Electrical Contractor Business Plan

Premiere Electric

Executive Summary

Opportunity

Problem

The population in Richmond is growing. With more people come the need for more apartments and stores, in other words, new construction. New construction needs skilled electricians that can wire everything.

Solution

Premiere Electric is a new electrical contracting firm that Robin has started to serve the former Gardner and Miller customers, as well as expand her services to new customers in the tri-county area.

Market

The market for commercial electrical contracting services is very fragmented and crowded. Among these, only a few are large firms with 20 or more electricians on staff. The remainder are small firms with less than three full-time electricians. Premiere Electric’s current niche is its strong relationship with former customers of Gardner and Miller, but this will not be sufficient for growth in a competitive market.

By focusing on data, communication and electrical installation and maintenance, Robin reduces her direct competitors to two large electrical firms that bid on the area’s largest projects. Though one day, Premiere Electric plans to be a force in the area’s largest projects, an opportunity exists now for new customers whose smaller projects are not being pursued aggressively by Robin’s competitors.

Competition

There are quite a few electric contractors in Richmond: Above Code Electric, Frazier Electrical, H.O. Feild Electric company, Prism Industries and Langhorne Electric to name a few. 

All of them advertise many years experience, training and customers who trust them. Electrical contractors enter their customer’s home. They need to do excellent work as well as be able to be in someone’s house without danger of invading privacy. 

Why Us?

Premiere Electric’s mission is to offer its customers the highest-quality electrical services. Robin focuses on personalized service by offering convenience and rapid service. Additionally, Premiere Electric has the technological expertise to install wireless voice and data systems, as well as intelligence systems in any size facility. Finally, Robin has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases) minimizing the system down time for Premiere Electric customers.

Expectations

Forecast

Currently, there is $100,000 worth of business with former Gardner and Miller customers. Robin believes she can capture a lion’s share of it and build from that base. She will start as the firm’s only employee but will hire additional electricians as her sales grow.

Financial Highlights by Year

Financing Needed

We will be getting $62,000. Robin will invest $40,000 and we will get a $22,000 long term loan. 

Opportunity

Problem & Solution

Problem Worth Solving

The population in Richmond is growing. With more people come the need for more apartments and stores, in other words, new construction. New construction needs skilled electricians that can wire everything

Our Solution

Premiere Electric’s focus is to meet the demands of the former Gardner and Miller customer base. Premiere Electric has established relationships with these companies and believes we will receive referral business from them over time. The company estimates that 80% of revenues will come from old Gardner and Miller clientele and 20% from new referrals and business. Though the former Gardner and Miller clientele will be important during the first year of business, Robin knows the future of the business is new referrals. 

Target Market

Market Size & Segments

Many factors are contributing to this projected building growth, notably regulation, demographics, inexpensive capital, a strengthening U.S. economy, and technology. Alternative delivery methods are helping to make projects viable where they otherwise would not be.

Labor shortages may Impede growth to some extent will be. According to the Bureau of Labor Statistics, employment rose in 43 states in October, while declining in seven states. Finding qualified workers to perform the work has become onerous. Immigrant labor from Central America has helped somewhat, but the need for more skilled craftsman—electricians, pipefitters, plumbers etc.—will not be filled through immigration. Labor shortages will begin to slow growth and create wage inflation.

COMMERCIAL CONSTRUCTION FORECAST

RETAIL STORES AND MALLS

Online sales continue to grow, and extreme discounters keep expanding. Major retail chains and deep-discount stores will lead construction growth in this sector, although there will be some significant activity among regional and national grocery, drugstore, and quick-service restaurants. Specialty stores in urban cores will also contribute to growth, as will e-commerce warehouses. Look for increased activity in store renovations as well. There is the potential for 9% construction growth in this sector in 2016. Retailers will continue to fret about a possible increase in the federal minimum wage and the strength in the overall U.S. economy, which could slow growth.

COMMERCIAL WAREHOUSES

Commercial warehouse construction is being buoyed by regional distribution centers for major retailers and the positive effect of the Panama Canal expansion. The strong dollar and a weakened global are pushing up imports of cheaper goods into the U.S., driving up warehouse construction. We are looking at an 8-10% growth in this sector in 2016. A slowdown in the U.S. economy could be a drag on this sector, but not by much.

 

MULTIFAMILY HOUSING

Multifamily housing remains the star performer in this recovery. The 20-34 age demographic (children of Baby Boomers) is growing. This age group is the typical renter. The untypical renter is the growing 55-64 demographic of empty nesters. These two age groups are pushing up demand for rental housing. They are demanding walkability and high-end amenities in a work-live-play environment.

A significant amount of capital is chasing the apartment sector, a trend that does not seem to be abating anytime soon. Deals can be financed at 3%, making them easy to justify, especially in light of the available fixed-income alternatives, which can’t come close to real estate.

Expect growth to remain torrid at 17-20% in 2016. Rental demand is on the rise and shows no signs of slowing down. Most markets cannot keep up with current demand, making this segment a star performer for 2016 and most likely beyond.

CONCLUSION

Demographics and the strengthening U.S. economy are helping to drive construction growth. As the economy strengthens, employment is increasing. After sitting on the sidelines for the past few years, businesses and developers are building new office space.

Millennials (age 18-34), who now outnumber Baby Boomers, are traveling more than other demographic groups, which is feeding hotel growth and remodeling. The strengthening economy is increasing discretionary income, helping the lodging and retail sectors. Millennials are impatient shoppers, making it imperative for retailers to invest in more robust order fulfillment systems and fast and excellent customer service. Retailers who ignore Baby Boomers do so at their own risk. Boomers have significant financial resources and are much more active and educated buyers than previous older generations. 

Millennials are also of the age to move out of their parents’ homes. They’re looking for apartments in the urban core, but there is also a significant amount of mixed-use development occurring in the suburbs, particularly in transit-oriented developments. This is an indication that developers believe that Millennials choosing to defer marriage and families will embrace the suburban lifestyle—albeit in the context of mixed-use properties rather than what their parents opted for.

Baby Boomers and the Affordable Care Act are infusing life into what just a few years ago was a moribund healthcare construction sector. Emphasis will be placed on preventive care and wellness initiatives for younger Boomers, as well as more traditional acute care for the older demographic.

Inexpensive capital is flowing into urban-core areas, especially those with a strong presence in healthcare, education, and the life sciences. In general, areas with historically high rents are faring much better than areas that rise and fall with the economy. Lower rent areas are also seeing some growth, but it is more tepid than in the urban cores.

These are heady times for builders, and there is cause for optimism. While it is true that certain larger issues, such as industry labor shortages or another financial crisis emanating from China, could slow down growth, the way things look today, this train has miles to go before running out of steam.

Competition

Current Alternatives

There are quite a few electric contractors in Richmond: Above Code Electric, Frazier Electrical, H.O. Feild Electric company, Prism Industries and Langhorne Electric to name a few. 

All of them advertise many years experience, training, and customers who trust them. Electrical contractors enter their customer’s home. They need to do excellent work as well as be able to be in someone’s house without danger of invading privacy. 

Some try and stand out like Above Code Electric which focuses on electric fan installations, or Prism Industries which focuses on TV and television installations. Others like Frazier Electric and H.O. Feild Electric are general contractors but are not locals, they are are a couple towns over.

Then there are our direct competitors like Langhorne Electric who focuses on electrical wiring upgrading for residential and commercial buildings. 

Our Advantages

When Robin opted to start her own company and take matters into her own hands,  this was just another step in her quest to deliver services to customers that were second to none. As a woman in the male-dominated electrician profession, it has always been Robin’s competitive edge that has pushed her ahead with customers and employers. Her focus on new electrical technology places her in a unique situation. Both her major competitors had sought her services when Gardner and Miller announced the company’s departure from the area. Her reputation for quality work and excellent customer skills could have landed her with a new employer and a bigger pay check. The Richmond tri-county area is booming with new commercial construction, including a new research park and airport. Robin’s technical skills in data retrieval and communication systems will be a valuable asset for a company to have in the next five years.

Keys to Success

Keys to Success

Premiere Electric’s keys to success include:

1. Expedient and convenient electrical services.
2. Growing and maintaining a referral network of customers.
3. Focus expertise in data, communication and electrical installation and maintenance.
4. Rapid order and delivery of electrical components.

Execution

Marketing & Sales

Marketing Plan

Premiere Electric’s focus is to meet the demands of the former Gardner and Miller customer base. Premiere Electric has established relationships with these companies and believes we will receive referral business from them over time. The company estimates that 80% of revenues will come from old Gardner and Miller clientele and 20% from new referrals and business. Though the former Gardner and Miller clientele will be important during the first year of business, Robin knows the future of the business is new referrals. The table below further estimates the total market potential of the type of services rendered by Premiere Electric in the Richmond tri-county area.

Sales Plan

We plan on having a sales plan that takes advantage of the relationships we had before we re-organized. The millennials are the biggest growing part of the market. To gain new clients we will take advantage of Social Media. We will speak directly to them by Twitter and Facebook. We have green initiatives and a website that speaks directly to them. Our well-trained sales team will take over once they come our way. 

Operations

Technology

The services rendered by Premiere Electric can cover a project in its entirety from original concept to acceptance of completed construction work.

• Consulting services: engineering studies (functional analysis), evaluations and recommendations (value engineering analysis), feasibility studies, master planning.
• Design services: cost estimates, design analysis, project scheduling, conceptual drawings: electrical standards, specifications.
• Field services: 24-hour emergency service, troubleshooting, field engineering liaison and inspection, commissioning and checkout, customer representation at acceptance testing of equipment, preventive maintenance programs.
• Construction services: commercial and industrial.

Milestones & Metrics

Milestones Table

Key Metrics

Our key metrics are: 

• inventory turnover 
• Tweets and Retweets 
• Facebook views and shares 
• returning customers 
• customer referral program 

Company

Overview

Ownership & Structure

Robin Sullivan is the sole owner proprietor and employee of Premiere Electric.

Team

Management Team

Premiere Electric is owned by its sole employee, Robin Sullivan. Robin is a talented electrician who holds a Bachelor of Science degree from Eastern College that she obtained while working full-time as an electrician. Robin entered the world of electricity at just the right time when national legislation made it possible for her to join the electricians’ union. She started her apprenticeship and early training as an electrician in St. Louis, Missouri in 1978. She later relocated to the Richmond area in 1983 and has worked in the local number three jurisdiction for the past 18 years.

For the past 10 years with Gardner and Miller, Robin has focused on the new electrical technologies as new industries and commercial growth have come to the Richmond area. During that time, she has created a base of customer support that praises her ability to handle all aspects and responsibilities of the design and engineering process.

Personnel Table

Financial Plan

Forecast

Key Assumptions

Our key assumptions are: 

• Buildings need electricity 
• Electricity wires fray and need repair 
• As technology gets more advanced it needs more electricity to accomplish its tasks
• Tech boom never dies, just changes. We will always have customers looking for services 

Revenue by Month

Expenses by Month

Net Profit (or Loss) by Year

Financing

Use of Funds

Our Startup Expenses are: 

Stationery etc.$100

Brochures$200

Start-up Inventory$10,000

TOTAL $10,300

Sources of Funds

We will be getting $69,000. Robin will invest $47,000 and we will get a $22,000 long term loan to cover the inventory as well as some machinery. 

Statements

Projected Profit & Loss

Projected Balance Sheet

Projected Cash Flow Statement