How To Start a Legal Electrical Business in 10 Steps

Updated June 26, 2023
14 min read
How To Start a Legal Electrical Business in 10 Steps | Lawrina

Introduction

You will likely agree that, generally, electric power is at the heart of every society. For example, with electricity, we can power our homes, businesses, and industries; and keep our technological devices and appliances running without any power shutdown. This goes to evidently shows that electricity, as well as electrical services, play a very significant role in sustaining one’s day-to-day livelihood.   

Suppose you have a burning passion for electrical work or services, or you’ve learned the ropes as an experienced electrician and intend to start an electrical business. In that case, you need to understand the business know-how and what you could do to avoid the general pitfalls that many new business owners face that prevent them from achieving success. 

This article highlights ten golden steps that will practically guide and give you valuable insights into starting a successful and profitable legal electrical business. 

What to Consider When Beginning an Electrical Business

Indeed, starting an electrical business with an industry that generated $242.4 billion in the US alone can be a lucrative venture if you do it right. You, too, can start an electrical business that will flourish in the electric business industry with careful planning, adequate preparation, determination, and patience. Here are the most critical things you should consider:

1. Choose what services you will offer

When it comes to electrical business service, there is so much you can do. It is an industry that is vast and all-encompassing. For instance, your services include electrical installations, repairs, maintenance, technical upgrades, etc. 

The important thing is: as you begin your venture starting an electrical business, you must determine the specific service you will offer your customers. In this industry, you cannot afford to be a jack of all trades and master of none. 

So, in setting up a business electrical venture, you must choose the unique service(s) that best fit your skill set, expertise, and even the market demand. You could provide tailor-made services in any of the following common electrical businesses: 

  • Residential electrical installations and repairs;

  • Commercial electrical services;

  • Industrial electrical maintenance;

  • Energy-efficient lighting solutions;

  • Electrical system inspections;

  • Electrical safety audits;

  • Smart home automation;

  • Emergency electrical services, etc.

When it comes to a business electrical engagement, one of the advantages of narrowing down your focus is that you can create a niche and strategically position yourself as a specialist or expert in that particular field. This would enable you to attract customers and distinguish you from your competitors.

2. Uncover your unique selling position (USP)

In a market where there are thousands of electricians and electrical business services, it is normal for competition to be part and parcel of such market space. However, where competition surfaces, there is usually a Unique Selling Position (USP) that tells customers that this particular business is different from the others. 

Basically, your USP is that special factor or the ‘holy grail’ that makes your business's electrical services so appealing to customers. It sets you apart from the pack and places a stamp of irresistible patronage on your clients. In other words, your USP is just something special about your business's electrical services. This could range from your deep-seated expertise in electrical apparatus, value, and quality customer service to quick response time, pocket-friendly pricing, etc.  

In setting up a business electrical service, here are a few pointers to assist you in discovering and maximizing your USP:

  1. What specialized skill or expertise will you offer? 

  2. What is the one thing that you are good at when it comes to electrical business service?

  3. Do you offer unique, creative, or innovative solutions to customers specifically and the electrical industry in general? 

  4. How will your electrical business offer exceptional customer experience compared to your competitors in the industry?

After you identify your unique selling point, integrate it into your branding, marketing, and customer interactions — all targeted at enhancing your business electrical service. With this, you can attract and retain existing clients while increasing your profits accordingly. 

3. Pick your business name

Starting an electrical business cannot be realistic without first choosing a business name. This is as important as anything, as it is fascinating because of what your business represents. When starting an electrical business, your chosen electrical name should be simple, memorable, and professional. 

Essentially, the electrical business name you should ultimately use should reflect your business's nature and resonate with your target audience. Look out for the considerations in selecting a business name:

  • It should be simple and easily remembered;

  • Avoid personal names, provided it is convenient;

  • It should be professional; and 

  • Incorporate relevant keywords or phrases that convey your unique services.

Remember that once you have a chosen name, you should quickly check for business name availability to ensure it is not already used. Also, you must register your electrical business name to avoid trademark disputes. 

Your chosen business name is the face of your brand. So, choose smartly and ensure it displays your values and expertise in the electrical business industry.

4. Get your paperwork in order

Starting a legal electrical business involves preparing various paperwork and legal requirements to comply with — from business name registration, compliance with relevant professional and industry regulations, and obtaining necessary licenses and permits. 

You must ensure you get all the necessary paperwork in order. The goal is to check that your business electrical service is protected by law and free from all legal or regulatory hiccups. 

Insurance is a critical factor in starting an electrical business as it protects your business against mishaps or liabilities. It is reported that insurance for businesses offers financial protection when unforeseeable losses happen. Some insurance coverage you may require includes general liability insurance and professional liability insurance.

Above all, such coverage should provide a safety net should your electrical business suffer any property damage, accidents, or potential legal claims. You may need to consult an insurance agent or professional for guidance on the best insurance policies necessary for your electrical business endeavor. 

5. Create a business plan for your electrical business

It is a common saying that those who fail to plan ultimately plan to fail. Similarly, you cannot underestimate how vital a well-thought-out business plan is when starting an electrical business. A well-crafted business plan provides foresight – a roadmap — for your business electrical service. It helps you to make well-informed decisions that will establish a solid foundation for growth and success in the short, mid, and long term. 

In your electrical business venture, your plan should generally outline your business goals, target market, strategies, financial projections, and more. These are some of the major components of a business plan.

  • Executive summary: You should provide a concise overview of your business, mission, vision, goals, and objectives. It should contain your business electrical service's unique value proposition or selling point, as earlier explained. 

  • Company description: You can give a detailed description of your electrical business, including its legal structure, location, unique features, services offered, and target market.

  • Market analysis: Conduct thorough market research to understand your target market, industry trends, and competition. You should equally Identify your ideal customer profile and outline your marketing strategies to reach them effectively.

  • Marketing and sales strategies: Your plans for promoting your services, acquiring customers, and building brand awareness should feature here. You should define the tactics and channels to promote your electrical business. For instance, you could consider digital marketing, local advertising, networking, or partnership. 

  • Financial projections: Projected revenue, expenses, and cash flow for the first few years of operation. You must have some expected financial expectations, which could help you assess your electrical business performance as you move along.

  • Management and organization: You should outline the organizational structure of your business, including key roles and responsibilities. If you plan to hire employees, specify the staffing needs, numbers, and any required qualifications.

Besides the fact that a well-written business plan demonstrates your preparedness, it shows potential investors or lenders that you mean serious business should you ever need to secure funding to finance the electrical business. 

6. Decide on your business structure

Usually, you select a designated business name and register it to ensure it is secured to prevent other businesses from using it. But that is not all that is needed when you want to start an electrical business. You need to take the next leap: choosing a business structure. This simply means the legal entity or structure under which your electrical business will operate. 

You must note that the business structure you decide on will have numerous implications for your electrical business. For instance, it will determine your legal or personal liability, what taxes you will pay, and the company's general management. 

The exciting thing is that you can choose from several business structures, depending on your unique circumstances and short or long-term business goals. The most common business structures for electrical businesses include sole proprietorship, partnership, limited liability company (LLC), and corporation. 

Each structure has its own advantages and disadvantages. A knowledgeable business law attorney can guide you on the most suitable business structure and legal ramifications.

7. Figure out your financial plan for your business electrical service

According to Forbes, for you to optimize your strategy for business success, you need a financial plan. As such, establishing a solid financial plan is a must for your electrical business. This plan may include your start-up costs, estimated ongoing expenses, and planning pricing strategies. You should consider the following items when formulating your financial plan to start an electrical business:

  • Van: As you start an electrical business outlet, your mobility or transportation to job sites is a vital issue. As expected, you will likely require a reliable and well-equipped van to transport yourself, your team, and your working tools to job locations as occasion may require. As such, you must factor in the cost of purchasing or leasing a van in your financial plan. 

  • Van wrap: Once you have a van, you may want to consider a van wrap as well. This is a very effective way to advertise your brand. Consider it as a mobile billboard to promote your business. So, with a cut for the van, also have an allocated budget for installing a professional and eye-catching wrap for your van. It should simply and mainly showcase your brand, services, and contact information.

  • Tools: This point involves all your gadgets or devices to carry out electrical work efficiently. So, you must invest in acquiring quality tools as these would be important to deliver excellent customer service. Some common tools and equipment you may require for your business electrical service include screwdrivers, voltage testers, pliers, wire cutters, drills, heat guns, circuit testers, safety glasses, shoes, helmets, protective clothing, etc. You should designate the cost of purchasing these tools in your financial plan.

  • Stock to use on jobs: Depending on your services, you may need to maintain an inventory of electrical components, such as wires, switches, outlets, and circuit breakers. Include a rough estimate of the initial cost of stocking up on these supplies in your financial plan.

  • Business basics: There are some basic business expenses that you must consider. For example, the cost of office rent, utilities, office supplies, etc., are some of the basic yet necessary expenses for running your electrical business smoothly.

  • Uniforms: Earlier, it was mentioned that your unique selling point (USP) is a must for differentiating your business from other competitors. Appearance could somehow be a definitive mark that does that trick. You should create a budget for uniforms for your employees and implement a cohesive, uniform policy. It could serve to promote your electrical business’s brand identity and professionalism.

  • Insurance and licensing fees: Insurance coverage will require some fees. To obtain the necessary licenses or permits to operate or start an electrical business legally, you must include a budget for those.

  • Advertising: Your marketing and advertising efforts must be well-funded to scale your electrical business. This could include online advertising, print materials, website development, and local networking events. Whichever channel best achieves the optimum result should be adopted and budgeted for.

8. Create legal documentation

In a legal electrical business, you will inevitably get into agreements with clients,  employees, or investors to provide certain services, as the case may be. By implication, you will have to get a contract in place that conveys that agreement. 

With such legal documentation, you’re assured that your interest is well secured; you’re not exposed to risk or needless liabilities; the terms of services for your clients are clearly outlined, and a mutually agreed framework for engagement is solidly established in writing. Some of the key legal documentation includes: 

  1. Electrical service contract: This contract outlines the terms and conditions of your services, including pricing, the scope of work, warranties, payment terms, cancellation, and rescheduling procedures. You can find an electrical service contract template that best suits your purpose and circumstance. 

  2. Employee contracts: If you plan to hire employees, you should create employment contracts that outline job responsibilities, compensation, benefits, dispute resolution, and any non-disclosure or non-compete agreements. With this, you’re certain that all parties are duly informed of their rights and obligations. 

Above all, you should consult with an attorney with expertise in business law. With this, you will get professional help to ensure your legal documents are enforceable and comply with applicable laws and regulations. 

9. Hire employees

Every business owners derive unspeakable joy and fulfillment when their business grows. With this comes the need to hire employees to match the workload as it comes. Therefore, getting the right employees is pivotal for your business's success and continued growth. So, you must be meticulous and hire the best brains and hands for the job.

10. Spread the word

Once you hit the ground running with the legal electrical business, it is time to send words across to attract customers. Effective publicity is a fire-proof medium through which you can make this happen. So, you must put in the effort to market and promote your business. Research shows that marketing is the common denominator for all businesses. 

Conclusion

A strong foundation is very critical for any business venture. The same applies to you when starting a business electrical enterprise. With the following ten proactive steps, you are well-equipped to embark on this journey with a potential for success. Remember that starting a business requires dedication, hard work, and a commitment to excellence. 

Also, as the needs of your customer and industry evolve, you must be flexible to adapt to these changing needs continuously. With this, you can build a thriving electrical business that brings value to your clients and personal fulfillment to your professional life.

Article by
Inna Chumachenko
Lawrina

Inna Chumachenko is the Content Lead at Lawrina. She is responsible for managing all the content found on the blog, guides, and other website pages. Inna has a degree in philology and a vast interest in law. In her role at Lawrina, Inna oversees the content team, establishes collaborations with writers, and curates content from various contributors.

If you have any questions or suggestions regarding the content for Lawrina, please feel free to contact Inna directly via email at i.chumachenko@lawrina.org or connect with her on LinkedIn.

Frequently Asked Questions

How to create a trademark name for my electrical business?

To create a trademark name for your electrical business, follow these four steps:

  • Come up with a unique and memorable name related to your business. Think about the services you offer and the message you want to convey.
  • Make sure that no other business has already trademarked or is using the name you have selected. This will help you avoid legal problems in the future.
  • Check if the domain name associated with your selected trademark name is available to create a consistent online presence in the future.
  • Consult a trademark lawyer who can guide you through the registration process and ensure that your selected name complies with the regulations.

Once you have chosen your trademark name, register it with the appropriate authorities to protect your brand identity and establish your business as a recognized entity in the market.

What should I include in my financial plan when starting an electrical business?

Starting an electrical business can be an exciting venture, but having a solid financial plan is crucial. Here are some key things to consider:

  • Start-up costs: List everything you'll need to get your business off the ground, from equipment and tools to vehicles and office setup. Estimating the prices for each item is essential so you can plan accordingly.
  • Operating expenses: Remember to account for rent, utilities, insurance, and advertising expenses. These costs will vary depending on the size and location of your business.
  • Pricing strategies: Consider market rates, competition, and desired profit margins when setting your prices. A well-thought-out pricing strategy can help you attract customers and earn a healthy profit.
  • Projected revenue and cash flow: A realistic idea of your expected revenue and cash flow for the first few years of operation is essential. This will help you plan and budget effectively.
  • Funds for necessary tools and equipment: The electrical industry requires specific tools and equipment, so budget for these essential expenses accordingly.
  • Marketing and advertising budget: Remember to set aside funds for marketing and advertising efforts to attract customers.

Review and adjust your financial plan periodically to reflect business needs and market conditions changes. With a solid financial plan in place, you'll be well on your way to starting a successful electrical business.

What are effective strategies for marketing and promoting my electrical business to attract customers?

Here are some efficient strategies for marketing your electrical business and drawing in new clients:

  • Establish a strong online presence for your company by setting up a website and social media accounts. You'll be able to connect with potential clients looking for electrical services online by doing this.
  • To optimize for local search, include your company's name, address, and phone number on your website and online profiles. This will enhance the visibility of your company in local search results.
  • Establish contacts with other nearby companies through networking, such as home improvement shops or contractors. They could recommend clients to your company.
  • Provide promotions: Consider providing a discount or exclusive promotion to new clients. This may draw price-conscious shoppers.
  • Participate in neighborhood events: Attend home and garden shows to market your business and network with possible clients.
  • Promote customer testimonials: Request that pleased clients post positive evaluations of your company on Google or Yelp. Positive feedback can aid in luring new clients.
  • Place ads in regional publications: Consider placing ads in regional newspapers or magazines to target local clients.

Do not forget to adjust your marketing and promotion techniques to your target market and your company's particular requirements. Using these suggestions, you may boost your visibility and bring in more clients for your electrical company.