We get it. You’ve finished your apprenticeship, gained lots of experience, and now you’re ready to jump into the world of entrepreneurship. As a business owner, you’ll gain flexibility, freedom, and reliable income.
But starting a business can be challenging. If you’re a first-time business owner, you’ll need to put in a lot of hard work, effort, and dedicate yourself to your business. You’ll also need to embrace change, be quick on your feet, and commit to continuous learning.
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That’s why we’ve put together a comprehensive guide to help you understand how you can get started. We’ll go through all the basics when it comes to your legal requirements, streamlining your business, finding and specializing in a niche, and more.
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Associations and unions are great organizations that can help you further your training qualifications and connect you with other service professionals in your area.
We also recommend you invest in developing soft skills. Soft skills are attributes that help you communicate with others effectively. They are characteristics like your attitude, work ethic, and positivity. Soft skills will help you improve customer retention. They’ll also boost first impressions (which are of critical importance when starting a business).
As a small business owner, you’re responsible for the financials of your company. Below, we’ve introduced a few key financial terms that are essential to running a business.
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These are ongoing business expenses not related to labor or raw materials. Examples include rent, insurance, and utilities. These expenses remain the same every month regardless of the sales you make. They’re also known as fixed or indirect costs.
The Break-Even Point is a time in your business when your sales are covering all expenses. Break-Even is a significant milestone, as it’s the point when the business begins turning a profit.
If you have multiple services, you’ll need to make sure the selling price and variable costs match up. For example, if your annual sales break down to 40% for replacing light fixtures (average value – $100 per service) and 60% for new lighting installation throughout the home (average value – $1000 per service), you’ll need to find out the weighted selling price.
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Let’s go through an example together: Say your fixed costs are $100, 000 per year. To find out the weighted selling price, you can multiply the sales price of each service and their contribution to overall sales.
In this example, we’ve kept things simple by only calculating direct labor for our variable costs. You should also consider the costs of electrical parts, fuel, and other variables.
You’ll need to calculate the variable costs (costs that change depending on the number of clients you have) using a similar formula. If a contractor’s hourly rate costs $30 per hour, and the time it takes to replace a light fixture (on average) takes 2 hours, while the time it takes to install new lighting throughout a home takes (on average) 10 hours, your variable costs are:
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= (Price per hour x hours of service x weighted percentage) + (Price per hour x hours of service x weighted percentage).
Once you’ve calculated your break-even point, you can outline how long it will take to reach this goal. For example, if it’ll take you 15 months to sell all these electrical services, you can make your Break-Even Point a goal in your second year of business.
That’s why if you want to run an electrical business with additional support, you can consider opening a franchise. With a franchise, you’re starting with an established brand and business model. Franchisees also receive training, marketing material, a national support network, and discounts on equipment.
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If you’re considering going down the franchise route, make sure you assess the different franchises available. Talk to existing and previous franchisees to understand what it’s like to be a franchisee yourself.
As a business owner, you’re responsible for everything in your business; from organizing your books, arranging appointments, and sending invoices. There’s also a lot of administrative work that needs maintaining as well.
To help you out, we’ll give you an overview of all the technical aspects you need to take into account when running a business.
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If you want to understand how these different tools and responsibilities align, then look below. We’ve included a visual to help you know what happens before, during, and after a client booking, and how you can streamline these business activities with online tools.
However, if you’re keen to grow your electrical business you’ll need to make sure you have systems and procedures ready for that growth. The smallest inefficiencies can quickly snowball into significant problems. That’s why we recommend businesses begin streamlining their systems from the very start.
Create standard operating procedures for routine tasks like (hiring, training, electrical work, etc.) If you need assistance, look to programs like Housecall Pro. Its online software can help you automate a lot of your everyday tasks like scheduling online bookings, sending invoices, and email marketing activities.
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While electrical supplies and equipment vary according to your specialization, there are quite a few tools to consider. From side cutters to screwdrivers, hacksaws to pliers, we recommend you buy toolsets, which often cover a lot of the basics. You may need to purchase a few extra tools down the track, but purchasing a toolset can be significantly cheaper and faster than buying tools individually. You can also explore wholesale or used models.
On top of the equipment, there are also uniforms. Being lax with your uniform is not a good idea when you’re working with energized conductors or circuits. You run the risk of severe and even fatal injuries if you’re not careful. Make sure you wear personal protective equipment like electrical overalls, fire retardant clothing, electrical safety gloves, and safety boots.
Having a uniform for your business can also make you appear more professional and trustworthy. If you’re a one-person shop, you can even order one with your logo. It’snot too expensive and can add a lot of value to your brand!
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You don’t want to start by selling generalized electrical services. It’s too broad, and you could be stretching yourself thin by offering too many services to different people. That’s why you should consider specializing in a specific segment within the electrical industry.
Customers prefer to go to a specialist than a generalist. To start, pick a specialty within the electrical industry. Specialization can also help you earn more (as you’re seen as an expert in your field) and help you target the right people.
It can be difficult knowing how much to charge your clients for a specific job. That’s why we’ve listed two primary ways that experienced electricians charge their clients. We’ve also collected national averages, so you have a clear benchmark to compare your hourly-rates.
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Some companies will waive the fee, while others won’t. It’s your decision whether you want to add the diagnostic fee. Just keep in mind that you want to charge at a point where you will remain profitable after deducting your fixed and variable expenses.
Averages can be challenging to determine when it comes to electrical work because prices depend on a variety of factors like labor and material costs. While it’s challenging to nail down costs, we’ve collected a list of price ranges for standard electrical services.
To give you a quick overview, electricians can bid (provide a price estimate) for completing particular jobs. The key to successful bidding is to become an expert at estimates. If you’re bidding too high, you could lose the job to another electrician. If you bid too low, you can sell yourself short.
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To be a successful bidder, you need to choose jobs that match your niche, skill level, resources, and availability. There is also a significant difference when it comes to bidding residential and commercial projects.
As with any business, you must be aware of what your service offerings are. If you don’t clarify this early on, you could be attracting the wrong type of customers.
You can start by putting together a list of services you can carry out. Here’s an example of a residential services list.
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While you may be a residential or commercial electrician, you could choose a specific segment within the industry and be the leader in that particular type of service. For example, while there are many residential electricians, you can specialize in installing and repairing outdoor lighting or even installing smart solutions for the home.
When it comes to getting leads, while you can pay for ads, here are a few free approaches that can help you get started.
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You’ll most likely start as a one-person electrical business. Many electrical businesses stay as a one or two-person team. But if you’re keen to grow your business, you’ll need to hire in a few extra pairs of hands.
When it comes to financial capability, we recommend having extra cash flow. You will not be able to
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