The electrical services business has long stood the test of time as a lucrative one. As long as humans rely on electricity, there will be an opportunity to profit from the need for service, particularly as the population continues to grow. And with the International Brotherhood of Electrical Workers acknowledging a shortage of skilled electricians, there’s never been a better time to start a business in this trade.
The electrical business is currently valued at over $160 billion annually, and if it’s the right fit for you, there are some steps you can follow to ensure you get your share of the pie. First, you’ll need to decide whether you want to focus on commercial/industrial clients, smaller-scale residential clients, or both.
You’ll also need to determine if you’re going to start your own business from scratch or buy an existing electrical business. Once you’ve made those decisions, you can begin to focus on the important aspects of running your business.
Setting yourself up for success
While the electrical business may seem like a slam dunk for profitability, there are still some very important considerations when it comes to running a business that stands above the competition.
Let’s take a look at eight things that will help your business run more smoothly, and ultimately succeed.
Establish a business plan. A clear plan is imperative in any business and electrical is no exception. You will need to map out what your business is going to look like, what the overall costs will be (see more on that below), what your target market will be, and how long it will take for your business to achieve profitability.
Map out your business costs. Once you’ve gotten your electrician’s license, you may be eager to get started with launching your own business. Before you do, however, make sure you have done your due diligence and that you have a solid handle on what all of your costs will be. Consider things like union dues (if you’re union affiliated), licensing fees, insurance fees, overhead and equipment costs. You’ll also need to decide if you will have office space or if you will run your business out of your home.
Offer superior customer service. While people will always need electricians, customers still need to be nurtured. They expect friendly and attentive service. Customer service excellence is one important area where you can set yourself apart from the competition in your area. It’s crucial that you — and any employees or apprentices you hire — have good people skills. As an electrician, you will be helping your customers solve problems. That means fostering open communication and making yourself available to answer their phone calls and address questions and concerns as necessary.
Obtain the proper permits and licenses. The electrical service business is a highly regulated one, be sure to secure the necessary permits and licenses. In most states, you need both an electrical contractor license and a business permit. Your specific state may also require additional permits for compliance with public safety, diversity, and occupational health and safety.
Form a legal business entity. You need to protect yourself in any business. Before you trip a single electrical switch in someone’s home or business, establish a legal business entity. This prevents you from being personally liable if a customer sues you.
Get your taxes in order. As a business owner, there will be a number of tax considerations at both the state and federal levels depending upon what type of company you set up (LLC, Co., or Corp.). It’s best to work with a tax professional who can ensure you’re correctly filing all of your quarterly, social security, and other taxes.
Don’t commingle business and personal finances. One of the first things you need to do as an electrical business owner is to open a business bank account. Having a dedicated checking account not only keeps your finances organized, but it projects a legitimate business to your customers. Make sure you have some type of business accounting system set up. Whether you decide to do it yourself in QuickBooks, or hire a professional accountant or bookkeeper, keeping accurate and detailed accounts will make your life a whole lot easier when it comes time to file taxes.
Establish a brand identity and presence. Even if you’re a one-person show, you need to think of yourself as a brand and create an identity for your business. This includes establishing at least a basic digital presence where customers can get information about the services you provide and verify that you are licensed and reputable. It’s also a great place to have satisfied clients leave reviews to help you generate future business. If you can, devote some resources to hiring an SEO/marketing expert to position your business so that it can be discovered by the 97 percent of Americans that search for local businesses and services online.
These are some of the most important factors to consider when running your own electrical business. If you’re still undecided about the path you’ll take to get your own business running, be sure to check out some of the current electrical businesses for sale in your market.
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