How to start up an electrician business

Electrician fixing a power boxElectricians work on domestic and commercial properties, installing, improving and repairing different types of wiring systems. Check out our practical guide for starting and running your own electrician business.

Research your target market

To find out whether there is enough demand for your electrical contracting business in your area, think about the number and type of customers likely to use your services. Then consider the level of competition you will face.

Domestic customers

Demand for domestic work will depend on the number of houses in your area. It will also be influenced by the type of housing. Clearly the greater the number of houses nearby, the more domestic work you are likely to get. But are the houses large or small, old or new? Are they well kept or run down? Owner occupied or rented out?

Older houses may require a complete re-wire. Newer ones might need little or no work for years unless they are extended or re-modelled. All types may require the occasional installation of things like electric showers, kitchen extractor fans, security lights, alarms or additional power points. Larger houses might give rise to outdoor work such as installing garden lighting, pond pumps, electric gates or garage power points.

Landlords will need electrical safety checks from time to time on the houses they rent out to make sure that they meet the necessary safety standards.

Commercial customers

Shops, pubs, hotels, nursing homes, factories and offices will all require the services of an electrician at some point. Identify which are most likely to use your services - a local shop, for example, might be more likely to call in a small electrical firm than a major supermarket. New businesses might need a complete electrical refit, while existing ones could be targeted for installation of CCTV systems, security lighting, burglar alarms or door entry systems. Office based businesses installing or upgrading computer systems often need network cabling installed. Many businesses will also require PAT (portable appliance testing) services from time to time.

Sub-contract work

Construction firms often sub-contract work out to electricians. You could try approaching construction firms to see whether they would make use of your services. Shop fitters and small local building firms are a potential source of work too. House extensions, loft conversions and shop refurbishment are all likely to require the installation of electrical wiring and fixtures.

Schools, universities, hospitals, offices and public facilities (sports centres, libraries and so on) will all require maintenance of their electrical systems. Try contacting them, and your local authority to let them know what services you are able to offer. They should be able to give you details about tendering for contract work and any special requirements (such as qualifications and quality standard certification) that you might need in order to be considered.

Establishing the level of competition

Once you have thought about your potential customers, you need to consider the level of competition in your area

Check how many other electricians are based nearby. A look through the relevant classifications on Yell.com and other similar online directories will give you an idea of how many electricians there are in your area. You could also look at local print directories. Do they offer similar services to those you intend to offer? It may be that you will only be competing directly against some of these businesses because you will be targeting a different segment of the market.

Try to find out more about your competitors. Sometimes you can get a good idea of this from their advertisements and websites. Try to establish:

  • what services they offer
  • what prices they charge
  • whether they advertise any special features, for example free estimates, no call-out fee, guaranteed work and so on
  • whether they offer a 24 hour service
  • whether they belong to any trade association - for example the Electrical Contractors Association (ECA)
  • whether they belong to an approved 'competent person scheme' for signing off their own work under building regulations (where these apply)
  • what sort of impression their advertisement gives (for example, does the firm come across as small and friendly, large and efficient, good value, upmarket)

Research current trends, plus legal and tax issues

Decide which services to offer

Think about the range of services that you will offer and the types of job you will take on. You may decide to specialise in a particular type of work, for example shop refitting. Or you might take on a wide range of jobs - although this will depend to a certain extent on your skills, experience and qualifications.

Domestic work

These jobs make up the bulk of work undertaken by many small electrical contracting firms:

  • installing wiring systems and fixed appliances in newly built houses
  • repairs to, or replacement of, the wiring system in older houses
  • maintenance and testing of electrical appliances
  • wiring checks for residential landlords
  • installation of showers, extractor fans, lighting systems, power points and so on
  • installation of burglar alarms
  • outdoor work such as installing garden or security lighting, electric gates and garage doors
  • installation of microgeneration technologies such as solar photovoltaic panels and small wind turbines

You might carry out Electrical Installation Condition Reports (EICRs) and Periodic Inspection Reports (PIRs) for customers who need them if you have the necessary skills and qualifications. You could also offer your services for signing off notifiable electrical work done by people who can't sign off their own work under building regulations - you'll need to be registered with an approved third-party certification scheme to do this.

Commercial services

Much of the work in commercial properties will be similar to that undertaken in domestic properties. However, additional services you could consider offering include:

  • CCTV systems installation
  • burglar alarm and security lighting installation
  • maintenance of electrical systems in hotels or nursing homes
  • specialist electrical and safety systems installation and maintenance in petrol stations, and at other sites where there is a high risk of fire or explosion
  • network and data cabling in offices
  • low voltage systems, including emergency lighting
  • air conditioning and ventilation systems

Industrial services

Industrial work is less commonly undertaken by small electrical firms as specialist equipment and knowledge is usually required. Industrial services include:

  • control system installation
  • high voltage and three-phase systems
  • high capacity fibre-optic data cabling
  • installation of lighting and machine power supplies
  • installation and maintenance of generator systems and uninterruptible power supplies
  • testing, inspection and safety certification
  • installing fire and security alarms and emergency lighting

Facilities management

Depending on the level of resources and manpower you have available, you might decide to offer a facilities management service to organisations like local authorities, emergency services and businesses with multiple sites. This generally involves providing 'reactive' maintenance services - troubleshooting and repairs - and can also involve testing and modification work when needed.

Other types of work

Many of the jobs you undertake will give rise to other work that will need to be done, for example re-plastering and making good, tiling and plumbing work. Depending on your skills and experience, you may decide to do these yourself. Alternatively, you might engage a sub-contractor to do it for you.

Consider your work rate

Assuming that you get a fairly steady stream of work, the amount you can earn depends partly on the number of days you work and the length of your working day.

You may decide to stick to normal business hours, for example 8:30 am to 5:00 pm Monday to Friday and perhaps Saturday mornings, or alternate Saturdays. Or you may decide to work longer hours - perhaps working long hours when your services are in demand and taking time off during quieter periods.

Some electricians offer a 24-hour emergency call out service. If you intend to offer this, you need to make sure that you can provide cover at all times. You might decide to team up with another electrician to share responsibility for emergency calls.

As an experienced electrician, you should have an idea how long certain types of jobs will take you. It is very important when quoting for a job that you can make an accurate estimate of how long it will take. It's no good quoting for three days work if it ends up taking you five!

The speed at which you work depends on your own skills and experience and on the type and standard of the work that you do. Your charges should reflect all of these things.

Non-productive time

Unfortunately, not all of every working day will be spent earning money. Here are a few examples of reasons why you may sometimes find yourself working hard but earning nothing:

  • visiting sites to cost new work
  • finishing off jobs that take longer than you had thought (possibly due to unforeseen problems)
  • re-doing faulty work
  • travelling to and from jobs, or to get tools or materials from a supplier
  • repairing tools or vehicles

Sometimes you may find that you are unable to work at all, because:

  • you are waiting for materials to be delivered
  • another contractor is behind with their part of the job
  • a vital tool or piece of equipment is broken, or your van is out of action
  • you are ill

Seasonality

Depending on the type of work that you carry out, you may find that business is much busier at certain times of the year than at others. For example, new building work, maintenance and improvements are often done in the spring and summer - so these may be your busiest months.

Take all of these factors into account when estimating the maximum number of productive hours that you can work each month.

Price your services

How will you decide on your prices?

Think about how you will charge for the work you do. For example, you might:

  • charge for your services on an hourly or daily basis, adding to this the cost of any materials that you supply
  • quote on a 'fixed price per job' basis; you might, for example, have a standard charge for wiring in a loft light and switch, installing a socket or providing an electrician's report for a home buyer

You may decide to use different methods of costing for different jobs, depending on the customer and the type of work.

It is very important that you set your charges carefully. You must make sure when deciding on what to charge that, assuming you get enough work, you will earn enough to cover all of your operating costs, including your drawings. Your charges should also reflect your skills and qualifications. Make sure when you set your prices that you will be working for a reasonable hourly rate. The same goes for any staff you employ - be sure that you will earn a reasonable margin for the business on top of the wages you pay them. Bear in mind, however, that the sector is very competitive and you are likely to have to have to price in line with your immediate competitors unless you are targeting a niche market that your competitors do not cater for.

Consider the following when setting your charges:

  • what do your competitors charge for similar work
  • do you aim to win business away from your competitors with attractive pricing
  • will you vary your rate depending on the type and complexity of the work involved
  • will you make a profit on any of the goods and materials that you supply, or will you pass these on at cost
  • will you make a call-out charge for some types of job
  • will you charge a higher rate (for example double time) for out of hours emergency work

Quote or estimate

If you give a quote for a job, that is a fixed price. Once it has been accepted by the customer the price can't be changed, even if there is a lot more work to do than you realised when you prepared the quote. So your quotes should give precise details of what is covered and make it quite clear that any variations or extras not covered by the quote will be charged for as extras.

An estimate is not a fixed price, it is just your best guess of what the job is likely to cost. You are not bound by it. It is perfectly acceptable to provide several estimates, each taking into account different circumstances from best to worst case scenario.

Where necessary explain to customers what could lead to the price for a job having to change - for example a whole circuit that needs up-rating before a new appliance can be installed. And if the customer asks for extra work, such as additional sockets, to be done during the course of a job, be clear about how this will affect the overall cost.

It is usual to provide estimates and quotes free of charge on a no-obligation basis. You might, though, decide to make a charge for more complex and time consuming consultancy work - perhaps you will refund this charge if it leads on to a substantial contract.

Trade rates

Clients that are other businesses might expect you to offer them a special 'trade rate'. Large organisations that invite firms such as yours to tender for contract work will also expect your rates to be very competitive, as will insurance companies.

Be aware that many of your clients will get quotes from several different electricians so you need to be able to quote accurately and competitively. Do remember though that many people value good, efficient service and are prepared to pay a realistic price for it. Above all, make sure that you don't end up working at a loss because your quote was too low.

Special guides are available to help you when pricing electrical work. They give up to date advice on what rates to charge for particular types of work and the likely cost of the materials required. One example is Spon's Mechanical and Electrical Services Price Book - visit the CRC Press website to find out more.

Promote your business

It's important to think about how potential customers will see your business and how you will get your key message across to them.

The right image

People's first impression of your business is very important. Many electricians work from home, but some have a separate workshop and/or storage area. This might be accessible to members of the public, who might call in for advice or discuss a potential job. If you have premises like this, make sure that the reception area is clean and tidy. Bear in mind that any vehicle you use will be a highly visible advertisement for your business. It doesn't need to be new, but it should look smart and well maintained. If you use a van, you could get it professionally sign-written.

Whether you work from home or separate premises, many customers' initial contact with you will be over the telephone. Always be polite and try to answer the phone promptly and in a friendly manner. If you are unavailable, use an answerphone and make sure that you follow up all messages. People will sometimes call several electricians for an estimate or a quote - a helpful and efficient telephone manner could make the difference between getting a job or not.

Good service

A reputation for good service can only be built over time, but from the outset you should aim to offer a high standard of service and ensure customers are satisfied with the work carried out. Deal with any questions or complaints promptly and politely. Take care when making estimates and try to ensure that the customer is well informed about the work being done. Keep customers informed if you're running late or you're going to miss an appointment, and try to keep mess and disruption to a minimum. A good reputation will pay dividends in terms of word of mouth recommendations, which are so valuable in promoting your business.

Quality standards

High standards are essential to attract and retain customers. One of the best ways of demonstrating that you work to a high standard is to join a trade association or quality assurance scheme. Membership helps to illustrate to potential customers that a high level of service is on offer. Schemes available include:

  • NICEIC Approved Contractor Scheme
  • IET Electrotechnical Assessment Specification (EAS)
  • Electrical Contractors Association/SELECT membership
  • TrustMark

If you are registered as an approved 'competent person' for self-certifying certain domestic electrical work against Building Regulations - or for installing microgeneration technologies such as solar voltaic panels - then be sure to advertise this fact to your customers. The same applies if you're an authorised Green Deal installer.

Advertising and marketing

Now that so many people search for businesses like electricians online, a good website can be a very good way of advertising your business and reaching a wider range of customers. Think about getting listed in online directories - perhaps 'contact an expert' directories run by some trade associations.

Social media can also be an effective way of marketing your business, staying in touch with previous customers and making contact with potential new ones. Think too about using relevant forums and perhaps a blog (although be aware that some forum websites ban blatant advertising in forum posts). You could sign up to a review website for trades-people such as Checkatrade. You could also consider trying to obtain work through job-referral websites like Mybuilder.com and Rated People too.

An entry in a local print directory can be an effective way of advertising your business. However, many of your competitors will have done the same so try to make your business stand out.

Some firms spend a lot of money on large, eye-catching display advertisements. You will have to decide whether to compete head on with these firms, or look for a different way of attracting customers. You could, for example:

  • focus on your own unique selling point (USP) in your advertising material. This might be, for example, "25 years experience", "Family run firm" or even simply "Friendly, honest service"
  • advertise in other ways. For example, you could distribute a paper flyer, plastic card or sticker with your business name and telephone number on it as part of a mail-shot that you do, perhaps in the early spring
  • look into becoming listed by an insurer, specialist helpline or directory as an 'approved tradesman' (most of these organisations operate a quality screening process and some will only list firms that have been trading for at least two years)
  • contact local residential landlords associations to enquire about being included in their suppliers guide

The important thing is to tell people as many of the good things about your business as possible in your advertisements, particularly things that distinguish your business from your competitors.

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