Other people’s “cat and mouse” tactics set Jarrod Conroy on the path to commercial solar, the founder of Victoria and NSW business Roycon tells EcoGeneration.
How long have you been installing solar?
I was doing it as an apprentice back in 2011. Systems were pretty much free with the rebates at the time. It was a really busy time between 2011 to late 2012, with the 60c feed-in tariff. Then there was a bit of a drawback and now we’re back into another boom cycle with power prices increasing steadily. We’re back to where we were in 2012 with the volume being installed. A large portion of that is commercial installations, which is what we focus on now.
Why did you move into commercial?
About three or four companies I had worked for went into liquidation, so I was losing money each year working for people who weren’t sustainable. I started involving myself in sales and marketing and took control of the whole process from first point of contact with a customer to 12 months’ service and maintenance into the future. You should always think about up-skilling and diversifying.
What do companies do wrong that sends them into liquidation?
A combination of things. A lot of them play cat and mouse, and they race to the bottom [on price]. They go in too low on a lot of their jobs to cover their overheads and contractors are often the last people to be paid. Some may not have experience across the entire process; they might be too top-heavy, with a huge budget for marketing and sales people on large commissions and then they get a couple of product recalls or unhappy customers … their sales team might get poached by another company, or they may expand too fast and their overheads get out of control, then they get to the point where they have to pay their suppliers and they just don’t have enough cash flow to sustain the beast they’ve created.
What do you mean by “cat and mouse”?
Cat and mouse is when we quote someone a system and allow for a profit margin to keep our doors open for the next 10 years to service and warrant that customer, so we quote $20,000 but the customer says he’s got a quote for $17,000, so can we do it for $16,000? That sort of stuff, where people are being squeezed to the point where they don’t have enough profit to pay their overheads, their GST, employer superannuation, tax, back up warranties … that’s what I call cat and mouse.
Do commercial customers have a good idea what solar can do?
I think there’s enough social proof – on TV, the radio in the press – people are hearing enough about it now, with Australia converting to [clean energy] and electric cars taking off. People know that there’s a movement; they may not know the ins and outs and for sure you have to educate them. Social proof and the pain of [rising] electricity costs are causing people to be more responsive than they were a few years ago when they were sitting on 6c wholesale market rates, which don’t exist anymore.
Do they understand how solar can help them solve their problems?
People who consume power 24 hours a day are probably less responsive to the idea, because solar can only knock off 40% or maybe less [off their energy costs]. When you put a proposal in front of someone which says I can reduce your bill by 30% and it will cost you this much, they might not see that it’s worth it. Whereas if you can show a saving of more than 50% off the power bill, it has a bigger impact. Most of our installations are definitely on factories that operate 7am to 6pm. Also, a lot of our finance is done over seven years, so they need a warrant that they’re going to stay in that building for at least that long.
It’s pretty difficult in today’s business arena. A lot of people don’t know what they’re going to do in 24 months let alone 84 months. That’s probably the biggest concern for business owners, whether they’ll stay in the building, because it’s an expensive exercise to relocate a commercial solar system.