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How to start an electrical business

How to start an electrical business 

 

So, you've committed to starting an electrical business, and now you are wondering how to take the first step toward success.

Owning and operating a business is the dream of many electrical professionals. Still, most of them figure it's too hard or costs too much money to start an electrical business, so they never act on their dream.

But you've made it to our ultimate guide on starting an electrical business, and we're here to help you turn your dreams into a reality. This guide will cover the A-Z of creating, founding, and growing an electrical business.

Read on as we begin by breaking down the specifics of starting an electrical business in Australia.

Starting an electrical business in Australia – A brief overview of the sector

 

Australia has a booming trade sector inhabited by professionals whose skillsets range from a jack of all trades to highly specialised qualifications held by only a few dozen individuals in the entire country.

To cut a long story short, you can be anything you want in the Australian trade industry. Starting an electrical business will not confine you to working in one lane for your entire professional career.

There are tens of thousands of registered electrical businesses in Australia, spread across various industries. You can find expert electricians fitting buildings within the residential, commercial, and industrial markets, performing high voltage electrical work, or advising project managers on electrical infrastructure.

You'll also find your fair share of challenges when starting an electrical business in Australia. Government policy changes, shifting customer demands, and new technology mean electricians need to stay on their toes or risk losing their market share to more adaptable trade businesses.

Overall, though, Australia is a land of opportunity for the aspiring electrician, and you'll be fine if you know how to do the job right, on time and within budget.

 

Do electrical businesses make a lot of money? 

 

Electricians are some of the best-paid tradespeople due to higher risks associated with the work, which keeps professionals who aren't willing to put in the extra effort away from the trade.

 

As an electrical businessowner, how much you make will vary based on your location, competition, the quality of your work, and how well you sell your business to customers and contract vendors alike. You can get a reasonable estimate for the average amount an electrical business owner makes by following this link.

How to create an electrical business plan

 

Before you even think of a name for your company, it's time to create a blueprint for your success as an electrical business owner. An electrical business plan packs all the information, data, statistics, and research you need to get things off to the best possible start. It could be a one-page document pinned up on the wall or a comprehensive file with dozens of pages outlining every possible detail about how your new business will operate when you get it up and running.

 

An electrical business plan provides clarity and makes everything about the business you will create completely clear from day one. It will help you understand how your business needs to run, how you're going to cover your costs, how you'll grow and how you'll stay ahead of your competition. Suppose you decide to expand your staffing and hire some help in future. In that case, your electrical business plan will also provide structure to their roles and make delegating responsibilities a lot easier.

 

Now let's get down to what else your electrical business plan needs to make it the central reference document for your business.

 

Market analysis

 

A market analysis helps you understand two crucial things before you start your electrical business; the local trends of the industry and what you can expect from your competition. We recommend focusing as much as you can on the latter of these two concerns, as what your competitors are doing will likely influence a lot of the decisions you'll make as you progress further towards opening your business. Find out what they do well and where they fall over, then compare this information to how you planned on operating your business and make any necessary adjustments. As for local trends, your focus should be on the types of customers in your local market and what they want from the service you plan on providing.

Remember that diligence is critical when performing a market analysis. The more work you put in now, the easier it will be to adapt your business further down the line if something in your business or the wider industry changes suddenly.

 

Business goals

With a firm grounding in your local marketing, it's time to put together your goals, perhaps the most important document for starting an electrical business. Documenting your business goals sounds simple, but they need to hit several key criteria to make sure that they fit the purpose of helping your business grow and succeed.

We call these criteria the SMART method, and we'll outline each letter below:

Specific – Can you explain your goals in a few sentences or less?

Measurable – Can you track how far along you are in achieving your goals?

Attainable – Can you realistically achieve the goals you've set out for yourself with the knowledge and resources you possess?

Realistic – Can you achieve your goals without any luck or good fortune?

Timely – Do you have a clearly defined timeline for your goals, and can you reach them in a reasonable amount of time?

 

Financial projections

Also known as a financial plan, a financial projection helps you understand how you're going to fund your electrical business and how much revenue you need to break even and eventually profit. Putting together a comprehensive financial plan can be tricky if you're just starting an electrical business, but this is an excellent opportunity to enlist some outside help.

You'll need an accountant or bookkeeper for your electrical business somewhere down the line, and a financial projection is a great point to get one on board. The trade sector is constantly changing, and a financial expert can help you navigate the more complex parts of a financial projection with no hassles.

 

 

Products &Services 

 

As part of your ongoing admin process, you'll need to create a list of your electrical business's products and services. We recommend following the quick 5-point guide for creating one below:

1. Write down all the products or services you have to offer

2. Compare your product/service list with your inventory list for accuracy

3. Attach a price to each product or service on your list (more on this in the next section)

4. Place products or services into similar categories for ease of reference

5. Check for mistakes and finalise your list

 

 

Pricing strategy 

 

After you've written down all the products and services your electrical business offers, it's time to figure out how much you need to charge to turn a profit and keep your electrical business in the black.

Before you even consider settling on a price for a product or service, it's essential to calculate how much it costs to produce and deliver it. Labour costs, material costs, goods and services tax (GST), and even storage costs must be factored into a final costing figure for each product or service, or you risk undercharging for your work.

With your costs calculated, it's time to move on to your pricing objectives. Making a profit should be your number one goal. Still, other objectives like an increased market share, increased customer reach and staying competitive with other electrical businesses must be considered.

Your pricing strategy may also cover some of the topics we've covered earlier in this guide on starting an electrical business, including:

- Your market

- Your industry

- Your competitors

- Your business goals

Have a quick read back through the earlier parts of our guide if you aren't sure what each of these four points is about and how they relate to your pricing strategy.

 

 

Sustainability and expansion strategy

 

We've grouped together sustainability and expansion in the same section because they both affect your ability to succeed as an electrical business owner, but we'll explain them both separately for ease of reading below:

Sustainability strategy:

When you start an electrical business, everyone you talk to will probably offer up some advice on how to grow your success. But what they rarely speak about is how to keep everything ticking along as it should be while you focus on the future.

A sustainability strategy lays out a comprehensive plan for how your business will maintain its current success and safeguard against unforeseen threats in the future. Good sustainability provides your business with a safety net should your grand plans for growth and upscaling be stalled or blocked by influences outside your control.

To create an effective sustainability strategy, you need to consider the three main external influences that surround your electrical business:

1. Economic Influences

2. Customer Influences

3. Government Influences

Each needs to be accounted for to create an effective plan for countering the effects of change on your electrical business.

Expansion Strategy:

Starting an electrical business is half the battle. How you expand your enterprise is what comes after you've got your feet firmly on the ground and are ready for the next challenge.

When discussing trade business expansion, it's important to tie your strategies to four fundamental types of growth that will guide you towards future success.

1. Your market

2. Your products/services

3. Your customers

4. Your competitors

Each point must be carefully considered and factored into your expansion strategy. We recommend not making any decisions about growth until your expansion plan is fully developed and implemented in your electrical business.

 

Sales strategy

 

Let's not beat around the bush; the electrical industry is a competitive market, and selling your products and services without careful planning and strategy building won't be easy. We recommend creating a sales strategy that incorporates three core components:

1. Clear goals – Your sales goals can be anything from hitting a certain sales quota to drawing in a certain amount of new and recurring customers. Most importantly, your sales goals must align with the goals you set out for your electrical business when you created your initial business plan.

2. Clear actions – To reach your sales goals, you need to clearly define each process step, from initial customer contact to closing a sale. Keep your actions achievable, straightforward, and repeatable, so anyone in the business can apply them if you need to shed the responsibility to an employee down the track.

3. Clear decision-making – Second-guessing your sales strategy can be disastrous for a newly opened electrical business a few months down the track. Any decision you make regarding your selling process should be well reasoned and well researched. If not, you risk hesitating in front of an important business decision and losing out.

 

 

Marketing Strategy

 

If a sales strategy helps you plan out how to get your customers to spend money when they walk through the door, then a marketing strategy helps you to plan out how to get them through the door in the first place.

We have some great articles on trade business marketing; make sure to check out our blogs on marketing strategy and how to get great online reviews if you're interested in learning more about marketing your electrical business online.

Once you're done brushing up on the basics, it's time to create a plan and stick to it. Here are nine things you need to do to create one:

1. Budget everything

2. Isolate your target audience

3. Create tailored product and service descriptions

4. Focus on what makes you better than your competitors

5. Create a marketing campaign draft

6. Research marketing tactics and adapt your campaign

7. Document the entire process

8. Create ways to track your process

9. Implement your plan and stick to it

Getting your licensing and permits

 

For most professionals, starting an electrical business means they already have all the qualifications and licences to operate as an electrician. If you're new to the industry or just finishing your qualifications, you'll need to make sure you hold valid licences and permits before working for yourself.

 

If you aren't sure who to contact to get your electrical licencing sorted, we've included a list of all the state government bodies responsible for dispensing them below:

 

Victoria – WorkSafe Victoria

 

New South Wales – Fair Trading NSW

 

Queensland – WorkSafe Queensland

 

South Australia – SA Government Website

 

Western Australia – WA Government Website                          

 

Tasmania – Department of Justice

 

ACT – Department of Environment & Planning   

 

NT – Electrical Workers & Contractors Licensing Board

 

Register your business

 

Once your permits are sorted, you need to register your electrical business and get an Australian Business Number (ABN). Registering for an ABN is quick and easy. Start by following this link, then follow the prompts to get your electrical business registered.

 

 

Choosing a business structure

 

Now it's time to choose what form your electrical business will take. Most professionals who are starting an electrical business will fall into one of three main business categories, which we've outlined for you below:

Sole trader

Working for yourself is the goal of many tradespeople starting an electrical business. Being a sole trader makes you responsible for running every part of the business, but it also means you get to be the boss.

Other advantages of being a sole trader include:

- Revenue control

- Lower start-up costs

- It's easier to upscale your business if you want to

Partnership

A partnership involves two or more tradespeople who have agreed to own and operate an electrical business together. Partnerships help electricians spread the workload between multiple people without one needing to report to the other. Partnerships also help tradespeople maintain a more stable financial footing by splitting the risk of doing business between multiple professionals instead of one.

The other advantages of a partnership include:

- Shared start-up costs

- The ability to promote valuable employees to a position as a partner

- More capital to invest in future growth

Company

If your dream is to get off the tools and have a team of qualified professionals working under you, then a company structure is your go-to. Companies are legally separate from their owners and controlled by either yourself or you and other stakeholders interested in the business's success. If you choose to start an electrical business as a company, it will also be easier to sell if you decide to move on to something else.

Other advantages of a company structure include:

- Decreased personal financial risk

- Access to government incentives and tax breaks

- Lots more growth and expansion options than other structures

Promoting & advertising an electrical business

In the initial stages of starting an electrical business, the last thing on your mind is how to advertise it to customers. Without a strong brand and quality promotion, though, your electrical business might fail to stand out from the crowd and suffer as a result.

Here's what you need to do to help give your electrical business a great start before advertising it to the public.

Define your brand and choose an electrical business name

The name you give to your electrical business is perhaps one of the most important decisions you'll make as a trade business owner. But coming up with good electrical business names is more complicated than it looks.

Make it easy to remember and even easier to say while steering away from complex words and unnecessary filler. For example, 'A to Z Plumbing' is about as generic as you can get when thinking about electrical business names, but it's 100% more effective than 'A to Z Plumbing and Drainage Solutions Pty Ltd'. As a rough rule of thumb when thinking about electrical business names, if it's annoying to say whenever someone asks what you do for a living, it probably isn't a name you want to stick with long term.

Your branding also heavily influences the effectiveness of your electrical business name. Many trade professionals think that their brand begins and ends at a logo and colour scheme, but it can be so much more than that if you want it to be. Consider hiring a specialist branding agency to help combine the various elements that tell the story of your electrical business. The aim is to turn your name, logo, and colours into something greater than the sum of its parts. The most important thing to remember when creating an electrical business logo is that it should be something you're proud to show to your clients and peers in the electrical industry. Choose something eye-catching but not so different that it confuses your customers as they struggle to understand whether they are staring at an electrical business logo or a piece of modern art. Your electrical business logo could even be the name of your business itself, or at least incorporate the text of your name as a backing to a central image or icon of your choosing.

There are millions of great electrical business logo ideas out there, so take the time to settle on something you really love.

Create some great business cards

Armed with an electrical business logo and some creative inspiration, it's time to create some amazing electrical business cards to show off your A-grade branding. It's important to remember why an electrical business card needs to stand out before designing one. Consider a situation where a client needs an electrician for some emergency maintenance. They go to their collection of electrical business cards and need to decide who they call. If your electrical business card stands out from the crowd with a great logo, eye-catching colours, and a reassuring tagline, you're suddenly far more likely to be picked.

Carry the same design decision you settled on for your electrical business cards into your other branding like vehicle decals, uniforms, and even office signage. It all helps build a picture of your business in customers' minds, both new and returning.

Claiming your Google My Business listing

Google is now one of the most powerful free marketing and advertising tools available to small business owners, and it's surprisingly easy to create a listing of your business and start raking in more searches of your business online.

We'll spare you the longwinded explanation of Google My Business (GMB) because we've already covered everything a trade business owner needs to know about GMB in our comprehensive guide on the topic; check it out if you haven't already.

3 extra tips for making your electrical business a success

Be aware of your customers' needs

We've talked a lot about starting an electrical business in this guide, but we haven't really touched on the most important part of any trade business's success, the people who pay you for your work.

Keeping in touch with your customers and their needs is an essential part of running an electrical business that's successful and continuously growing. Customer needs are constantly shifting, and what your current clients request from your service may be completely different from what your future customers will want once they walk through your doors or contact you for a quote.

Take any chance you can to talk with your customers, find out how happy they are with your business and ask them how you could be improving your service. It all helps build a clearer picture of what your customers need from you and your business.

Keep your tech up to date

We must mention how useful it is to have a feature-rich job management platform backing your business before opening your doors. We've spent a lot of time working with trade businesses moving away from pen and paper methods over the years, and there's a reason so many tradespeople are jumping to a digital job management system like ours.

Going digital from the beginning eliminates paperwork, cuts down on job handling times, while automating the parts of your business that don't need your direct attention all the time, like timesheets, invoices, and scheduling.

We highly recommend exploring your options in the digital job management space before starting an electrical business. It's a commitment that has paid dividends for thousands of our happy clients who have ditched the paperwork and sorted their operations with a job management system.

Leverage meet-and-greet and coaching opportunities

One of the best things about starting an electrical business is that many have travelled the same path before you. When you get out into the wider trade business community, you'll quickly meet many professionals who have done the hard yards before are more than willing to share their experience.

Asking for help or advice can be difficult, especially if you've started an electrical business yourself and want to maintain the image of self-sufficient business success. However, there are numerous coaching and planning services out there and not getting help if or when you need it could cause your business more harm than good in the long run. At the very least, we recommend seeking out the services of an expert accountant, as any successful electrical business lives and dies on its financial viability.

And that's all there is to it. You've made it to the end of our' how to start an electrical business guide', and the only thing left to do is get started. We wish you the best of luck in all your electrical business endeavours and hope you use the information in this guide to start an electrical business destined for success.

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