How to Start a Small Electrical Contractor Business

By Emily Beach

  • Overview

    Electrical contractors are responsible for installing light fixtures, receptacles, control switches, and related wiring in homes, businesses and industrial facilities. They can also be called upon to repair power outages, damaged wiring or to expand electrical services in the home. Like all contracting companies, electrical businesses can focus on commercial work or residential work, though some may be a mixture of both.
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    • Step 1

      Gain as much experience in the construction industry as you can. It's a complex industry. Knowing how the bidding and building processes work gives you an advantage over competing businesses.
    • Step 2

      Get licensed. Electrical contractors must have both a state master electrician's license and a general construction license. Your local government may have additional requirements. Check with your local state department or chamber of commerce to confirm. A link to these organizations can be found in the Resources section of this article.

    • Step 3

      Purchase equipment. You'll need service vans or trucks as well as job site lock boxes for your tools. The tools you'll need will vary depending on what type of services you'd like to provide. In general, you will need drills, wire snips, standard wiring, receptacles, switches, and connectors. Much of your supplies will be purchased on a job-by-job basis. Don't worry about investing a lot of money upfront.
    • Step 4

      Draft a business plan. This is a great way to get all your ideas on paper, and it will also help you see any areas of your plan that may need more planning or research. Because of all the dangers involved in the electrical business, you'll want to focus largely on how you'll train your staff to safely perform their work. As even a single oversight in this industry can be life-threatening, you'll need to layout training, safety equipment, installation procedures, and how you'll respond to accidents. As with all businesses, you will also need to detail daily operational plans, company policies and marketing.
    • Step 5

      Approach banks to apply for business loans. You will need to present a completed business plan and business financial data. You will be required to include personal tax and financial data as well. Securing a loan can help with start-up expenses such as buying tools, service vans and supplies. Loans can also tide you over until checks start coming in. Plan to borrow enough to cover all upfront expenses, 3 to 6 months of payroll, rent,supplies, and enough to pay your own bills for the first six months.
    • Step 6

      Contact general contractors. Let them know about your business. Ask for an opportunity to bid on jobs with them. They will likely give you a chance to start with smaller projects so they can evaluate the quality of your work. If you'd prefer to do residential work, advertise in your local phone book and ask friends and neighbors to spread the word.
    • Skill: Moderate
    • Tip: When starting a commercial electrical business, you can expect to be paid about 90 days after you submit an invoice. If your electrical business will focus on residential work, it's common to bill for one third of the cost of the job up front and to be paid the balance upon completion of the project.

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