start up costs

[atm84]

So guys tell me roughly how much it cost you to start up your business and how long did it take to see get into the black.

 

[Guest125]

I started in 2010 with nothing but £3k credit from Neweys. It can be done but it was not easy mate. Stay on top of invoicing is the key and only start jobs that you can afford to finish. I had a really nice QS that helped me and made sure I was paid on time and after a month I was earning money. I woukd say that only this year I would say I have the business where I want it though.

 

[Deleted member 26818]

A lot will depend on what sort of work you intend doing.
Someone who does domestic repairs and alterations, would not need a lot of start up capital.
Someone doing re-wires for a builder, would need more.
Someone doing commercial, would need even more.
Some commercial contracts will allow for payments at specific targets, 25% payment for 25% of the work completed etc.
I once re-wired an industrial unit and allowed the client the favour of obtaining the fittings etc. himself. All I needed then from him were wages.

 

[atm84]

(null)

Thanks for the advice. Was the QS a friend of yours or did you have to pay for his services. Well done for making profit so early on. What about a van, test equipment, scheme membership, tools, insurance etc etc

 

[Guest125]

Thanks for the advice. Was the QS a friend of yours or did you have to pay for his services. Well done for making profit so early on. What about a van, test equipment, scheme membership, tools, insurance etc etc

he is a friend now but he was just a QS for my client then. Realky helped me out showing me how things worked at that level.

I already had a van, tools etc. Insurance was cheap as it was only me back then. I did not have any scheme membership when I started. Have now but did not then.

 

[HandySparks]

So guys tell me roughly how much it cost you to start up your business and how long did it take to see get into the black.

£13k for first year capital including second hand van, some tools, insurance, C&G courses, etc.

Test gear was borrowed from a mate for the first few years, as he didn't need it at the time. Not Part P registered till later.

Took exactly a year before I broke even (with no wages taken out).

 

[Octopus]

Ongoing costs about £5k per year! start up costs vary massively and the most important thing you need is a separate bank account with about £2k float in it

 

[astormatt]

I have just set up on my own, in fact this week is my first official week!. I borrowed money from my folks to set myself up.
My costs up to now are about £3.5k and i still need to join a scheme, all i left my old compamy with was my hand tools so i did need pretty much everything else.
I borrowed £6.5k BUT in that i have allowed for wages while i am getting going as i have nothing in savings or the bank for that matter.
I have been given a van to borrow for as long as i need so i haven't had to pay out for a van or insurance so that has saved me a lot.

 

[Octopus]

I have just set up on my own, in fact this week is my first official week!. I borrowed money from my folks to set myself up.
My costs up to now are about £3.5k and i still need to join a scheme, all i left my old compamy with was my hand tools so i did need pretty much everything else.
I borrowed £6.5k BUT in that i have allowed for wages while i am getting going as i have nothing in savings or the bank for that matter.
I have been given a van to borrow for as long as i need so i haven't had to pay out for a van or insurance so that has saved me a lot.

I hope that you have made sure it covers YOU for YOUR business!

 

[astormatt]

Yes Murdoch it definitely does, i am a named driver and change of use. He kept it in his name as i realistically wont be borrowing it for long and saves hassle of cancelling insurance and re-insuring when i give it back.
I am waiting for the phone call "you know i lent you my van"

 

[Guest125]

I have just set up on my own, in fact this week is my first official week!. I borrowed money from my folks to set myself up.
My costs up to now are about £3.5k and i still need to join a scheme, all i left my old compamy with was my hand tools so i did need pretty much everything else.
I borrowed £6.5k BUT in that i have allowed for wages while i am getting going as i have nothing in savings or the bank for that matter.
I have been given a van to borrow for as long as i need so i haven't had to pay out for a van or insurance so that has saved me a lot.

Good for you. You are starting something that will take you on a great journey. Good luck.

 

[uksparks]

Ongoing costs about £5k per year! start up costs vary massively and the most important thing you need is a separate bank account with about £2k float in it

£5k per year? On what?

 

[pennychew]

£5k per year? On what?

Costs would be around 5k easy, just say you lease or HP a van for £250 a month then thats 3k straight off. Insurances, accountants, workwear and the like will quickly push it up to that kind of area

 

[Guest125]

£3k - van
£1k - van insurance
£300 - PL insurance
£200 - clothing
£150 - ppe
£350 - livery
£1k - tools
£500 - scheme
£2k - fuel
£200 - road tax
£500 - MOT service etc
£350 - phone
£200 - office supplies etc

 

[pennychew]

£3k - van
£1k - van insurance
£300 - PL insurance
£200 - clothing
£150 - ppe
£350 - livery
£1k - tools
£500 - scheme
£2k - fuel
£200 - road tax
£500 - MOT service etc
£350 - phone
£200 - office supplies etc

I'd agree with almost of that, I probably wouldn't include the fuel though as I charge for that on a job by job basis. also livery should pretty much be a one off cost and i probably wouldn't spend 1k every year tools

 

[Guest125]

Fair point. But for the First year it would need to be taken into account.

 

[pennychew]

Scary when you add it all up!

 

[Guest125]

And I bet we have forgotten loads.

 

[GMES]

And I bet we have forgotten loads.

How about Tax and National insurance for starters

 

[Guest125]

How about Tax and National insurance for starters

Impossible to say until the income is worked out.

 

[pennychew]

When I think of costs I just add up things I will have to pay regardless of If I make a profit or not.

 

[pennychew]

Just operating costs if you know what I mean

 

[GMES]

Impossible to say until the income is worked out.

so you wouldn't put some away each week in preparation

 

[pennychew]

My plan was to stick 20% out of every invoice received away in a separate account but it never happens!

 

[pennychew]

Before I get thrown to the wolves can I just add for the benefit of anyone reading this that I'm not self employed as an electrician!

Edit - or a DI or an Engineer, it's a minefield this!

 

[Guest125]

I get stopped 20% CIS at source so that covers that side of things.

 

[uksparks]

£3k - van
£1k - van insurance
£300 - PL insurance
£200 - clothing
£150 - ppe
£350 - livery
£1k - tools
£500 - scheme
£2k - fuel
£200 - road tax
£500 - MOT service etc
£350 - phone
£200 - office supplies etc

i don't agree with that as such,

£250 - van insurance (fully comply protected)
£200 - PL insurance
£200 - clothing
£75 - ppe
£0 - livery
£500 - scheme
£2k - fuel
£200 - road tax
£200 - MOT service etc
£350 - phone
£200 - office supplies

if you are paying £1k for van insurance you are being had. I pay £250 fully comp with protected no claims, and that's not even my main car.

As for tools, I spent probably £12000 on tools in total, annually I do but kit so not sure what figure to put on it but do t class it as running costs.

i think to say £500 on MOT is too much.

Livery, I presume you mean van signage? This was in the startup cost, I had the entire ban fine for £80.

 

[uksparks]

And why a load of you are leading vans is beyond me, it's false economy. I paid £800 for my van and It owes me nothing.

 

[Octopus]

£5k per year? On what?

costs to to be SE. Based on 4 years experience. Excludes vehicle purchase as it was bought outright in year 1.

 

[bigbaddave]

Before I get thrown to the wolves can I just add for the benefit of anyone reading this that I'm not self employed as an electrician!

Edit - or a DI or an Engineer, it's a minefield this!

Your not an electrician?? Tut tut.. You know a decent one though yeah?

 

[pennychew]

And why a load of you are leading vans is beyond me, it's false economy. I paid £800 for my van and It owes me nothing.

I paid 1800 for a vivaro about 8 months ago. I've had to take the box out and replace a selector shaft. The bottom end went down Sheffield so I had to get it recovered back to Newcastle for £300 then stick a scrapyard lump in it, it failed the MOT for a seized caliper and I've just put a turbo on it cos it was leaking oil all over my drive.

I do about 35k miles a year so if I can find a lease deal where I don't get hammered for excess mileage I'll gladly give up the hassle of an old van and welcome the comfort of something new to drive about in with no maintenance worries

 

[TJ Anderson]

And why a load of you are leading vans is beyond me, it's false economy. I paid £800 for my van and It owes me nothing.

Yeah I agree, the amount of new start ups who think they must have a new van on HP or lease. I'd never borrow money for anything accept a mortgage. I had a 3K van when I started on my own (2007) and still got £1800 for it 3 years later. Own nice new transporter now though (owned not leased)

 

[trev]

Your not an electrician?? Tut tut.. You know a decent one though yeah?

Yeah I told him I'm always just a phone call away

You make the bullets Damian, I'll fire em

 

[TJ Anderson]

I paid 1800 for a vivaro about 8 months ago. I've had to take the box out and replace a selector shaft. The bottom end went down Sheffield so I had to get it recovered back to Newcastle for £300 then stick a scrapyard lump in it, it failed the MOT for a seized caliper and I've just put a turbo on it cos it was leaking oil all over my drive.

I do about 35k miles a year so if I can find a lease deal where I don't get hammered for excess mileage I'll gladly give up the hassle of an old van and welcome the comfort of something new
To drive about in with no maintenance worries

vivaro/primastar/traffic are good price but all have weak gearboxes. If you are doing those mileages look for something else. Older Merc Vito's are cheap but do will the miles, but have poor corrosion resistance to say the least.

 

[pennychew]

Your not an electrician?? Tut tut.. You know a decent one though yeah?

Yeah but he only has good days when his handsome sidekick is keeping him right though

 

[bigbaddave]

Yeah I told him I'm always just a phone call away

You make the bullets Damian, I'll fire em

ha ha ha, ----ed into that one didn't i..

 

[bigbaddave]

Walked even

 

[bigbaddave]

Yeah but he only has good days when his handsome sidekick is keeping him right though

Ha ha, handsome???

 

[trev]

Walked even

Or perhaps a fruedian slip?
I'm going to stfu now mate. I promise I'll behave myself

 

[pennychew]

ha ha ha, ----ed into that one didn't i..

Haha you daft sod! Canny typo that like!

 

[pennychew]

You never know what you are getting though, will give it another couple of months with the vivaro and see how it goes

 

[HandySparks]

....and i probably wouldn't spend 1k every year tools

Over the last few years, I've been averaging just over £2k per year on capital equipment (that will last more than a year).

ie, hand tools, power tools, test equipment, tool storage, PC, some PPE, books.

This excludes the van.

 

[Octopus]

Over the last few years, I've been averaging just over £2k per year on capital equipment (that will last more than a year).

ie, hand tools, power tools, test equipment, tool storage, PC, some PPE, books.

This excludes the van.

Does that include your shed?

 

[HandySparks]

Does that include your shed?

Yes, but part cost only. As well as materials storage it also does duty for gardening stuff!

 

[Leesparkykent]

I paid 1800 for a vivaro about 8 months ago. I've had to take the box out and replace a selector shaft. The bottom end went down Sheffield so I had to get it recovered back to Newcastle for £300 then stick a scrapyard lump in it, it failed the MOT for a seized caliper and I've just put a turbo on it cos it was leaking oil all over my drive.

I do about 35k miles a year so if I can find a lease deal where I don't get hammered for excess mileage I'll gladly give up the hassle of an old van and welcome the comfort of something new to drive about in with no maintenance worries

the cost of lease hire is roughly 75% tax deductible. I have a few vans on lease hire, i dont pay for tax, maintenance, tyres etc either. one of the vans i have is a new transit custom and costs me about £220 a month.

 

[pennychew]

That's exactly what I was hoping for, do you have a 10k mileage allowance though?

 

[Black Dog]

QUOTE=atm84;1048473]So guys tell me roughly how much it cost you to start up your business and how long did it take to see get into the black.[/QUOTE]

I started in 2010 with nothing but £3k credit from Neweys. It can be done but it was not easy mate. Stay on top of invoicing is the key and only start jobs that you can afford to finish. I had a really nice QS that helped me and made sure I was paid on time and after a month I was earning money. I woukd say that only this year I would say I have the business where I want it though.

Indeed, at the start never take on anything you cannot afford to pay for yourself.

You must know what your costs are so you will be able to charge the proper price for your work at hand. you do not want to expose your hourly rates to the client, but you must give them a grand total price start to finish for all of the required tasks, to get the job done. In order to do that you must be sharp in calculating all of the tasks and the cost to you, along with your desired salary--DO NOT SELL YOURSELF SHORT, you must make enough to pay all taxes and the like, then make money for yourself so you can buy the equipment needed for your shop to thrive.

Charging by the hour will give the client the advantage to shop, so do not do that, Give them a grand total price with payment terms that will be to your advantage, never give into a clients demands for a discount, unless you want to be Wallmart Electric.

You must train yourself to think, live and breathe that electrical work is a profession and not just a glorified toilet scrubber.

This is a profession and we all spend UN-ending hours studying such.

Work very hard at learning to sell without being a jerk. Clients are good folks, talk to them as friends and be confident in yourself so when you are making a sale, walk if they object to your price the next client will pay it, so DO NOT SELL YOURSELF SHORT. You must make what will keep the lights on on your shop, stand up for yourself, the price you quote must be what the client pays--otherwise walk.


This is the work of a member of one the big USA electrical forums, put this tool to use you will be very happy with the results, good luckatriot:

Here’s how to figure your selling price for a one truck operation (you in the truck, no employees): Copy and paste this into Word, Excel or program of choice.

Note: This formula is for residential/light commercial service work (no new construction) using flat rate pricing.

Billable Hour: A billable hour is the actual time during the workday when income is produced. FACT: Your total billable hours for one year will not exceed 1,000 hours.
4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr.
Total Billable Hours/Year: 1,000 Hrs. Don’t make this higher, it very accurate.

Selling Price:This is the hourly amount you must charge as the labor component of your flat rate pricing. It does not include material. Include material in your flat rate pricing and mark it up whatever amount you desire (or not). You’re really selling your labor, so if you sell your parts & equipment at cost (including freight & taxes) it really doesn’t matter. What matters is selling your billable labor hour. Here’s how to calculate the selling price.

OVERHEAD ITEMS: Fill in amounts and total it on line 36.

A word about owner’s salary: Consider what you could be paid in a year if you worked for a reputable company, that pays what you are worth, as a tradesman and offers a bonus based on performance. It is not uncommon for some to earn upwards of 70-80,000/yr. or more. Do not sell yourself short, even in the first year of business. As a business owner you should pay yourself at least 80k/yr and more like 100k/yr. treat your salary as a business expense.

1. Owner’s Salary __________________
2. Advertising - YP ___________________
3. Advertising – Other ___________________
4. Answering Service ___________________
5. Bad Dept ___________________
6. Bank Charges ___________________
7. C.P.A. ___________________
8. Call Backs ___________________
9. Cellular Phone ___________________
10. Computer Expense ___________________
11. Credit Card Fees ___________________
12. Donations ___________________
13. Dues/Subscriptions ___________________
14. Educational Expense __________________
15. Gasoline Expense __________________
16. Health Insurance ___________________
17. Insurance – Truck ___________________
18. Insurance – Contractors ________________
19. Insurance – Umbrella __________________
20. Insurance – Workers Comp ______________
21. Legal Expense ___________________
22. Office Supplies ___________________
23. Payroll Company ___________________
24. Payroll Burden ___________________
25. Postage Expense __________________
26. Rent & Taxes ___________________
27. Retirement/401k ___________________
28. Telephone ___________________
29. Tool Repair/Replace ____________________
30. Travel & Entertain ____________________
31. Truck Expense ___________________
32. Truck Maintenance ____________________
33. Unforeseen Items ____________________
34. Uniform Service _____________________
35. Utilities _____________________

36. Total Yearly Expenses ___________________

37. Expenses Divided by 1,000 B/H = _____________ (This is your break even (B/E) price –
NO PROFIT!

20% PROFIT ON TOP OF BREAK EVEN COST: This is a standard acceptable profit, please don’t short change yourself. Enter the breakeven number from above and divide by .80 to get your selling price.

__________________Divided by .80 = CORRECT Selling Price Of______________/hour
Enter break even number here
B/E Cost = 80% Of Selling Price


The above list of expenses is only a representation of expenses and may not include all expenses. Be sure to add any and all additional expenses you may incur.

 

[Leesparkykent]

That's exactly what I was hoping for, do you have a 10k mileage allowance though?

Mileage allowance is 75000 over the 3year term, burnt tree, northgate and arval are the best places to get a quote from. Plus have a word with your accountant as I think as much as 75% of the lease hire per month is tax deductible anyway.

 

[pennychew]

Mileage allowance is 75000 over the 3year term, burnt tree, northgate and arval are the best places to get a quote from. Plus have a word with your accountant as I think as much as 75% of the lease hire per month is tax deductible anyway.

Thanks for that, I'll start making some calls next week [emoji106]

 

[atm84]

That's exactly what I was hoping for, do you have a 10k mileage allowance though?

Mileage allowance is 75000 over the 3year term, burnt tree, northgate and arval are the best places to get a quote from. Plus have a word with your accountant as I think as much as 75% of the lease hire per month is tax deductible anyway.

Can you explain why its only 75%. Why is it not 100% deduct able. Its an expense after all.