As the famous adage goes: “Fool me once, shame on you. Fool me twice, shame on me.” In business making the same mistake twice is reckless. That first time, you’re learning. You don’t know anything yet. But the second time, you are supposed to have learned something. Presumably, you would pay attention to the first instance and adjust course. It may not be perfect for that round but you build on the knowledge gained from each new experience and adjust until it is optimized. This is the premise of the Lean Startup and an endless number of entrepreneurial philosophies. Study your data and make better business decisions. There are probably as many sayings testifying to the importance of a data analysis mindset like: you can’t improve what you don’t measure. Solar is no different from any other business in that respect. Here too, business decisions should be data driven.
As someone who loves strategy discussions, I always bring up the goal first. Having a SMART company goal can give your company direction. Are you a survive-until-next-quarter kind of company or a planning-5-years-down-the-road kind of company? When you’re starting out, growth decisions are terrifying. Hiring permanent workers means that you have to have a steady flow of work. It means more vehicles, more tools, and more overhead. Understanding your numbers can help you set baselines of performance, whether staff are meeting those standards, and a number of things.
Desperate times call for desperate measures (or rather measurements). Here are a couple of scenarios that may sound familiar to you. For each one we propose a toolkit of useful metrics.
Please note that while most of these metrics have stood the test of time, your mileage may vary. Depending on your management style, organizational chart, and other myriad factors, you may have to tweak or augment these metrics. Use them as a rule of thumb, but ultimately every company should have its own set of North Star metrics.
Scenario 1:
Your company is in a groove doing one kind of project like net-metered residential on pitched-roof homes. You see the other opportunities that are out there like ground-mounts, commercial work, or even floatovoltaics. You have to decide if your team has the capacity to do that work and whether the rest of your projects (and teammates if their work is quota-based) will suffer by adding this kind of project. It’s here where having reviewable data can create an informed decision. Try a few small projects and see what the numbers look like.
Study the difference of Profit and Loss (P&L) between those types of projects. If a large city is in your service territory and there are endless numbers of row and townhomes, you may have installed solar using materials like U-Anchors or Schletter. These projects are challenging because there’s more risk, the arrays are often smaller, and they typically cost more. If you study what the variations are between the projects, you can determine what costs need to be adjusted to make it more worthwhile.
Scenario 2:
You’ve established yourself and are ready to grow. Expansion means overhead. You now need new field staff, more support staff, more vehicles, and more equipment. Find out how much revenue you need to support a new site. Knowing the average revenue per salesperson will tell you how many salespeople you will need. How efficient are your operations at the first site? Cost per Acquisition, Cost of Material per Project, and Cost of Labor per Project should be included in your calculations to establish that baseline for solvency. Knowing how many projects are in each stage and the typical time in each stage can tell you about your bottlenecks.
Here are a few examples from each of the typical workgroups.
Sales
Leads generated per month
Appointments scheduled/month vs. appointments sat (shows quality of lead generator)
Close rates (quality of salesperson)
Install rates (how many closed deals are installed)
kW sold per month
Top performers
Disqualification rates (rate that projects get disqualified i.e., old roof, electrical out of code, etc.)
Max sales/month (i.e. another salesperson needed)
Survey
Surveyor runbacks (indicates incomplete surveys or missed items)
Survey quality (design makes assumptions on important but non-critical items)
Time of survey per site complexity (hours per 1 mounting plane (MP) vs 11MP)
Completed surveys per month
Accounting
Gross profit margin
Net profit margin
Cash flow
Working capital
Other customer and supplier metrics
Design
kW designed/month
Time to design pitched roof project
Time to design battery project
Time to design ground mount
AHJ resubmittals
Completed designs per month
Permitting
kW permitted/month
AHJ review time
AHJ approvals/submissions
AHJ costs
Submitted permits/month
Approved permits/month
Logistics
Failure rates for specific products
Install
kW installed/mo
Runback rates (indicates incomplete installations or other problem with the installation)
Design errors
Leaks (if you don’t install in the desert)
On-site redesigns
At-fault failures (failures that are the fault of the installer like poor flashing or improperly landed wires)
Hours/kW
Mods installed/day
Inspections
Passes per month
Passes per AHJ
Passes per inspector
Passes per crew
Failures per month
Failures per crew
Failures per AHJ
Failures per inspector
Reasons for failure
PTO
kW PTO’ed/month
kW PTO’ed/crew/month
Operations & Maintenance
Failure rates for specific products
Causes of failure
Is it worth it now? I’m just starting out.
At the beginning, it seems that metrics are not a high priority. Remember that you build on lessons learned with each project. Metrics can help you set baselines to improve upon. Systemic inefficiencies become much harder to eradicate the longer they exist. There is a cost to adding an analytics bundle to your software. Look back at all of those metrics above and imagine the value you could discover. Data removes bias, helps make decisions or persuade decision-makers. Every solar company in business today is sitting on gold — the invaluable latent data that is pouring in and out of their operation. Only the best use it to be proactive and see what their less data-savvy competitors cannot!
Ok, Ok, I’m sold. How do I do it?
Coperniq’s analytics package will be coming out soon! We are accepting early adopters to our platform so, if you want to be able to, we will throw in the analytics package for free. Our analytics will be powered by the data inside your workspace and allow you to extract trends and insights with rich visualizations. Most project management tools allow you to export your data into a spreadsheet but then you’re stuck having to do your own analysis. Coperniq does the work for you so you no longer have to google cryptic Excel formulas and struggle with pretty but impractical charts. If you want to learn more, click on the Schedule a Demo button in the top right corner to talk to our founders. As part of your onboarding we will help you curate a list of killer metrics to keep an eye on!
If you have any metrics that you have found to be really useful, please share what you were able to find and what decision that led to.
Thanks for reading the article and see you next week!
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