How to Start a Small Electrical Contractor Business
Small businesses dominate the electrical contracting marketplace with around 80 percent of firms employing less than 10 people, according to First Research. To start a company, you must have the skills, experience and licenses to handle a wide range of electrical installation, upgrading and maintenance projects for residential and commercial customers, plus the ability to manage a business.
Customers want to know your firm can provide a safe, reliable, quality service. When hiring electricians, look for employees with the qualifications to deliver that level of service. Electrical Contractor’s 2012 Profile of the Electrical Contractor notes that employees in smaller firms are more likely to have apprenticeship, trade or vocational school training, compared to larger firms where technology changes are driving employers to hire employees with higher qualifications.
In most states, you will need an electrical contractor license. The National Electrical Contractors Association provides a guide to individual state requirements. You also need business permits. You can obtain details of local requirements by using the Business Licenses and Permits Search Tool available from the U.S. Small Business Administration website. In certain states, you may need local permits for compliance with public safety, diversity, and occupational health and safety legislation. Take out insurance to cover your premises and equipment, as well as public liability and professional indemnity insurance.
You may wish to operate your business from home, but check local zoning requirements before setting up operations. Contact real estate agents to buy or rent commercial premises with the space to accommodate an office area and storage for supplies and equipment. Open trade accounts with electrical equipment suppliers so you can obtain supplies and pay for them monthly. Buy or lease a vehicle to transport your equipment and supplies when you’re working on-site.
Traditional power and lighting projects remain the main source of income for the majority of contractors. However, contractors are diversifying into other areas of work, such as home or industrial automation, green energy and communication systems, according to the 2012 Profile of the Electrical Contractor survey. Developing the skills to offer a specialist service in those alternative markets may help you to compete effectively against other local contractors offering a general service.
To build your customer base, run ads in local directories or newspapers and set up a website to promote your services to residential customers. To win contracts on new build or refurbishment projects, focus on developing relationships with building contractors and architects by introducing your services and asking for opportunities. Facilities managers who need occasional maintenance or upgrade services are another useful source of work. Contact electrical retailers and do-it-yourself stores about opportunities to become their recommended electrician for customers who need installation for products like home entertainment systems, security systems or home automation. Quality of service, word-of-mouth referrals and relationships with construction industry professionals are key to success for small contractors.