About two-thirds of all electricians in the US work for someone else. They work for companies associated with contractors. Of the remaining one third, most of them are also employed in a business or company.
But 10% of electricians are self-employed. Want to own your own electrical contracting business? We’ll get you… connected.
The Electric Utility Industry in 2023
In 2023, there are approximately 667,000 electricians in the US according to labor statistics. From 2020 to 2026, the electrical business is projected by market analysis to grow by nearly 9%.
Do the maths – and if you’re going to do electrical work, you should be good at maths – that means there will be 67,000 new jobs for electricians. Experts estimate that 60,000 new jobs will be created and about 7,000 jobs from the expected retirements of working electricians.
Why you should start your own electrical business
Why Should You Start Your Own Electric Company?
- The money is good.
- The cost of starting an electrical business is not terrible. the average start-up cost is $20,000.
- Electrical businesses are varied and there are many options for business focus. In addition to the continued need for maintenance on existing homes, experts predict an increase in new construction. The electrical industry is turning to a greater need for experts in solar and wind technology. Potential electric vehicle customers need specialized 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 easy 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 begins with education. If you were lucky, earning 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 be an 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 apprenticeships in your area, go online to the national website.
Here are ten steps to guide you to your successful electrical business.
1. Choose the type of electrical contracting business to start
Many people who start an electrical business start with home electrical services. There are also more specialized types of electrical work, such as commercial work, which may include instrument and fiber optic work.
2. Research other electrical contractors in your area
Look at other electrical contractors in your area for two reasons:
- To get a sense of the kind of competition for work you’ll face from local businesses.
- To find a person or company to take you on as an apprentice so you can learn more about the business with on-the-job training before starting out as your own boss.
3. Get the necessary permits and licenses for your electrical business
If you graduate from a trade school, you will likely receive a certificate and/or an associate’s degree. Even with a degree, all of these prospective electrical business owners must take an exam to become a state-licensed electrician according to government regulations. The test is called the journeyman electrician licensing exam, and you must pass it to get your electrical contractor’s license.
You may also be required to take city and/or county exams. you can find out at your county office. Continuing education, work experience, and certifications can eventually lead you to become a master electrician. Master electricians are an elite group.
You will need to obtain a business license, which you can usually get from your state. Licensing may also be required by your county and/or city, depending on local regulations.
4. Identify the target market for your electrical business
Electrician businesses can be general or specialist. For example, you may want to specialize where the need is greatest – such as in the home charging business of electric vehicles for residential customers. Or you may prefer new construction work as a subcontractor for a contractor. If you live in an area with generally old houses and old electrical systems, you can focus on maintenance, both for residential electrical wiring customers and commercial customers.
5. Write a business plan for your electrical business
A business plan is important when starting an electrician business, for you and for 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 plan for marketing and growth strategies.
The plan is extremely important because it may someday be part of small business loan application submissions. 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 work.
6. Choose a legal business structure and business name
Most electricians who operate their own businesses choose the limited liability company or LLC. This way your personal and business assets are kept separate. Your personal assets may include your home and personal vehicle.
7. Get your business finances in order and open a business bank account
The cost of your equipment to get started can be as high as $1,000 for a small electrical business, but the average is around $20,000. The inventory will include electrical supplies such as wiring, electrical boxes, cover plates, etc., which can be purchased from the job.
Before starting an electrical business, you will need some electrical equipment tools, such as voltage indicators, insulated screwdrivers, wire cutters and strippers, a multi-function tester, and battery-operated tools (since you will be turning off the electricity when it is working).
If you are 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 that is used for business purposes only. To make tax time easier, buy accounting software.
8. Get electrician business insurance
A professional electrician needs general liability insurance, but that alone is not enough. If you are going to use your personal vehicle or a commercial vehicle for work, you will need commercial auto insurance. Electrical installation is basically a mobile business where you bring tools and supplies to job sites.
There are other types of additional insurance that may apply to you. For example, you may want to add business interruption insurance, which can help pay the bills if you’re unable to work due to a natural disaster or car accident.
To save money, you can often bundle liability insurance, plus the additional coverages 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. Create Your Electrical Business Website and Promote Your Electrician Business
Use social media platforms and a business website as your primary marketing tools. You can also attend trade shows in the contracting industry, which are great networking opportunities. These 14 electrician apps can also give you an idea if you want to create your own app.
Final Words
The cost of establishing electric company entrepreneurs is low. There is a growing need for licensed electricians. But you can learn more about how to start a business: step by step guide as well as how much it costs to start a business.
Start an Electrical Business Frequently Asked Questions
How much does it cost to start an electrician business?
Nationally, the average for starting a small business is about $20,000.
Is an electrical business profitable?
Yes. On average in the US, a sole proprietor earns about $60,000 in this small business.
IIs it difficult to start your own electrical goods business?
An electrician needs specialized training and licensing, advanced math skills, and the ability to perform physical labor.
How do I write an electrician business plan?
There are essential elements such as the executive summary, business description, financial projections, marketing and sales plan. It is part of small business loan applications. There are business plan templates available online.
Image: Envato Elements