About two-thirds of all electricians in the United States work for third parties. They work for companies that are connected with contractors. Of the remaining third, most also work for a company or company.
But 10% of electricians are self-employed. Do you want to own your own electrical contracting business? We will… connect you.
The Electric Business Industry in 2023
In 2023, there are about 667,000 electricians in the US, according to labor statistics. From 2020 to 2026, market analysis predicts that the electric business will grow by around 9%.
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 estimate that there will be 60,000 new jobs and about 7,000 jobs created by the expected retirements of electricians.
Why You Should Start Your Own Electric Business
Why should you start your own electrical company?
- Money is good.
- The cost to start an electrical business isn’t terrible; the average cost to get started is $20,000.
- The electrical business is diverse and there are many business focus options. In addition to the continued need for maintenance in existing housing, experts predict an increase in new construction. The electrical industry is turning to the need for more specialists in solar and wind technology. Potential electric vehicle customers need specialist electrical services to install an electric car charging station in their homes.
- 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 similar steps for those starting a new business.
The typical path to an electrical contractor business starts with education. If you’re lucky, earning a high school diploma includes 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 too can be an apprentice. Programs are offered through several national organizations, including the International Brotherhood of Electrical Workers, the National Association of Electrical Contractors, Independent Electrical Contractors, and the Association of Builders and Contractors. To research apprentice programs in your area, go to the national website online.
Here are ten steps to put you on the path to your successful electrical business.
1. Choose the type of electrical contracting company to start
Many people who start an electrical business start out in residential electrical services. There are also more specialized types of electrical work, such as commercial work, which can include instrumentation and fiber optic work.
2. Research other electrical contractors in your area
Look to other electrical contractors in your area for two reasons:
- To get a sense of what kind of competition for work you will face from local businesses.
- To find a person or company that will hire you as an apprentice, so that you can learn more about the business with on-the-job training before launching yourself as your own boss.
3. Get the necessary permits and licenses for your electrician business
If you graduate from a trade school, you will likely earn a certificate and/or associate degree. Even with a degree, all prospective electric business owners must take an exam to become a state-licensed electrician, as per government regulations. The test is called the Journeyman Electrician Licensing Exam and you will need to pass it to get your electrician license.
You may also be required to take city and/or county tests; you can find out at your county clerk’s office. Ongoing training, work experience, and certifications can eventually lead you to becoming a master electrician. Master electricians are an elite group.
You will need to obtain a business license, which is usually obtainable in 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
The electrician’s business can be general or specific. For example, you might want to specialize where the need is strongest – such as the domestic electric vehicle charging business for residential customers. Or you might prefer a new construction job as a subcontractor to a contractor. If you live in an area with generally old housing and outdated electrical systems, you can focus on maintenance for both residential electrical wiring customers and commercial customers.
5. Write a business plan for your electrician business
A business plan is important when you are starting an electrician business, for yourself and your future financial needs. The basic plan includes an executive summary where you describe the business structure, focus and future plans. You will also need to include your growth plan and marketing strategies.
The plan is extremely important because one day it could be part of small business loan applications. It should be professional and also updated annually to include documentation (tax returns) about the business. Your company name should reflect how serious you are about electrical work.
6. Choose a legal business structure and business name
Most electricians who operate their own businesses choose limited liability company or LLC. That way, your personal and business assets are kept separate. Your personal assets can include your home and personal vehicle.
7. Get your business finances in order and open a business bank account
Equipment costs to get started can be as low as $1,000 for a small electrical business, but average around $20,000. Inventory would include electrical supplies such as wiring, electrical boxes, cover plates, etc. that can be purchased by the job.
Before you start an electrical business, you’ll need some electrical equipment tools like voltage gauges, insulated screwdrivers, pliers and strippers, a multi-purpose tester, and battery-operated tools (since you’ll be turning off the electricity when you’re doing it).
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 will need a business credit card used for business purposes only. To make tax time easier, purchase accounting software.
8. Get Commercial Electrician Insurance
A professional electrician needs general liability insurance, but that alone is not enough. If you are using your personal vehicle or a commercial vehicle for work, you will need commercial auto insurance. Electrical installation is basically a mobile business, with you bringing tools and supplies to job sites.
There are other types of supplemental insurance that may apply to you. For example, you might want to add business interruption insurance, which can help you pay the bills if you are unable to work due to a natural disaster or vehicle accident.
To save money, you can often bundle your liability insurance, plus any necessary supplemental insurance, into 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. Create your electrical business website and market your electricians business
Use social media platforms and a business website as basic marketing tools. You can also attend hiring industry trade shows, which are great networking opportunities. These 14 apps for electricians can also give you an idea if you want to create your own app.
The cost of starting entrepreneurial electric companies is low. There is a growing need for licensed electricians. But you can learn more about starting a business: step-by-step guide and how much it costs to start a business.
Frequently asked questions about starting an electrical business
How much does it cost to start an electrician business?
Nationally, the average for starting a small business is around $20,000.
Is an electrical business profitable?
Yes. On average in the United States, a single owner earns about $60,000 in this small business.
IIs it difficult to start your own electrical business?
An electrician needs specialized training and licensing, superior math skills, and the ability to do physical work.
How Do I Write an Electrician Business Plan?
There are basic components such as executive summary, business description, financial projections, marketing and sales plan. It is part of the presentations for small business loans. There are business plan templates available online.
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