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DEC.30, 2020

Electrical Contractor Business Plan Sample

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Electrical Contractor business plan for starting your own business

So, you want to become an electrical contractor. Well, this is undoubtedly an exciting venture, but can end up causing huge legal troubles if you couldn’t manage it properly.

An electrical contractor can be a person or company that employs electricians to design, install, and maintain electrical systems. Due to the delicate nature of work, the company is required to comply with specific standards.

To succeed in this challenging yet profitable enterprise, you must write an effective business plan for electrical contractor as the first step. In your business plan, you must include details about how you will train the employees, reach your customers, and obtain your goals within the resource constraints.

If you don’t know how to write an effective business plan, you can take help from here. In this electrical contractors business plan pdf, we have provided all the details of an electrical contractor startup, E-Volts.

Executive Summary

2.1 The Business

E-Volts will be a registered, licensed, certified, and insured electrical contractor company based in Detroit. The business will comprise of highly trained electricians and supervisors to ensure the highest-quality work delivery.

From installation of transmission and distribution lines to the provision of electricity to buildings, E-Volts will be there to shine and help.

2.2 Management of Electrical Contractor

Managing an electrical contractor business requires extensive pre-planning. In some cases, even a smaller mistake can lead to a disastrous situation. Therefore, you should be very careful about all the details.

E-Volts will lease a facility in Detroit to set up their office. Following that, a procurement and HR manager will be hired so that the company could find the best equipment and the best hands to handle the equipment.

To manage the tasks effectively, E-Volts will be creating a database so that employees’ activities and engagements could be recorded. And the availability of specified workers could be ensured for upcoming projects.

2.3 Customers of Electrical Contractor

Before exploring how to start an electrical contractors business, you should identify your customers. Knowing your client base will help you to develop a sales strategy that is best suited to target them. Besides, recognizing customers will also enable you to create a precise electrical contractor startup plan by defining pricing, and services, etc.

E-Volts will provide its services to individuals, businesses as well as local government. In this business plan electrical contractor, we will be discussing the ways E-Volts will adopt to target these customers.

2.4 Business Target

Our target is to become the most renowned electrical contractor business in our vicinity within a year of the launch. Moreover, we aim at generating a net profit margin of $10.5k per month by the end of the two years. Our 3 years’ profit forecast based on our gross profit margin, sales forecast and net profit is given here:

3 Years Profit Forecast - Electrical Contractor Business Plan

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Company Summary

3.1 Company Owner

E-Volts will be owned by Mark Koch. Mark is an electrical engineer who has also acquired a degree in MBA after his graduation in engineering.
He has a strong grip on power and protection systems. He has also captured much experience in the field as he did electrical systems’ related jobs during the last two years.

3.2 Why the electrical contractor is being started

Marks always wanted to start his own business. As business offers flexibility and scalability, extensive profits and freedom to implement own ideas.

He opted for starting an electrical contractor business since there couldn’t be a better way to invest his interest and knowledge of electrical systems.

3.3 How the electrical contractor will be started

Step1: Creating A Business Plan

Before starting this business, you must create a detailed electrical contractor business plan template.

If you are new to creating a professional business plan, you can take help from this electrical contractor business plan example.

Step2: Acquiring Required Licenses & Permits

Step3: Leasing Property, Equipment & Hiring Managers

E-Volts will be started in a leased facility. After which the company will procure the equipment, machinery, furniture, and other items.

Step4: Establishing Company’s Database & Website

A software developer/ IT expert will be employed to create a management database and website for the company. The database will help the company in keeping a record of completed and pending activities. Moreover, the platform will also enable customers to book the services remotely and give their reviews and feedbacks.

Step5: Hiring & Training Staff

At the same time, the company will establish its workforce by hiring and training technicians and electricians. In this sample electrical contractors business plan we will provide the list of employees that will be hired by E-Volts along with their job responsibilities and estimated salaries.

Step6: Marketing & Advertisement

To reach its target community E-Volts will start advertising about its services and competitive aspects before a month of the launch. The detailed marketing and sales strategy plan of the company will be given in the upcoming sections.

Our startup expenses and available assets are summarized in the graph given here.

Startup Cost - Electrical Contractor Business Plan

Start-up Expenses  
Legal $255,000
Consultants $0
Insurance $43,000
Rent $30,000
Research and Development $35,000
Expensed Equipment $70,000
Signs $3,000
TOTAL START-UP EXPENSES $436,000
Start-up Assets $315,000
Cash Required $360,000
Start-up Inventory $49,000
Other Current Assets $198,000
Long-term Assets $260,000
TOTAL ASSETS $1,182,000
Total Requirements $1,618,000
START-UP FUNDING
Start-up Expenses to Fund $436,000
Start-up Assets to Fund $1,182,000
TOTAL FUNDING REQUIRED $1,618,000
Assets
Non-cash Assets from Start-up $1,546,000
Cash Requirements from Start-up $392,000
Additional Cash Raised $54,000
Cash Balance on Starting Date $32,000
TOTAL ASSETS $2,024,000
Liabilities and Capital
Liabilities $30,000
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $41,500
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $71,500
Capital
Planned Investment $1,618,000
Investor 1 $0
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $1,618,000
Loss at Start-up (Start-up Expenses) $334,500
TOTAL CAPITAL $1,952,500
TOTAL CAPITAL AND LIABILITIES $2,024,000
Total Funding $1,618,000

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Services

Deciding the services is the most important phase of a business. In this sample business plan for electrical contractor, you can look through the services provided by E-Volts. To have a greater idea of which services you can provide as an electrical contractor, you should read more electrical contractor business plan examples.

  • Interior & Exterior Lighting: This will be our primary service. We will design and install lighting in homes, school buildings, plazas, restaurants, public spaces, and government buildings.

Areas Of Expertise:

  • Home Décor Lighting
  • Flush Mount and Semi-Flush Mount Ceiling Lighting
  • Outdoor Landscape Lighting
  • General Ambient Lighting
  • Street Lighting
  • Smart Lighting System
  • Electronic Appliances Installation: Our workers specialize in installing air-conditioners, fans, electric chargers, motors, generators, transformers, solar panels, intercom, doorbells, circuit breakers, network wiring, and smart home wiring.
  • House & Commercial Wiring Services: We will do wiring in homes and small buildings’ as well as in commercial properties.
  • Installation of Underground/ Overhead Transmission Lines: Our workers are also skilled in the installation and removal of distribution & transmission lines whether they are overhead or underground.
  • Repair and Upgradation: We have experts who can repair and upgrade electrical systems. You can have us at your doorstep whether you want just a fuse replacement or a complete electrical service upgrade. We also repair electronic appliances.
  • Safety Systems: E-Volts specialize in protecting your power systems. We can tackle power surges. And we can also install safety systems in your homes like childproof electrical outlets, smoke detectors, and fire detectors, etc.

Marketing Analysis of Electrical Contractor

Marketing analysis is one of the most important parts of a business plan template electrical contractor. In this part, you have to identify who will be your customers so that you could meet their expectations and concerns within the available budget and resources.

Note

The biggest problem new startups face is attracting potential customers. With a problem worth solving electrical contractor business plan you can understand your target customers’ psychology to determine their preferences and needs.

An effective electrical contractor business plan also includes a detailed analysis of market dynamics. By knowing the market ups and downs, and the strengths and weaknesses of your competitors, you can plan ways to outperform your competitors.

5.1 Market Trends

These days people are moving towards newer technologies. Some want to install a newer type of power outlet while some want to have a smart lighting system. Simply put, electricians are in demand like always. The only thing that can make you unsuccessful in this venture can be a really poor service delivery or extremely bad customer care.

According to IBIS World, nearly 205,048 electrical contractors are operating in the U.S. Their collective annual revenue sums up to $170bn as reported by First Research.

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5.2 Marketing Segmentation

Marketing segmentation means dividing the population of your target customers into distinct groups. So that you can determine the dominant traits of each group of your buyers.

This activity can help you get an insight into how you should plan your services, pricing, and customer care.

In this blog on how to write a business plan for an electrical contractor, we have listed the marketing segmentation done by E-Volts.

The detailed marketing segmentation of the target audience of E-Volts is as follows:

Marketing Segmentation - Electrical Contractor Business Plan

5.2.1 Residents: Our first target group will be the locals living in Detroit. We expect them to avail of our lighting services as well as repair & upgradation services. The residents will also be needing us frequently for the installation or replacement of electronic appliances and safety systems.

5.2.2 Businesses: Our second target group comprises of small and large businesses. They will consume all of our services like electrical repairing, AC installation, commercial wiring, ceiling lighting, etc.

In this category, restaurants, shopping malls, and cinemas, etc. will require our landscaping lighting, interior & exterior lighting, and ambient lighting the most. To turn them into potential buyers, we will be offering them several discounts.

5.2.3 Local Government & Construction Companies: Our third target group will comprise municipalities and home builders. They are expected to avail of our electronic appliances installation services, lighting, repair & upgrade services, as well as commercial wiring services.

This category will also be acquiring our wiring services.

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Residents 29% 28,000 30,000 33,000 35,000 38,000 10.00%
Businesses 39% 53,000 57,000 60,000 63,000 65,000 10.00%
Local Government & Construction Companies 32% 18,000 19,000 20,000 22,000 23,000 11.00%
Total 100% 99,000 106,000 113,000 120,000 126,000 10%

 

5.3 Business Target

Our business targets set to be met in a defined time are given below.

  • To obtain an average rating of 4.65 by the end of the first year
  • To balance startup expenses with earned profits by the end of the second year
  • To achieve the net profit margin of $10.5k per month by the end of the second year
  • To extend our work areas by the end of the first two years

5.4 Product Pricing

Our prices will almost be in the same range as that of our competitors. However, we will be charging a little more for the installation, removal, and repair of transmission and distribution lines.

Marketing Strategy

In this electrical contractor business proposal, we are listing the ways adopted by E-Volts to reach their target customers. Moreover, we are also explaining the competitive advantages that E-Volts decided to come up with to go ahead of all competitors.

6.1 Competitive Analysis

  1. All of our professionals are skilled, licensed, and certified.
  2. We follow the National Electrical Code to ensure safe and secure working.
  3. We are offering an online booking facility so that our customers can call us to their location without visiting our office.
  4. In case of repairing services, our workers will reach the desired area in less than 45 minutes.
  5. Client satisfaction is our topmost priority. You can contact us anytime between 6 a.m. to 12 p.m. Moreover, you can tell us any problems you had with our workers through the feedback portal. You are also welcomed to give your valuable suggestions to improve our services.

6.2 Sales Strategy

The selling strategy of E-Volts as defined in its business plan electrical contractor is given here.

  • We’ll create a great SEO optimized website for our business
  • We’ll advertise our services through Google Local Services ads, local magazines, and newspapers
  • We’ll ensure a strong presence on social media platforms
  • We’ll offer a 50% discount on our lighting and repair services for the first month of the launch
Any questions? Get in Touch

6.3 Sales Monthly

Sales Monthly - Electrical Contractor Business Plan

6.4 Sales Yearly

Sales Yearly - Electrical Contractor Business Plan

6.5 Sales Forecast

Unit Sales - Electrical Contractor Business Plan

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Interior & Exterior Lighting (Landscape/ Ambient/ Ceiling) 46,000 48,760 51,686
Installing Electronic Appliances & Safety Systems 53,000 56,180 59,551
Electric Wiring & Installation of Transmission Lines 35,500 37,630 39,888
Repair & Upgradation 33,000 34,980 37,079
TOTAL UNIT SALES 167,500 177,550 188,203
Unit Prices Year 1 Year 2 Year 3
Interior & Exterior Lighting (Landscape/ Ambient/ Ceiling) $47.00 $54.52 $63.24
Installing Electronic Appliances & Safety Systems $49.00 $56.84 $65.93
Electric Wiring & Installation of Transmission Lines $38.00 $44.08 $51.13
Repair & Upgradation $34.00 $39.44 $45.75
Sales
Interior & Exterior Lighting (Landscape/ Ambient/ Ceiling) $2,162,000.00 $2,658,395.20 $3,268,762.74
Installing Electronic Appliances & Safety Systems $2,597,000.00 $3,193,271.20 $3,926,446.27
Electric Wiring & Installation of Transmission Lines $1,349,000.00 $1,658,730.40 $2,039,574.90
Repair & Upgradation $1,122,000.00 $1,379,611.20 $1,696,369.93
TOTAL SALES $7,230,000.00 $8,890,008.00 $10,931,153.84
Direct Unit Costs Year 1 Year 2 Year 3
Interior & Exterior Lighting (Landscape/ Ambient/ Ceiling) $50.00 $53.00 $56.00
Installing Electronic Appliances & Safety Systems $56.00 $58.00 $60.00
Electric Wiring & Installation of Transmission Lines $37.00 $38.00 $40.00
Repair & Upgradation $28.00 $30.00 $32.00
Direct Cost of Sales
Interior & Exterior Lighting (Landscape/ Ambient/ Ceiling) $2,300,000.00 $2,584,280.00 $2,894,393.60
Installing Electronic Appliances & Safety Systems $2,968,000.00 $3,258,440.00 $3,573,048.00
Electric Wiring & Installation of Transmission Lines $1,313,500.00 $1,429,940.00 $1,595,512.00
Repair & Upgradation $924,000.00 $1,049,400.00 $1,186,521.60
Subtotal Direct Cost of Sales $7,505,500.00 $8,322,060.00 $9,249,475.20
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Personnel plan

To ensure the smooth running of the business and efficient tackling of any disruptions or risks, you have to train your workers properly. E-Volts hired a business continuity coordinator to develop business continuity plan electrical contractor so that company can stay competitive.

The list of staff E-Volts will hire is given here in this business plan sample electrical contractor, along with their job responsibilities and average salaries.

7.1 Company Staff

Mark will supervise overall business operations himself, however, he will hire the following people.

  • 1 Co-Manager & HR Manager to help manage the business
  • 3 Supervisors to monitor different projects
  • 1 Business Continuity Coordinator to manage threats and risks
  • 2 Electrical Engineers to design electrical systems
  • 6 Electricians to work for the company
  • 1 Accountant to maintain financial records
  • 1 Sales Executive to carry out the company’s sales strategy plan
  • 2 Drivers to provide transport
  • 1 IT Expert to manage company’s sites and database
  • 1 Customer Care Representative

7.2 Average Salary of Employees

 Personnel Plan      
Year 1 Year 2 Year 3
Co-Manager/ HR Manager $35,000 $38,500 $42,350
Supervisors $34,000 $37,400 $41,140
Business Continuity Coordinator $22,000 $24,200 $26,620
Electrical Engineers $33,000 $36,300 $39,930
Electricians $44,000 $48,400 $53,240
IT Expert $18,000 $19,800 $21,780
Accountant $15,000 $16,500 $18,150
Sales Executive $14,000 $15,400 $16,940
Drivers $18,000 $19,800 $21,780
Receptionist $10,000 $11,000 $12,100
Total Salaries $208,000 $228,800 $251,680

 

Financial Plan

The last step before initiating a business is creating a financial plan. A profit and loss business plan electrical contractor template analyze your investment group business plan, payrolls, taxes, and other expenses to draft a way of earning profits.
In this electrical contractor business plan pdf we are providing detailed brake-even analysis, profit and loss projections, business balance sheet, and business ratios of E-Volts.

8.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.08% 8.11% 8.17%
Long-term Interest Rate 8.20% 8.34% 8.45%
Tax Rate 22.60% 25.00% 26.90%
Other 0 0 0

8.2 Brake-even Analysis

Brake-even Analysis - Electrical Contractor Business Plan

 Brake-Even Analysis  
Monthly Units Break-even 5250
Monthly Revenue Break-even $135,000
Assumptions:
Average Per-Unit Revenue $246.00
Average Per-Unit Variable Cost $0.61
Estimated Monthly Fixed Cost $166,000

 

Any questions? Get in Touch!

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $7,230,000 $8,890,008 $10,931,154
Direct Cost of Sales $7,505,500 $8,322,060 $9,249,475
Other $0 $0 $0
TOTAL COST OF SALES $7,505,500 $8,322,060 $9,249,475
Gross Margin ($275,500) $567,948 $1,681,679
Gross Margin % -3.81% 6.39% 15.38%
Expenses
Payroll $208,000 $228,800 $251,680
Sales and Marketing and Other Expenses $126,000 $132,000 $140,000
Depreciation $2,000 $2,100 $2,250
Leased Equipment $0 $0 $0
Utilities $3,200 $3,400 $3,800
Insurance $1,950 $2,000 $2,200
Rent $2,500 $2,600 $2,750
Payroll Taxes $37,500 $39,000 $42,000
Other $0 $0 $0
Total Operating Expenses $381,150 $409,900 $444,680
Profit Before Interest and Taxes ($656,650) $158,048 $1,236,999
EBITDA ($656,650) $158,048 $1,236,999
Interest Expense $0 $0 $0
Taxes Incurred ($131,330) $31,610 $247,400
Net Profit ($525,320) $126,438 $989,599
Net Profit/Sales -7.27% 1.42% 9.05%

 

8.3.1 Profit Monthly

Profit Monthly - Electrical Contractor Business Plan

 

8.3.2 Profit Yearly

Profit Yearly - Electrical Contractor Business Plan

8.3.3 Gross Margin Monthly

Gross Margin Monthly - Electrical Contractor Business Plan

8.3.4 Gross Margin Yearly

Gross Margin Yearly - Electrical Contractor Business Plan

8.4 Projected Cash Flow

Projected Cash Flow - Electrical Contractor Business Plan

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $54,000 $58,320 $62,986
Cash from Receivables $12,500 $13,500 $14,580
SUBTOTAL CASH FROM OPERATIONS $58,500 $63,765 $68,866
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $62,000 $66,000 $72,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $32,000 $35,000 $39,500
Bill Payments $18,000 $20,500 $23,100
SUBTOTAL SPENT ON OPERATIONS $53,000 $56,000 $60,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $57,600 $62,208 $67,185
Net Cash Flow $15,000 $17,000 $19,000
Cash Balance $27,000 $29,000 $33,000

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $284,000 $318,080 $349,888
Accounts Receivable $25,200 $28,224 $31,724
Inventory $4,500 $5,040 $5,600
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $301,000 $337,120 $378,923
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $17,700 $19,824 $22,302
TOTAL LONG-TERM ASSETS $22,000 $24,640 $27,720
TOTAL ASSETS $281,000 $314,720 $354,060
Liabilities and Capital Year 4 Year 5 Year 6
Current Liabilities
Accounts Payable $14,600 $16,352 $18,380
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $11,400 $12,768 $14,351
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $12,500 $14,000 $15,736
Paid-in Capital $28,000 $29,000 $30,000
Retained Earnings $62,000 $67,580 $74,338
Earnings $183,000 $199,470 $219,417
TOTAL CAPITAL $290,000 $316,100 $347,710
TOTAL LIABILITIES AND CAPITAL $302,500 $314,720 $354,060
Net Worth $287,000 $312,830 $344,113

8.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 7.08% 7.84% 8.69% 3.00%
Percent of Total Assets
Accounts Receivable 9.17% 10.16% 11.26% 9.80%
Inventory 5.38% 5.96% 6.60% 9.90%
Other Current Assets 2.35% 2.60% 2.89% 2.40%
Total Current Assets 150.00% 151.00% 152.00% 158.00%
Long-term Assets 11.50% 11.70% 12.10% 12.00%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.76% 4.80% 4.84% 4.34%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 7.19% 7.25% 7.31% 7.38%
NET WORTH 103.80% 104.63% 105.59% 110.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.02% 99.64% 102.43% 99.00%
Selling, General & Administrative Expenses 93.80% 96.33% 99.03% 97.80%
Advertising Expenses 1.63% 1.67% 1.72% 1.40%
Profit Before Interest and Taxes 41.34% 42.46% 43.64% 33.90%
Main Ratios
Current 37.5 38.2 40.1 32
Quick 33.1 34.2 35.055 33
Total Debt to Total Assets 0.26% 0.23% 0.21% 0.40%
Pre-tax Return on Net Worth 75.83% 79.62% 83.60% 75.00%
Pre-tax Return on Assets 90.70% 95.24% 100.00% 111.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 33.01% 34.03% 35.09% N.A.
Return on Equity 57.66% 59.45% 61.29% N.A.
Activity Ratios
Accounts Receivable Turnover 7.7 7.8 7.9 N.A.
Collection Days 100 100 100 N.A.
Inventory Turnover 33.4 35.07 37.6 N.A.
Accounts Payable Turnover 16.8 16.91 16.99 N.A.
Payment Days 26 27 27 N.A.
Total Asset Turnover 2.52 2.6 2.71 N.A.
Debt Ratios
Debt to Net Worth -0.03 -0.04 -0.05 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $233,000 $246,048 $259,827 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.84 0.86 0.91 N.A.
Current Debt/Total Assets 1% 1% 0% N.A.
Acid Test 26.8 27.5 29.4 N.A.
Sales/Net Worth 2.1 2.2 2.3 N.A.
Dividend Payout 0 0 0 N.A.

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