Congratulations on considering starting your own electrical business!
There’s nothing that beats becoming your own boss in the electrical industry. Besides improving your income, it helps you set your own working hours and tailor your business according to needs.
Whether you’ve just graduated from an apprenticeship or are already a licensed electrician, it’s essential to know what it takes to start your electrical business.
Unfortunately, it’s easy to get overwhelmed on how to get your electric business up and running amidst the pool of ideas out there.
But you don’t have to worry. Here’s a step-by-step guide on how to start an electrical business and manage it in the long run.
In the end, you should be able to take practical steps to establish your electrical business without any doubt.
Is it Worth it to Start Your Own Electrical Business?
Starting and running your own electrical business can be rewarding, challenging, and fun.
You’ll have the opportunity to set your own hours, decide how much work you’ll do, establish your own goals and objectives.
Starting an electrical business is a dream of many electrically minded people, but it’s not for everyone.
Electrical contractors who want to open a business on their own must roll up their sleeves, embrace risk, and be prepared to build a brand new skillset.
Starting a business as an electrical contractor bears more similarities to opening a retail store than most people realize.
Like a store, you’ll need financing to get going; you’ll need to advertise your services, and you’ll have to work hard at attracting customers.
Additionally, opening your electrical business means you have to start doing the things you did not do as an employee, like marketing and sales.
However, starting your own business is worth it if you are ready to work hard and earn a substantial income while building an exciting new career.
Types of Electrical Business
You should be sure to settle on a specific segment within the electrical industry when starting your electrical business.
It’s a good idea to develop a specialty because it will allow you to manage your time more effectively, as you won’t be running in all directions at once.
Tailoring your services to a niche will help you grow quicker by selling a specific service instead of many different ones.
You can consider the following common markets:
- Residential Electrical Services: You will primarily deal with homeowners here and work with houses. Home energy consumption is not very high, so homes use only single-phase power.
- Commercial Electrical Services: Buildings, offices, shopping malls, and even schools are all things you will deal with here. There is a lot more power drawn by commercial buildings than residential ones. Therefore, the power you use must be three-phase.
While professional electricians operate in a wide array of sectors and environments, they fall into two broad categories:
- Linemen (Outdoor electricians): Linemen are responsible for the electrical transmission networks. They transmit power at higher voltages on wires connected to substations.
- Wiremen (Indoor electricians): An electrician in this field installs, maintains, and repairs interior wiring systems. They may install receptacles and light fixtures or install alarm and door systems.
How to Start an Electrical Business
Step 1: Set Goals
Setting your goals is the best place to start when creating an electrical business.
We’ve all got different reasons to start a business, but the same concerns to consider.
Without even bothering to pick up a pencil and paper yet, you should be able to come up with several reasons for starting your own business.
Do you want more flexibility than you’d get from working for someone else? Do you want to be in charge of your destiny?
To ensure success in your endeavour, you need to have a clear goal, be realistic and most importantly, know what makes your business tick.
Step 2: Have a Business Plan
A business plan is essential to the success of any business which needs investors to finance its start-up. It serves as a blueprint for the ongoing success of your electrical business.
Your business plan will spell out your electrical business’s short- and long-term goals. It allows you to analyze the marketplace, estimate costs carefully, and gauge your startup expenses.
The sections in an electrical business plan may vary, but they often include:
- Financial Plan
- Market Analysis
- Business Strategy
- Executive Summary
- Company Structure
- Personnel Plan
Step 3: Get Electrical Licenses, Training and Qualifications
Did you know that most provinces require electricians to be certified and licensed?
Do you also know that most people will not hire an electrician unless the person is certified by a province’s agency or has completed an apprenticeship program?
Maybe you already meet these requirements, but if not, it’s essential to understand what you will need to qualify for jobs from these populous provinces.
The electrical industry has several different roles, each requiring a different certification.
There are many other tasks that are possible to complete, and, again, each of these requires a specific license or certification.
Therefore, it’s essential to consider all of your options when learning how to start an electrical business.
In addition to the license requirements, some electrical contractors take training courses from local colleges or agencies.
The training can teach them new skills, like advanced wiring techniques, or prepare them for mandatory annual continuing education courses.
Step 4. Source for Funds
In order to insure the survival of your electrical contracting business, you’ll need access to some cash for start-up costs.
Don’t go chasing money from family and friends unless you absolutely have to. It’s far better to seek grants and loans from banks or credit unions.
If you’re able to offer a good plan and a genuine need to borrow money, a bank or credit union will usually be willing to listen and perhaps lend you what you need.
However, the best way to finance a business is to grow it slowly and take care of expenses as they arise without taking on additional debt.
Step 5: Get Your Equipment
Before you decide the type of electrical service provider you would like to be, you need to make sure you have the right equipment.
However, since you’re pretty new to this, we recommend that you purchase a basic toolset.
From the most basic side cutters to more advanced electrical cables, there are many electrical supplies you’ll need.
Even if you already have many tools on hand, buying a complete set will help ensure everything you need is there.
It will also save the time and problems of searching for each tool down the road.
Step 6: Know Your Competitors
Before you can begin your journey to start an electrical business, you need to know your competitors.
Your local area will be populated with other electricians. You’ll have to be different and better than them or at least perceived that way.
Knowing what your competitors are charging for their services will help you set appropriate pricing.
Start planning your business by knowing your competitors to know exactly what you have to offer that will pique people’s interests.
You might also be able to stand out from the crowd if you consider the following elements:
- Marketing strategy
- Specialization
- Pricing
- Coverage area
- Customer reviews
Take pride in whatever makes you different from everyone else. In addition to helping you win more work, it will help you stick in people’s minds.
Step 7: Insure Your Business
One of the best decisions you have made is to start an electrical business. This is an exciting and rewarding venture with an area of opportunity that is sure to see steady growth over the next few years.
However, running any business takes insurance coverage against all kinds of mishaps and damages as part of the process. As a result, electrical businesses are no exception.
Insuring your electrical business is vital. You will protect not only the tools and equipment but yourself and employees.
Find a good insurer, create a policy that fits your needs, Insure a rough-and-tumble business that relies on electricity.
You might find these coverages useful in your electrical business:
- Property insurance
- Business Owner’s Policy (BOP)
- Workers’ compensation insurance
- General liability insurance
- Business interruption
Step 8: Market Your Electrical Business
You will need to market your electrical business. Electrical businesses have a unique challenge when it comes to marketing their services.
The first option is to rely on word of mouth, which can work, but there are far more efficient methods.
Many details must be considered when starting an electrical business, making it difficult for a novice.
You can also decide to go digital with your business marketing. To build a business website, you need to ensure your website will help people find you.
Your website is the home base of your business. You concentrate all your efforts into this one place.
Therefore, it needs to serve as a reference point for all the other marketing channels you will use to sell your services.
Whether through traditional yellow pages advertising or simply through word of mouth, how you advertise your business depends on your choice.
5 Tips on How to Manage Your Electrical Business
Starting an electrical business is one thing; managing it is another. In fact, management is one of the common differences between successful and failed electrical businesses.
In the long run, it’s how you manage your business and not how you create it that determines your business’s success. As a result, it’s essential to know how to manage your electrical business after establishing it.
Here are five practical tips that will help you manage your new electrical business:
1. Find a Business Mentor
Like every other business, electrical business owners need mentors to guide them toward a successful path.
Having a business mentor helps you benefit from someone’s experience and avoid costly mistakes in the long run.
However, you must be careful when choosing a business mentor. Since your business mentor is likely to influence your decision, ensure you find someone with a good track record in your business field.
2. Know When to Hire Employees
You can start an electrical business without hiring anyone. This will save you cost in the long run and reduce your liability. However, this may not be suitable in the long run.
As your business grows, you will need to hire people to help you perform specific tasks. Don’t hesitate to do so when the time reaches.
Ensure you hire the right people and meet all the requirements for hiring employees in your location.
3. Cultivate Team Relationships
As with other businesses, relationships matter a lot in an electrical business.
When you create good relationships with vendors, facility managers, and people that matter to your business, you’re exposing yourself to ample opportunities.
Most electrical projects are awarded through recommendations. How well you relate with people that matter to your business will determine the number of recommendations you will get.
4. Maintain Your High Safety Standards
Electricians are exposed to personal injuries, making it essential to maintain high safety standards at all times.
Whether you have employees or not, protecting yourself from risk is the first step to completing any electrical project.
If you have employees, ensure you have a worker’s compensation policy and run safety training programs frequently to protect them against personal injuries.
5. Keep Your Business Plan Current
A current business plan is the life engine of your business. When your business plan is outdated, your business is outdated as well.
Things change quickly in this industry. You don’t want to be left behind on issues that concern your business. Ensure you’re always updated about the electrical happenings in your area to take comparative advantage.
You should always use a “SWOT” analysis to update your business plan. SWOT stands for:
- Strengths
- Weaknesses
- Opportunities
- Threats
A “SWOT” analysis will help you cover every aspect your business needs to improve.
Final Thoughts on How to Start an Electrical Business
Electricians are in high demand globally. Starting an electrical business should not be your opinion but a necessity if you have the knowledge and experience.
Besides being your own boss, achieving a work/life balance, an electrical business exposes you to the different opportunities you wouldn’t have come across by working under someone.
So if you were overwhelmed on how to get started before, now you know the step-by-step processes you need to follow to hit the ball rolling.
As with every other business, you’re likely to fail if you don’t have a working business plan and competitive marketing strategy. This means you must continue to look for ways to manage your electrical business after establishing it.
Thankfully, you have everything before you on how to start your electrical business and manage it.
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FAQs on to Start an Electrical Business
How much does it cost to start an electrical business?
The cost of starting an electrical business depends on your location, business size and target market.
Is electrical business profitable?
Electrical business is profitable if you know how to manage it well. Like other businesses, you’re likely to fail if you don’t have a working business plan and competitive marketing strategy.
How much does an electrical shop profit?
It depends on the shop location, size and sales. However, an electric shop can make 10% on average as profit.
Is it hard to start an electrical business?
It’s not hard to start an electrical business once you have the right information. All you need is the commitment, knowledge, and capital to hit the ball rolling.
