There’s a reason you chose a career in electrical work rather than finance, sales or marketing, right? But now that its your own business, you need to get your head around all these aspects of your small business. It can be pretty mind blowing as a business owner, and it all takes time.
But here’s the thing, taking time away from your day to day electrical business to plan, strategise and focus on your business will pay dividends. You’ll understand the best areas to invest time and money in. You’ll have a clear roadmap to work towards your business goals. You won’t feel like you’re swimming against the tide anymore.
Here, we’ll guide you through the seemingly overwhelming task of creating a business plan for your electrical business. And don’t worry, it can be created with six simple steps.
Why Does an Electrical Contractor Need a Business plan?
You’ll have a clear snapshot of where your business is now, and a roadmap to where you want to be in five years time. That business plan will become your go-to reference point to inform your decision-making. It’ll show you what you need to do, why, where and by when.
Put simply, it’ll get your phone ringing with enquiries, your inbox filling up with emails, and your diary getting booked up with jobs. And if you need funding, your business plan will be the information that persuades lenders to say yes.
Your head’s probably filled with your daily work questions. Have you got the right, experienced electricians for the current jobs? Have you got the relevant tools and electrical equipment? But taking time out of your everyday work to create headspace and think carefully about your electrical business’ future will help long term.
What would make the most significant difference to your life right now? New customers? Better cashflow? A management team (or person) that you can delegate to? Or perhaps you want to improve you own balance of work and life (ie having time for a life away from work). All of that is possible with an effective, carefully considered business plan.
What Should Be Included in an Electrician Business Plan?
Your detailed business plan will show how you’ll run your electrical contracting business. We go through the six steps in detail below. Basically, you need to explain how you’ll run your business, the electrical services you offer, your target customers and how you’ll attract them, and your financial plans (from pricing and profit margins to financial projections).
In short, it’ll show:
- your ideal target market (eg do you want to focus on commercial work or deal directly with local homeowners?) and how you’re going to reach these potential customers
- your business’ strengths and how you outshine your competitors (do you have a niche service? What are your green credentials? What does your electrical company do best? Shout about your specific skills, qualifications and experience)
- your daily operations plan and processes (how many vans will you use? Which electrical materials are needed? Who manages each project and timelines?)
- your cashflow (when’s money coming in and when’s it going out?)
- your roadmap to where you want to get to and how (do you want to increase profits, expand your team, gain new business and get booked up for three to six months?).
Remember, your electrical contracting business plan isn’t set in stone. It’s important to adjust and update it as your electrical company evolves and/ or your target market changes.
What are the Six Key Components of a Successful Business Plan for an Electrical Company?
These six steps will include all the information you need for your electrical contracting business plan. If it feels daunting, you’ll find electrical contractor business plan templates to follow online too.
Executive Summary
Start with the easy bit – your business name. Then move on to your concise, elevator pitch for your electrical company. Describe your mission, vision, business structure and the problems you can solve for your target audience.
Market Research
This bit needs detective work. You need to look into the electrical industry landscape near you and check out your competitor electrical contractor companies. It’ll help you to work out where you fit in, your pricing and which electrical services to offer and promote.
Market analysis: what’s happening in the electrical industry currently? What changes are coming and what may be the next big thing? Should you be focussing on energy saving electrical services for example? Perhaps you specialise in security systems, lighting and installation?
Target market: look into the market size for your electrical services. Determine which is the most important market to target (eg domestic homeowners, developers of new properties, commercial facilities managers)
Competitive analysis: who are your local competitors and what can you learn from them? Is there a gap that you can fill? See what they’re doing well and not so well, and work out how you can stand out from them.
Organisation and Management
This section focuses on the people behind your small business. It reveals how your business is set up, how it’s organised, who’s involved, what they do, and how they work together to ensure the electrical business operates smoothly.
For example, alongside yourself, your core team may include:
- 3 experienced electricians
- 1 technical manager
- 1 sales and marketing executive
- 1 finance executive
- 1 customer service assistant.
You’ll also need to point out the business structure too – sole proprietorship, partnership, corporation or LLC.
Your Service Offering
Shine a spotlight on the specific electrical services that your business offers and why they’re special. How will they help your target market?
You may offer electrical installations, maintenance and repair work for domestic homeowners. Perhaps you specialise in solar panel installations and energy efficiency consultations for customers looking to minimise their carbon footprint.
Maybe you work with a different demographic – commercial office buildings where you install, repair and upgrade electrical systems. Explain why your particular service is unique.
Sales and Marketing Strategies
What’s your game plan for encouraging potential customers to employ your services? Explain how you’ll catch your target audience’s eyes (marketing plan) and how you’ll get them to actually buy your stuff (sales strategy).
Include your pricing strategy and justify why you’re pricing your services that way. Then outline your sales and marketing strategies, considering promotions such as:
- Social media presence and advertising
- Website creation and SEO
- Referral marketing and word-of-mouth
- Print promotions like flyers, brochures and banners.
Financial Projections
This part gives everyone, from team members to investors/ lenders, an insight into your financial projections for the future. Make definite financial projections for your business in the first year and beyond, including the income statement, balance sheet and cashflow statement. Use data from financial statements and your market research to look ahead and predict your financial future.
Profit and loss statement: use data to make predictions for at least three years
Cash flow forecast: offer a monthly cash flow forecast for the first year
Break-even analysis: explain when your business will cover all expenses and begin to make a profit
Balance sheet: document your electrical contracting business’s assets, liabilities, and equity. Include your startup costs and assets like your business vehicles, tools and equipment.
Funding needs: specify the amount of funding needed, its uses, and the type (such as bank loan, credit card or equity). Discuss any future funding rounds, the intended use of funds, and potential exit strategies for investors.
ActionCOACH tip: One of the biggest financial hurdles that small business owners encounter isn’t about funding. It’s about their own mindset. Developing a business growth or investment mindset over a fixed mindset can be transformative. Remember that not every spend is a cost. Some will actually save you money. You may need to employ a specialist contractor for a particular job, but that investment will result in a higher fee for the overall job for example.
Get Some Help With Your Business Plan
If all this sounds daunting, Phil Chantry Action Coach can help you with it. Book a call to talk it through.
“I was living on my savings and now I’m able to cover my expenses which was goal number one… My goal next is £1 million turnover in three years time or even sooner. How are we going to do that? We have been really focused on the domestic. At the moment, 80% of our business comes from domestic… Now we’re trying to change our business and be more commercial. We’re setting the strategies on the commercial side.”
Success story: EMS Electrical
Phil’s helped hundreds of entrepreneurs and business owners to create winning business plans and strategies, and he can help you too. Call him on 07770 884297
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How to write a business plan in six easy steps – use our business plan template to get started.
