Answer 3 Questions to Make your Small Business a Solar Sales Machine

The most important element of a profitable solar company is maximizing what I am referring to as “the sales equation”. In this article, I want to share specifically what the sales equation is, and what questions you can ask to begin to understand how well your company is doing.  Sales is the front line of the solar industry. While your business needs the technical expertise to design and install a solar system, those skills alone will not insure your business is successful.

While consulting with a new solar company, figuring out the best way to structure the new company to maximize profits, and speaking with Keith Cronin who sold solar company to SunEdison, I’ve learned that there is one single question key to a successful solar company. If you’re running a small businesses that is run on cash and does not have outside investment, super efficient marketing and sales and an overlap with operations is what will set your business apart.

This may sounds simple, but it’s not. Most small construction companies have net profit margins of around 5%. In the solar or geothermal industries, you should be able to bump this up to at least 10%. Accordingly, your gross margins should be around 20%.

In order to do this, this is the equation you need to maximize.

A profitable solar or geothermal sales engine = high gross margin on project * closes the fastest / marketing dollar spent. 
Why this equation?
The equation is showing that the best companies will get the most amount of profit and cash in the fastest amount of time possible. By it’s nature, it includes how you structure the company, your ability to cost jobs correctly, your effectiveness at client relations, and how effective your marketing is.

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Lessons Learned from Selling a Solar Company to SunEdison

Now that hard installation costs are dropping rapidly in the solar pv industry, everyone’s looking at how to decrease soft costs.

Across the board support for decreasing solar’s soft costs is the result of how well organized the industry is becoming. State governments, the DOE, and private software companies are all working to help.
Note: Download A Free Chapter from Keith’s Book Solar Success Principles, or take his “Best Practices in Solar Sales and Marketing”, or apply for the “Solar Executive MBA” course that Keith is teaching.
Cost reduction and the commoditization of project financing are two keys to building profitable companies and an industry. However, when the costs fall, financial barriers are eliminated, and policy bottlenecks are lifted, the company that has the advantage will be the one that is uber-efficient on the operations side. Companies with marketing and sales engines will have the upper hand. We can already see the early adopters of this strategy in the growth of strongly branded residential and commercial companies: Sungenvity, SolarCity, and SunRun, just to name a few.

There is one lesson for small and medium-sized solar companies going head to head with these huge solar companies: To compete in the residential or commercial solar space, you need to become extremely efficient with your operations. Both with you marketing and sales and more specifically, your overlap with operations.

For this reason, I spoke with Keith Cronin from Sun Hedge. Keith is based on Hawaii and built and sold his solar integration company to SunEdison. Now Keith consults with solar integrators and works as a consultant to companies who are looking to develop large solar projects in Hawaii.

We had a great discussion that lasted almost 45 minutes, here’s what we talked about.

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