Smart growth is necessary for any solar business—but achieving it is often easier said than done.

Starting a solar construction business on a modest budget means making every dollar count. You can’t afford to overspend in areas where you might be able to get by with less. Software represents a prime example of this dilemma.

Should you invest in a robust infrastructure for future growth from Day 1, knowing it might feel like overkill initially?

Or should you stick with spreadsheets for as long as possible, knowing it will come with growing pains?

From our experience growing, scaling, and selling a solar business, here are five lessons to help you decide how to approach your software budget wisely:

1. Skip the Tweens

When you start most any company, unless you are flush with cash and have investors demanding immediate, unrelenting growth, you really should be fine with using free tools like spreadsheets for almost everything. After all, if you only have a handful of customers to get started, you don’t need a full-fledged CRM, field service tool, ERP, or project management tool (to name a few).

However, it’s rarely worth upgrading to cheap, intermediate tools after the spreadsheet phase. Why? Because they’ll soon become insufficient, and you’ll face another costly and time-consuming migration to more robust software.

I can’t tell you how many solar installers I’ve talked to who went from a spreadsheet to the cheapest CRM they could get their hands on, only to have to perform yet another data migration and software transition another 12-18 months later when they then needed a more sophisticated piece of software to scale their business.

Instead, once you’re ready to move beyond spreadsheets, invest in a software you want to live with indefinitely. Many comprehensive tools offer scalable pricing, so you won’t overpay upfront but will avoid being hamstrung as you grow. Choosing a subpar solution may save you money in the short term, but it can limit your growth and frustrate your team in the long run.

2. Start with the End in Mind

Inertia and lack of foresight would have the average business owner look at the various slots in their tech stack as mutually exclusive and essentially unrelated.

This is a big mistake.

You’ll want to consider how each area of your businesses software needs relate to one another, how they will share data back and forth, and the ways in which they’ll either complement one another or conflict with one another.

In short, your tech stack should function as an interconnected system, not a collection of isolated solutions.

Early in our journey, we learned this one the hard way. Yours truly failed both this criteria and the (1) above by choosing a CRM after the spreadsheet phase that was cheap and easy, but had no API to talk with other pieces of software.

The result was a short-term cash savings, but an unsustainable tech stack with siloed softwares that didn’t talk to one another.

Every software tool in your stack should meet two key criteria:

• Open APIs: To enable seamless data sharing between systems.
• Clear Functionality: Each tool should excel at its specific purpose without duplicating functions already handled by other software.

Then, your core software categories might include:

• CRM
• ERP
• Field Service
• Project Management
• Customer Portal/Fleet Management
• Solar Sales Proposal Tools

These are the primary categories, though some may have more or fewer, depending on the business model. It’s not uncommon to fit too many, or too few functions and features into a single software, or conversely to have softwares that do too many of the same things resulting in overpaying for redundant features. That’s why you need to begin with the end in mind, as to avoid either scenario.

3. Begin with the Exit in Mind

This one is just a macro version of point (2) in that you not only want to begin with the end of your tech stack in mind, but you also want to begin with the exit of your business in mind.

I rarely, if ever, talk with a business owner who knows exactly when and how they want to exit their business, either because they either hadn’t thought about it or because they are genuinely in it for the love of the game. They enjoy the solar construction business and don’t want to think about leaving.

Who can blame them?

I had the same dilemma, and it’s not always easy to start or grow a business with an exit in mind — but if you don’t, you may end up making decisions driven by short-term needs rather than long-term strategic thinking.

Nowhere is this more true than considering your tech stack and how you want it to look to potential buyers.

For example, if you want to sell your business 15 years after starting it with a revenue of $20M and a profit of $2M, then you’ll want to consider what it’s going to take to get there, and how sustainable and scalable your business will appear to potential buyers.

One thing that I’m certain of is this: you won’t get to those kinds of numbers without having the most robust tech stack, and that is going to cost you a higher percentage of your revenue than you might think (or prefer).

Why? Well, think about it.

The most sophisticated pieces of software can do as many tasks as possible that otherwise would have required a human being performing manual work. The least sophisticated pieces of software, however, automate little and still require a tremendous amount of manual work from a human being. This is an almost universal truism, and every dollar that you invest in automation represents five to ten dollars that you might have had to pay a person to do the same work with a potentially higher error rates, greater training needs, attrition, etc.

The businesses that begin with the exit in mind will make smarter decisions about investing in automation and a complementary tech stack early, rather than later.

4. Balance Sales and Operations

Sales and operations can sometimes feel like different businesses, which is why the American solar industry is often so factionalized between the two. They are commonly viewed as sub-industries relative to one another. But if you’re going to build a strong business, we recommend remaining verticalized and excelling at both simultaneously.

This means you’ll want to thoughtfully split your software tech stack between features and functions that support operations and those that support sales.

After all, if you don’t have enough sales, the software that supports operations is wasted.

On the other hand, if you don’t have sufficient operational software, your sales will suffer—even if you have plenty of them.

It’s common to think of software as primarily serving the operations side of the business, because most software functions are naturally geared toward operations. However, if you walk the floor of a solar trade show or conference, you might be surprised by how many tools are available to serve the sales side of your business.

If there’s one lesson most of us learned from the increase in interest rates and the subsequent downturn (myself included), it’s that you don’t want to take your sales infrastructure for granted. The market might be booming due to macroeconomic factors unrelated to your business genius. When those factors inevitably change, you’ll need the elements of a referral-based business in place—and software is a key component.

Sunvoy is a perfect example of core sales infrastructure that can grow your business into a referral-based model incrementally over time. From Day 1, you’ll own the customer relationship, rather than leaving your customers in the dark by outsourcing monitoring to the manufacturer.

How many referrals and how much brand equity are you losing by not having your own branded app or by giving your customers a subpar experience?

While we may never know the exact numbers, it will become painfully clear during any market downturn—especially if too much of your software spending has been focused on pure operations.

4. The answer? About 2.5 of Revenue

Well, up until now, there was no mention of how much to spend on your tech stack, was there?

Saying the answer to the tech stack budget question is 2.5% of revenue is admittedly tongue-in-cheek, because so much depends on where you are and where you want to go. However, 2.5% is the number our company consistently scaled at, which translates to $250,000 for $10M in revenue.

The reason we feel comfortable using this as a baseline is that our tech stack was always a step ahead in terms of sophistication, automation, scalability, and ease of use.

But your mileage may vary! If you want to grow at 60% year-over-year, you might consider spending closer to 5% of your revenue on your tech stack to gain an edge over the competition.

On the other hand, if you’re content to grow minimally because you’ve been in business for 20 years, have plenty of referrals coming through the door, and are running with a tech stack that’s a bit outdated but functional—and you’re in the process of selling the business to your employees—then maybe you can live with spending 1% of your revenue.

Final Thoughts

As with most things in life, balance and foresight are key.

Consider these points, and feel free to reach out if you’d like to discuss where you are today and where you want to go with your solar tech stack tomorrow.