Thinking of joining the electrical industry?
Just as with any other, starting an electrical business requires not only the relevant skills but proper market research.
This will help determine whether electricians are in high demand in your area and if the trade is lucrative.
This article will also help you figure out registrations, be legally compliant, and to position yourself where your potential clients can find your business.
You’re not looking to start an electrical business. You’re looking to start a successful electrical business. Whilst still on that thought, let’s help you get started.
The First Steps to Starting An Electrical Business
1. Assess The Demand
Do people actually look for residential electricians in your area? Are you comfortable moving to where the demand is? Is your community growing? Did a big electrical corporation recently shut down or move to a different area? Are people disgruntled with the current electrical service that they are receiving?
If you responded ‘Yes’ to all of these (or some) then you’re good to go. Demand is what will keep you in business which is why it’s critical to make sure you’ll have enough business to keep you afloat, and yes successful.
2. Plan. Plan. Plan.
This one is essential in preparing you for specifics of the business and any other factor you might not have known about. It also includes the goals of your electrical business. Some key points to note are:
- Who is your target market?
- What are the startup costs plus operating costs?
- How much time will you need to break even?
- What’s your business name going to be?
We’ve already done the bulk of the research for you so you won’t have to.
Who is your target market?
Householders are your automatic target market. It’ll be up to you to make the decision on whether to charge them on an hourly basis or a flat fee.
Commercial accounts are preferable because they’ll likely have longer-term contracts that pay much more.
Residential areas are a good source of ongoing income.
What are the usual ongoing expenses for an electrician?
Ongoing expenses for electricians are usually minimal. Rent, insurance, licensing, and travel expenses are a few that most businesses must cover.
Depending on your location, you might want to check what the costs are for these so that you fit them appropriately in your job costing plan.
For starters, you should consider sharing office space with other (non-related) small business owners or work from home.
1. How much can you charge customers?
Job costing can often require the help of accountants who will calculate your expenses against the profit you should make in order to stay afloat business-wise.
Your level of skill determines how much you can charge plus the kind of work involved. These fees can range from $40/hour for newbie electricians to a hefty $150/hour for experts.
2. Register for Taxes
This is a crucial step that you’ll need to ABSOLUTELY set time aside for.
You will save a lot of money by paying your taxes on time and taking advantage of any rebates available for your business.
New businesses are mostly affected by income tax, service tax, and capital gains tax.
Visit the ATO website to learn more about these taxes, the forms you’ll need to fill, and how you can register before beginning business operations.
If this step feels overwhelming you can always outsource an accountant that will help you with your compliance accounting and all other financial legal issues.
3. Open A Business Bank Account and Credit card
These are vital for the protection of your personal assets.
In the event that your business gets sued your home, car and other valuables can be repossessed if there aren’t any protective structures guarding them. In law, this is referred to as piercing your corporate veil.
This move will also make tax filing and accounting simpler.
4. Business Credit Card
This puts all your business expenses in one place, instead of mixing them up with personal ones.
Future investments and the raising of funds will be a smoother experience when all your business credit history is easily traceable.
5. Will you need employees?
It’s honestly best to start solo then work your way into hiring as the need arises.
Gradually hiring a team will also make the transition easier for you in labour expenses than beginning the business on high expenditure.
6. Truck and Tools
Rent doesn’t necessarily have to be on your ‘essential list’ when you start. But it’ll be close to impossible managing an electrical business without a truck and tools. Yes, even when you’re working on a small scale.
It’s imperative that you set funds aside for a truck that will help you reach clients and come back home. You’ll also need the best tools that you can find.
If you can afford the latest version of these tools then you’ll be in a better position to be competitive and, of course, be efficient.
If not, then purchase used tools and a second-hand truck for starters. As your business picks up steam you’ll be able to upgrade.
7. Obtain necessary permits and licenses
The last thing you want to do is spend your hard-earned money on fines or worse, watch your new business get shut down.
States in Australia have different requirements for electricians. Unless exempted by regulation, electricians can only trade after they’ve acquired the electrical worker’s license issued by the Electrical Licensing Board.
Find information here on the types of licenses and permits available, forms needed, and payment methods along with how you can get started.
8. Set Up a Website
A website will give clients the opportunity to view all the services that you have on offer.
They can also process payments through the website, leave reviews, and get to know about any promotions that you’re throwing.
If you’re working from home, think of this as your virtual office that your potential clients will encounter and make decisions before they’ve lifted the phone to speak to you.
Your website can be connected to social media platforms that can keep you connected to your clients on a daily basis. These platforms will open up audiences that you can never reach through regular traditional marketing.
As your business grows, you might end up needing help to manage these platforms but they’ll serve your electrical business well when managed well. If you need any assistance with your accounting, you can contact us today!