The 5 Criteria You Should Use When Selecting a (Good) Solar Distributor

If you’re getting into the solar industry, read the 16 questions that every profitable solar company can answer. It will give you a good understanding of the business strategy, sales, marketing and installation questions you must answer as a new or growing solar company. One of the elements to growth is selecting and working with a solar distributor. It’s key to have a good relationship with your distributor, especially when your company is just starting.

Here is a scenario I’ve seen before. You currently have a job, but are moonlighting as a solar contractor and are waiting to quit your current job until you can be sure you can support yourself, and your family, on solar alone. You’ve signed your first few contracts and need to establish a relationship with a distributor to get your equipment. You see solar as the future of your career so you’d like to pick a top-notch distributor. Read below to see the full article. If you felt I’ve missed something very important or have a question feel free to leave a comment or a question on HeatSpring’s facebook page.

Here are 5 Elements Every Solar Contractor Should be Looking at When Selecting a Solar Distributor:

Design and/or Sales Assistance. If you’re a new solar contractor and looking to establish a relationship with a  distributor, one of the most critical elements will be design or sales assistence or both. Yes, this will make your equipment prices more expensive but having a sales and design support team at your disposible will be invaluable, especally when you’re just getting started.

Price. HOWEVER, price is NOT the most important item. LET ME REPEAT, if you’re just getting into the industry PRICE IS NOT VERY IMPORTANT. This, of course, is within reason. A distributor’s prices can’t be substantally higher then another distributor or a project will not be economical. My point is simple, you should not base your decision solely on the price per watt quoted for modules. There are many other thigns that will have a huge impact on your business.

Availability of Product. It may be hard to determine this before you start working with a distributor but having the right product, and it be available when you need it is key. It can kill your momentum to design a project only to find out you can’t get certain types of modules, inverters, or racking that was specified. Then you must delay the project and redo the design. Bottom line, find a distributor that keep steady inventory.

Shipping Honesty. A slightly overlooked fact but some distributors but I have some stories of dishonest distributor reps. Sometimes they can be a little dishonest about when they can get product to you, or your jobsite. Since your construction timeline and costs are in large part being determined by when the equipment will arrive, make sure you work with distributor that will be honest with you.

Credit Terms. Does your distributor have credit terms? If not, does your business have enough cash to purchase equipment before collecting money from the customer? If yes, what are they? How are they going to overlap with your payment terms with your customers? This also bring ups operational issues and cash flow implications, which will impact your company strategy. Ideally, you will collect money from the customer for a completed project before you have to pay the distributor for the equipment. If not, you’ll need some excess cash to pay the distributor before you collect from the customer.

Two examples of good distributor I’ve came across that I really like.

Affordable Solar – Great prices, super-friendly and they provide sales and design assistence. They are based in New Mexico and also run a solar installation company in their local area. So they’re very familiar with sales, design, permitting and incentives and this makes them very qualified to help new contractors because they have done it themselves.

Lighthouse Solar – Lighthosue solar has a solar franchise model, the only one I’m familar with in the industry. How does it work? It’s similar to every other franchice model. You can purchase a franchise from Lighthosue in your area and then they will provide you with equipment, systems, support and knowledge to start your own solar company. The benefits of being a part of a franchsie are clear. First, a discount on equipment because it’s being purchased as a group, a support network which is especially useful if you’re scaling from residential into the commericial market, you can tap into other franchinesse to increase your learning curve. Lastly access to a huge base of knowledge that is constantly learning and adapting from the marekt that you can access. I see this as especially important as the legal issues around solar change, every franchisee can help each other around the issues.