How to Start an Electrical Business: 8 Steps to Success

1. Get the required training and state license

The electrical industry is highly regulated, which is why you’ll need to be a certified master electrician to run your own electrical business in most states. 

However, training and licensing requirements may vary from state to state and even city to city. For example, electricians in Massachusetts require a license to perform any electrical work, and it must be renewed every three years. Electricians in Texas also require a license to work on electrical jobs, and it must be renewed annually.

Check with the National Electrical Contractors Association to see what certifications are required for your region.

If you’re just starting out, join an apprenticeship program and get work experience alongside a journeyman electrician or master electrician.

2. Secure funding to start your business

Starting an electrical business is an expensive endeavor. It can cost anywhere between $5,000 and $25,000 to get your business set up, purchase tools and equipment, and advertise your services.

This cost could double if you still need your electrical certification or need to buy a work van.

Unless you’re sitting on a large savings account, you’ll need a loan or funding from a third party to get your business up and running.

Luckily, there are a few options available to help you get financing to start your electrical business:

• Apply for a small business grant through your local government
• Get a small business loan from your bank
• Ask family, friends, or angel investors to invest in your business

To help you secure funding for your new electrical business, you’ll need to create a business plan to share with potential investors or lenders.

3. Get set up: registration, business license, insurance

You’ll need to register your electrical business before you start working. Here’s how to get set up to legally operate your business.

Choose a business structure

Before you can register your electrical business, you’ll need to decide what business structure to operate your business under. For small electrical businesses, these are your typical options:

• Limited liability company (LLC) – For electricians, registering as an LLC protects your personal assets just in case you run into legal trouble and are being sued for damages.
• Sole proprietorship – If you’re starting a business alone, register as a sole proprietorship and you’ll have complete control over your business.
• Partnership – If you’re starting your business with two or more partners, you’ll want to register your business as a partnership.

Register your business name

Pick an electrical company name that’s professional, unique, and easy to remember. Then register your business with your regional government. 

Pro tip: To check if your business name is available, Google [NAME + LOCATION] or run a quick search in your country’s trademark database.

Get a business license

Check with your local city or state to see what licenses or permits you’ll need to operate your electrical business.

Insure your business 

Electrical work can be dangerous. Get the right insurance to protect your business and your customers. Then speak to your insurance provider to discuss what coverage you’ll need for the electrical services you offer.

The types of business insurance you may need include:

• General liability insurance
• Commercial automobile insurance
• Workers’ compensation insurance 
• Professional liability insurance
• Equipment insurance
• Property insurance

4. Set up your business accounting

Open a business bank account to separate your personal assets from your company’s assets and make things easier at tax time.

READ MORE: 30 small business tax deductions to save money when filing

Then use Quickbooks Online to keep your business’s finances organized and manage your electrical inventory.

Investing in electrical contractor software like Jobber that syncs with Quickbooks Online lets you easily manage your accounting in the same place you schedule and manage your work.

5. Purchase electrical tools

Stock your electrical van with the right electrician tools and equipment to get the job done. Here’s what you need to purchase before your first job:

• Voltage tester
• Wire cutters
• Electric drill
• Screwdrivers
• Pliers
• Fish tape
• Flashlight
• Level
• Tape measure

To save yourself from running to a hardware store before every job, stock up on other electrical supplies like:

• Electrical tape
• Solder wire
• Cotton buds
• Solder flux
• Solder wick
• Freezing spray
• Flux cleaner
• Kapton tape
• Single-core wire
• Multi-core wire
• Wire wrapping wire

6. Learn how to price your electrical services

Knowing how to estimate electrical work will help you quote faster, win more jobs, and grow your electrical business. Here’s how:

Choose what services you’ll offer

Make a list of the types of services you plan to offer. For example, if you’re targeting residential customers, your services may include:

• Doorbell installation
• Wiring a new outlet or switch
• Installing an electric car charging station
• Installing a video surveillance system
• Installing a new electrical panel
• Removing knob and tube wiring

Then jot down the materials you’ll need to complete each job, determine your hourly rate, and calculate your profit margin.

Pro Tip: To make sure your pricing is competitive, check online to see what other electricians in your service area are charging. 

READ MORE: Pricing strategies for service business: everything you need to know

Build an estimate template

Creating an estimate template will speed up your estimate process and help you win more work, faster.

Your electrical estimate template should include:

• Your business name, logo, and contact information
• Your customer’s name and contact information
• An estimate number
• A breakdown of the electrical services you’ll be providing
• An approximate cost for the services
• How long the estimate is valid for

7. Get your first electrical customers

Investing in marketing will help attract new electrical leads—but you don’t have to spend a ton of money to get new customers through the door.

Here are a few marketing strategies to help you get new electrical leads:

• Build a brand for your electrical company by designing a logo, picking company colors, and ordering business cards and uniforms.
• Use website builders (like GoDaddy) to create a website for your business that lists your services, tells people where you work, and makes it easy for potential customers to request work.
• Set up your Facebook Business page to connect with new customers 
• Use Google’s Local Service Ads to advertise your electrical contracting business to clients in your area
• List your business on lead generation websites like Thumbtack, Angi, or HomeAdvisor to get more electrical leads.
• Start a customer referral program that gets happy customers to find new leads for your business.

READ MORE: Electrician advertisement: how to advertise your business

8. Hire electrical contractors and grow your business

If you’re struggling to keep up with new quotes and are turning down work, it’s probably time to hire an electrical contractor to help grow your business.

To find qualified contractors to join your team, you’ll need to write an electrician job description that includes:

• Job title
• Position summary
• Responsibilities
• Qualifications

Then compile a list of interview questions that test the candidate’s electrical knowledge and how they would handle specific situations. This will give you a better understanding of their skillset, on-the-job experience, and work values.