Thinking about how to start an electrical business? You’re entering a thriving industry with plenty of potential. The electrical services market was valued at USD 122.17 Million in 2024. And is projected to reach USD 208.75 Million by 2032, growing at a CAGR of 6.20%. Given today’s market, it’s a great time to step into the electrical services sector with confidence.
Starting your own electrical business can be both exciting and challenging. We’ve outlined the 12 important steps to help you get your electrical business up and running.
12 Steps to Start Your Electrical Business
In this article we’ll cover each step in detail. That way you have a clear roadmap for starting your electrical business and setting you up for long-term success.
- Get licensed and certified
- Develop a solid business plan
- Choose your business structure
- Secure funding
- Invest money in essential tools and equipment
- Set up your business location
- Obtain necessary insurance
- Establish pricing for your services
- Build a strong online presence
- Network and form partnerships
- Hire and train skilled electricians
- Implement efficient business management systems
1. Get Licensed and Certified
To start working as an electrical contractor, you’ll need the proper licenses and certifications. The requirements to become a qualified electrician vary by state. Generally, you’ll need to have the following:
- Complete an apprenticeship program
- Gain several years of work experience
- Pass a licensing exam
Check with your state’s electricians licensing board for specific requirements. You can find a list of requirements by state from the National Electrical Contractors Association (NECA).
2. Build a Solid Business Plan
Having a well-structured business plan is crucial for your electrical business as this will help all your initial ideas to take shape. A solid electrical business plan should outline your:
- Business structure and electrical services
- Main target market and service areas
- Competitor landscape
- Marketing strategies
- Financial projections
Your business plan is like a roadmap. It helps you understand the direction for business growth as well as drive progress towards your goals. A formal business plan also serves as a powerful tool to attract and impress potential investors. That increases your chances of securing the funding needed to grow and sustain your electrical business.
3. Choose Your Business Structure
One of the first major decisions will be to determine the legal structure for your electrical business. Common options include:
- Sole proprietorship
- Partnership
- Limited Liability Company (LLC)
- Corporation
Each structure has its pros and cons. You need to consider the effect this will have on your business. For example, taxes, liability, and operational complexity. Consulting with a business lawyer or accountant can help determine the best fit. You can find a comparison of the different business structures from the Small Business Association (SBA).
4. Secure Your Business Funding
Starting an electrical business requires initial funds for equipment, tools, and operating expenses. It is important to ensure you have enough capital. That ensures you can cover expenses and sustain your electrical business during the early months. Common funding options include:
- Personal savings
- Small business grants
- Equipment financing
- Business loans
- Investors or partners
The average total startup cost ranges from $24,000 to $85,000 for a small operation. Each option comes with its own requirements and advantages, so take the time to research before deciding.
5. Invest in Essential Tools and Equipment
Before you can start your electrical business, you need to prepare the necessary electrical tools and equipment. That ensures you can provide professional electrical services to your customers. Here’s a list of tools you should consider investing in:
- Hand tools (screwdrivers, pliers, wire strippers)
- Power tools (drills, saws)
- Testing equipment (multimeters, voltage testers)
- Safety gear
- Work vehicles
When selecting the tools, you’ll want to focus on reliability and durability, as well as costs. It may also be useful to consider getting tools and equipment insurance. That will cover the cost of repairing or replacing your tools and equipment.
6. Set up Your Business Location
Deciding where you’ll run your electrical business gives you a better picture of what your operations will look like in the future. Options include:
- Home-based office
- Rented commercial space
- Mobile operations
You need to think about storage needs, customer accessibility, and local zoning laws. If there is a mismatch between your locations and business goals, the impact will stretch far beyond hampering operations. It means fewer electrical leads, limited space for growth and poor customer experiences.
7. Get Necessary Insurance for Electrical Business
Getting insurance for electricians is critical to protect your electrical business. This includes:
- General liability insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Professional liability insurance
Consider speaking to an agent who specializes in small business coverage to ensure proper protection.
8. Establish A Pricing Strategy For Your Services
With the foundations of your electrical business in place, the next critical step is to establish your pricing strategy. You’ll need to determine competitive yet profitable pricing for your electrical services. Here are some factors to consider:
- Labor costs
- Material expenses
- Overhead costs
- Desired profit margin
- Competitor pricing
Regularly reviewing and adjusting your pricing strategy is crucial as your business grows. There’s no one-size-fits-all approach to electrical service pricing. A digital price book ensures techs in the field price jobs consistently. It also helps customers understand costs upfront. Check out our comprehensive guide on how to implement an electrical price book for your business.
9. Build A Strong Online Presence
Having a strong online presence is crucial for attracting new customers. You can develop your online presence by:
- Creating a professional and user-friendly website
- Optimizing for local search and updating your Google My Business profile
- Maintaining an active presence on social media
A variety of digital channels will play a key role in boosting your online visibility. It’s especially helpful when potential customers search for nearby electrical services. Learn more about expert-tested electrician marketing strategies in our in-depth guide.
10. Start Networking
Building relationships within your community is a great way to grow your electrical business in the long term. Here are a few tips you can consider:
- Joining local business associations
- Attending industry trade shows and events
- Partnering with complementary businesses (e.g., contractors, suppliers, real estate agents)
- Offering referral incentives
This helps you connect with other local businesses. These valuable partnerships can help provide a steady stream of electrical leads.
11. Hire And Train Skilled Electricians
Your team is the key to delivering great services to customers. As your business grows, you’ll need to build a team of skilled and well-trained electricians. You can focus on the following steps:
- Recruiting experienced professionals
- Providing ongoing training and development
- Creating a positive work culture
- Offering competitive compensation and benefits
Your team plays a key role in shaping customers’ first impressions of your electrical service. Building a learning-focused culture keeps your electricians motivated. That ensures they deliver consistent, high-quality work.
12. Streamline Operations With Seamless Electrical Business Software
In today’s market, efficiency and customer satisfaction are crucial. A tool like Payzer can offer solutions to streamline your operation:
- Job scheduling and dispatching
- Invoicing and payment processing
- Inventory management
- Customer relationship management (CRM)
- Financial reporting and analytics
Efficient systems can save you time, reduce human errors, and improve customer experience.
What Are Top Challenges of Starting an Electrical Business?
Starting an electrical business is an exciting opportunity, but also comes with its own challenges. Here are some common obstacles and strategies to overcome them:
- Rising material costs: Build strong relationships with your suppliers and consider bulk purchasing.
- Skilled labor shortage: Competitive wages, training opportunities and a positive work environment help attract and keep talent.
- Cash flow management: Use financial management tools to track expenses, manage invoices, and maintain healthy cash flow.
- High market competition: Differentiate your business through exceptional service, specialization, or innovative offerings.
Understanding these challenges and implementing proactive strategies positions your electrical business for success.
Start Your Electrical Business Journey with WEX FSM
Starting an electrical business is an exciting journey with great potential for success. By utilizing the right tools, you can build a thriving electrical business.
WEX Field Service Management offers robust field service management software tailored for electricians. From job scheduling and invoicing to payment processing and reporting, it streamlines operations.
Ready to tranform your electrical business with smarter business management solutions? Explore how WEX FSM’s electrical business software, and schedule a free demo today!
