How To Start A Small Electrical Contractor Business?

How To Start A Small Electrical Contractor Business?

If you are tired of working for somebody else’s business and feel ready to become your own boss, start reading to find out what you need to launch a successful electrical contracting company.

Why starting an electrical business is a good idea?
Cost of opening and operating an electrical contracting business
Work hard on your first business plan
Prepare everything you need for legal operation
Decide on prices for your electrical services
Take the first steps towards starting your own electrician business

After a couple of years of the trade school and apprenticeship, every electrician starts dreaming of becoming independent and investing time and money only in their own business. If this idea seems alluring to you, too, it’s time to take the first steps toward your dream. In this article, you will learn how to properly plan, prepare, and start your first-time business in the electrical contracting industry.

Why starting an electrical business is a good idea?

Becoming an entrepreneur may seem like a challenging and long path to go. But don’t get discouraged right away! You can overcome any trouble and achieve your goals if you clearly understand all the benefits it will bring to your life. Let’s look at some of them:

Electrical businesses always have a lot of work. Today, we all rely on electrical devices and cannot imagine everyday life without properly functioning electrical systems.

A skilled electrician that provides a high level of service always finds clients. Residential and commercial clients need electrical services, you just have to specialize and decide who it is better for you to work with.

A good source of income. Independent electrical contractors are paid well, especially if compared to other trades. Moreover, you can double or even triple your business's profit when your business grows.

Freedom to select what to do and who to work with. Whether you like installing new wires in buildings, working with electric cars’ charging stations, or repairing malfunctioning electrical systems like fire alarms, you can choose your specialization and your clientele. And change your mind at any time.

Cost of opening and operating an electrical contracting business

Now, we are going from dreaming straight to numbers. Every business requires a solid financial ground so you have to assess what budget you will need at the start and later each month. Your startup costs will vary depending on your area and available assets (e.g., power tools, a van, and an office).

As a professional electrical contractor, you may have collected the necessary tools to do the job properly, so your equipment costs will be low. An exception is if you want to specialize in the area where you need unique equipment. When purchasing new tools, pay attention to their quality, as it is crucial in keeping yourself safe and offering excellent service.

As electrical services are mostly mobile businesses, you will need a vehicle to travel to the client’s side and carry your equipment. If branded, your truck can also be an additional marketing tool. So, don’t forget to factor in this investment.

There will also be some overhead costs that you have to be prepared for. These include rent of property for your office, utilities, insurance, and certification renewals. Subscriptions to digital tools also fall into this category. These are business management software for electrical contractors, online accounting solutions, job scheduling tools, etc.

To cover your startup investments, you can use your personal savings, ask friends or family to support your new venture, use small business loans, find an investor, or apply for a government grant.

Work hard on your first business plan

Writing a business plan aims to make you think through all the aspects of running a company and prepare for possible challenges and opportunities.

Although you will need to show this blueprint to lenders and investors, preparing it is more valuable than the final document. Remember the following points to review when writing your business plan:

Your business goals and objectives. Outline achievable results you want to achieve from a short and long-term perspective. Be sure to plan your business development as well.

Finances. You should prepare a detailed analysis of how your business will generate money. Calculate your break-even point, cash flow and sales forecasts.

Marketing strategy. Here, you should describe your target audience and how you will attract potential customers.

If this is your first business plan, this task will seem overwhelming, so don’t hesitate to ask for professional assistance. Remember also that you should regularly review your business plan to track progress and adjust it accordingly.

The legal aspects of creating a business are worth taking your time to study carefully. Electrical businesses are highly regulated, so you must receive licenses and permits before working with electrical systems. To get everything set up right from the start, do good research or consult specialists regarding the following points:

  • What are government regulations in your area?
  • What are the requirements to obtain a business license?
  • What kinds of insurance policies do you need? Would business insurance and property insurance be enough?
  • What is the best business structure for your future business? Should it be a limited liability company, a partnership, or a sole proprietorship?
  • What taxes should you pay? How can you optimize small business taxes?

This part of the work is not fun, so be prepared for it to take some time. As a result, you won’t worry about your business being fined for not complying with the law.

Decide on prices for your electrical services

Charging the right price is a pain point for many business owners. You want to be competitive while getting profits and delivering a good quality of service. To find the balance between winning more jobs and doing a better job, follow these tips:

  1. Calculate your ideal price per hour and compare it to the average one on the market. What would you offer your customers as additional value if you want to price higher than your competitors? Why should they choose you over other electricians with the lowest prices in the area?
  2. After you put together your list of services, you should track what jobs bring in more profit, what is prevalent among your clients, and what you can stop providing. According to the Pareto principle, you should dedicate 80% of your time and resources to the most profitable jobs.
  3. Prepare to defend your estimates. When pricing an electrical job, you should be confident about your prices and be ready to explain to clients what value they get for the price they pay.

Take the first steps towards starting your own electrician business

The essential part of every planning is the actions you take after. Success starts with small steps, so be brave to take your first ones. Depending on your business strategy and goals, your to-do list may vary but some tasks remain essential for every entrepreneur:

  • Let your family and friends know that you are working solo from now on. This will help you build your network and get referrals.
  • Find reliable suppliers of electrical equipment and inventory.
  • Purchase the necessary tools and consumables, and prepare your office and van.
  • Create a website and social media accounts and get listed on maps and small business listings.
  • Print out business cards and necessary marketing materials.
  • Open a bank account to divide your personal money from your business.
  • Sign up and configure the software and services you need to keep track of your work and finances.
  • Join professional associations and find a mentor to support you.

And the most important is to keep doing what you love despite any challenges you may face on your exciting road as a business owner. Celebrate every win and treat failures as opportunities.


Starting a small electrical contractor business is an attractive career path for skilled electricians. The demand for this service is consistently high, so you shouldn't be concerned about missing jobs. There are many things to do before you can operate on your own: planning, financing, registering, licensing, marketing, and executing your strategy. If you do everything right at the start, you will avoid many pitfalls and build a profitable business.

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