How to Start an Electrical Business? Get the complete Guide

How to Start an Electrical Business?

The journey of an electrical business involves hard work and dedication. These are general things that every profession needs. However, in the case of electrical business, you need to follow the following steps.

1. Develop a Business Plan

The starting of any business begins with proper planning. This is the foremost step because planning is needed for every business. Your business plan should cover business goals, strategies, and other financial actions for the benefit of your profession.

Executive Summary – In this section, you need to show your company’s mission, roles, and types of service you will offer.

Company Description – Describe everything about your company with proper details of company name, year of establishment, and location.

Product and Services – What kind of electrical products or electrical services you will offer to your customers will be covered here.

Market Analysis – Do market research and find out your target audience and areas. It also includes competitor research based on their service, price, and area of serving.

Investment Plan – There should be a proper description of your investment plan and funding details for your business.

2. Do Business Registration

You need to perform a business registration as per your state guidelines when starting an electrical company. Small business owners can do it by visiting the secretary of state’s office and getting their business approved.

Local licensing – Local licensing refers to special permissions you will need to run your business in your city. You need to contact the local administrator for approval.

State license – This kind of permit is issued by the state government after proper analyses of your skills. Depending on the company structure, you may also need a general contractor’s license.

The Internal Revenue Service will offer you an Employer Identification Number. This number will be useful at the time of tax payment and other kinds of financial actions related to your business.

3. Choosing the Business Structure

There are different business structures and you need to choose it wisely. You can follow any business structure for your electrical business –

Sole Proprietorship – This option is best when you run your business alone. Registering yourself as a sole proprietor if you are alone to handle your business.

Limited Liability Company (LLC) – This business structure will safeguard your personal assets during legal actions.

Partnership – This is another business structure. Under this, you can register your business as a partnership if you have one business partner or more.

4. Financial Planning and Secure Funds

Starting an electrical business is not a cost effective profession. You need to purchase tools, acquire permits, and promote your business. The investment cost can be between $5,000 and $25,000.

Most importantly, you must have proper planning of investment. Choose a wise path while investing. You can also get help from others who are experts in finance management and electrical business.

Some of the investment points are listed below –

• Van – $10,000 to $60,000
• Tools – $6,000
• Stock to use on jobs – $1,000 to $2,000
• Buying computer, laptop and best electrical contractor software – $2,500
• Uniform as per your brand – $2,000

As far as funding is concerned, there are several ways to obtain capital for your business.

Apply for Loan – There are several types of loans like peer-to-peer lending, small business administration or traditional bank loans. These loans will give you enough money to start your electrical business.

Utilize Personal Saving – If you have a handsome amount of your personal savings then you can utilize that also. The major advantage of this is there is no repayment of installments because it’s your own fund.

Get into Partnerships – It is a good option to get partnered with investors or any other businesses. However, you must have a clear picture of the terms and conditions on it.

5. Get the Required Training and Certification

You must have proper training when starting an electrical company. This is important in many areas because electrical work comes under sensitive tasks. This will not only help to perform your work well but also build trust between you and your client.

The certification will vary from place to place. So you must check the National Electrical Contractors Association to know which certificate is needed in your area.

6. Get Insurance For Your Business

Never forget insurance in the journey of starting an electrical contracting business. Electrical work is quite a dangerous task. So you must choose the right insurance for your business and your customers. Some of the business and electrical contractor insurance options are –

• Insurance of commercial vehicles
• Business Owners Policy (BOP)
• General liability insurance
• Workers compensation insurance
• Insurance of equipments
• Property insurance
• Professional liability insurance

7. Use the Proper Invoicing Tool

Invoicing and the overall billing process are quite important for any business. So, you must choose the best billing software like Moon Invoice. It offers a complete solution for the invoicing process.

The software offers 66+ customized electrician invoice templates to create a professional invoice in any form. Users can choose the desired format in Word, Excel, Google Docs, Google Sheets, and PDF. Here are more features that compel you to choose Moon Invoice.

Key Features

• User friendly interface
• 15+ payment integration
• Supporting multi currencies for international trading
• Works offline without connecting your data to the server
• Duplicate your invoice as an invoice, estimate, proforma invoice, credit note, or purchase order.
• You can request for signature
• Customized print setting
• Activity log for easy tracking
• Sharing of invoices through Email or WhatsApp

8. Establish Business Accounting

Business professionals need to have their separate business bank account. It is essential for keeping personal finance management different from business finance.

Also, this will make it easy to manage your business finances and never get mixed with personal or other kinds of capital.

9. Purchase Electrical Equipment

A successful electrical business is incomplete without tools and equipment. For this reason, you must purchase you purchase the following tools –

• Wire cutters
• Pilers
• Electric drill
• Voltage tester
• Fish tape
• Level
• Screwdrivers
• Flashlight
• Tape Measure

10. Pricing Your Electrical Services

The next thing will be to define the charges for your electrical services which are as follows –

• Wiring a new outlet or switching
• Installing a video surveillance system
• Installing an electric car
• Removing knob and tube wiring
• Installing a new electrical panel

Now for pricing your electrical jobs, you can either choose an hourly pricing model or another one is flat rate pricing. Each pricing model comes with its own advantages and disadvantages. So, you need to choose wisely when thinking about how to charge for an electrical contracting business.

The average hourly rate is between $50 to $100 per hour and the flat rate or standard electrical price is between $162 to $535.

Some of the factors affecting price –

• Location
• Experience of electrician
• Equipment and tools to use
• Size of the area
• Labor cost in your area
• Emergency case (it will charge more)

Moreover, you can choose an electrical estimate template for a better estimation of your cost.

11. Hire Electrical Contractors

There will be a need for electrical contractors when you have so many customers to serve. This will enhance your productivity as your business grows and you have a vast area to serve your service.

To hire electrical contractors you must create job descriptions that carry proper details. It includes the following fields –

• Job profile
• Description of roles and responsibilities
• Experience required
• Qualifications

Afterward, you can call for an interview and examine their skills and knowledge for better insight.

12. Marketing and Promotion

Will you get leads and work without promoting your business? Probably not, for this reason, you must follow proper marketing of your business.

You can follow offline or online marketing strategies. In offline marketing, you can promote your business through advertisements in newspapers and local magazines.

In an online promotion, you can promote your services on social media platforms. Also, you can make and promote your business websites. The other approach is listing your business on various lead generating sites like HomeAdvisor and Angi etc.

You can also choose paid marketing, including PPC or social media paid advertising options.

What Is the Electrical Business Start-up Cost?

The approximate electrical business start-up cost is between $5,000 and $25,000. However, this may be changed as per the region and the type of electrical service you offer. Here is the complete list of costs for various investments –

Last Words

The above explanation has represented a clear picture of starting an electrical business. It will be hard if you miss the above steps or in the case if you have not followed them properly. In contrast to this, this will be an easy game when you follow the strategy well. Define your business plan well, upgrade your skills, establish a business brand, and offer high-quality service. You will be close to your business goal.

Frequently Asked Questions