Starting an electrical business takes a lot of work. However, it could be a wise move for hardworking and skilled individuals. Electricians enjoy steady job growth and high employment rates around the country, according to data from the Bureau of Labor Statistics. It’s also a well-paid trade, with electricians enjoying an average yearly salary of $63,310 (as of May 2021).
If you think that learning electrical work is for you, read on. This guide for electricians can help you understand the steps you may need to take to start a small business, from learning electrical basics to protecting the company you build.
Learn Electrical Work Basics
Before you can open an electrician business, you need to learn the trade. Most states will require you to complete classroom instruction. Approved courses are often available through community colleges and technical schools.
During your classes, you will learn the electrical basics you need to work as an electrician. These skills are necessary to provide electrical services to your customers and stay safe while doing it. The electrical basics you may learn are:
- Installing, repairing, and maintaining electrical wiring
- Installing power points and lighting fixtures
- Running cables
- Fitting switchboards
- Reading technical drawings and diagrams
- How to find faults in a system
- Safe work practices
- Building codes and standards
- Working with renewable energy
Once you learn electrical work in the classroom, it may be time to take these skills into the real world.
Find an Apprenticeship
Many states also require electricians to have a minimum number of work experience hours before they can legally work in the trade. On-the-job training is typically done through an apprenticeship, where you learn under a licensed electrician while earning a paycheck.
Being an apprentice may also count towards your classroom hours requirement. Electrical apprenticeships typically take four years to complete, whether you’ve finished an education program first or not.
An apprenticeship is your chance to put what you’ve learned in the classroom to work. During the first year, you will probably spend a lot of time observing, cleaning up after jobs, and doing small routine projects. As you practice the electrical basics, you will learn safe work habits and improve your skills. You will be trusted with more complex work as you advance and be supervised less and less as you go.
Get Your Electrician’s License*
After you’ve completed the required training, you may need a state or local electrician’s license to legally work. This will depend on the laws in your state, county, or city. For example:
- Florida requires electricians to pass an exam and show proof of their experience to get licensed.
- Electricians in Ohio must have electrical and construction experience to apply for a license. You will also need to pass an exam and show proof of General Liability insurance.
- Pennsylvania does not issue state-wide electrician’s licenses, but you may need to meet local requirements to work in the field.
- In Texas, there are three licensing levels for electricians: Apprentice Electrician, Journeyman Electrician, and Master Electrician. Each has its own work requirements and exam.
Generally, you will need to have a minimum amount of work experience and pass an exam to get an electrician’s license. You may also need certain types of business insurance (typically, General Liability and Workers’ Compensation) to work legally in the trade.
Know the Local Market
You’re trained and licensed, but you may want to hold off before jumping into business. Understanding the need for electrical work in your area could be the difference between success and failure.
Looking at the competition is often a good place to start. What services do they offer? Who seems to be their ideal customer? How much are they charging? How do they advertise? This information and more could help you figure out how your business will fit into the local market.
There may be an opportunity to offer a specialized service that’s quick for you to do and very profitable. Or, there may be a need for an all-rounder who can provide electrical basics to residential properties. To decide this, you will also need to think about your ideal customer—the type of people you want to help.
Set Up Your Small Business
Before you can offer your services to others, you will need to formally set up your electrical business. The steps to do this may vary, and the exact steps you must take will depend on the laws in your state, county, or city. However, you will generally need to:
- Get a business license – Most places require you to have a business license, even if you are a sole proprietor or trader.
- Register your business name – This step may help prevent other businesses from using the same name. However, you might also need to consider your trademark options to protect it more fully.
- Set up business accounts – Keeping your business and personal finances separate is usually a good idea. It can help you understand how your business is doing and could make filing your taxes much simpler.
- Apply for an Employer Identification Number – This number, also known as an EIN, is issued to businesses by the Internal Revenue Service (IRS). It is used when you file business taxes.
Your state or local small business office can help you complete the necessary steps to make your electrical business official.
Protect Your Business
Becoming an electrician and setting up a small business is hard work. Taking steps to protect your efforts may be important to you. Simple actions, like creating and sticking to a safety plan or always practicing excellent customer service, could go a long way towards avoiding accidents, injuries, bad reviews, and other events that could bring down your company.
Business insurance** is another way that electricians and other tradesmen protect themselves and their businesses. Policies like General Liability and a Business Owner’s Policy help shield your finances from expensive claims and lawsuits. Rather than paying out of your own pocket, your insurance policies shoulder the costs.
Some types of business insurance may be mandatory in your state or local area. For example, you might need to show proof of General Liability coverage to get your electrician’s license. If you have employees, you will need Workers’ Compensation insurance in every state except Texas.
Hire Help (If You Can)
Running an electrical business is about more than pulling electrical wiring and replacing breakers. You also need to think about finding new customers, sending invoices, filing taxes, and scheduling your workdays. It may be hard to do all this—and more—by yourself!
Hiring other professionals could help you manage the admin side of owning a small business. While you might not be able to bring in a full-time employee just yet, you may be able to hire independent contractors to help. They will bring their specific knowledge and skill to tasks that you may not be as confident handling.
Many electricians consider getting help with:
- Marketing – Finding new customers can be a full-time job itself! Getting some help with market research, advertising, and branding might be useful. A marketing plan may help your small business grow faster and larger than you ever imagined.
- Web Design – The internet is now a must for small businesses. A good web designer can help you build a professional website that customers can find.
- Accounting – Even a small mistake could put your accounts out of balance. Hiring an accountant or bookkeeper could free up time spent on invoicing, processing payments, recording transactions, and filing business taxes.
- Other Electricians – Too much work should be a blessing, but it might become a curse. If customers can never reach you because you’re on other jobs, you may lose them to a competitor. A part-time or full-time contractor could help you accept more jobs and keep your customers happy.
Helping Others Light Up Their Lives
A good electrician is a good person for busy homeowners to know. You help them keep the lights on and their homes safe. Whether you provide electrical basics or a specialized service, you are no doubt improving your community one breaker at a time!
We hope this guide for electricians was helpful and that your electrical business is a great success.
BizInsure can help you protect your new electrical business. Learn more about insurance for electricians and start comparing quotes today.
**As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.