Starting a business of any kind can be daunting. Oftentimes, people looking to start up an electrical contracting business aren’t sure where to start or what steps they need to take to make their business a reality.
We are here to provide a concrete, step-by-step process to help you get your dream of starting an electrical business up off of the ground.
Keep reading to learn more.
Are you ready to start your own electrical business? Ask yourself these five questions to be sure.
Running a successful business requires time, dedication, and hard work.
According to a survey, most business owners dedicate 50 work hours per week to running their business.
Do you have the time to put your all into the success of your business?
As you continue to grow your business over time and hire more employees, you may be able to delegate more work and responsibilities to other capable hands. But in the beginning phase of your business, you should expect to be taking on a full-time workload.
Owning a business requires you to have skin in the game. You will likely need to make sacrifices to get your business off of the ground.
The average start-up cost for an electrical business is approximately $19,267.
Typically, budding electrical business owners make financial sacrifices to afford the start-up costs of running a business. This can include:
However, starting a business doesn’t mean you should put your entire life on hold. Before starting your business, it’s also important to identify what you are not willing to sacrifice for your business, such as:
Take some time to write down sacrifices you predict or intend on making and non-negotiables you’re not willing to sacrifice.
Success cannot be measured without goals.
What does running a successful electrical business look like to you? What are you hoping to accomplish? What are your goals and objectives for your business?
It’s crucial to be hyper-granular with your goals so you can create a clear pathway on how to achieve them.
Here are some examples of clear-cut goals:
Once you establish your goals, you can work on creating a plan to measure and meet those goals.
“Failure is an option here. If you’re not failing, you’re not being innovative enough.” - Elon Musk
When it comes to starting a business, the unavoidable truth is that roadblocks and “failures” are inevitable.
However, you can better equip yourself to deal with those failures by anticipating potential issues and having a plan on how to deal with them.
What could possibly go wrong with starting a business? Here are some typical stumbling blocks electrical business entrepreneurs may face:
To own a successful electrical business, your heart has to be in the right place.
According to data from the Bureau of Labor, 80% of start-ups don’t survive past their first year of business.
If you’re planning on starting an electrical business because you think it is a good way to get rich quick or merely a legacy you can leave behind for your children, you may find it difficult to break through the start-up curse.
When it comes to running a successful electrical business, passion plays a role.
When you’re putting your blood, sweat, and tears into building your business, investing loads of time and money all while worrying if it will pay off — it’s your passion that is going to motivate and inspire you to press on.
Do you feel ready to take the leap and start up your own electrical contracting business?
Here are nine critical steps you’ll need to follow. Let’s discuss how to navigate through each of these steps in detail.
When it comes to deciding what services you offer, here are some questions you’ll need to think through:
Keep in mind that you can always expand your services as your business grows. Focus on providing services you are confident in performing and have a great profit margin first.
What does your competition look like? Start making a list of other competing businesses in the area. Analyze their website and the services that they offer.
Is there an unmet need for a service in your market? Do you see any opportunities to offer better services?
Maybe the market is highly saturated in one city but there is little competition in neighboring cities. Do your research!
Customers will likely have multiple options in their area when it comes to choosing an electrical business. Why is your business going to be the obvious/best choice? What sets you aside from other electrical businesses in the area?
Start thinking of ways to personalize your branding. Maybe you have the more qualified team around with years of experience under their belts. Perhaps your business operates near a military base and you offer military discounts as an appreciation to service members.
Just be careful and don’t fall into traps like offering dirt cheap prices to get more business. This could have the opposite desired effect and scare off customers who get the impression that the quality of your work must match the price tag.
Choosing the right name for your business is critical. When it comes to deciding a name for your business, consider these tips:
When it comes to starting any kind of business, there is always red tape involved. The regulations and requirements can vary depending on what state you’ll be registering your business in, so always consult your specific state laws and regulations.
Let’s go over some of the typical paperwork you’ll likely need to get in order.
To work as an electrician in most states, you need to have an electrical license. Additionally, many states require electrical businesses to have a special electrical contracting license and a business license to operate within the state.
Here is a list of electrical licensing requirements by state.
According to the Small Business Association, the process of obtaining a business license can vary by state.
Here is generally what the process of applying for a business license looks like:
1. Determine whether you will register your business as a limited liability company (LLC), corporation, or partnership.
2. Gather the following documents needed for your business license application:
3. Apply for the business license
4. Maintain the license by complying with policies and renewals
It’s highly likely that you will need to register your business at the state and local levels. This typically involves:
You will likely need to apply for an Employer Identification Number (EIN) with the IRS. Click here to read resources from the IRS that can help you apply for your EIN.
Full stop: Your business must be insured. Aside from transferring some financial risks involved with starting and running an electrical business, some states require you to have insurance.
Insurance you may be required to have can include:
You’ll also want to insure assets like tools and business vehicles.
Make sure you do your due diligence and speak with an insurance representative to determine insurance that you're required to carry and what type of coverage you will need based on your business’s needs.
The more prepared you are, the better chance you have of starting a successful electrical business. This is where creating a business plan comes into play.
A business plan should cover every aspect of your business, including:
Along with a business plan, you’ll want to also create a financial plan.
This plan should outline:
This is a great place to organize and track any loans or assets that you have invested into the start-up of your business.
As we shared at the beginning of this guide, the average start-up cost for an electrical business is $19,267.
Many different factors can impact the total start-up cost for your business, including:
When creating your financial plan and budget, itemize your potential expenses to get a better idea of what your start-up costs may look like.
Your business is only as good as the team behind it. Hiring the right people can help you grow your business and take on more jobs each month to help increase your revenue.
When considering who to hire, think about:
Marketing is critical in successfully launching your new electrical business.
Before your launch, ensure your website, social media accounts, and resources like flyers and business cards are ready.
There are many marketing strategies you can use to make a splash as a new electrical business. Click here for detailed directions on how to implement six effective marketing strategies to stimulate growth for your new business.