You must create a strong business plan to seek money from private investors or obtain a loan from a bank (such as an SBA loan) for your electrical contractor company.
In this post, we walk you through each section of the business plan you need for your electrical contractor firm, step by step. Create a thorough, understandable, reliable business plan using this template to secure funding.
Please read our guide below for additional details about electrical contractors:
How To Grow a Small Electrical Business and Double Your Sales?
Electrical Business Executive Summary
The executive summary of a business plan gives lenders and investors a sneak preview of the details of your business plan.
Potential lenders and investors will get disinterested if the information you present here needs to be clarified, comprehensive, and scannable.
Even though the executive summary is the first and most crucial piece, you should often write it last because it summarizes every section in the overall plan.
Why do you need a business plan for an electrical business?
A business plan’s goal is to obtain finance from one of the following sources:
- Obtain funding from a bank or a loan from another party (such as an SBA loan).
- Obtain private financing from angel investors, investment funds, etc.
- Obtain a grant, either governmental or private.
How to write an executive summary for an electrical business?
Give a detailed and high-level summary of each component you’ve included in your electrical firm’s business plan. Potential lenders and investors should be immediately interested in the facts and statistics you present in this section.
Additionally, ensure that the executive summary is at most two pages. It should serve as a summary for investors and lenders who don’t have the time to read through 40–50 pages.
The executive summary typically has five main sections:
Business Overview:
- Begin by outlining your prospective electrical contracting business, location, the services you’ll provide, and the pricing plan you wish to use.
- Describe how your company differs from others in the industry.
- Consider the possibility that you are a master electrician with ten years of experience in the design of electrical systems.
Market analysis: Briefly describe the market in which you plan to operate, your target market, target audience, spending power, etc. Include information about the size and growth of the electrical contractor business sector in the region where you intend to operate and a list of the key rivals.
People:
- Present the management and personnel structure of your electrical company.
- Give a quick summary of the team’s expertise and experience (no more than a few sentences per).
- Include information on the organization’s structure, including management roles and reporting lines.
Financial plan: How much sales and profit do you anticipate in the following five years? When will you start turning a profit and reach break-even? Here, you can attach a chart with your most important financial data (sales, gross profit, and net profit).
Funding ask: Which grant, investment, or loan are you looking for? What quantity do you need? When will this be over?
Electrical Business Overview
In this business plan section, you will describe your prospective electrical contracting business in more detail.
You must respond to critical inquiries about your company and activities that potential lenders and investors frequently ask. You must respond to the following questions, for instance:
- Why did you decide to start an electrical contracting company now?
- Where will you be operating, and why?
- Which services will you provide?
- Are there particular services or industries in which you excel?
- What price method would you choose, and why?
- What will your company’s legal structure be?
1 Background of the Project
Any business overview must begin by describing the project’s history. Here, there are two elements:
Experience & passion of the business owner
justification for launching an electricity business nowadays
Enthusiasm and expertise
It would be best to show your enthusiasm while showcasing your background. For instance, you can be a master electrician with the capacity to create ground-breaking electrical systems, or you might have ten years of experience as a journeyman electrician.
Rationale
Is there a specific issue (or perhaps a group of subjects) that your electrical contracting business intends to address once established?
For instance, there can be a consistent rise in the demand for commercial electrical contracting companies. Still, a few poorly structured service providers cannot effectively manage commercial contracts.
A detailed examination of the industry in the region where you intend to launch your electrical contractor business must support the justification for your project. We will discuss this more in the market overview section that follows.
Whatever you decide, ensure adequate demand for the kind of electrical contracting business you want to start and the range of services you will provide.
- Services
Your services will vary depending on the customers you serve and the talents you possess. Give a brief rundown of the primary benefits you’ll be providing. Some services could consist of the following:
- both outside and inside illumination
- installation of electronic devices and safety systems
- installation of transmission lines and electrical wiring
- improvements and repairs, etc.
- Pricing Strategy
Strategy
It would help if you now gave a general outline of your pricing approach. For instance, you can price more than your rivals because you use a group of electricians with extensive knowledge, as well as because you work with superior wiring and other supplies.
Similarly, you can set your prices cheaper than your rivals since you could reduce the cost of your services by buying supplies like wires, switches, etc., in bulk.
Explain your price approach and the reasoning behind it, whatever the situation.
Pricing table
Even though you might not be able to provide a thorough pricing table for every service you intend to offer, it is still a good idea to present a table that gives a general overview of your pricing structure.
Providing individual pricing for each service might not be practical, but you can offer a range. Consider this:
- Installing innovative systems might cost between $75 and $150 per hour, depending on the design and the location.
- $80 to $120 per hour for repairs and upgrades.
However, avoid going into great detail because prospective investors are not concerned with the specifics of your pricing. Since they’ll later link your pricing approach with your financial projections, all they need to evaluate profitability is the broad picture.
Electrical Business Market Overview
For your business to succeed, you must be thoroughly aware of the market in which you wish to compete. It would help if you highlighted that in your company plan as well.
For instance, it might not be wise to concentrate on industrial clients despite a relatively tiny market size when there is a strong need for residential and commercial electrical contractors.
As a result, you must address these three crucial points:
Market size & growth: How large is your area’s electrical contractor business sector, and how fast is it growing? What causes influence its increase (or decrease), and what is its growth (or decline) rate?
Overview of the competition: how many participants are there? What kind of clients do they cater to? What types of projects do they prefer to work on? How do they stack up against your company? How can you set yourself apart from them?
Customer research: who is your intended market? when often do they need the services of an electrician? How much do they spend annually on the benefits of electrical contractors?
- Electrical Contractor Industry Size & Growth
How large is the US market for electrical contractors?
Approximately 650,000 electrical employees were employed by over 70,000 electrical contracting businesses in the US in 2021.
The electrical construction sector is worth $202 billion, or $2,800,000 per company yearly, according to the National Electrical Contractors Association (NECA).
Additionally, most electrical contractors run tiny businesses—more than 80% have less than ten staff members.
Electrical Business SWOT Analysis
SWOT stands for Strength, Weakness, Opportunities, and Threats. Thanks to this study, lenders and investors will better understand how you compare to competitors and your company’s overall risk and reward profile.
You can follow this example as a model:
Strengths: Master electrician with 12 years’ worth of expertise working for a reputable electrical contractor firm
Weaknesses: No initial brand recognition, startup costs
Opportunities:
- Construction of residential flats has increased due to the surge in demand for rental properties, and builders are looking for competent electricians to wire everything (backed up by data on population growth and the real estate boom).
- Increased demand for electricians for installation and maintenance has been caused by growth in retail establishments and malls (due to population influx); provide facts.
- Increased commercial warehouse construction as a result of the expansion of e-commerce retailers’ regional distribution centers, which call for electrical installations (provide data and explain the reasons behind the increase in commercial warehouse construction, such as increased demand and the ensuing importation of less expensive goods)
Threats: Major companies are pursuing the expanding market, including Helix Electric, Bergelectric, and Cupertino Electric, Inc.
Customer Analysis
Finally, we must consider your clients.
The target audience must first be precisely identified, though. You could provide services to specific houses, businesses, or even factories.
You should consider the following issues when conducting your consumer analysis:
- How much does your target market spend annually on electrical services?
- How frequently do they require electricians?
- What kinds of electrical services (new installations, inspections, repairs, etc.) do they typically need?
- What kind of electricians do they typically hire (large brands, small businesses, independent contractors, etc.)?
- What (for instance, a slow response time) do they find objectionable about the neighborhood’s current electrical contractors?
Management & People
Here, you must take care of two things:
- The leadership group and their background
- Who reports to whom, and what are the team members’ responsibilities?
Management
Many small firms collapse as a result of poor management. Having a capable management team is essential. When choosing senior managers to run your electrical firm, emphasize their expertise and education.
Describe each person’s responsibilities, roles, and tasks. Also, emphasize their prior experience and discuss how they were successful in those positions.
It would help if you also described how their backgrounds and skills will help you conduct your electrical business. Include details if they have specialized education and experience, such as a master electrician or journeyman electrician with eight years of experience working for a reputable electrical contractor.
Organization Structure
You must offer a flowchart of the organizational structure outlining hierarchy and reporting lines, even if you still need to employ electricians, trainees, managers, drivers, accountants, and other pertinent staff members.
Financial Plan
The financial plan and executive summary are arguably the most significant elements of any business plan for an electrical contractor company.
A solid financial strategy shows lenders that your company is viable and can repay the loan you need from them. A solid financial plan will demonstrate to potential investors why your electrical contractor business is a desirable investment if you want to raise equity from them.
Your financial strategy should be divided into two sections:
- The costs of starting your business
- The five-year financial forecasts
- Startup Costs
It’s always a great practice to start by stating the launch costs of your project before we get into more detail about 5-year financial estimates in the following section.
Startup costs for an electrical contractor business are all incurred before beginning to generate revenue. Particularly for small enterprises, these costs are generally constrained. They include:
- The leasing deposit (if you lease a space for your equipment, such as a warehouse or an office)
Vehicles
- Electrical tools and equipment, etc.
- Business insurance, licenses and permits, etc.
Of course, the upfront costs may vary based on several variables, such as the size of your business (the number of employees), the services you plan to provide (which will influence what equipment you would need), etc.
Use of Funds
The business plan for your electrical contractor business concludes with this section. After describing your business strategy, the services you provide, how you attract clients, etc., this section must now respond to the following inquiries:
- How much money do you require?
- Which financial instrument(s) are required: equity, debt, or even a public grant for free money?
- What is the duration of this funding?
- Where else does the funding originate? Where does the other portion of the investment come from (your own money, private investors) if you seek an SBA loan, for instance?
Using Money
An explicit section on using finances should be included in any business plan for an electrical contractor business. Here, it would help if you described how the funds will be used.
Will you use most of the loan or investment to cover COGS (inventory) and staff salaries? Or will it primarily pay the expense of purchasing the machinery and equipment?
We also advise using a pie chart to allocate cash, similar to the one in our financial model template, where we list the primary spending categories as seen below.