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.
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:
3.1 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.
|Research and Development||$35,000|
|TOTAL START-UP EXPENSES||$436,000|
|Other Current Assets||$198,000|
|Start-up Expenses to Fund||$436,000|
|Start-up Assets to Fund||$1,182,000|
|TOTAL FUNDING REQUIRED||$1,618,000|
|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|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$41,500|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1,618,000|
|Loss at Start-up (Start-up Expenses)||$334,500|
|TOTAL CAPITAL AND LIABILITIES||$2,024,000|
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.
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:
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.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|Local Government & Construction Companies||32%||18,000||19,000||20,000||22,000||23,000||11.00%|
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.
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
- All of our professionals are skilled, licensed, and certified.
- We follow the National Electrical Code to ensure safe and secure working.
- We are offering an online booking facility so that our customers can call us to their location without visiting our office.
- In case of repairing services, our workers will reach the desired area in less than 45 minutes.
- 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
6.3 Sales Monthly
6.4 Sales Yearly
6.5 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|
|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|
|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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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
|Year 1||Year 2||Year 3|
|Co-Manager/ HR Manager||$35,000||$38,500||$42,350|
|Business Continuity Coordinator||$22,000||$24,200||$26,620|
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
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.08%||8.11%||8.17%|
|Long-term Interest Rate||8.20%||8.34%||8.45%|
8.2 Brake-even Analysis
|Monthly Units Break-even||5250|
|Monthly Revenue Break-even||$135,000|
|Average Per-Unit Revenue||$246.00|
|Average Per-Unit Variable Cost||$0.61|
|Estimated Monthly Fixed Cost||$166,000|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$7,505,500||$8,322,060||$9,249,475|
|TOTAL COST OF SALES||$7,505,500||$8,322,060||$9,249,475|
|Gross Margin %||-3.81%||6.39%||15.38%|
|Sales and Marketing and Other Expenses||$126,000||$132,000||$140,000|
|Total Operating Expenses||$381,150||$409,900||$444,680|
|Profit Before Interest and Taxes||($656,650)||$158,048||$1,236,999|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|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|
|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|
|SUBTOTAL CASH SPENT||$57,600||$62,208||$67,185|
|Net Cash Flow||$15,000||$17,000||$19,000|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$301,000||$337,120||$378,923|
|TOTAL LONG-TERM ASSETS||$22,000||$24,640||$27,720|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$11,400||$12,768||$14,351|
|TOTAL LIABILITIES AND CAPITAL||$302,500||$314,720||$354,060|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.35%||2.60%||2.89%||2.40%|
|Total Current Assets||150.00%||151.00%||152.00%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||93.80%||96.33%||99.03%||97.80%|
|Profit Before Interest and Taxes||41.34%||42.46%||43.64%||33.90%|
|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.|
|Accounts Receivable Turnover||7.7||7.8||7.9||N.A.|
|Accounts Payable Turnover||16.8||16.91||16.99||N.A.|
|Total Asset Turnover||2.52||2.6||2.71||N.A.|
|Debt to Net Worth||-0.03||-0.04||-0.05||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$233,000||$246,048||$259,827||N.A.|
|Assets to Sales||0.84||0.86||0.91||N.A.|
|Current Debt/Total Assets||1%||1%||0%||N.A.|
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