The last week of March began with the sold-out NABCEP CE 2022 conference and ended with the Department of Commerce launching the anti-circumvention trade case. So episode of Power Forward!, BayWa re Vice President of Operations David Dunlap and Vice President of Sales Keith Ostwald help us put it all into perspective. We recap some highlights from NABCEP, then discuss how solar installers can remain resilient in the face of market uncertainty.
Be sure to watch the full 19 minutes. video. Here is an excerpt from the discussion.
Crowell: So growing a solar business in 2022. I think a lot of listeners understand the issues and the complexities that are happening right now, so when you’re talking with entrepreneurs, what are the important things that you keep bringing up? What shouldn’t we lose sight of in the middle of everything right now?
Dunlap: The two most important things for me are agility and resilience. I look for every opportunity to talk about it, talk about it, and ask the installers the tough questions. Have you thought about your emergency plans? What if your master plan isn’t working well? What if you can’t get 100% of your supply? Where have you built into your process some ability to pivot, to be resilient, to have some redundancy?
I think if anything over the last few years of Covid and the supply chain challenge has taught us, it’s that we don’t have certainty. So in the midst of this uncertainty, what can I do? Well, what you can do is have backup plans. I also ask people what their trusted partnerships are, and do you actually lean into those partnerships? This is a time when deep partnerships built on a foundation of trust, transparency and mutual benefit truly shine.
The final type of principal is that I encourage installers and contractors to focus on selling their core values and service rather than a specific product or brand. Brands are going to come and go, and we’re going into a kind of commoditization state of our industry, and most of us aren’t really ready for that. We haven’t experienced it before. But when I look at what our sister societies in Europe are doing, it’s just a kind of interchangeability and, again, it’s a form of resilience.
Brands, they’re still important, but they’re not the cornerstone, and I think entrepreneurs need to differentiate themselves on their core values and service.
Ostwald: Chris, I would kinda take issue with the fact that a lot of people are really knowledgeable about this. During our session at NABCEP, we demonstrated that there are a lot of gaps in people’s awareness of what is happening in the industry. Yes, they see constraints; they see the scarcity and the challenges, no doubt, but the depth of the challenges…whether it was WRO, AD/CVD legislation…there was a lot of table setting for the first half of our presentation, and it was a little pale in the face as they received the data.
Second, how do you prepare for it? We have these conversations every day and I think the level of honesty we brought to it as a distributor, not marketing ourselves, to just say you should choose products where you have multiple sources.
Crowell: You know there was a recent survey that SEIA did that indicated that even though the industry is in a potentially bad spot with the AD/CVD business case, residential and commercial installers may not have Haven’t felt the pinch since 7:55 a.m. because they’re working through the cast. But at some point it’s going to happen, and somehow all at once the whole industry is going to scramble and look for alternative mod solutions.
So Keith, the other panel you were on [at NABCEP] “Does your solar coaster grind gears?” How to grow in 2022”, is closely related to this. Can you walk us through the product and planning challenges that impact solar businesses, given all that we’re talking about.
Ostwald: There is a level of security and planning that we are used to having with our customers and that given the business situation, the data available is very difficult to plan. For those who haven’t planned, it’s a very rude awakening. For those who are used to planning, it gets harder week by week, month by month.
We get tons of questions every day, “what should I sell” and a big part of our consultative selling style is asking, how long is your delivery time? Is it a month? Is it six months? With what backlog? We’ve spent a lot of time talking about fill rates lately with our clients so we don’t just focus on “I sold 10,000 of these modules”. This is to understand how many do you normally do put inside in a month. Is it 1000? That’s really good to know, so we can focus on keeping 1,000 a month for you for the next few months, but if it takes 10 months to put them on, just because of SKU changes and hardware costs. inventory, we both have to find common ground to be flexible.
Crowell: Now let’s move on, if we can, to the medium and long term challenges. What do you think are the main challenges for solar entrepreneurs in this time frame, and also define what you consider to be in the short, medium and long term.
Dunlap: For me, these deadlines, it is useful to put them in parentheses. So in the short term, I tend to think what is the value of your transactional business for the next month? For most installers, their backlog is usually over a month’s worth of sales, but what they’re trying to do is do all that immediate short-term work over the next four weeks. Further than that is not in the short term.
Then, parenthetically, the long term is outside the bounds of their sold backlog. So if they are currently selling into a six month backlog, I would say long term starts at seven or eight months.
What do I think comes next in my sales cycle? Should I change my way of selling? Should I change the product mix? Should I offer more storage accessories in my portfolio? You need to be beyond this sales cycle to make changes. Have time to train your sales team and set it up, right? It must be something longer than your backlog.
Then, by default, after being bracketed in this way, the middle term is anything in between. If I need a more immediate change to my sales that are at the back of the hopper, there may still be time to make non-disruptive change orders. You’ve closed the contract but you can already see that you’re going to have a problem with the spec of the module, so before you wait until it’s in the near term planning where it’s really going to be an issue, what are some viable substitutions? You can solve this one with a different mindset and a different approach than you solve the immediate supply chain challenge of whether this order ships from BayWa tomorrow.
Be sure to watch the episode for more information on solar power sourcing and planning. Topics include:
- Sales vs. operations and building a company culture
- Are solar products now basic products? And why is it important?
- What does it mean to be “agile” and “resilient”?
- Definition of short, medium and long term purchasing strategies
- How to think differently about the product line and work with distributors
- Sell products according to company values
- Product categories to watch in the future
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