20 Steps to Successfully Start an Electrician Business
Contractor Tips , Posted by Charlotte Smith on
The electrician trade is a steady field that can be very lucrative, especially for those who choose to start their own electrician business.
Starting an electrician business is an excellent idea, whether you've been working as an electrician for someone else's company for a while or you've always wanted to dive headfirst into the trade but have no current experience.
Before you take the next step and start making moves to start your business officially, you need to have a plan.
At Contractor Training Center, we know the ins and outs of the various contractor trades, including electricians. We've helped countless hopefuls just like you turn their ideas into realities with training and exam prep for electrician's licenses. We've learned a lot about starting these businesses along the way.
Below, we're sharing our insider knowledge with you so you can follow a step-by-step plan to start your own successful electrician business.
1. Set Goals for Your Electrician Business
The U.S. Bureau of Labor and Statistics expects electrical work to grow by 9% by 2030. Now is the time to get started if you've ever dreamed of starting your own business within the industry.
First, get to daydreaming about your biggest goals for your electrical work company. What are the lofty goals you hope to one day achieve? What are the smaller goals you want to accomplish with your business?
Perhaps you're considering the switch because you need more flexible work, or you want to build your own company. Considering what you want to get out of your career move will help you develop the right company.
Thinking about bigger, long-term goals is also a great way to establish a vision for the future. Goals like having a national franchise, becoming the top service provider in your area, or employing and mentoring over 100 people are great places to start.
2. Plan Your Electrician Business
Next, you can get into more of the nitty-gritty, detail-oriented planning for your company.
You'll need to plan for startup costs like business registration, certificates, permits, licenses, insurance, equipment and tools, location, and purchasing or renting a truck or a van. These items cost money, and they are imperative to getting your business off the ground. Consider these your up-front overhead costs.
You should also consider what financial assistance may be available to you via grants, tax deductions, or free mentorship. You can save a lot on training and business setup costs if you know where to look.
Then, you'll need to start developing your business plan. It will need to include things like your financial projections, growth opportunities in the market, marketing strategies you'll use, financing, and goals.
Putting all of this in writing will help establish a clear-cut vision for your business and give you a greater purpose.
3. Pick a Name—And Register It
Once you have a solidified business plan in writing, you can fill in some of the blanks by coming up with a name that reflects you, your business, what you offer, and your values.
It doesn't have to be overly creative, but it should indicate what your company offers. Try your name if you're looking for a good place to start. “Johnson Electrical Work” would be just fine as long as there's not another company with the same name.
Or, have fun with it and get creative if that feels more true to you and your business.
Once you have selected a suitable name, register it. There are four ways to register a business name, depending on the type of business. You can file it as an entity name, trademark, doing business as (DBA), or domain. Select the one appropriate for your newly formed company.
4. Form a Legal Entity
It's time to make things official now. You should decide on a legal structure that will work the best for your business and its trajectory.
Your best bet is to choose a structure like a corporation or an LLC to protect yourself from being personally liable should your business get sued.
Another option is to consider are sole proprietorship, but that would only work if you plan to be the sole electrician at your company. A partnership is a good option if you go into business with a partner and want to share the business equally.
An LLC is probably the most popular choice. An LLC will protect your personal assets, give you tax benefits to speed up your growth, choose between S-corp taxation or pass-through taxation, and increase consumer trust in your business.
Some states require electricians to form their companies as LLCs, so you'll want to learn more about your state's specific requirements and guidelines.
5. Register Your Business for Taxes
Your business will also need to get registered for different local, state, and federal taxes before you can start doing any business. To do that, register for an EIN.
It's an easy process that's free to everyone. In just a few short minutes, you'll have your very own customized number that you can use when you file your taxes each year.
Start locally, contacting the appropriate regulatory agency that handles your city's or county's taxes, and then ask about any additional state taxes. From there, you can register for your EIN and check off all of your tax requirements.
6. Complete Training
Many states require electricians to complete training before they can receive licenses or permits. This training is often in the form of mentorship or apprenticeship.
Your state may require you to train for a certain number of hours or may require a year or more of time spent in the trade, so be sure to understand these requirements before you start establishing your business.
Other times, the only training you'll need is to pass an exam for an electrician's license. If that's the case, you can rely on the exam prep resources from the Contractor Training Center. We’ll help you improve your chances of passing your exam the first time to save both time and money.
7. Get the Licenses and Permits Needed
Once you've got your training done and feel confident that you can pass the exam or meet any requirements for a license and permits, it's time to schedule your exam or fill out the application.
Some states allow you to take the exam online, while others work with reputable test centers and hold testing slots on certain days.
If all you need to do is complete an application, the Contractor Training Center can help with that too. It can be helpful to have someone familiar with the process to ensure you have provided all the documents and have gathered the necessary information to avoid having your application get denied. That's what our training experts are here to help you achieve.
You may also need permits to perform work in certain areas, although this may be on a project-by-project basis.
Be sure to check in with the appropriate regulatory authority in your area to determine if there are any more requirements before you can start taking business.
8. Open a Business Bank Account and Credit Card
Before you can start making money, you'll need a safe place for that money to go—and it's likely not your personal bank account.
To keep things organized for you and your business, open up a business bank account for your business and consider getting a credit card for your business as well. It will immediately give you a line of credit you can utilize if necessary for upfront costs.
The bank account is where all of your money earned will go. From there, you can pay for things like equipment and tools and pay yourself and any employees you end up hiring.
Most banks will require an EIN to open a new bank account, so have that handy when you go into the bank to speak with an account manager.
9. Get Business Insurance
Business insurance is invaluable when the field you're in is something like electrical work. You will need to get coverage for both your vehicle and your equipment, and you'll also want to set up general liability insurance to keep you protected in the unlikely but possible case that something goes wrong.
Other insurance policies to consider include worker's compensation, income protection insurance, and a general business owner's policy.
Some banks will offer packages that include one or more of these policies, which can be a great way to bundle what you need all in one place.
10. Set Up Accounting
The next step in preparing to start accepting jobs and taking payments is setting up an accounting system that you can use to keep all of your financials organized. This systematic approach is to your benefit throughout the year but is also a huge help when it comes time to file your taxes.
Some things to consider at this stage are:
- How will you manage accounts payable and receivable (i.e., what clients owe and what you owe)?
- How will you accept and process credit cards (an essential feature in today's day and age)?
- What accounting system will you use to keep everything organized?
Accounting software programs like Quickbooks do a great job streamlining all of these tasks to keep it simple for non-accounting-savvy business owners who are just getting started.
11. Define Your Brand
With most technical and legal aspects out of the way, the fun can begin. Once you have set up your business, you can bring your brand to life.
A brand is different than a business. The business is the company itself—the organization that offers electrical services, in this case. The brand is the company's public-facing persona.
What do you want your electrical brand to be? Do you want to be known for the lowest prices, 24/7 emergency repair, your friendly and helpful service associates, or something else entirely?
Choose one or two things that you think your organization would do well focusing on, and go after it, defining your brand around these things.
Your brand will influence how you market your company, why people recommend your company, and how you get business.
12. Choose Your Services and Your Market
Next, choose the specific services you'll offer and what market you will serve. Decide whether you want to work within commercial or residential sectors.
Commercial electrical services involve working with offices, retail centers, and other commercial buildings and the services you offer may vary. There are also differences in the electrical systems and work, with commercial buildings using three-phase power and containing the wires in tubes. With more power and bigger systems, there's a potential for more work in the commercial industry.
Residential electrical work involves working inside residential homes, mainly with homeowners but also with landlords, multi-family apartments, condo associations, etc. Residential units only use single-phase power, and their systems are often much simpler, making this a slightly more accessible market.
Then, choose the kinds of services you want to offer. Some specialties to consider include:
- auto electrical
- industrial electrical
- linemen (outdoor electrical)
- wireman (indoor electrical)
- wind turbine electrical
- telecommunications repair and installation
- smart-home or smart-building electrical
- security electrical
- fire alarm electrical
- emergency electrical
13. Develop a USP
With a well-defined brand, services, and market to tap into, it's time to start differentiating yourself within the market so you can thrive. The key to differentiation is a USP, or unique selling proposition.
Suppose you already offer a service that is unique to your area, such as becoming the first 24/7 emergency electrical repair service provider in your town. You've got a built-in USP. However, not everyone is this lucky.
To set yourself apart from the crowd, uncover your USP by asking yourself a few questions:
- What unique features does my business provide? Do you know your way around the wiring for cutting-edge smart home technology? Do you live and die by incredible customer service?
- How do these unique features bring advantages to my customers? Knowledge of smart home or security systems helps your customers protect themselves and streamline their home lives. Excellent customer service means they can expect pleasant experiences, fair prices, and good conflict resolution.
From the information gathered here, create a value proposition statement that encapsulates what you bring to the table and how it benefits your client. For example:
“We are smart home and security electricians with an understanding of the most cutting-edge systems, allowing you to streamline your home life for one less thing to worry about.”
“We are the friendliest electricians you'll ever find, keeping customer service as our top priority. Work with us, and we guarantee you’ll never have to deal with another unpleasant service call again.”
You can use these statements to help shape your marketing and sales initiatives as well.
14. Create a Website
Time to establish a digital home for yourself. Building a website isn't just a “nice to have” anymore. It's necessary for any business that wants to do well in the digital age.
You’ll need to choose a domain name, preferably one that is the same as your business name or close to it. You can find plenty of resources online to set up a domain name for free.
Next, create your website using templates available for free online, or hire a web designer to create a custom one for you. There are options available for every budget.
Make sure your website includes an informative home page, a contact page, a services page that lists all of your offerings, links to your social media accounts, and perhaps a blog.
A blog isn't necessary from the start, but it's a good idea to incorporate it eventually. It's here that you can share valuable information to secure your position as an industry expert. You can offer tips and insights like how to know when to call an electrician or a primer on the different types of electrical systems.
15. Set up Business Contacts
When people need to get ahold of you, you want to ensure it's as easy as possible. Don't make them go on a wild goose chase to track you down.
First, establish a phone number and list that on your website online. It could be your cell phone number if you're comfortable with that and don't want to set up a new line. You can also get a Google Voice phone number that will call you directly but uses a different number to protect your identity.
Then, create a Google My Business listing, which helps your information pop up if someone searches online for your company or the kinds of services you provide. Be sure to add your website, phone number, hours, and other details that may be helpful.
Finally, create an email address for your business with a custom address related to your website to create consistency across platforms. If your website is Johnnson Electrical Services, and your website is johnsonelectrical.com, your email might be email@example.com.
16. Gather Supplies, Tools, and Equipment
Start gathering up the items you'll need to take on your first job. For this, you'll need a basic toolbox set-up of electrical supplies, tools, and any special equipment you may need.
Also, consider transportation—if you have a lot of equipment, you may need to buy or rent a van or truck to transport everything efficiently.
Be sure to pay for all of these items with your business bank account or business credit card, and you may be able to write them off during the tax season. Plus, with credit cards, you can earn points to use at a later date.
17. Find a Location
Unless you want to be a mobile electrician who travels from one job to the next (no shame there), you'll want to establish a business location.
It doesn't have to be customer-facing, as in an office where potential customers walk in to inquire about services. It could just be a warehouse for equipment and a small office room. Your location should reflect your needs.
Be sure it's in a prime spot. Ideally, you want it in the middle of your service area, so you'll never have to drive too far from the office. The location can serve as a solid home base in between jobs.
18. Hire Employees
If you want to build a one-man or one-woman empire, have at it. However, growth is a lot easier with a supportive team behind you.
Now would be a good time to consider hiring employees to help pick up the slack. Employees can handle specific projects so that you can focus on CEO-level things to keep the business running.
Some jobs you may want to consider hiring for include:
- administrative assistant
- associate electrician
- electrician apprentice
19. Market Your Business
If you want people to come to you, you'll need to get the word out about your new venture.
You can start by sharing the news with family and friends. Ask them to spread the word to anyone they know who might need electrical work.
However, if you want to take off, utilize digital and traditional marketing strategies.
As far as traditional marketing goes, put an ad in your local newspaper, for starters. Then, create a small budget for digital ads on Facebook and Instagram to drum up some social awareness.
20. Learn from Industry Veterans
The best way to find success is to learn from the success and failures of others. Take notes from industry veterans, whether national or local. It’s a great way to find out what works and what might not.
Before You Go
There will more than likely be plenty of challenges along the way to starting your own electrical business. However, this roadmap will help you stay on track and ensure you're checking all the boxes and staying compliant in your field.
If you need help studying for contractor exams or support for your licensing applications, get in touch with the Contractor Training Center. We have the best solutions for contractors because we’ve been contractors ourselves.