Electrical businesses have a real path to $5M–$10M in revenue, but choosing the wrong business model can cost you everything.
In this episode of JackQuisitions, Jack Carr breaks down what it takes to start, buy, and scale a profitable residential electrical service company. From starting with less than $75K to building a multi-million-dollar operation, Jack explains where the money is made, why margins matter more than revenue, and what separates successful electrical businesses from struggling contractors.
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In this episode:
- Starting an electrical business for under $75K
- Turning $300 service calls into $15K+ jobs
- Scaling from $1M to $3M and eventually $10M
- The biggest hiring, licensing, and pricing mistakes
- Why residential service beats new construction
- When buying an electrical company makes more sense than starting one
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Electrical service companies might be one of the best home services you can own right now. I'm talking about residential service, the company that shows up because you lost power or you bought a new Tesla and you need a charging station. Demand is strong. The labor is licensed and difficult to replace. There are plenty of high-ticket jobs, but there's also a few things about electrical that I think people misunderstand. So if I were buying or starting one today, here's exactly how I would look at it. The first thing that I like is that you have an enormous amount of houses. Every house has electrical on it, and they're consistently and constantly asking for electrical system work. And most houses, think about it, are built 1985, 1990, even 2000. That house was not designed for two electric cars, an induction range, a hot tub that you added in 2015. The houses weren't built for that. And every year we keep putting more and more electrical crap into our house. The great part for electricians is this creates work. Some of it's tiny, but at that same house, they might need a panel upgrade, or a new dedicated circuit, or surge protection, or a generator.
And now the ticket goes from a few hundred to a few thousand really, really quickly. And that's what makes this service model so beautiful. That's one of the major disadvantages compared to something like HVAC and plumbing, though, is electrical doesn't naturally break on a predictable or or very reoccurring schedule. So if you want repeat customers, you have to work on the relationship a little bit more. You have to work to get generator maintenances or electrical safety inspections, work with membership programs. Now, I could start one pretty lean. You get a used service van in the $20,000 range. You already have tools, but if you have to buy them, buy a few more thousand dollars worth of tools. You could probably get all in for under 75k. And then most of that's going to go into marketing, making sure that you can keep filling this the board for yourself and pay for the gas to get there. But if I'm not an electrician and I'm hiring an electrician from day one, I need a little bit more because I need to be able to front roll that pay early on when I'm not bringing in as many leads. So early on, I care far more about lead generation than I do having the perfect office or the newest truck because the basic engine here is simple. Phone rings, book call, run call, present options, get paid. And that's what brings us to where the money actually comes from. The small service work is incredibly important. I think that's where a lot of early contractors mess up. Breakers, outlets, lighting, ceiling fans. They're only $300 tickets, and you can't stack those forever, but that's how you get to the next layer. And then from there, you can do the specialty stuff. So personally, my favorite version of this company is overwhelmingly residential service with some light generators mixed in. The last thing I want is a new construction electrical contracting service. It's a whole different animal. You can have enormous revenues, huge payroll, mountain of receivables, and somehow make less money than the guy running a few service vans. How do you scale this thing? Going to the first million is mostly about keeping two electricians busy. A good electrician is going to produce in home services $300,000 to $400,000 a year. Two service techs can get to that million dollar mark pretty regularly. But the hard part comes from the one to three. Because once you get to that one to three range, you need a CSR. You need a real CSR who's answering phones. You need flat rate pricing because you can't make it any further on hourly rates. You need to be able to offer financing and you need a sales process. It can't just live all up in here for the owner. Because once you get to five or six electricians, those small differences that you did at that one to three million are going to make the huge differences later on. They're the infrastructure to the business. And this is where you have to start building all that is that one to three. Somewhere around three is the giant owner
hell wall. You have to climb it, you have to scale it, but it's the hardest wall, in my opinion, because the owner is still the best electrician or the best salesperson or still doing too much work that they haven't delegated out. Turn the company into a machine rather than just one person burning themselves out. At five to ten million, you shouldn't be in the field at all any longer. You should, this is a real service company. You have real service managers, you have CSRs, dispatch marketing, install coordinators, warehouse people. But that's why also scale can make the business worse if you do it badly. One of the biggest risks here is always going to be labor. This business is a labor business, and good electricians are really hard to find. And worse, if you lose your best electrician, sometimes you don't just lose the production of that guy, you lose the guy that everybody's also asking the questions. You lose the knowledge base, you lose the training capacity, and you lose the potential for their them to be the future manager or future leader of the company. And that's why I would be extremely cautious in buying a business where the seller is also the master electrician and the best salesperson and also holds the license. Because once he walks out of the door, what did you buy? Would I start or buy one? It depends. If you're a licensed electrician, yeah, you already have the hardest piece down. You have the licensure, you have the technical credibility. But if I were coming to this from as an entrepreneur's standpoint, which I originally did, I would much rather buy. Because when you buy the right electrical company, you're really buying all the difficult stuff right out the gate. You bought the problems from the past that they've already fixed. You you're buying a series of technicians, you're buying the phone number that's already ringing, you're buying the a thousand reviews that keeps the phone ringing, you're buying this huge customer database for the last 30 years. If I were gonna buy a business today, I would try to buy as big as possible. I would try to buy in that three million revenue range just because as you start buying into that range, if the old ownership has already set up a lot of these things for you, then you're able to get in and professionalize it. And you don't have to go through all of the hardships
of the owner operator early on as the technician problems. So here's my final score: demand. Demand is so great for this business. Nine out of 10. I love demand for electrical homeowners, aren't going to do it themselves. There is a huge mo against DIY here, and so demand is just increasing and it's better for electrical owners. Eight out of ten on margins. Margins are everything in home service department, and margins in electrical are amazing. They're just hands down, some of the best margins in all of home services. Startup difficulty, you are an electrician. I'm gonna give this a seven out of 10. Most of the startup difficulty you're going to run into is going to be learning how to convert from an electrician to a business owner. Labor, four out of 10. If you're hiring, it's gonna be hard to hire. That's home services for you, that's the trades for you. But if you can figure it out, this becomes also a moat. Scalability, eight out of ten. I think that this is an extremely fragmented market. The ability to buy other electrical businesses after you have your own running is very, very great just because of the fragmentation. Would I own one? Absolutely, I do. It's amazing to own. It's a great business. So this is uh we practice what I'm preaching right now. What I wouldn't do, and I want to be very cautious in saying this, is don't buy an electrical contracting business unless you really are trying to buy an electrical contracting business. Because I would buy a residential service business any day of the week that does electrical, but electrical contracting business is not the same thing. It sounds like a word of difference, but there are different electricians or different margins. It's a B2B business, it's it's huge, it's not small whatsoever. If you like what you heard, like, sub, share, leave a comment below, and good luck. See you in the next one.
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