is expected to grow 17% per year until 2027.
Therefore, starting a solar panel business could be an opportunity for you to be your own boss in an $11 million industry and do your part to better the planet.
If you’re wondering how to start a solar panel installation business, we’ve outlined the next steps you can take to get started today.
Before diving headfirst into registering your solar panel business, conduct market research to determine whether the company will be viable financially. First, consider whether there is demand in your area for solar power installations. Next, is that demand already being met by other solar power businesses?
Moreover, consider the startup costs associated with solar power companies and whether you’ll have enough business to offset those expenses. Typically, a startup solar business will cost around $45,000 to $140,000. Conversely, full-time solar business owners usually earn $40,000 to $150,000 annually. Of course, your potential profit will be lower when you first begin the business. However, your margin can significantly increase with proper marketing and a unique selling point.
Along with researching your potential startup costs and profit, look into the potential competition you may have in the solar power industry. If your area already has some leaders in solar power installation, consider offering services or products that can set you apart. For instance, your unique selling points could include the following:
When starting, you may decide to take on all the work associated with solar panel installations. As such, you will need the credentials, certifications, and experience to do so.
The North American Board of Certified Energy Practitioners (NABCEP) sets the national standards for solar panel professionals. The organization also offers certification programs for individuals in the renewable energy sector to ensure they have the necessary skills and experience. Some of NABCEP’s certifications include:
Besides NABSEP certifications, you can also gain experience through the following:
Solar panel installation certifications can also increase clients’ confidence in your company and allow you to charge a higher premium for your services. For instance, certified professionals earn an average of $11,000 more for solar panel services than non-certified individuals.
Just like measuring twice and cutting once, the same applies to creating a business plan. Ultimately, a business plan serves as a blueprint for how you will run your solar panel business to maximize success. It also allows you to anticipate and create contingency plans, such as obtaining extra funding.
A business plan consists of the following sections:
A brief overview of the entire business plan should be included. Keep in mind that this section will likely be written last and have a short description of each of the other sections.
Included in this section should be a summary of the company’s vision, mission, goals, ownership structure, and model.
This section includes all the products and services you will offer clients. If you already have projected costs, also include those projections in this section.
This section includes the market research you conducted earlier. This includes demand for solar power services and products, target clients, potential weaknesses, and growth opportunities.
Also previously mentioned, this section includes competitor analysis. The information contained should be industry leaders in the area, as well as their strengths and weaknesses. You should also include your solar business’ unique selling points in this section.
In this section, determine which advertising channels you’ll use to promote your company, services, and products. Also, choose the visual and written materials you’ll use to market your solar panel business.
This section includes management roles in the company, the individuals in those positions, their backgrounds, and duties.
Your office location, equipment, and other logistical details should be included in this section.
This section includes the pricing for your services or products and how much your projected revenue will be. It also includes startup costs and potential loans you may need to obtain to get the business off the ground. However, don’t forget to also include ongoing expenses, such as salaries, rent, and marketing.
As mentioned in the business overview section above, you must also determine your company model. This can include a solar panel installation, solar panel product sales, or an all-inclusive business model.
Before you can even begin operating your solar panel business, you’ll need to register your business. First, determine which state you’ll be incorporating or registering your solar company. This will affect your taxes, legal requirements, and licenses.
When registering your solar panel business, you’ll also need to determine your business structure. You can structure your business as a:
Finally, once you have chosen a business structure and registered your solar power company, you must obtain an Employer Identification Number (EIN). The IRS uses this number to identify your business when you file taxes.
Once you register your business, your next step is to obtain proper local, state, and federal licenses and permits. These may include:
Keep in mind that some states have stricter regulations for solar panel businesses. As such, check with the U.S. Small Business Association for a list of license and permit requirements per state.
Before you’re up and running, you’ll also need to obtain insurance to protect your solar business from accidents and liabilities. These are some types of insurance you may consider:
As previously mentioned, the startup cost of a solar power company is typically between $40,000 to $140,000. However, this number can dramatically rise to $500,000. This increase is due to several factors, including your state and its licensing requirements, the number of employees you hire, and whether you want to open a storefront.
While some business owners may have the capital to fund a solar company on their own, others may not. If you don’t, there are still several funding options that you can consider. Here are some ways you can raise capital for your solar startup:
This financing option is the most common because many banks offer various funding options and amounts, such as credit cards and lines of credit between $10,000 and $250,000. However, the process is often lengthy, and the bank has strict requirements, including credit scores and time in business.
Startups often prefer these loans because they may offer borrowers lower interest rates or capped APR. The SBA may also act as a guarantor for the loan. However, in most cases, a high credit score, collateral, and down payment are required.
The U.S. Department of Energy Solar Energy Technologies Office offers several grant opportunities for solar power businesses. Entrepreneurs looking for startup funding in this sector can visit the agency’s website for more information.
Solar power business owners can also network with potential investors who may be looking for early-stage startups to invest in. These angel investors may offer a lump sum of financing in exchange for a stake in the company, such as a percentage of ownership.
In some cases, business owners can also turn to friends and family to gather funds for startup costs. Crowdfunding websites like Kickstarter, GoFundMe, and Indiegogo allow entrepreneurs to receive donations online.
While some of your clients may be eager to upgrade their homes with solar panels, they may not have the funds for the project upfront. In fact, residential solar panel installations can cost between $15,000 and $50,000, depending on the extent of the work.
As such, some of your clients may need help financing the work. By offering solar panel financing for customers, you can create a unique selling point for your company. In turn, this can be a great marketing tactic that increases revenue.
With solar panel financing, you can lock in your installation project, and your clients can pay for the renovation in convenient monthly installments. With solar panel loans, making high-cost home improvements becomes a possibility for your clients. Rather than wait to save up money for the installation, your clients can get started with the upgrades right away.
When your solar business is just starting, you may choose to do all the work yourself or only hire a few skilled employees. However, as you expand, you’ll likely need additional individuals to keep up with demand.
Depending on the business model you choose, you may hire the following:
Of course, potential employees should have experience in the solar panel industry, as well as the necessary licenses. You can begin your search on LinkedIn, Indeed, ZipRecruiter, or other job posting websites.
Before marketing your solar panel business, determine whether your target market will be residential or businesses. For instance, will you only offer home solar panel installations, or will you cater to businesses?
Once you have determined your target market, there are many avenues through which you can market your services. This can include your website, social media, or PPC advertisements.
You can create your website on WordPress, Wix, or Squarespace. These web-building sites include easy-to-use webpage templates, requiring little to no knowledge of website building. Make sure to include a few top pages, including services and pricing, about the company, and a blog page. The blog section can be a great opportunity to convey the benefits of solar panels to your clients and to rank on Google’s search engine results using high-ranking keywords.
Social media can also be a good avenue to promote your solar installation business and connect with potential clients. You can advertise your business by running competitions and posting infographics about the perks and potential savings of installing solar panels. Moreover, Facebook ads allow you to target potential clients by area, age, and other demographics.
Finally, you can pay to have your solar panel advertisements appear on the first page of Google’s search engine. For instance, if a potential client searches for a “solar panel business near me,” your ad can be listed as an option. If the client clicks on your link, you will be charged a small fee.
Also, consider listing your company’s information on Google My Business. If a client searches your company’s name, your address, phone number, and website will be listed at the top of the search results.
With growing incentives and demand for solar energy, now is a great time to enter the growing industry. However, before starting your journey to business ownership, make sure you take the proper steps to open a solar panel business. When getting started, create a business plan, register your business, fund your operations, and market your company.