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How to Start a Solar Panel Business

Harness the power of the sun and spearhead a sustainable future with our comprehensive guide on starting a solar panel business, shining a light on the pathway to success in the booming renewable energy sector.

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Harnessing the sun’s power to light up homes and businesses isn’t just an environmental triumph — it’s a booming entrepreneurial avenue. The solar panel business requires an initial investment that can span from a modest $50,000 to an ambitious half a million or more, depending on the scale and focus. But it’s not just about placing panels on rooftops. Success demands a deep understanding of solar technology, adept installation skills, and a flair for navigating the ever-evolving energy market.

With profit margins shining brightly between 20% and 40%, the horizon looks promising. Yet, the road ahead also brings challenges, from adapting to rapid technological shifts to competing against traditional energy giants. Ready to turn sunshine into success? Let’s illuminate the pathway to launching a thriving solar panel venture.

Considerations Before Starting a Solar Panel Business

Initial Investment	Starting costs can range from $50,000 (small installation business) to over $500,000 (large scale with manufacturing and/or bulk distribution). Costs include equipment, licensing, training, and initial marketing.
Skills Required	Knowledge of solar technology, installation expertise, customer service, marketing, electrical skills, and business management.
Demand	Growing rapidly due to increasing awareness about renewable energy and government incentives for solar installations.
Location	Best in areas with plentiful sunshine, but demand exists in most regions due to environmental concerns and potential savings.
Hours	Standard business hours for consultations and sales. Installation hours might vary based on project size and weather conditions.
Permits and Licenses	Business license, specialized solar installer certification, electrical contractor license (in some areas), and possible permits for larger installations.
Profit Margin	Typically ranges from 20% to 40% depending on the scale, region, and whether the focus is on installation, distribution, or manufacturing.
Challenges	Keeping up with technological advancements, navigating changing government policies and incentives, managing installation logistics, and facing competition from established energy providers.

Now is the Time to Start Your Solar Power Company

Solar power is a smart investment as electricity cost rise nationwide. According to Walid Halty at Dvinci Energy, “solar is the #1 most bankable sustainable technology, which has turned the industry into a gold rush.” ‘Gold rush’ is right because according to the US Energy Information Administration (EIA), 1.6% of total electricity generation in the US is powered by solar.

What’s more, the National Renewable Energy Laboratory (NREL) claims that 40% of total US electricity could easily be provided only by solar roof panels.

These are whopping numbers and they all point to the same thing: the solar panel business is a lucrative one. Once you take the first step, you should patiently and effectively work to expand your new business. You never know, you could easily end up in the same ranks as Sunrun and Vivint Solar, currently the biggest solar installation firms in the United States.

A Day in the Solar Panel Installation Trade

Before you start dreaming about your name in lights, you should understand what a typical in at work would look like for you. This will vary depending on whether you’re buying, manufacturing or installing solar panels. Or even all three.

The typical day will start out with a customer asking you for a consultation or a new installation. You will ask them what they require and then once you’ve determined the type of panels they need, it can take from 1-3 days to get a complete installation finished. According to Kristin, a photovoltaic installer at HelioPower, the last thing you’ll need to do is meet the inspector at the site you’ve installed so they can check if the panels are functioning properly.

Meanwhile, on the back end, your outreach team will get in touch with new and existing customers to ensure that sales keep going strong.

Let’s Talk Skills Needed for Solar Business

The skills you need for a solar panel business aren’t too different from the ones you’d need in any other business. Most of all, you need to understand how to interact with people because they can all be potential customers. According to Val Geisler, Strategist, “you need to be comfortable with numbers and selling.” Be confident about your product and only then will you be able to do things like door-to-door sales and social media selling.

What’s more, once your business grows, you will have to hire more people. This means you have to be on top of your game. Keep learning about HR, Finance, Taxes, and other vital topics. A willingness to learn and a lot of confidence will help you on your journey to success.

Helpful Experience for Solar Entrepreneurs

Generally, if you have some experience in the field of renewable energy, this will help you. However, most industry experts and entrepreneurs believe that lack of experience shouldn’t hinder anyone from becoming a business owner.

According to Filipa Neto, Managing Director of Chic by Choice, “you can learn as you go and you have nothing to lose.” You need to have some basic knowledge of solar energy industries and the confidence to know you want to succeed.

Who’s Buying Solar Panels

Once you start a business, it’s important to know who you’re selling to. A recent University of Texas study showed that current solar buyers weigh two things before shelling out for panels. They want solar panels to be a “good financial investment,” i.e. cost-effective as well as be able to reduce their environmental impact. Make sure your consumers hear referrals and positive Word of Mouth (WOM) about your particular products and know about all upfront costs.

How Your Solar Panel Businesses Makes Money

Now onto the important bit: how solar panel installation businesses make profit. This is done in a couple of ways: revenue stream and incentives.

Moreover, the government often offers tax credits to both customers and solar companies. The companies can take advantage of this as well as faster depreciation on solar assets, meaning they pay even lower taxes. They can also enjoy other government incentives given to companies in the renewable energy field.

Growth Potential for Solar Panel Businesses

Solar power is growing by leaps and bounds and will continue to do so in the long term. According to a report by Allied Market Research, the market will exhibit a Compound Annual Growth Rate (CAGR) of 20.5% by 2026 as solar power systems and solar technologies develop and grow at furious rates.

Startup Costs for Solar Panel Business

Not all solar installation businesses are the same. According to experts at Profitable Venture, you’d need about $8,750 for a small solar panel business, about $560,000 for a medium-sized one and if you want to start a whole corporation, you’d be set back by around $2,240,000.

Market it With All You’ve Got

There are several marketing and promotion techniques you can use to grow your solar panel business. According to serial eco-entrepreneur Scott Cooney, you should use a combination of WOM, community building and strategic partnerships to get the word out. It’s important to know your consumers and once you do, link up with a beneficial partner to capitalize on their reach and exposure as well.

When to Hire Additional Solar Panel Installers

You should be able to recognize the right time to expand your business by taking on employees. You should start to hire when you want someone with specific technical skills and when the task required from them will be lucrative for the company. You need to hire to expand, after all. Just make sure it’s at the right time.

Solar Industry Experts Advice

Industry expert and owner of 400 companies, Sir Richard Branson, believes that great business ideas come for “people’s bad personal experiences.” He says, “…you think, ‘well I could maybe do it better than it’s being done,’ and there you have a business.”

In addition, Selena Soo, founder of the S2 Groupe, believes that “cultivating relationships” and being a people person is the way to go. “Behind every life-changing opportunity is a person who can give it to you,” she says.

So there you have it. Go ahead and set up your solar panel business. Just remember to create communities, invest in people and believe in yourself.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

Written by Team ZenBusiness

ZenBusiness has helped people start, run, and grow over 500,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.