How to start a successful electrical business
Electrical business is thriving in the UK. Indeed, according to ElectricianCourses4U, the demand for electricians is currently far exceeding the supply. With the rolling out of smart technology and nationwide regeneration schemes on the rise, the demand for electricians is currently outweighing supply.
This means, for those qualified tradespeople, there has never been a better time to start your own electrical business.
However, launching a successful business involves a lot of hard work. From creating a realistic business plan to purchasing appropriate electricians’ insurance, there is a lot to think about. In this guide, we outline the steps you’ll need to take to start your own business.
What do I need to start an electrical business?
If you’re an electrician and are thinking of going solo, there are a number of steps you will have to take. To help you decide if this is something you’d like to do, we’ve explained exactly what you need to do below.
While it may go without saying, the first step to launching your own electrical business is to become a qualified electrician. There are many ways to become qualified in this field. For example, you might work your way up as an electrician’s apprentice, learning on the job. Alternatively, you may opt for classroom-based qualifications. Whichever route you choose to take, a number of qualifications are mandatory.
These include a Level 3 Diploma in Installing Electrotechnical Systems and Equipment, Electrical Installations or Electrotechnical Services. Additionally, a Certificate in the Requirements for Electrical Installation is required, as is the Award in Initial and Periodic Inspection.
Create a business plan
Once you are a qualified electrician with some experience under your belt, the next step is to create a business plan. Although it’s not compulsory unless you want to obtain a bank loan, this process involves creating a document to show your understanding of how your business will operate. It will also need to highlight your goals and explain how you plan to achieve them.
Business plans are often used at the funding stage of launching a new business. They can act as a roadmap that lays out your business’ unique potential to would-be investors.
A business plan for an electricians’ business should include:
- A brief description of your business
All business plans should start with this. This brief overview will help to make sure the reader understands who you are and what your business will do. This section should always include basics like the name of your business, where you are located and an explanation of the services your electrical business will provide.
- Market/competitor analysis
By defining your desired target market (the type of customers you want to work with), you can explain what group of people will make up your customer base and how your business can fulfil their needs. This section may include research that highlights how competitive the electricians' market in your area is currently.
- Financial planning for first few years of operation
A business plan should include financial projections. This should include a detailed list of start-up costs and forecasted sales projections for the first few years of business. On top of this, if your business requires financial help, it should also include a clear total figure that you are looking for, that is fully explained and costed.
- Initial marketing plans
A good business plan will also include a brief marketing strategy overview. By covering the strongest aspects of your strategy - be that a focus on social media advertising or good old-fashioned word-of-mouth marketing - you can keep the reader's interest and provide a basic framework to refer back to and follow. This doesn’t need to be complex, especially if you’re starting out and have a limited budget, but can include some initial ideas. Branding your work van and work wear with a logo or even creating some business cards to hand to potential customers can all be a part of your marketing plan.
Decide on the type of business you want to run
One of the first major decisions you will need to make relates to what type of business you want to run - a sole trader or limited business. It’s common for electricians to start as a sole trader, before then becoming a limited company as the business starts to grow.
The largest difference between a limited company and a sole trader involves liability. A sole trader business is owned and controlled by one person who is 100% financially liable for the business. On the other hand, as the name suggests, financial liabilities are limited when it comes to limited companies.
There are a number of pros and cons of each type of business. It is important to research all of these before making a final decision on the type of business you’d like to start.
Buy tools and equipment
Electrical work not only requires specific skills and qualifications, but also specialist equipment to help you carry out jobs effectively and safely. Unless you already have your own equipment, this will likely be your biggest investment when setting up your business.
When it comes to getting everything you need, try to think about all the equipment you already have and then identify the gaps in your inventory. These are items you will have to invest in.
It’s important to remember equipment doesn’t only refer to tools. Most self-employed electricians will also require a company vehicle too, for example. This means you may also have to think about sourcing a secure and reliable work van that can take you - and your tools and materials - to and from each job. The cost of purchasing all equipment you need should be listed in your business plan.
As with any industry, accidents do happen in the electrician trade. Even when it comes to the most careful tradespeople and the most diligent businesses, unforeseen events are inevitable. For this reason, having adequate financial protection in place can be essential. Policies are needed to cover you, your business, and any related third parties, should something go wrong.
Many specialist insurers, including Markel Direct, offer bespoke electricians’ insurance. These packages typically provide a range of covers, including:
This insurance is designed to protect you against a claim should a member of the public sustain an injury due to work you have carried out. This cover also protects you against any accidental damage to a third party’s property caused by your business.
This cover protects you and your business in the event a customer claims to have suffered financial loss due to negligence in the course of your professional duties.
This is a legal requirement for businesses with employees. This insurance protects you should a staff member become ill or injured while working for you.
These policies are designed to financially protect you in the event that tools and equipment needed to carry out your job are damaged or stolen.
Market and grow your business
The final thing you need to do in order to get a new business off the ground is to attract and keep customers. The best way to do this is through marketing. While the thought of this may conjure thoughts of expensive radio and TV adverts, the truth is that traditional self-marketing can be just as effective. Good word-of-mouth marketing from customers who are happy with the quality of your work is the cheapest and most effective form of marketing you can benefit from.
However, there are also lots of proactive ways you can market your business. For example, by simply letting past clients know you’ve started your own business and putting your name in their mind, you can generate future work without spending a penny. Aside from this, for a minimal cost, you can post flyers/leaflets through doors in your local neighbourhood detailing your services. You can also use free social media platforms such as Facebook, Twitter and Instagram to advertise your business.
As this guide highlights, launching a successful electrician business takes a lot of time, money and effort. However, the independence to be your own boss and control your own income can make it all worthwhile. While success is never guaranteed, by following the steps above and putting in the necessary planning, preparation and hard work, you will give yourself the best chance possible.
Here at Markel Direct, we offer a comprehensive electricians’ insurance policy. This allows you to combine a number of covers together into a single, specialised policy. Get a quick quote here.
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