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How to Start a Solar Business? Step-by-Step Guide Provided

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Embarking on a journey to establish a solar panel business is a bold and challenging venture that requires more than just initial enthusiasm.

Transforming this initiative into a profitable enterprise involves overcoming a variety of obstacles, not only in solar panel installation but also in managing different aspects like welding, roofing, and plumbing.

You’ll also need to coordinate with contractors and understand local grid systems.

While solar panels themselves may be straightforward, the business landscape surrounding them is far more complex.

Once you enter the competitive arena, be prepared to face rivals eager to outperform you and establish their own businesses as leaders in the field.

Now that we’ve set the stage, let’s delve into how one can successfully launch and profit from a solar panel business.

Why You Should Start a Solar Company?

As mentioned earlier, the opportunity to enter this burgeoning industry won’t last forever, given the rising competition and eventual consolidation of major players.

However, the good news is that as the sector is still in its growth phase, a local solar panel business has a strong chance to dominate its regional market.

There’s significant profit potential if you can achieve this. If this prospect intrigues you, you’re likely curious about what steps are involved in launching a solar business.

What to Know Before You Get Started?

Becoming an expert in the solar business involves more than just knowing your product; it’s crucial to understand available rebates, financial incentives, and regulations to set your company apart and win contracts.

Targeting niches within large, oversaturated markets can offer untapped opportunities.

Stay informed by connecting with local solar organizations (like SEIA) and finding a unique selling point—like aesthetic design or specialized financing options—to differentiate your business.

Types of Solar Business You Can Start

Solar Lead Business

Initiating a solar enterprise doesn’t always entail having a team installing panels on rooftops. If you excel in sales, numerous companies specialize solely in this aspect.

These firms manage the entire sales process, from solar lead generation and qualification to conducting in-home or online consultations and securing customer commitments.

After a customer agrees, these businesses collaborate with a contractor who handles the rest of the installation.

Solar Installers

The market for solar installation businesses is often highly competitive. If you’re contemplating how to enter this field, a logical starting point could be roofing.

If you’re already involved in the roofing industry, expanding into solar installation could be a lucrative addition to your existing services.

The worlds of solar and roofing are increasingly intersecting, and it’s easy to see why. Both solar panels and roofing materials tend to have similar lifespans—around 25 years.

Forward-thinking roofers are capitalizing on the synergies by offering both roofing and solar installations concurrently.

Whether you’re a specialized roofing contractor or a solar installation expert, combining the two can tap into new market niches and offer a more comprehensive service package.

How to Start a Solar Panel Business?

Starting a new business is a complex endeavor, but with a solid plan and focused execution, you can get your solar business up and running in as little as 3 to 6 months. Here are eight steps to help you launch:

Step 1: Plan Your Solar Business

Are you targeting residential clients, commercial enterprises, or a mix of both? Do you intend to handle both sales and installations? Will you employ in-house installation teams or opt for subcontractors? Addressing these fundamental questions is essential for structuring your business effectively.

The cost for a residential solar panel installation can range from $15,000 to $50,000, contingent on the scale and variety of panels being fitted. For businesses focusing solely on sales and installations for residential customers who make one-time payments, profit margins can range from $5,000 to $10,000 per project.

Step 2: Form Your Team

The foundation of a thriving business lies in having a dedicated team aligned with the company’s vision and prepared to build from the ground up.

The early months and quarters can be challenging for any nascent solar enterprise, often due to limited external funding and fluctuating sales and revenue cycles.

Therefore, having a robust team poised for rapid growth is vital.

Step 3: Register a Solar Company & Get the Necessary Permits and Insurance

Creating a legal structure for your business, such as an LLC or corporation, shields your personal assets in case your solar panel operation faces legal challenges.

The choice between in-house and outsourced installation crews significantly influences your business liabilities.

To register for tax purposes, you’ll need to apply for an Employer Identification Number (EIN), a straightforward and free process.

For state-specific licensing requirements, consult the Small Business Administration’s (SBA) guide to state licenses and permits.

Your solar installation company will also need to establish a service agreement, specifying the scope of work, pricing, and client expectations.

If your solar business operates from a physical office, you’ll generally need a Certificate of Occupancy (CO). Additionally, securing business insurance is crucial to safeguard your company’s financial stability in case of any insured losses.

Step 4: Establish Business Banking and Create a Financial Strategy

Maintaining separate business banking and credit accounts is crucial for safeguarding your personal assets and is often a prerequisite for securing business loans.

It’s vital to track all expenses and income streams to grasp your business’s financial health.

Accurate and comprehensive accounting also makes tax preparation much easier.

Create a well-thought-out financial blueprint for your initial year, setting realistic revenue and profit-and-loss goals based on your existing capital and resources.

Step 5: Set up your Sales Plan

Which locations are you targeting for your sales? Solar installation is essentially a local enterprise; expanding your service area too quickly can erode profits and introduce operational risks.

Since each customer requires on-site visits for permitting, inspections, and multiple phases of installation, a focused geographic approach is vital for success.

Usually, businesses have a key individual in sales or operations capable of securing initial customers and fulfilling contracts.

Once that foundation is set, you’ll need a team to help grow the business.

Step 6: Set up Your Marketing Strategy

A robust brand can set you apart from the competition. When choosing a business name, it’s advisable to conduct a thorough research by examining state business records, federal and state trademark databases, social media handles, and domain name availability.

Popular website-building platforms include WordPress, WIX, Weebly, Squarespace, and Shopify.

Setting up a dedicated business phone line is a great way to separate your personal and professional lives.

It’s also beneficial to integrate your website with your Customer Relationship Management (CRM) system for streamlined communication and customer service.

Step 7: Look for Investors

If you find that you can’t personally fund the startup costs of a solar power company, it may be a good idea to seek external investors to support your business plan.

The solar industry has been attracting a steady stream of investment, even from major venture capital firms.

If your business plan is compelling, you should have a relatively smooth path to securing investment capital or obtaining a business loan.

Step 8: Get Your Team Trained Well for Customer Service

In California and most other states, residential solar projects come with a workmanship warranty of 10 years or more, provided by the licensed solar installer.

Given that residential customers are making a substantial upfront investment, excellent support and service are crucial to ensure a positive experience as they work towards recouping their costs in 5-7 years.

While solar systems generally require minimal maintenance, annual inspections are advisable.

Additionally, as customers’ energy requirements evolve—perhaps due to purchasing an electric vehicle or changes in electricity rates—they may need to expand their solar panel array or add energy storage solutions.

A successful solar business not only keeps its customers satisfied to secure future business but also gains new customers through positive word-of-mouth referrals.


Launching a solar business requires substantial research, financial investment, time, and effective leadership. Despite the challenges, it offers a rewarding career in a growing industry.

When you plan to start a solar business, it’s essential to have the right software tools to set your business up for success.