If you’re warming up to the idea of starting a solar installation business, your future may be bright. The push for going green is greater than ever before, with homeowners and corporations leveraging solar for many different purposes. Some see it as their civic duty to combat the ever-worsening climate crisis, while others see a personal benefit in a solar investment like reducing their long-term cost of electricity or increasing the value of their home.

Business Overview

A solar installer evaluates the potential installation location before installing the panels. Additionally, managing staff and having a basic understanding of solar energy, construction, and electrical experience will help you stick out and be a better leader to your staff when they come to you for guidance.

Industry Summary

Every second, the sun creates enough energy to power the earth for 500,000 years, and as of Sept. 2021, there was 108.7 GWdc of total installed capacity, which is enough to power 18.9 million American homes. There have been 3 million installations in the United States, with most solar panels being installed on residential properties.

Accounting for 1.6% of the total U.S. electricity generation, solar panels are a hot commodity. Not to mention, Solar panels could meet the demand for the United States’ electric needs by using a mere 21,250 square miles of solar panels. To put this into perspective: That’s approximately 50% of land leased by oil and gas and an estimated 0.5% of American land.

Industry Trends

The Solar Market Industries Association anticipates that the solar industry will continue to break installation records every year for the next three years, minimum. As more people are opting-in for solar, the solar industry is projecting an annual growth rate of 15%. As more systems are installed, there will also be an increased demand for repair work as well.

Target Market

Home and business owners hit the sweet spot for the solar target market but don’t forget about the recent boost in digital nomads. Before 2020, the amount of American’s who worked from home was approximately 7% and has since increased to 49%, according to Stanford University. As 10.9 million Americans currently combine work and travel, many aim to reduce living costs and choose to install solar panels to power their rigs off the grid.

Additionally, Adtargeting.com reports that the words “solar panel” have 26,244,600 audiences on Facebook, with the major age group between 25 and 34. Out of that audience, 66.8% are men, and 33.2% are women.

Skills, experience, and education useful in running a solar installation business

Being an expert in the solar niche is indispensable, as a solar business has to stay on top of changing solar technologies and be a great installer and explain options to customers. Most solar industry workers hold a minimum of high school diplomas and will receive on-the-job training. Having experience in the following categories can help you stand out from your competitors:

Construction experience: Installation includes checking the roof and ensuring that there are no missing shingles or tiles. After ensuring the proper condition of the roof, an installer will complete wiring and then install racking to hold the panels in place.

Electrical experience: Connecting electrical wires is part of the installation process. Once the panels are situated, the installer will connect inverters to the panels. This allows the direct current energy to be converted into alternating current energy.

Knowledge of solar power and science: A basic understanding of the science behind how solar panels can power homes is essential for explaining to customers and making a sale. The solar P.V. system can work through what’s called the “photovoltaic effect.” This is where light particles are converted into energy. When a photon contacts a PV system, the energy knocks electrons in it. When the electrons begin flowing, it produces an electric current. In other words, solar cells act as an absorbent to the sun, which creates an electric current to begin flowing.

Attention to detail: It’s vital to imagine how the solar panels will look once completed, but it’s even more important to notice when something is out of place during the installation process.

Costs to Starting a solar installation business

The cost to start a solar company can be inexpensive. Once proper training is completed, you would need to purchase equipment such as a truck or van, trailer, tools for installation, along with licensing, insurance, and other business startup costs. If the business is being run from a commercial location, the real estate cost would need to be added as well.

If you are looking at a franchise, you would also likely need to invest between $100,000 to $300,000 to get started.

Steps to Starting a Solar Installation Business

It isn’t a quick process to start a business from the ground up, especially when it involves solar installation. The following steps will point you in the right direction when deciding to pull the trigger on your business venture:

Step 1: Write your Business Plan

First, take the initial step of writing out your business map. This is a document that not only will be requested by banks, potential partners, investors but will also help you navigate where you want your business to go.

Have your business plan established so that you can lay out in front of you your competition and see what sets you apart from them. Additionally, it will help with keeping track of your financial targets.

Step 2: Name the Business

Deciding on a name for your new business can greatly impact whether you achieve success or not. Choosing one that connects to those who hear it can bring you major achievements in marketing and your brand. Avoid choosing a name that is difficult for customers to spell and conduct research to ensure it isn’t being used elsewhere. It’s also beneficial to get feedback from outsiders on the name. Some business owners will conduct polls on their Instagram or Facebook stories once they’ve narrowed down their options to gain honest feedback from their followers.

Step 3: Form a Business Structure

A business structure refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

Step 4: Select your Location

There’s a common misconception that solar can only operate when the sun is shining. However, if you live in a location where clouds are often blocking the sun, solar panels are unlikely to operate at full capacity. This can deter clients from switching over to solar on their homes if they live in chronically cloudy locations, which could be detrimental to the success of your business.

A solar panel installation business can be operated out of the home, however, in order to grow and be visible to potential customers, a commercial location will be needed.

Step 5: Apply for Business Licenses and Permits

Licenses and permits will vary based on location. Not every state has a licensing requirement for a solar installation, but if you operate outside of your home state, you should prioritize checking the requirements there. Many states require a plumbing and/or electrician’s license. Others will have a specific solar contractor license.

In addition to licensing, there are a number of certification programs available, such as the North American Board of Certified Energy Practitioners (NABCEP). While certification may not be required to install solar in your state, certification programs will provide professional training for installers and helps to build trust with potential customers. education and development and

Step 6: Find Financing

How will you finance a solar installation business? Personal savings accounts or getting a small business loan are a couple of options for entrepreneurs to find funding. One finance option that many forget about is pulling cash out of the equity of their home. Mortgages come with low-interest rates in comparison to credit cards or personal loans. Just make sure you explore all options and list the pros and cons of each once you get quotes.

Step 7: Open a Business Bank Account

You’ll want to open a business bank account to keep work and play separate, especially if you’re choosing an LLC as your business entity. A business tax I.D., the date your business was started, legal documentation proving the state your business is registered in, your legal business name, and personal documentation about the business owner such as a driver’s license and social security number, are a few things you’ll need handy when strutting into the bank.

Step 8: Get your Marketing Plan in Place

Marketing is easier than ever now, with the internet right at everyone’s fingertips. Leveraging marketing, such as traditional advertising and social media, for your business, allows you the opportunity to create growth and skyrocket your sales. It keeps customers up to date or in the loop with the latest updates you have.

According to a study by Business News Daily, 86% of consumers said they are more enticed to pay more to shop at a small business, so don’t forget to put a face to your business so that you stick out and don’t seem like a large corporate robot.

Step 9: Get Business Insurance

Property and liability, workers’ compensation, and auto are a few insurance policies that a company installing solar panels should consider. The type of coverage will be largely dependent on the state requirements, so just make sure you do your due diligence and research before providing services.

Step 10: Hiring Employees

There isn’t a shortage of people wanting to work in the solar industry, as the U.S. has over 242,000 solar workers. That’s more employees than the oil, natural gas, and coal industries when you put them all together.

Related: Hiring your first employee

Step 11: Set up an Accounting System

An accounting system for your business will help keep finances organized and give you visibility on the business profits. Not to mention, it keeps things easier for tax purposes. Considering a solar installation business is unlikely to have smooth operations with just the business owner doing everything, there will likely be several employees, which makes an accounting system key for payroll purposes.

How Much Can You Potentially Make Owning a Solar Panel Installation Business?

You shouldn’t go in expecting an immediate profit with this type of business. Consider it a long-term investment, especially when many customers will choose to finance and not pay all at once. The average price for a residential PV system is $15,000, and based on the average profit margin for a solar business being 22%, the business owner should expect to see a profit of $3,000 from the average installation if the customer pays everything in one payment and it typically takes one to three days to complete it.

So, hypothetically, if the customer pays for the P.V. installation in one payment and if your business completes two installations a week, you can expect to make $6,000 a week or $322,000 a year. It all depends on the staff, business costs, and how your customers are going to finance the cost of the installation.

Installing solar systems is the most obvious way to make money, but what about different avenues to earn cash like from investors, tax credits, or when someone you previously installed panels for calls you and needs maintenance completed?

Things to consider before starting a solar installation business

To make selling solar panels easier, understanding the various tax incentives is critical to lowering the price of systems. Incentives can be found in your area on the Solar Energy Industries Association website or the Database for State Incentives for Renewables & Efficiency (DSIRE).

Before starting your business, select your market and then consider getting even more specific than that by finding a niche within a niche! Getting detailed about what you offer allows you to stand out! You could focus strictly on R.V. or commercial installations, for example. If you are comfortable taking the plunge, then get to where you’re going….and help your community go green!

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