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Electrical Estimating and Contracting-Strategy to Grow Your Electrical Contracting Business (2021)

Electrical estimating and contracting tips for growing your electrical contracting business.

What is the main thing that limits how many jobs and what size jobs you can do?

  1. The answer is the amount of credit you have to buy electrical materials.

Example: Say you sell a residential job for $3,500.00 and your material cost is $1,200.00.

Say you have zero credit to buy materials and you must fork out cash to buy all your materials out of pocket. The amount of jobs you could do would hinge on how much cash you could cough up to buy materials. No cash no work.

But if you have $5,000.00 credit at a distributor, you could fund over 4 times as many jobs because of using credit instead of cash to buy materials.

The more credit you have to buy materials, the larger the jobs you can do and the more jobs you can do. 

I recommend you establish credit with at least 3 electrical distributors. Also, establish credit with stores like Home Depot or Lowes

Why three distributors?

  1. Because electrical distributors represent different manufacturers like panel & switchgear manufacturers.

One distributor may represent Square D and another General Electric. If you need a Square D Panel you will need to buy it from a Square D distributor, in order to get the best price.

Example: If you buy a Square D panel from a General Electric distributor, the GE distributor has to go out and buy the panel from a Square D distributor, and you will have to pay double mark-up.

Then, another reason to have credit established at multiple distributors, if you reach your credit limit and they cut you off at one distributor (which they usually do when you reach your credit limit) you are still able to buy materials somewhere else.

Obviously, you must be able to buy materials to stay in business. You do not want to use your cash for materials. You will have plenty of other ways to spend cash. Like on labor or job expenses.

But, you might ask, “What if I have lousy credit?”

To be continued in Part II – Electrical Estimating and Contracting: How to Obtain a Credit Line with Bad Credit. (Part II)  


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