Perhaps you’re good at working with electrics, or you’ve been working for another electrician for a while and now you’re ready to branch out on your own. Starting your own electrical contracting business can be a great way to earn a steady income and work with your hands. 

But like every service business, you need to set it up in the right way so that it can grow and thrive. This includes determining the business structure that best suits your needs, getting the proper licenses and insurance to operate an electrical company legally, developing a business plan, and attracting customers. 

Read on to learn what’s involved in starting your own electrical contracting business. 

Laying the groundwork for your electrical contracting business

The first step to starting your electrical contracting business is choosing a business structure. The two most common options for small electrical businesses are sole proprietorship or LLC. As a sole proprietor, you alone own and operate the business, taking on personal liability. An LLC provides liability protection, but involves more paperwork. Each has its pros and cons regarding taxes and cash flow. 

Next, develop a business plan to outline your strategy and goals. A good business plan will help you obtain funding and guide your growth. You’ll also need business insurance, and to register your business and obtain the necessary permits and licenses to perform electrical work in your city or state. 

To attract potential customers, build a professional website highlighting your experience, services, and credentials. Social media profiles and online listings can also help you establish credibility and connect with new clients. With the groundwork in place, you’re ready to start your electrical contracting business. 

Creating a business plan for your electrical company

Starting an electrical contracting business requires careful planning. The first step is to develop a solid business plan to outline your vision and the steps to make it a reality.

Deciding on your electrical service

A good business plan will help you define your target market and decide which services to provide. Are you focusing on residential or commercial electrical work, or both? Pinpoint which specific electrical services you want to offer. This will help determine the licenses and certifications you need, and guide you in promoting your new business.

Developing a financial plan

A financial plan will map out how you’ll fund your startup costs and keep cash flowing as you grow your business. Determine how much it will cost to properly equip your team and market your services. Calculate your overhead costs and how much you need to charge to turn a profit. Find ways to keep costs low, especially when you’re first starting out. Using free resources like social media to market your business can help.

Creating a marketing plan

Focus your marketing on the specific services you provide and the value to potential customers. Use your website and social media to educate people about your business, showcase your experience, and build trust in your brand. Offer promotions and discounts to attract new clients. Satisfied customers will become your best source of repeat business and referrals.

With a solid plan in place, you’ll be well on your way to launching a successful electrical contracting business. Keep tweaking and improving your plan as you start your business, and you’ll be able to grow sustainably over the long run.

Obtaining licenses, permits, and insurance for electrical work

Starting an electrical contracting business requires obtaining the proper licenses, permits, and insurance to legally and safely perform electrical work. These steps legitimize your electrical business and instill customer confidence.

Licenses and permits

To perform electrical work, you’ll need to obtain an electrical contractor’s license for your state. Requirements vary, but usually involve passing an exam, paying licensing fees, and having a certain amount of experience. You’ll probably also need permits for each electrical job you do, which your local municipality will issue once you provide details about the work.

Business insurance

General liability insurance protects you if a customer is ever injured on the job site or if there is property damage. As an electrical contractor, you’ll want at least $1 million in coverage. You’ll also want workers’ compensation insurance if you have any employees. These policies can be expensive, but are necessary to operate legally and avoid major financial risks.

Attracting customers and growing your electrical services

Now that you have the legal aspects of starting an electrical contracting business out of the way, it’s time to attract new customers and grow your business. As a new electrical company, tapping into your target market of residential and commercial property owners looking for electrical work is key.

Develop a business website

Create a professional website to tell potential customers about your electrical services and experience. Make sure to include full information about the services that you provide, which area you cover, and your pricing. Optimize for search to rank higher in Google, and consider writing blog posts that share useful advice for customers to cut their electricity bills and maintain their electrical items.

Build your online presence

Create social media profiles for your electrical contracting business on platforms like Facebook, Instagram, and Google My Business. Post updates, share photos of your work, and engage with your followers. This helps raise awareness of your new electrical services business and connects you with potential customers. 

Provide high-quality electrical work

Your reputation depends on the electrical work you provide. Focus on high-quality installations and repairs to build a loyal customer base. Ask clients to leave reviews on your website and profiles to build social proof. Happy customers will refer others to your electrical contracting business.


Join your local chamber of commerce and electrical contractors association to connect with others in the industry. Attend events and meetings to spread the word about your electrical contracting business. People will often refer good contractors to their friends and neighbors, so make personal connections whenever you can.

Expand your business carefully

As your reputation grows, so will the demand for your electrical contracting business. Over time, you can hire additional electricians and expand into new services or locations. But for now, keep costs low, be diligent about cash flow, and market aggressively to new customers. Success will come from dedication and word-of-mouth.

Managing finances and operations for a successful electrical business

To start an electrical contracting business, you’ll need to establish solid financial and operational foundations. As a business owner, it’s up to you to manage the business’ cash flow, accounting, and daily operations.

Set up reliable bookkeeping and accounting processes

Track your income, expenses, accounts receivable, and payable to monitor your company’s financial health. Many small electrical businesses use affordable bookkeeping software like QuickBooks to automate record keeping. 

Monitor your financials

Review your financial statements monthly to catch any issues early. Many bookkeeping tools and business management platforms like vcita can generate easy-to-read reports that allow you to check up on your financial situation at a glance. 

Pay attention to cash flow

To keep your business running, you need positive cash flow. Keep costs low, especially when you’re first starting out. Pay close attention to the financial aspects of each job to ensure you’re making a profit. Over time, as you gain more experience, you can charge higher rates.

Your thriving electrical contracting company is on the horizon

Starting an electrical contracting business requires effort and patience. But by laying the right foundation, registering properly, and focusing on growth, you’ll be well on your way to owning a thriving company. With diligent financial management, marketing, and customer service, you can establish a successful electrical company. Review how your business is doing regularly, and make changes as needed to ensure steady growth over the years.