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Discussion Starter #1
I am considering starting my own electrical business in the next 2-5yrs. I think I will give it a 6 month shot while still employed as my current job in the evenings. working out of my home to keep overhead low.

I currently make $75,000/yr and would like to maintain that salary as an electrical contractor. however, i'm thinking I should only plan to work 1,000 hours a year because I don't imagine I will have customers calling everyday when I first start.

$75,000yr / 1000hrs = $75hr add benefits $25hr = $100hr
add 15% profit for business = $100hr / .85 = $118hr

that's just covering my gross wage, benefits and business profit without even adding overhead costs yet.

does this thinking seem right to you guys, or am I out in left field already?
 

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There is a lot of stuff you are overlooking, and an unknown is the material you will sell, markup on material can be a major income generator.
 

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Your missing the OVERHEAD. And you will be working ALOT more than 1000 hours if your going to stay in business:laughing: Because when the phones aren't ringing you better be working DAMN HARD on making them ring!
:thumbsup::thumbsup:


FIFY
 

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Discussion Starter #7
I hadn't included the overhead into the equation yet on purpouse because I'm just trying to figure out what my labor cost needs to be to cover my gross wage, benefits and business profit.
I'm trying to figure out one factor at a time for the next couple years to see if being a EC is going to work for me.
 

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Do you need $75,000 a year or want? If you can live off less for a year I would pay yourself less, leave some wiggle room in your account for unknown surprises....trust me there will be plenty. I went from being a employee at $80k a year to paying myself 60k until I got things established. It was tough mentally making less then my employees! A couple years later I am paying myself just over 120k in salary and my wife 42k to stay at home to watch the kids. I needed as much money in my business account as I could at the start to help buy tools, uniforms, service vans plus all the extra expenses that add up quickly on you. Even if you want to be a one man show, you overhead will surprise you, even if you list everything the guys on here tell you there will always be something else that pops up. Best tip I can give you is NEVER expect a customer to pay on time. If your counting on that check to be on time to pay your bills your doing it wrong.
 

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Discussion Starter #9
I would like to test the waters for maybe 6 months while working at my current job which is evening/night shift.
I would consider lowering my salary for the first year to maybe $50/60k. I plan to buy most all the power tools and some essential equipment before I get started, and I've been watching autotrader for a used van already somewhat equipped for $4-6,000.
I'm planning to work from my house to keep overhead cost down, until things really kick off and get busy. I'll need to figure out approx overhead fees in before I head out on my own.
 

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Imagine the success Steve Jobs would have had if he decided his new company Apple should pay him as much as he was making working for Atari.

Yeah he would have wound up going back to Atari and kept working for the man.
 

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Discussion Starter #11
So I was figuring in my cost of staying in business 1,000 hours a year for safety, and anything over that is more profit. How many hours do you guys figure for yourselves working a year for salary
 

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I work about 1600 billable hours but my circumstances are different then most. I couldn't see billing out more then 1000 if I didn't have a couple golden apples.
 

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I would like to test the waters for maybe 6 months while working at my current job which is evening/night shift.
Your dreaming.. this is not a country club golf outing..:rolleyes::laughing:

Six months will tell you absolutely nothing.. but try it for yourself...

Just make sure those bridges you cross allow a return trip.. :thumbsup:
 

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I am considering starting my own electrical business in the next 2-5yrs. I think I will give it a 6 month shot while still employed as my current job in the evenings. working out of my home to keep overhead low.

I currently make $75,000/yr and would like to maintain that salary as an electrical contractor. however, i'm thinking I should only plan to work 1,000 hours a year because I don't imagine I will have customers calling everyday when I first start.

$75,000yr / 1000hrs = $75hr add benefits $25hr = $100hr
add 15% profit for business = $100hr / .85 = $118hr

that's just covering my gross wage, benefits and business profit without even adding overhead costs yet.

does this thinking seem right to you guys, or am I out in left field already?
The 1000 billable hours applies to a service truck and to meet your goal if doing only service your hourly rate needs to be at least $252.00/hr. For jobs you are bidding your rate needs to be at least $180.00/hr.
 

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Discussion Starter #16
Thank you Rewire, i really appreciate all the info/help I can get. Most of the contractors in my town are getting close to retirement age and I think this will be a great opportunity.
In my apprenticeship I worked electrical construction, and service calls but we were never shown any business aspect of the work we did.
 

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Discussion Starter #17 (Edited)
well I followed the template someone had posted for service work, sorry I don't remember who posted it. do you guys think everything here is pretty accurate?

Overhead

Salary $80,000
Advertising YP $800
CPA yr cost $2000
Cell phone $1200
Continuing Ed $150
License fee $100
Insurance
- health $5,000
- vehicle $1000
- umbrella $1,000
- workers comp $5,000
- contractors $2,500
Legal fees $1,000
Office supplies $250
Garage payment $6,000
Retirement $5,000
Tools $500
Van
- payment $2000
- gasoline $10,000
- maintenance/ repairs $1,500
Uniforms $350
Utilities $800

Total $121,150
Salary = $80,000
Benifits & overhead = $41,150

Break even =
$121,150 / 1000 BH's =
$121.50 hr = break even price not including any profit

20% profit is standard

$121.50 hr / .80 = $151.45 hr


BTW thank you whoever posted the template
 

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well I followed the template someone had posted for service work, sorry I don't remember who posted it. do you guys think everything here is pretty accurate?

Overhead

Salary $80,000
Advertising YP $800
CPA yr cost $2000
Cell phone $1200
Continuing Ed $150
License fee $100
Insurance
- health $5,000
- vehicle $1000
- umbrella $1,000
- workers comp $5,000
- contractors $2,500
Legal fees $1,000
Office supplies $250
Garage payment $6,000
Retirement $5,000
Tools $500
Van
- payment $2000
- gasoline $10,000
- maintenance/ repairs $1,500
Uniforms $350
Utilities $800

Total $121,150
Salary = $80,000
Benifits & overhead = $41,150

Break even =
$121,150 / 1000 BH's =
$121.50 hr = break even price not including any profit

20% profit is standard

$121.50 hr / .80 = $151.45 hr


BTW thank you whoever posted the template, might have been yrman maybe.
Good start. Some of your numbers might be low. Don't be afraid to inflate them a bit.
 
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