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.

Ask Yourself These 5 Questions Before You Start Up Your Electrical Business

Are you ready to start your own electrical business? Ask yourself these five questions to be sure.

#1: Do you Have the Time to Dedicate Yourself to the Business?

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.

#2: What Are You Willing to Sacrifice to Make Your Dream a Reality?

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:

• Holding off on making big purchases like a new home or car
• Putting your dream vacation on hold
• Making cuts to your entertainment budget

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:

• Family
• Relationships
• Your mental and physical health
• Your happiness

Take some time to write down sacrifices you predict or intend on making and non-negotiables you’re not willing to sacrifice.

#3: What Goals Would You Like to Reach With Your Business?

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:

• “I want to become profitable by the end of the first year of running my business.”
• “I want to have the means to hire at least five employees by the end of the year.”
• “I want to establish my brand as the most trusted electrical business in my area.”

Once you establish your goals, you can work on creating a plan to measure and meet those goals.

#4: What Are Potential Roadblocks You May Anticipate With Owning Your Business?

“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:

• Equipment financing. Perhaps you underestimated the cost of equipment you need to make your electrical business a success. Many traditional credit card options don’t offer enough credit limits to finance these costs. 
  
  The Flexbase card is the first card designed for construction and contracting companies. With Flexbase, you can get 10x the credit limit than traditional credit cards offer, pay 0% interest on the first 60 days*, pay $0 annual fees, and more. Click here to learn more and get pre-approved today.

• Marketing mistakes. Maybe you trusted the wrong web developer or SEO agency. You tried to run your own ad campaign and blew your ad budget with little to no results. You accidentally broke Google guidelines and got your Google Business Profile suspended. 
  
  As a new business owner, you’re likely going to make marketing mistakes. You can help mitigate this problem by accounting for mistakes in your budget and vetting marketing agencies with a fine tooth comb before signing into partnerships.

• A slow start. It’s always possible that your new business doesn’t take off as quickly as you hoped for. Make sure to account for this in your financial projections and budget planning so you can work on increasing business without feeling strapped for cash.

#5: Is Owning an Electrical Business Your Passion?

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.

How to Start an Electrical Business in 9 Steps

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.

Step 1: Decide What Services You Will Offer

When it comes to deciding what services you offer, here are some questions you’ll need to think through:

• What services do you plan on specializing in?
• What equipment do you need to complete certain services?
• Do some services have a higher profit margin than others?
• Are you planning on offering services 24/7 or during established hours of operation only?
• What areas do you plan on offering services to?

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.

Analyze the Market

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!

Step 2: Decide What Will Set You Apart From Your Competition

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.

Step 3: Choose a Name for Your Electrical Business

Choosing the right name for your business is critical. When it comes to deciding a name for your business, consider these tips:

• Keep it simple: You want to go with a name that is easy to remember and easy to spell.
• Make sure the name isn’t already taken: You can run a trademark search to ensure the business name you are considering isn’t already taken. Once you decide on a business name, make sure to register it for a trademark as well.
• Ask for feedback: Share some of your name ideas with other business partners and friends/family to get some opinions on stand-out favorites.
• Set up your social accounts and domain name ASAP: Look up any potential names on social media and Google to ensure they aren’t already taken. Once you decide on a business name and register for a trademark, you’ll also want to set up your domain name for your website and any social media accounts you plan on using to market your business.

Step 4: Take Care of the Necessary Paperwork

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.

‍

Ensure You Have the Proper Certifications

‍

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.

‍

Apply For a Business License

‍

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:

•  A description of your business, location, and planned activities
• Proof of your local/state tax status
• Copies of corporation information, such as bylaws
• The registration fee
• A list of business owners and managers
• Proof of insurance
• Records verifying your business certifications

      3. Apply for the business license

     4. Maintain the license by complying with policies and renewals

‍

Register Your Business

‍

It’s highly likely that you will need to register your business at the state and local levels. This typically involves:

1. Deciding on a business structure, such as an LLC, corporation, or partnership
2. Registering the name of your business with your local government
3. Registering your business with the IRS and obtaining a Tax ID number
4. Registering your business with the state tax and revenue authorities
5. Applying for the proper license and permits required based on the state you live in

‍

Apply for an Employer Identification Number

‍

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.

Step 5: Get Your Business Insured

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:

• General liability insurance
• Worker’s compensation insurance; and
• Income protection insurance. 

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.

Step 6: Create a Business Plan

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:

• Key partnerships: Identify who you are working with and what their roles in the business are.
• Key activities: Identify each requirement and step you need to take to get your business off of the ground.
• Key resources: Identify resources you can leverage to create value for your customers.
• Value proposition: Create a compelling statement highlighting your business's value and brand.
• Customer segment, relationships, and channels: Identify your target audience and how you plan to communicate/relate with them.
• Financial projections and budgeting: Identify potential costs and create a budget forecast.
• Revenue streams: Identify streams of revenue such as services and products.

Step 7: Create a Financial Plan

Along with a business plan, you’ll want to also create a financial plan. 

This plan should outline:

• Your current financial situation
• Your ideal financial projections
• How you plan to meet your financial goals and objectives
• Profit and loss statements
• Balance sheets
• Cash Flow statements
• And more

This is a great place to organize and track any loans or assets that you have invested into the start-up of your business.

How Much Does It Cost to Start an Electrical 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:

• How large your business is
• The cost of equipment
• Certification fees
• Whether you are purchasing a brick-and-mortar location and company vehicles
• The number of employees you hire
• Your marketing budget
• And more

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.

Step 8: Hire a Team

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:

• Whether a new hire will fit in with other employees
• The experience level of potential hires
• How a potential hire may fit into your company culture
• And more

Step 9: Begin Marketing Your Electrical Business

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.