Want to go out on your own? Here’s the A-Z guide to starting your own electrical business

We’re not going to bullshit you.

Running your own business is tough. 

That’s why half of all new one-person businesses fail within the first three years. 

And many of the businesses that do go the distance, are too inefficient to scale into bigger and better machines.

We’re not telling you this so you’ve got an excuse to back out - we’re telling you this to drive home a really important point; 

If you want to start a successful business, you’ve got to do it right. 

No short-cuts, no bullshit excuses, and no getting caught with your pants down. 

You’ve got to go in fully committed, totally prepared, and willing to learn from the guys that have been there and done that. 

At times, your electrical business will require your blood, sweat and tears; especially early on. 

You’ve got to be ready to persevere through the good times, and the bad, if you’re building a successful business in any industry.

There’s no silver bullet solution for business success. But there’s absolutely a right way to do things - whether we’re talking about the service you provide, bringing in new customers, or the back-end of your business. 

At the Academy, we’ve spent years creating systems for success and used them to transform thousands of electrical businesses around the world. 

As our members will tell you, the right business model combined with the right guidance and attitude can unlock the financial security and personal freedom that drives all of us to take the plunge in the first place.

That’s why we’ve created this A-Z guide on starting your electrical business - to prevent you from going in unprepared and not reaping the rewards of your hard-work and dedication.

We’ve broken down everything you need to know before you start your electrical business into ten key sections. 

Each section is super-important - so make sure you’re across all of them.

1.BUSINESS KNOWLEDGE

I’m a great sparkie. Do I really need to know all this stuff about getting clients and running a business?

You could be the greatest electrician in the world, but without basic business knowledge you won’t be able to build, or run, a successful business.

You don’t need business degrees in fancy frames splattered across your wall, but you do need to know your basics around cashflow, budgeting and quoting.

People always talk about the right timing; and there is some truth to this, but usually it’s an excuse.

Here’s why; a weak business owner is probably going to fail regardless of how good conditions are, and a strong business owner is probably going to succeed regardless of how bad conditions are. 

To drive this point home, at the Academy we helped a tonne of electrical businesses skyrocket during the COVID pandemic, when many other tradies were forced to scale back, or even driven out of business.  

Moral of the story? You should be more concerned with learning your craft than timing things just right.

2. GETTING SYSTEMS IN PLACE

What systems should I have in place before I start?

As a sole trader, you need to be just as handy on a spreadsheet as you are with a pair of wire-cutters.

The first thing you need to do is make sure you set your business foundation for a skyscraper, not a granny flat.

Because you want to have the option to build something big on top of it. 

A good business management system, a good accounting system, and a good team will set you up for a big growth trajectory. 

You might not be thinking of running a 5-man team right now, but you want to create the right framework to be able to evolve into that, if you decide to. 

We recommend Simpro for job management - it works well with the Academy’s systemised pricing system, it helps you establish high job efficiency, and is great for managing a team. 

Ontop of all that, it integrates smoothly with Xero - which is what we recommend for the accounting and financial side of business.

Paperwork can be a pain in the ass for new trade business owners, so you need to make sure it’s handled efficiently.

3. ESTABLISH A LONG-TERM VISION

How do I create a plan for where I want my business to go?

If you want to succeed, you need to set goals.

After you’ve set your goals, you need to work out how you’re going to build towards them. 

It’s pretty simple, and yet so many tradies launch their operations without an actionable, concrete, business plan. 

Where do you want to be in one year? Where do you want to be in five years? How are you going to get there?

We highly recommend checking out our article on the future-setting method to help you plan for your future. 

4 . UNDERSTAND YOUR EXPENSES

How can I really get a grip on how much money is coming into the business, and how much money’s going out of it?

You’ve got to be religious with your profit and loss - when all is said and done, it’s the measurement of your success.

It’s not good enough to cast an occasional eye over your spreadsheets - you’ve got to understand them with great depth.

That way, you’ll begin to understand why you’re making the sales you’re making and identify the driving factors behind your numbers. 

You want to get good at understanding what works, and what doesn’t.

To master your profit and loss, you’ve also got to keep a close eye on your cost of sales - these are the wages, materials, associated costs and hire equipment that go into getting, and doing, electrical work.

Then you’ve got your operating expenses - this includes everything that helps you get business done. For example, fuel for your vehicle, phone, internet, printers, paper and everything else. 

Your operating expenses should be fairly consistent from month to month, but there will be fluctuations in your cost of sales and your sales lines. 

Stay on top of it.

You’ve also got to decide how much you’re going to pay yourself each week - We recommend paying yourself the bare minimum to start with so you’re keeping more money in the business to invest and grow.

Even as you grow, there will be ups and downs with business and you’ve got to be comfortable with that.

5. ADMINISTRATION

How do I take care of the admin side of things?

Are you going to run a website? How will you register the domain? What’s your plan to drive traffic there?

Are you going to design a logo for your company? Business cards? Start developing a social media presence on Facebook or Instagram? 

Some tradies prefer to take care of this themselves, others prefer to outsource. Either option is fine, but you do need a plan.

6. MARKETING

So how do I actually get work?

Marketing is the lifeblood of your business.

You need a clearly defined strategy to generate work and find leads. 

In 2021, there’s no shortage of ways you can go about it - there’s social media platforms, there’s outbound marketing, automated e-mails and texts, and your ability to optimise SEO so you’re visible for searches in your local area.

Basically, you want to be trying lots of different things. Test, see what’s working, and then refine your strategy. It’s an ongoing process.

Much like the admin, some tradies are keen to do it themselves, and others prefer to outsource it to digital marketing professionals.

Both options are fine.

7. PRICING & QUOTING

How do I set my price and send out quotes?

Pricing is so crucial. 

So many sparkies join the Academy because they’re getting smashed on the tools day after day, and not making much profit. 

It’s not sustainable, and the problem often stems from poor pricing because tradies don’t understand their value, or how they can integrate it into a pricing strategy.  

That’s why at the Academy, we make sure our members hit the ground running with this. 

The Academy’s systemised pricing techniques makes sure electricians earn a better hourly rate and enjoy greater productivity on their jobs.

As for quoting, that’s all about your ability to communicate the value of your service to the client during your initial contact with them - check out our article on mastering the quote letter for more on this.

The more you earn, the more you learn.

8. BUSINESS ANXIETY 

But what about if it all goes tits up?? What then?

Lets be real, every business owner has been there; and it’s horrible.

There will be times when doubts set in, and dark thoughts creep into the back of your mind. 

You need to learn how to control your fear, instead of letting it control you.  

They say we suffer more from imagination than from reality.

Because it doesn’t matter how good things are going for you, there will always be a “what if?”

We recommend looking into the fear-setting method - it will help you come to terms with the worst case scenario, and taking measures to reduce its impact in your mind. For many sparkies, the nightmare scenario is going out of business and being forced to work for someone else again. 

Check out Tim Ferris’s awesome video on it here.

9. UNDERSTAND WHY YOU’RE DOING THIS

Why am I really going out on my own?

As an employee, you’ll probably have all your jobs lined up for you. You’ll have materials supplied, most of your paperwork will be looked after and you’re not legally responsible in the same way your employer would be if things ever went pear-shaped.

Going out on your own means all those responsibilities now sit squarely on your own shoulders.

Don’t just be ready for it - Crave it.

Make sure you have some money set aside too. 

10. ACTUALLY GETTING STARTED

Alright, I’ve got it. I’ve been learning my stuff, now it’s time to take action. What do I need to do?

There are four ways to launch an electrical contracting business. You can either set yourself up as a sole trader, partnership, company or trust.

The cheapest, easiest and most popular option to get going is as a sole trader.

Getting started as a sole trader is easy.

All you need to do is apply for an ABN, which won’t cost you anything, and then apply for a business name, which will only cost you about $30 a year.

You’ll also need to register for GST if you expect your annual revenue to exceed $75,000, which means you’ll need to submit a Business Activity Statement to the tax office every quarter.

On the business side of things, there are two main ways that a self-employed tradie will operate.  Either you’ll subcontract to a few builders, or you’ll get jobs direct from the public.

There will be some legal and licensing requirements, which you can check out at the Australian Business License and Information Service website. And you might also need to invest in public liability insurance, depending on your license application. 

That’s pretty much it. 

You want a really strong grasp of all ten areas before you go out on your own, but just as important will be your drive to succeed. 

If you’re highly motivated, coachable, and ready to launch your business, you should sign up for a free trial with the Academy. 

If you have any questions, you can also drop me a line on Facebook. 

A well-run business will allow you to work less, earn more profit, and sleep easy.  

A great business will make your dreams come true. 

Good luck.