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Starting an Electric Company

Nmm540

Contributor
Nov 4, 2015
33
26
47
30
Hey everyone! Im pondering about starting an electric company and I was curious if anybody has any experience starting an electric company, or at least starting another tradesman company? Or knows someone who did? Id like to get some inside experience on what its like when beginning. Ive done the basic research and know about getting a contractors license and getting journeyman card and taking all the tests etc. I received my journeymans card 2 years ago (7 total years in trade) and figure its prob a lot smarter to put 7 years of skills to the use versus starting over from scratch at something else. I work for a local electric company and I know the owner and can say that theyre at least banking 300-500 grand a year. They throw a company party twice a year and drop 20,000 per party. That seems pretty fastlane to me. Id like to start small, perhaps double my income, then implent the business strategies outlined in the books. Thanks
 

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404profound

Platinum Contributor
I've Read UNSCRIPTED
Speedway Pass
Aug 27, 2017
1,325
2,708
662
Desert of Desertion
That is definitely a Fastlane hustle from my perspective. I'm curious what the overhead looks like for infrastructure, that seems like one of the bigger barriers to entry.
 

White8

Contributor
Dec 6, 2007
272
45
30
47
Salem, OR
I bought a shop in Oregon just before the "Great Recession" Some things to consider:

1. Does your state allow a Journeyman to run his own shop? In Oregon, each shop must have a supervising electrician who has x number of hours in the industry and passes an additional test. I know some states have master electricians who are essentially the same and some with no requirements beyond a Journeyman.
2. Insurance- Again it's by state but Oregon requires a $2m liability policy along with a bond. When you add up that along with vehicle insurance expect around $1200-$1500 per month for insurance.
3. Location- If you can start from home with no office staff it's great. Around here for an office/shop you're looking at $2500-3000 a month. Someone to answer the phone so you don't have a phone in one hand and a screwdriver in the other laying under a house will run around $2000 a month and rule of thumb you can figure $2-4/hr for payroll taxes on top of it.
4. Rolling stock- you can find older vans pretty reasonably priced. Fuel will probably run around $100 per week per van unless they are always on small service calls.
5. Electricians- Around here, they are running around $40/hr IF you can find one to hire. Again $2-4/hr for payroll taxes. Health insurance will run $5-8/hr if you offer it

Now the fun stuff:
1. Lost time- I always figured about an hour total to get set up once on the job and to get everything put away at the end of the job. So a day only includes about 7 hours of billable time. A guy might stop by the gas station buy gas, grab a drink and a candy bar and there went 30 minutes. Same goes for a trip to the supply house.
2. Mistakes. I once had an electrician do a service change on a church. It was 200 amp so he ran 4/0 SER. Turns out a church is commercial so the 4/0 had to be replaced with 250 MCM. There went a few hours and 100' of 250 MCM I wasn't expecting to buy when the customer was quoted a price.
3. Bids- They can turn out great and you can make a pile or you can pay a customer to do the job. Profitability seemed to be inversely proportional to the length of time the job took. i.e. it's easier to screw off, lose material, etc on long jobs.
4. Try to never send more than one experienced electrician to start on a job. There is wayyy to much head scratching on how to do the job with more than one.
5. Customers paying. I had a church stiff me for $8k. Wrap your head around that one. I haven't.

This all being said, yes, you can make a lot of money with the right jobs and the right guys but you can also lose your shirt. With my overhead and profitability I always figured if I had 3 electricians working 40 hours a week my overhead was covered and that didn't include material which is too variable depending on the type of jobs. ( a duplex and cover on a service call don't add up to much) Anything over that I was in good shape and got a paycheck.
 
OP
OP
Nmm540

Nmm540

Contributor
Nov 4, 2015
33
26
47
30
I bought a shop in Oregon just before the "Great Recession" Some things to consider:

1. Does your state allow a Journeyman to run his own shop? In Oregon, each shop must have a supervising electrician who has x number of hours in the industry and passes an additional test. I know some states have master electricians who are essentially the same and some with no requirements beyond a Journeyman.
2. Insurance- Again it's by state but Oregon requires a $2m liability policy along with a bond. When you add up that along with vehicle insurance expect around $1200-$1500 per month for insurance.
3. Location- If you can start from home with no office staff it's great. Around here for an office/shop you're looking at $2500-3000 a month. Someone to answer the phone so you don't have a phone in one hand and a screwdriver in the other laying under a house will run around $2000 a month and rule of thumb you can figure $2-4/hr for payroll taxes on top of it.
4. Rolling stock- you can find older vans pretty reasonably priced. Fuel will probably run around $100 per week per van unless they are always on small service calls.
5. Electricians- Around here, they are running around $40/hr IF you can find one to hire. Again $2-4/hr for payroll taxes. Health insurance will run $5-8/hr if you offer it

Now the fun stuff:
1. Lost time- I always figured about an hour total to get set up once on the job and to get everything put away at the end of the job. So a day only includes about 7 hours of billable time. A guy might stop by the gas station buy gas, grab a drink and a candy bar and there went 30 minutes. Same goes for a trip to the supply house.
2. Mistakes. I once had an electrician do a service change on a church. It was 200 amp so he ran 4/0 SER. Turns out a church is commercial so the 4/0 had to be replaced with 250 MCM. There went a few hours and 100' of 250 MCM I wasn't expecting to buy when the customer was quoted a price.
3. Bids- They can turn out great and you can make a pile or you can pay a customer to do the job. Profitability seemed to be inversely proportional to the length of time the job took. i.e. it's easier to screw off, lose material, etc on long jobs.
4. Try to never send more than one experienced electrician to start on a job. There is wayyy to much head scratching on how to do the job with more than one.
5. Customers paying. I had a church stiff me for $8k. Wrap your head around that one. I haven't.

This all being said, yes, you can make a lot of money with the right jobs and the right guys but you can also lose your shirt. With my overhead and profitability I always figured if I had 3 electricians working 40 hours a week my overhead was covered and that didn't include material which is too variable depending on the type of jobs. ( a duplex and cover on a service call don't add up to much) Anything over that I was in good shape and got a paycheck.

Thank you for sharing your experience. So only after 3 electricians doing jobs would allow you to pull a profitable paycheck? Seems like electrical overhead is crazy high. Ive heard profit margins are around 8%. What kind of capital did you start out with when you started your company?
 

smark

Bronze Contributor
Speedway Pass
Oct 25, 2017
88
192
141
Long Beach, California
I know nothing about starting an electric company but this is insanely interesting to me. Looking forward to seeing how this turns out for you.
 

GoGetter24

Gold Contributor
Speedway Pass
Oct 8, 2017
571
1,114
365
Various
All comes down to the market. I've known electricians who were making serious bank just working for themselves, because they went where there was demand. The highest I ever heard was $300k/year for individual electricians during regional booms.

So asking for internet-wide advice isn't going to get you the answer. You need evidence of demand outstripping supply. You need to hear "I've tried to get an electrician but they're all busy", "electricians are too expensive", "electricians here treat their customers like shit". Pay attention to their faces. Do other electricians look laid back and in control? Or struggling or stressed out? All of these things indicate supply-demand position. That guy throwing big company parties indicates it too (although he may just be a skilled businessman). Also check demand for specialties, like auto electrics.

The first thing you'd do to start would be to work for yourself. Get whatever you need to start up as a contractor, put out some ads for basic home electrical, and do some work on the weekends. That'd get you half way there, since you'll have to complete at least half of what's necessary to start a company (quoting, invoicing, insurance, advertising, legal, getting to know the ropes of working independently, etc).
 
OP
OP
Nmm540

Nmm540

Contributor
Nov 4, 2015
33
26
47
30
All comes down to the market. I've known electricians who were making serious bank just working for themselves, because they went where there was demand. The highest I ever heard was $300k/year for individual electricians during regional booms.

So asking for internet-wide advice isn't going to get you the answer. You need evidence of demand outstripping supply. You need to hear "I've tried to get an electrician but they're all busy", "electricians are too expensive", "electricians here treat their customers like sh*t". Pay attention to their faces. Do other electricians look laid back and in control? Or struggling or stressed out? All of these things indicate supply-demand position. That guy throwing big company parties indicates it too (although he may just be a skilled businessman). Also check demand for specialties, like auto electrics.

The first thing you'd do to start would be to work for yourself. Get whatever you need to start up as a contractor, put out some ads for basic home electrical, and do some work on the weekends. That'd get you half way there, since you'll have to complete at least half of what's necessary to start a company (quoting, invoicing, insurance, advertising, legal, getting to know the ropes of working independently, etc).
Thats what im currently doing. I figure the way the to check out the market is through side jobs. I have flyers out for just small basic residential electrical jobs (receptacles, lights, washer and dryer hookups, fans) I have no business license or liability insurance yet. I figure when and if it takes off then I can buy the full necessary ingredients needed.
 

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