Clear Solar, DCM, Beyond Building, NU Energy, Solar Shop. All top-ten companies at some time in their history. Today, they’re either hibernating or defunct. All have languished. Why?
Failures and let-downs
#1 Customer serviceArticle continues below…
Reviews from its own customers on www.solarquotes.com.au reveal Clear Solar ranked lowest amongst the larger installers in the categories of customer service, installation, quality, and value for money. Beyond Building was also ranked in the bottom 15 per cent of reviewed companies in terms of customer service and quality. While there are clearly other factors involved in their demise, letting your customers down doesn’t bode well for future business, especially when complaint forums appear alongside your company on internet search engine results.
Lesson: Pay attention to customer feedback – it’s an early warning indicator for deeper business problems.
DCM focussed almost exclusively upon vast installations of 1 kilowatt systems on retirement villages, and consequently missed the transition to new opportunities posed by the solar multiplier. NU Energy was doing exceptionally well, but dominance in New South Wales was both the recipe for success in early 2011, and a contributing factor to a downward slide following the end of the feed-in tariff in that state.
Lesson: Putting all of your eggs in one basket can create a sizable omelette.
#3 Input cost management
Every company has been hurt at some stage by a falling Renewable Energy Certificate prices or the falling dollar – in 2008 both coincided with rising panel costs. A colleague wasn’t alone when he had to eventually write-down Small-scale Technology Certificates (STC) in the Clearing House, but he could have saved millions with better advice and better planning. Solar Shop might have survived intact had its overheads been lower (unfortunately its debtors incorrectly bet the market wouldn’t recover). With rising penetration, cost of customer acquisition is the next battleground in input cost management.
Lesson: Be informed, and spend your money wisely.
#1 Large systems
The ability to sell large systems is a clear indicator of success. Having invested so much money in customer acquisition, larger systems typically increase net profit and are a clear precursor to success in the nascent commercial (photovoltaic) PV sector. Ingenero and Infinity Solar have consistently managed to sell more large systems than most other solar companies, and Ingenero possesses enviable experience in delivery of commercial projects.
Lesson: Incentivise your sales staff to upsell.
Market movement doesn’t just involve ever-shifting subsidies. Customer tastes evolve, as do their buying needs. As penetration increases, innovative service offerings such as finance, upgrades, maintenance, and energy management will be required. Nickel Energy’s recent ‘RoofJuice’ partnership with American company Sungevity is a clear example of a new market proposition. Urban Group (SolarFund) and SolarJuice are examples of wholesalers that have developed complementary STC offerings that have resulted in them being top ten STC creators in 2012. One of the most innovative solar companies is Bright Generation, which is certainly one to watch.
Lesson: Pioneers may not always get the product or timing right, but expending energy in developing new offerings ensures you won’t get left behind.
SolarGain, ZEN Technologies, and Eko Energy (now AGL Solar) have all encountered the challenges involved in opening up in a new state, but reaped the rewards of diversification. Seemingly managing scale and risk management better than previous ascendants, True Value Solar’s focus on culture and workplace productivity has been vital to its success. In position number one for 2012 installations, True Value Solar is not far behind catching up with Origin Energy’s five-year head-start.
Lesson: Expand strategically, ensuring culture remains strong.
Start small, grow sustainably
Australia’s predominantly residential PV industry has an exceptionally low barrier to entry. Indeed, the top 50 retailers are responsible for less than half of 2012 STC creation. This means those wishing to establish long-term sustainable businesses can thrive at a human scale.
Take Brian Springer for example. Brian relates that 73 per cent of his customers are referral based. This means he’s able to avoid peaks and troughs – indeed he was booked out 4 months in advance, even through a multiplier reduction. This stability helps him to employ his installers rather than contracting out. Falling prices has meant that he’s had to double sales to keep turnover constant, but he’s still been able to increase his margin and has installed 1.5 megawatts in the past year. Not bad for someone who was home when I called at 4pm, having left the business in the care of his two sons.
There’s a lot that solar businesses – large and small – can learn from successes and failures of leading companies. The Australian solar industry provides a natural experiment about what works and what doesn’t. It truly pays to be ‘in the know’. Insular companies are the often last to find out they’ve been left for dead.
ENSURE YOUR SUCCESS
- Focus on customer service: Pay attention to customer feedback – it’s an early warning indicator for deeper business problems
- Diversify: Dominating in one area means alternative opportunities can be missed
- Be informed: The market is constantly changing – don’t be left behind
- Innovate: As penetration increases, innovative service offerings such as finance, upgrades, maintenance, and energy management will be required
- Expand: The ability to sell large systems is a clear indicator of success.
SunWiz has a long history of supporting the growth of new solar market entrants by providing vital market intelligence. SunWiz offers small businesses substantial discounts on subscriptions to its products and services. For more information, visit www.sunwiz.com.au or call 0413 361 534. Data in this article is drawn from SunWiz’s industry intelligence products.