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#155064 - 12/07/04 01:37 PM starting an electrical business
jayson Offline
Member

Registered: 05/12/04
Posts: 49
Loc: russellspringsky
I know i am still a few years away from doing this but can anyone give me some pointers or advice on starting my own business thanks

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Business, Office, Estimating, Legal:
#155065 - 12/07/04 02:05 PM Re: starting an electrical business
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
Jayson,

Go to the Business Articles topic in this forum and visit the websites that are listed in it. There is a lot of good information about starting and running a business on these websites. Subscribe to some of these magazines. www.pmmag.com and www.thesuccessfulcontractor.com

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#155066 - 12/07/04 03:34 PM Re: starting an electrical business
Electricmanscott Offline
Member

Registered: 01/12/02
Posts: 1478
Loc: Holden, MA USA
After the day I had today I would say don't do it!

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#155067 - 12/07/04 03:58 PM Re: starting an electrical business
Jps1006 Offline
Member

Registered: 01/22/04
Posts: 609
Loc: Northern IL
Start now learning to live below your means. I am having trouble expanding because I spend every penny I make (and then some). When I first started I had 3 months worth of bills in savings, a cheap van, and some tools. I was single with a low mortgage (condo), no vehichle payments, etc.

I think it will make the whole process a lot less stressful if you aren't freaking out about every penny, and it will allow you to spend that energy on getting and doing work, developing paperwork systems, organization systems etc.

Plus a lot time at first will not be billable, setting up accounts, seeing accountants and lawyers etc. Good to start now learning to live cheap. Then after things get established and you start churning the money machine, you can dip in the well a little more.

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#155068 - 12/07/04 07:19 PM Re: starting an electrical business
Electric Eagle Offline
Member

Registered: 04/20/02
Posts: 928
Loc: Alpharetta, GA
The main thing I can say is be prepared to work like a dog. In the beginning if you aren't willing to work 60+ hours a week and do work you don't like, you won't make it. And you need to have a savings, I suggest enough to cover 6 months or more of living expenses. You have to budget, so don't spend the sales income until you pay the bills, just because it's in the bank doesn't mean you can spend it.

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#155069 - 12/07/04 07:46 PM Re: starting an electrical business
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
Calculate what your hourly rate needs to be. Include all expenses business and personal. Figure enough in this hourly rate to cover ALL personal and business expenses. This will be the hourly rate that you need to charge just to break even. You then need to add a percentage to this hourly rate for profit. Profit is for company growth not for your personal spending. Your personal income should allready be included in the hourly rate before you added the profit.
Don't charge the going rate or less just to get work. If you can't get work charging the hourly rate you calculated than you either need to reduce costs or become better at marketing and selling.
Don't just call other contractors to find out how much they charge and charge the same or less. You need to do the math to find out what you need to charge.
Don't assume you don't have overhead just because you don't have employees and work out of your home. Everyone has overhead. Your personal income is overhead among other things.

[This message has been edited by A-Line (edited 12-07-2004).]

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#155070 - 12/07/04 07:56 PM Re: starting an electrical business
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
Jayson,

If you are not currently tracking your personal expenses and creating a budget for your personal spending I would suggest you start. Doing this with your personal finances will help to prepare you when you need to do this for your business. I use Quicken software for my personal finances and Quickbooks Pro for my business finances.
I track every penny I spend in both my personal and business finances. Look at your P&L statements often not just at the end of the year.

[This message has been edited by A-Line (edited 12-07-2004).]

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#155071 - 12/08/04 06:19 PM Re: starting an electrical business
Active 1 Offline
Member

Registered: 02/22/03
Posts: 684
Loc: Grayslake IL, USA
Like others said it's less stressfull day to day if you have less bills and money in the bank.

Something elce to concider- Once you take the leap to be full time by yourself it will make a differance on your ability to obtain a loan or at least at a good rate until you have a steady few good years.

If you a serious you might start the business paperwork now. That way on paper once you are full time you would have been in business for a few years. That can help you with suppliers, insurance, loan officers, and even customers by being able to say we didn't just open yesterday. This can give you time to set up your office and establish a paperwork system. If you ever do come across some big work your set up to go.

When you figure you hourly rate don't count on booking 1 hour for every hour worked. With drive time, material pick up, bidding, paperwork, returning phone calls, no work, etc. Depends also on the type of work you do.

Think of a number you need for yourself for maybe working 60 hours a week.

Say your saliry is $60,000
Overhead bills $30,000 (old truck & at home office)
Totsl overhead $90,000
6 hour billable days is about 1500 hours a year
Your at $61 an hour
add 1% warrenty, 10% proffit, 15% tax and you have $70 an hour.

If you want to be like some EC, have 0 profit and make $40000 for yourself your at $48 an hour.

I'm not saying what to charge just play with the numbers and don't kid yourself with not having any overhead.

Tom

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#155072 - 12/08/04 06:29 PM Re: starting an electrical business
Electric Eagle Offline
Member

Registered: 04/20/02
Posts: 928
Loc: Alpharetta, GA
Don't forget when you figure overhead that your employer has been paying a matching tax on your Social inSecurity and Medicareless. This totals 7.65%(6.2+1.45). You will have this additional tax on your income on top of the 7.65% you normally pay, no matter what you tax bracket or deductions.

[This message has been edited by Electric Eagle (edited 12-08-2004).]

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#155073 - 12/09/04 08:30 PM Re: starting an electrical business
jayson Offline
Member

Registered: 05/12/04
Posts: 49
Loc: russellspringsky
thanks guys very helpful

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