How to Start an Electrical Business

Starting your own electrical business can be a hugely rewarding and lucrative enterprise. Given the current demand for electricians in the UK, setting up your own operations may return some serious revenue. Analysts believe that over half of the UK’s regions and counties are more than 50 electrical professionals short of the desired quota. This has led industry leaders to predict, such as Andy Laycock of ERF Electrical, that approximately 15,000 electricians will need to be trained in the next five years. These conditions evidently offer ample opportunity to those interested in setting up a business in this field.

However, moving into self-employment, particularly in a complex trade such as the electrical sector, takes considerable time and effort. Furthermore, individuals will need to ensure skills are finely honed, and that all necessary qualifications have been acquired. Therefore, those interested in pursuing a business must be extremely motivated, engaged and disciplined from Day One. Otherwise, their endeavours may quickly run out of steam.

This article intends to offer an advisory overview of how to set up an electrician’s business in the UK. Content will draw upon elements such as planning, cost management, sales reporting, and marketing presence. It will also provide helpful tips to support these efforts. This text only serves to simply inform and guide, and therefore, if you’re looking to pursue an electrical business venture, how you move forward is ultimately up to you. However, some points raised are non-negotiable in nature, and therefore must be viewed as compulsory components towards legitimately setting up an electrical firm. If you’re receptive to the concept of starting up your own company, then this article should provide plenty of information to aid your decision-making process.

Starting Motivations

As already touched upon, f you’re eager to establish your own electrician’s business, then you must have a considerable drive to do so. Fledgling companies in a number of industries can fail early on and is often due to individuals not understanding the scope or magnitude of the effort involved. Particularly in its infancy, a new electrical business takes a significant investment of time, money, and commitment. Please make sure you’re in a position to both physically and mentally embrace this.

To help with this, it’s worth considering what your central motivation is. If this is purely financial, then there’s a reasonable chance your interest may wain if revenue/earnings dip below expectations. The most successful entrepreneurs tend to be motivated by a mixture of passion for their chosen sector, and the prospect of increased earnings. It also goes without saying, that they’ll also have a genuine aptitude for their given trade.

Crafting your Vision

Once you’re fully aware of why you’re conducting this endeavour, you can start to construct some early business goals and objectives. These will allow you to configure financial targets, but will also steer you towards how much personal time and money you actually want to commit. Therefore, an understanding of your potential work/life balance, crucial for any individual, can be understood from the outset.

At this point, objectives, with appropriate measures of success, should be quite general. It’s important to have a basic framework before launching too far into the detail. This comes later, after performing market research and financial analysis. When pulling together these early stages of your business plan, consider the following questions:

  • What do I want to achieve?
  • What type of electrical business do I want to run?
  • How do I want customer service to look and feel?
  • How much am I expecting to turnover?

Your responses will conspire to give you a robust overview of your business’ outlook. In turn, this will help you start your enterprise off in the right spirit and direction.

Business Plan detail

Once this has been achieved, it’s time to consider implementing a more thorough strategic plan. A model for future growth is perhaps the most important element of business set-up. A clear and coherent approach requires calculations around the scale of the potential opportunity, and significant marketplace evaluation. Without this, individuals may find themselves lost in a challenging new landscape. These topics will serve to provide an outline to your model:

Financial Projections

Work through some market data analysis, and complement this by considering your own personal capability and productivity. From this review, you’ll be able to start forming a picture on how viable your electrical business is. Its worth thinking about external forces which may cause unavoidable risk to your efforts. This could include as inflation or potential future pandemic-related restrictions.

Growth Plan

Think about potential new fields you could diversify into in the future. This could promote sustained growth and onwards adaptability to marketplace conditions. Sustainability areas such as electrical vehicle charging point and solar panel installation offer great opportunities. Furthermore, training in completely different electrical disciplines will increase the breadth of your customer base. Learning fire alarm design and implementation, CCTV and security system fit-outs, and datacomms techniques are just some examples of additional workstreams.

Marketing Opportunities

How will you ‘brand’ your electrical business? Consider the amount of investment you’d like to sink into advertisement efforts. As an extension of this, you may also want to think about constructing a professional logo or complementary slogan. You also need to think about positioning on online and social media channels.

Cost Lines

What about operating costs? Running a company isn’t just about generating revenue, individuals also need to know how to balance books and protect profitability. Business expenditure touches every aspect of your operation; how will you control and budget spend activity?

By planning in alignment to the principles above, you’ll infer the short-term building blocks needed towards achieving your long-term vision. This will result in the formulation of a core strategy for your electrical business. Over time, this should be regularly tweaked, added to, and scrutinised as you progress through trading periods.

Training and Qualifications

Given the nature of an electrician’s role, it’s absolutely essential that you’re completely informed about appropriate electrotechnical regulations. This clearly includes any recruited employees you have onboarded.

Undertaking legally required qualifications and absorbing key legislation information allows you to conducting operations in a responsible and compliant way. Acquiring extra certification through additional training is a good way to secure more work. Clients will always tend to favour, if given the chance, the most qualified candidate for the job.

There are a range of compulsory courses you’ll need to have navigated to ensure you’ve earned fully-fledged electrician status. Completing these, and making sure knowledge is suitably ‘topped-up’ at relevant intervals, will sustain your credibility and reputation in the marketplace.

To be an industry-recognised qualified electrician, individuals must have passed an appropriate NVQ/AM2 course. This will most likely have been the City & Guilds 2357 NVQ Level 3 Electrician Installation/Maintenance programme. A course which culminates in the AM2 Assessment (full name, Electrotechnical Assessment of Occupational Competence). Alternatively, the C&G 2346 Experienced Worker NVQ Level 3 may have been undertaken. This is targeted at those who already harbour substantial industry experience prior to their training.

Updated qualifications

The electrotechnical sector constantly evolves in line with shifting technologies and increasing customer expectation levels. Therefore, business owners must ensure themselves, and employees, complete periodically released upskilling courses, and are familiarised with qualification criteria changes. Pass the latest wiring regulations assessment, and sustaining a relevant ECS card, are two appropriate examples of upholding relevancy.

Wiring Regulations

The IET (Institute of Engineering and Technology) wiring regulations is the cornerstone guidance document for electrical installation and maintenance. Its principles and regulations give critical guidance on how to safely and compliantly carry out electrical works. And, although, there not part of formal legislation, they serve to preserve the integrity of the client-contractor relationship. Despite their diminished legal status, they can still be used as mitigating evidence in a court of law. Therefore, it’s vital, for your own protection, to know exactly what the latest edition articulates.

ECS Card

The ECS card scheme is an industry-recognised programme that identifies the qualification grading of any electrotechnical sector persons. If you’ve suitably completed all training as an electrician, you can legitimately apply for an ECS Gold Card. This facilities clients and peers alike to easily acknowledge your status as an electrical professional. However, there is a range of card types available, aligning to various disciplines and certification levels. If you’ve pursued a specific skill set, such as a datacomms specialist role or an aerial and satellite engineer, you’ll need to apply for the corresponding ECS Card type. Individuals should keep a close eye on card expiry dates as these elapse after set periods of time. They should ensure their all-important ECS Health, Safety & Environmental Assessment certificate also remains legitimacy.

The bigger risk may be in fact ensuring all of your employees also undertake the required activity. Attendance of courses and sending applications for cards may be something that apprentices or trainees miss or purposefully avoid. Therefore, they may need considerable support in order for your business to remain fully compliant.

Financing your Electrical Business

Building an electrical business from the ground-up will require a substantial initial cash investment. Acquiring tools and materials, securing transportation, and executing any primitive advertising campaigns all come at significant cost. Some may be fortunate enough to have adequate financial resources available, and therefore dive straight into activity. However, for most, it’s likely that this funding will have to be secured via a different channel.

Prospective businesses should take time to assess their options. Third-party operators such as banks and ‘angel’ investors may offer you the required capital to get your operations launched.

Banks and building society support

In most major high-street banks and building societies, small business specialists will be on hand to provide information and advice. It could well be worth applying for a small business loan. Furthermore, you may also want to consider a business account and associated credit card. The ideal scenario is that your advisor has some form of previous industry experience, and they encourage a long-term, supportive relationship. Don’t underestimate the benefit of this! And don’t by shy in asking ‘stupid’ questions or flagging for help. Setting up a new business is an incredibly complex and challenging endeavour. Everyone needs support at some stage, which is usually in those opening phases of trade.

However, please note that banking institutions will not just simply sign a cheque! You’ll need to present tangible evidence to demonstrate your electrical business is fit for purpose. This will involve articulating growth opportunities, and showing that you’re personally committed to its success. Bring your business plan along, as this should offer real structure and credibility to you approach.

It may also be worth checking out what potential governmental support is on offer. Small businesses can currently apply for loans between £500-£25k, aiding initial start-up costs and early growth efforts. You may even receive up to twelve months of free mentoring as part of this package. Visit www.gov.uk/apply-start-up-loan for more information.

Angel investors, friends & family

As referenced, ‘angel’ investors might also be interested in committing funds to your endeavour. These entrepreneurs are consistently on the lookout for new investment opportunities. If you present your credentials well enough, they may decide to take a punt on your success. However, you should always thoroughly review the terms of any agreement, and understand what their onwards expectations will be. For the exchange of capital, investors may want a slice of your equity, or look to acquire an amount of convertible debt. This would mean once your business was up and running, a pre-agreed amount of cash would be handed back. However, this process would only commence after generating relatively consistent revenue.

Also consider how your friends and family could potentially financially support. They’ll be sure to want to see your electrical business flourish, and your personal brand to be a success. Loans from loved ones will often come without added interest payments, which is perfect to offset unwanted early costs.

The cost of getting kitted out

The most significant cost of your initial outlay will be undoubtedly in the purchasing of tools. Furthermore, you’ll clearly need an adequate vehicle to store and transport these. When purchasing equipment, ensure that you obtain exactly the right items to professionally conduct the service you’ve set up to achieve. Although parting with a large quantity of funds may be particularly difficult early on, don’t be tempted to scrimp on tool standard or capability. Cheap accessories invariably begin to malfunction over time, and your quality of finish will undoubtedly suffer. Therefore, the more desirable method is to think long-term. Invest in equipment which will not only help you work better, but also save you cash further down the line.

Vehicle purchasing will also be a sizeable cost, however, it’s worth reviewing finance options in this space. Most car dealerships offer competitive rates on payment plans, and this may be the perfect solution rather than paying outright. Also explore which purchases are tax-deductible, as the government permits tax on certain expenses to be claimed back.

Tools required for electrical works

Each businesses tool requirement will differ, and will be primarily based on the work undertaken and nature of client profile. However, the below list offers to illustrate the scale of your potential early outlay. This may also serve to provide an initial purchasing plan for set-up purposes:

Wire strippers, stripping cutters, multiple screwdrivers, multiple pliers, hacksaw, hammer, spirit level, utility knife, torch, pencil/marker pen, tape measure, fish tape, Kapton tape, high-visibility jacket, hard hat, safety gloves, power drill, power saw, electrical tape, solder wire, solder flux, solder wick, flux cleaner, freezing spray, wire-wrapping wire, single-core wire, multi-core wire, voltage tester, multi-function tester, electrical wall chaser.

And this list is by no means exhaustive!

However, its important to remember that any tools or equipment purchased contribute to the value of your company, as they ultimately form part of your asset holding. You can position these accordingly when aiming to secure a loan or funding, as it builds the full picture of your business strength and prowess. Furthermore, given the scale of marketplace demand, it’s highly likely that you’ll be able to re-sell these if required. Therefore, individuals should not be concerned by sinking considerable finance into working apparatus.

Accountancy action and integrity

Spending transactions will also need to be logged, organised and processed for accounting purposes. This is a key stumbling block for new business owners, who may have limited knowledge or experience in this field. To navigate this new discipline, individuals can lean on a range of supporting mechanisms.

Accounting software, increasingly more popular in the sector, provides business owners with professional administering solutions. Reputable brands in this space include Xero, Sage, MYOB, and QuickBooks. These market-leading programmes will enable users to accurately process all types of business activity. Indeed, they offer a comprehensive suite of invoicing, sales reporting, and tax return tools.

It may also be that you enlist the help of a qualified accountant. Using professionals means you receive expert advice on regulatory requirements, and also save a colossal amount of time and effort. Organizing and compartmentalizing your finance can be both an overwhelming and gruesome task. Leveraging somebody to do this on your behalf may well completely eradicate this pain. This does come with an appropriate price tag, but, again, may be an investment that saves you money in the long run. Often, start-ups will use a combination of software and professional service channels for their accounting requirements.

Whichever method you select for processing transaction documentation, it’s incredibly important you do so compliantly and in timely fashion. If this is not adhered to, the tax department could quickly undermine all of your business efforts with a considerable fine or back payment charge. This can be a terminal blow to provincial businesses. Therefore, please make sure you take the appropriate time to keep your finances in order.

Governmental legislation

Aside from financial compliance, all employers, particularly in trade industries where there is an elevated risk of health & safety breaches, must be aware of relevant government legislation. This is in addition to the electrotechnical regulatory obedience discussed earlier. Principles established by the Health & Safety Executive must be observed, and employers must have strong awareness of relevant legislation. This includes items such as the Health & Safety at Work Act, 1974.  Apart from potentially incurring crippling fines, you could present a serious real risk to public and client safety.

All of the above financial activity should be protected through robust insurance coverage. It goes without saying that vehicles need to be legally insured, but also consider other elements that carry lucrative value. Tools are the obvious commodity, but items such as clothing, qualifying certification, and client information may be other desirable items. Liability insurance is also crucial, as this mitigates against the risks involved with fraudulent payments and accusations of foul play. Although these will be your most pressing concerns, it’s also worth exploring what supplementary policies could provide additional assurance. There may be insurance plans covering worker’s compensation, general business ownership activities, and income protection. Research which ones are most conducive to your business model and associated risks. Ask insurance-based questions when liaising with your banking support provider. It could be that they have knowledge of favourable insurance packages, or could even do the set-up on your behalf.

Process Management

Every business requires good process control and functionality, enabling them to manage workflow, and complete tasks efficiently and cost-effectively. For most electrical start-ups, the most difficult hurdle will be setting-up systems which can harness all the different elements involved in running a business. Electrical firms don’t just simply turn up and carry out installations, they have developed infrastructures which facilitate their operational activity. New business-owners should consider how to address the following workflow challenges:

Quoting

Individuals should consider benchmarking criteria for how much a job may cost. The more prepared and consistent you are, the easier it will be to position quotes for customers. There will also need to be consideration around the administration of quotes, what will this documentation look like? Will it be on hard copy or digitised? How detailed will it be? Every factor, no matter how big or small, has a cost and branding significance.

Task Management

Once you’ve appropriately quoted and secured the work, you’ll need to plan out its scope and timeframe. This may involve creating a process chart, so you can effectively track how long each specific task milestone will take. By building a knowledge base through experience and detailed planning, you’ll be able to optimise your profitability. This comes as a result of being able to quote customers swiftly and accurately for jobs. Hired employees will need to be rostered into working patterns, and their personal flexibility and availability will need to be captured. Legal HR articles, such as eligibility to work and proof of visa documentation, may also need to be acquired.

Materials Inventory

If you want to ensure the productive use of materials and resources, its important to track stock levels and order quantities. Having a bank of reports which indicate the amounts of materials and consumables previously used, are hugely helpful when future planning and ordering. This will also serve to highlight opportunities to reduce wastage and control expenditure.

Invoicing

Individuals should consider when they invoice customers, whether they require an initial deposit, and also the timeframes for settlement. Unfortunately, there are customers who may try to circumvent payment, and produce obstacles to delay the process. It’s important that this payment information is presented in a clear and transparent way, and allows no space to create ambiguity or confusion. There also needs to be a log of when costs have been settled, and a prompting system for overdue transactions.

Reporting

Having visibility on your commercial and profitability performance is absolutely critical to understanding business growth and opportunity. Furthermore, it allows you to detect warning signs and arrest declines, and exploit those areas which are currently most successful. If you have employees working directly for you, it can also serve as an engagement and recognition tool. It also offers the capability to project your future earnings, and therefore identify how viable your business plan is moving forward.

Marketing

Conducting competitor analysis is an often-under-utilised endeavour that can lead to material changes in the way you operate your electrical business. It’s critical to understand what your competition provides in the marketplace, as this helps you compose a strategy to defeat them. There is no shame in taking best practices from other businesses, and blending these with your own unique approach. The key is to incorporate the elements your competitor does well into your business plan, and also offer services that take advantage of their weaknesses and limitations.

Pricing decisions

Pricing can be difficult dynamic to get right. Different locations have different client profiles, so make sure you’ve researched the space where you’re looking to operate. Certain population demographics may mean a higher or lower expectation of services or varying abilities to pay premium prices. A positive price strategy is based on a balance between quality and value, and neither should be compromised in pursuit of acquiring more customers. If you believe that too many of the customers you visit are exclusively concerned with price, and only want the cheapest possible option, it may be worth looking further afield to grow your electrical business. Reviewing up-and-coming neighbourhoods or new housing estates in the suburbs may lead you towards lucrative current and long-term opportunities.

The power of the web

Utilising social media channels effectively is crucial for any contemporary electrical business. Consider your presence on different social networks, and whether these provide a platform to tap into your target market. It’s also worth reviewing which social channels are most consistent with your branding position.

A user-friendly, well-functioning business webpage is also a huge advantage. This provides customers with an easy way to quickly locate you. Ensure that your services are listed accordingly, and, if appropriate, approximate pricing information is also articulated. Think about search engine optimization, and therefore what keywords you need to include in your website to drive traffic and views. It’s also worth registering with reputable local and national directories, as this can ultimately identify customers for you. Companies such as Check a Trade, Rated People, and MyJobQuote are all useful tools in the hunt for more business.

Advertising activity

You may also want to invest in an advertising campaign to catapult your electrical business into the public consciousness. One of the toughest tasks for new electrical firms is to get their name circulating the industry, and to build credibility in their services. Relatively modest investment in advertising can help achieve this. Presence in publications, signage spaces, or even sponsoring local events all serve to elevate assurance levels in your brand. A well-executed advertising campaign can foster confidence, trust and integrity toward your fledgling company.

Don’t also forget to utilise the more basic tools at your disposal. Your workplace van provides a superb opportunity to advertise your services and contact information, and will invariably be parked up in a residential estate or built-up area. A creative, eye-catching piece of branding on your vehicle is a cheap and effective way to shout about your business.

Ensure all of your advertising content, such as logos, slogans and handwriting style, is consistent. This will create a drumbeat and uniformity about the brand. Repetition will always serve to infuse messages quicker into an audience’s psyche.

Conduct a SWOT Analysis

The most successful businesses ensure they allocate time for introspection and self-reflection. An awareness of a company’s strengths and weaknesses allows them to create a culture of continuous improvement. However, when conducting any personal analysis, individuals should always ensure they’re transparent and honest in their critiques. Otherwise, the exercise will be an entirely wasteful endeavour. If you can isolate and address your weaknesses, and protect and build on your strengths, then your business will have far higher potential for growth.

A SWOT analysis is a commonly used business tool. This not only allows companies and individuals to reflect on their own performance, it also serves to illustrate external, uncontrollable factors. The combination of these elements conspires to present a holistic view on a business’ successes, outlook, and risk level.

How to approach

To conduct a SWOT analysis, you must list your business’ strengths (S), weaknesses (W), opportunities (O), and threats (T), in relation to how it functions. Within this analysis, you should also take into account the environment in which it operates. The strengths and weaknesses aspect will be quite easy to comprise. As the key business operator, you should already have an in-depth knowledge of what works well, and where improvements need to be made.

Identifying opportunities and threats may require a little more digging. This review is requested in order signpost what marketplace developments may impact your electrical business. To do this, you’ll need to execute considerable research into a number of areas. Think about the electrotechnical sector, wider society, and current economic conditions. Those items that could lead to positive consequences, such as the construction of a new housing estate in your locality, or the launch of a time-saving piece of equipment, should be labelled opportunities. Conversely, elements which may jeopardise performance, such as a new competitor, or higher insurance premiums, should be documented as threats.

Once you’ve completed your SWOT analysis, you’ll be able to edit and adjust your original business plan accordingly. This will help to capitalise on fresh opportunities, take action to mitigate against any looming threats, consolidate strengths, and address weaknesses.

Learn from Others

As previously referenced, it’s important to have no fear in asking for help. Lean on as many support pillars as you possibly can, and consider those around you who have experienced similar challenges. It’s useful to acquire a coach or mentor to support you in those early first steps, even if it is just to bounce ideas off or to ask basic advice. Think about similar-sized electrical companies in the area, and drum-up relationships accordingly. Individuals heading up these businesses may well have been in the same boat as you previously, and eager to support the industry’s next generation of entrepreneurs.

It may also be worth contemplating your role models and who you aspire to be like. This doesn’t necessarily need to be someone in the trade but could be somebody who inspired you with their commercialism or tenacity.

Summary

As we’ve seen, building an electrical business is not for the faint-hearted. The principles of hard work, determination, and commitment are a bare minimum. You may also need to initially work a considerable number of hours per week to get your business plan in motion. Also, be prepared to engage in a significant programme of upskilling and always be braced for new challenges and fresh obstacles.

However, if you have the right level of motivation, engagement, and capability, then running a business may be the perfect path to realising your career ambitions. This could also substantially impact your personal life, with superior earnings, a better work/life balance, and higher job satisfaction levels all potentially at stake.

This guide will hopefully serve to prepare you for the challenges you’ll need to navigate whilst setting up an electrical business. Whether it’s financing your enterprise, staying legally compliant, or advertising your new company, each element will play a role in securing future success. Going back to your original core business plan, its crucial to keep your end goal firmly at the forefront of your mind throughout. This can offer motivation when times are tough, and provide a platform for celebrating success.

By trusting the process, having patience, and capitalising on opportunities that present themselves, it’s within your reach to become a successful, self-employed electrician.

If you do decide to take the plunge, best of luck on your onwards enterprise. It takes considerable bravery to go it alone, and we applaud you for doing so!