If you happen to be a skilled and qualified technician in the UK and have some experience to go on, you have probably considered the option of starting your own electrical business at one point or another. There is certainly scope for it and right now might be your chance – can you really afford to miss out on it.
Your next question is probably “but can I afford to start my own business?” and yes, funding is always a hack for electrical entrepreneurs just starting out or looking to expand in the industry. How do you compete with electrical businesses that have been operating in the UK for many years already? That is the thing about the latest green tech demands. The electrical industry is changing, and your business can offer something new and innovative. The secret to successfully starting a new electrician’s business is simple: you need affordable, flexible funding that does not keep you waiting around.
How to Start an Electrical Business in the UK
If you are qualified and experienced already as an electrician, here is what you will need to do to start your own electrician’s business. It is important to know this so that you can budget accordingly.
Setup your business as an electrical contractor. The UK government website provides step by step guide on registering a business.
- Open a business bank account. You will need your company registration documents for this. Make sure that you keep a record of each transaction. If you can’t afford to hire a bookkeeper at this point, you should start an Excel spreadsheet to keep track of things.
- Set up your website and marketing campaigns to get business.
- Register your business for Corporation Tax. You can do that here.
- Ensure your new business is fully compliant. You will need to register your business with NICEIC or NAPIT.
- Set insurance in place. This is essential if you are running an electrical business. It is a legal requirement to have public liability insurance. The minimum cover is £ 2 million. You are looking at much higher public liability insurance, if you are doing government work. Other insurance required is Employer’s Liability Cover.
- Recruit employees and provide training. You can do your own recruiting and training or hire professionals to assist.
- Find and setup business premises.
Funding options for electrical businesses
Numerous entrepreneurs in the electrical industry struggle to secure High Street bank loans. Often this is because of a lack of security/collateral and because of credit score issues.
Unfortunately, if your credit score is less than perfect, you are going to struggle to get a bank to hand over the much-needed cash. There are some alternative funding options to consider as follows:
- Merchant Cash Advances.
This funding option is not for a brand new business that has not traded yet. This type of financing is more for the electrician who has been providing services already and wishes to expand or set up a fully-fledged electrical contracting business. If you process credit cards and debit cards often, you can apply for a merchant cash advance. This is a loan that provides a lump sum immediately in exchange for a percentage of your future card sales. Your cash sales aren’t affected and when your business is having a slow month, (because the repayments are percentage based), your loan repayments will be lower. It’s a win-win.
Many entrepreneurs, being self-starters by nature, cringe at the idea of having an investor. It is understandable – who wants to have another person having a say in the general running of the business that you put so much thought and effort into? However, if you do not mind having a “partner” who funds the business and if you work well with other people, finding an investor is a viable option. You will find various websites that match up entrepreneurs and investors online. A good option to check out is the UK Angel Investment Network.
- Get your share of the UK Industrial Challenge Strategy Fund.
Very recently, the UK government launched the Industrial Strategy Challenge Fund and dedicated £ 80 million to it. £ 19 million of it is set aside to help fund businesses and projects that will provide support to the mammoth task of driving electrical revolution in the country.
- Unsecured business loans.
One of the main allures of unsecured business loans is that lenders in the industry have a high approval rate. In most instances, pay-outs are within as little as 24 hours from approval and you can typically get an amount of between £ 5,000 and £ 500,000. What makes these loans even more alluring for entrepreneurs and very small businesses looking to expand is that your personal credit score will not necessarily affect the outcome of your application. Lenders typically take a broader overview of your proposed business, the expected performance and your current relationship with credit or debt (you need to be paying your bills when you apply). Alternative finance providers such as SME Loans specialize in this funding option.
Wrapping it up
If you have the intention of entering the electrical field in the UK, here is a great piece of advice: plan, plan, and plan some more. Funding forms a large part of the planning process, so investigate all of the financing options available to you and choose an option that has your company’s success and best interest at heart.