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About two-thirds of all the electricians in the US work for somebody else. They work for firms that are connected with contractors. Of the remaining one-third, most of them are also employed by a firm or company.
But 10% of the electricians are self-employed. Do you want to own your own electrical contracting business? We’ll get you…connected.
The Electrical Business Industry
Currently, there are about 667,000 electricians in the US according to labor statistics. The electrical business is predicted by market analysis to grow by nearly 9% over the next few years. For those interested in how to start an electrician business, this growth presents a promising opportunity.
Do the math – and if you’re going to do electrical work, you should be good at math – that means there will be 67,000 new jobs for electricians. Experts figure there will be 60,000 new jobs and about 7,000 jobs created by expected retirements of working electricians.
Why You Should Start Your Own Electrical Business
Why should you start your own electrical company?
- The money is good.
- The cost to start an electrical business isn’t awful; the average cost to start is $20,000.
- Electrical businesses are diverse, and there are many options for business focus. In addition to the ongoing need for maintenance in existing housing, experts predict a rise in new construction. The electrical industry is pivoting to more need for experts in solar and wind technology. Potential customers for electric vehicles need expert electrical services to install an electric car charging station at their residences.
- Qualified electricians are always in high demand.
How to Start an Electrician Business in 10 Simple Steps
Are you ready to start your own electrician business? A new electrical business will be successful if you follow steps that are similar for anyone starting a new business.
The typical path to an electrical contractor business starts with education. If you’ve been lucky, getting your high school diploma included the opportunity to complete technical training in construction-related fields, including electrical work. Another path could take you to a two-year technical school.
You could also apprentice. Programs are offered through several national organizations, including the International Brotherhood of Electrical Workers, National Electrical Contractor Association, Independent Electrical Contractors, and Association of Builders and Contractors. To search for apprentice programs in your area, go online to the national website.
Here are ten steps to get you on the way to your successful electrical business.
1. Choose what Type of Electrical Contracting Business to Start
Many people starting an electrical business begin in residential electrical services. There are also more specialized types of electrical work, such as commercial work, which may include work with instrumentation and fiber optics.
2. Research Other Electrical Contractors in Your Area
Look at other electrical contractors in your area for two reasons:
- To get a sense of what type of competition for work you’ll face from local businesses.
- Find a person or company that will hire you as an apprentice so you can learn more about the business through on-the-job training before launching out as your own boss.
3. Get the Necessary Permits & Licenses for Your Electrician Business
If you graduate from a trade school, you’ll most likely get a certificate and/or associate degree. Even with a degree, all those prospective electrical business owners must take an exam to become state-licensed electricians according to government regulations. The test is called a Journeyman electrician licensing exam, and you’ll need to pass it to get your electrical contractor license.
You may also be required to take the city and/or county tests; you can find out at your county clerk’s office. Continued training, work experience, and certifications may eventually lead you to become a master electrician. Master electricians are an elite group.
You’ll need to obtain a business license, which you can typically get from your state. Licensing may also be required by your county and/or city, depending on local regulations.
4. Determine the Target Market for your Electrical Business
Electrician businesses can either be general or specialized. For instance, you might choose to focus on areas with high demand, such as the electric vehicle home charging sector for residential clients. Alternatively, you may prefer to work as a subcontractor in new construction projects. If you reside in a region with predominantly older homes and outdated electrical systems, you could concentrate on maintenance services for both residential and commercial electrical wiring customers. This approach is essential when considering how to start an electrician business.
5. Write a Business Plan for Your Electrician Business
A business plan is important when you’re starting an electrician business, for yourself and for your future financial needs. The basic plan includes an executive summary, where you describe the business structure, focus, and future plans. You’ll also need to include your plan for marketing strategies and growth.
The plan is extremely important because it may someday be part of submittals for small business loan requests. It should be professional, and also updated annually to include documentation (tax returns) about the business. Your business name should reflect the serious nature of electrical jobs.
6. Choose a Legal Business Structure and a Business Name
Most electricians operating their own businesses choose the limited liability company or LLC. That way your personal and business assets are kept separate. Your personal assets may include your home and personal vehicle.
7. Sort Out Your Business Finances and Open a Business Bank Account
The initial equipment costs for starting a small electrical business can be as low as $1,000, but the average investment is around $20,000. Your inventory will include essential electrical supplies such as wiring, electrical boxes, cover plates, and more, which can be acquired on a per-job basis.
Before launching an electrical business, you’ll need to gather essential electrical tools, including voltage indicators, insulated screwdrivers, wire cutters and strippers, a multi-function tester, and battery-operated tools, as you’ll need to turn off the electricity while you work.
If you’re going to operate from a brick-and-mortar business location, obviously, your costs will be higher with a mortgage or lease.
You’ll need to separate your personal and business accounts, so you’ll need an account solely for your business. Same with credit cards; you’ll need a business credit card only used for business purposes. To make tax time easier, purchase accounting software.
8. Get Electrician Business Insurance
A professional electrician requires general liability insurance, but this is not sufficient on its own. If you plan to use either your personal vehicle or a business vehicle for work, obtaining commercial auto insurance is essential. Since electrical installation operates as a mobile business, you will be transporting tools and supplies to various work sites.
There are other types of add-on insurance that may apply to you. For example, you may want to add business interruption insurance, which can help you pay the bills if you can’t work due to a natural disaster or vehicle accident.
To save money, you can often group liability insurance, plus the add-on insurances you need, under one policy called a Business Owner’s Policy or BOP.
9. Register Your Electrician Business for Taxes
Get an EIN or Employer Identification Number.
10. Build Your Electrical Business Website and Market Your Electrician Business
Use social media platforms and a business website as basic marketing tools. You may also attend trade shows in the contracting industry, which are great opportunities for networking. These 14 electrician apps can also give you an idea if you want to create your own app.
Final Words
The cost of starting an electrical company as an entrepreneur is low. There’s a growing need for licensed electricians. But you can learn more about how to start a business: a step-by-step guide, as well as how much it costs to start a business.
Start an Electrical Business FAQs
How Much Does It Cost to Start an Electrician Business?
Nationally, the average cost of starting a small business is about $20,000.
Is an Electrical Business Profitable?
Yes. On average in the US a sole proprietor nets about $60,000 in that small business.
Is it hard to start your own electrical business?
An electrician requires specific training and licensing, strong math skills, and the capacity for physical work.
How do I write an electrician business plan?
There are basic components, such as the executive summary, business description, financial projections, marketing, and sales plan. It’s part of submittals for small business loans. There are business plan templates available online.
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