How to Start an Electrical Contracting Business

You might be good with your hands and have knowledge about electrical systems that you’ve learned over the years, but that isn’t generally good enough to start a business based on those skills. Knowing how to start an electrical contracting business means being able to prove you’ve received formalized training and are certified to do the work that is required. This means you may need to go through a certified training program or go through an apprenticeship program before starting your own business.

Once you have fulfilled the training requirements, most jurisdictions require electrical contractors to prove their knowledge by passing a licensing test. There are fees associated with the test and the license may also have a fee as well. If you plan on hiring contractors and not do the work yourself, however, you can get started today. You’ll just need to hire licensed contractors to work for you. Then you’ll be ready to follow these additional steps.

1. Get your business registered.

Most electrical contractors will want to incorporate their business. Many have the business structured as a limited liability corporation. This will protect personal assets in case litigation is started by a potential client in the future. You’ll need to have this business identity in place to secure the insurance you’ll need for the next step.

2. Obtain a surety bond.

Not every jurisdiction requires a surety bond to be an electrical contractor, but having one is still a good idea. This line of credit is essentially an insurance policy against inadvertent damage that may be caused while on a job site. The surety bond will cover the issue for the customer and give you a point of emphasis for marketing purposes. If you have enough capital on hand, a dedicated bank account can be set up in lieu of a bond if it stays funded. Make sure you finalize all insurance policies and make them active before going to the next step.

3. Obtain the licensing needed so you can make money.

Once your insurance is in place and your business is registered, you’ll be able to pursue licensing. To be licensed, you will need to submit evidence that all electrical contractors who will be working for the businesses have been properly certified for the work that will be done. This process usually takes up most of an afternoon at the licensing office as all documents must be personally reviewed by the issuer. Many cities also have special licenses that are required to be held for electrical contractors so that business can be conducted within their borders.

4. Get the supplies that you’ll need.

It’s hard to work at a job site if there isn’t any transportation to get your there. Although an independent electrical contractor could use their own vehicle, there will still be other equipment and supplies that is required to complete a job. If you don’t have the money to secure the equipment, then look to raise capital in some way so that you can work. Traditional loans, crowdfunding, and other lending options exist that will potentially supply the needed cash.

5. Begin finding customers.

Electrical contractors are in demand in every community. Some focus on more of a handyman specialty where they replace boxes, outlets, and switches in homes. Others focus on new construction. Some might decide to focus on remodeling projects that require electrical work. There are also residential and commercial paths from which to choose. Select the one that makes the most sense for you and then market your services to that specific niche. Don’t try to be everything to everyone because you’ll either become quickly overwhelmed or you won’t be able to find any work at all.

6. Determine if a union affiliation makes sense.

Although it is not required to be associated with a union, there are certain projects or contracts you may wish to pursue that have a preference for unionized electrical contractors. One of the most common affiliations is with the International Brotherhood of Electrical Workers. There may also be local contractor unions to consider joining as well.

7. Finish the job.

Your reputation will be built off of the quality of service provided. If you offer fair, competitive prices and good work consistently, then you’ll build a solid customer base over time.

Knowing how to start an electrical contracting business means navigating the world of licensing and certifications so that money can be made. Follow safety procedures, double-check everyone’s credentials, and then perform the licensed work that can bring in big profits.

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