I’d like to share our experience expanding into electrical work and then 11 years later deciding to abandon it. We learned a lot from trying something new, and we learned even more from trying to make a round peg fit in a square hole. And we also feel like some of the stuff we learned is what integrators should know about before starting work in electrical.

Like Kenny Rogers sings in “The Gambler” chorus, “You’ve got to know when to hold them, know when to fold ’em.”

Why You May Want to Branch out into Electrical Work

We had the vision to start offering electrical services that would be done “our way” — if we do it ourselves, it will be done right. We can integrate high-voltage and low-voltage work so they execute as one beautiful package. It will save on coordination costs, rough-in wiring will never have conflicts, etc.  

While these things weren’t wrong, for the most part, what we wish he had known ahead of time was that there were other, more powerful forces, in the electrical business that ultimately worked against us. Despite our ideas being “not wrong,” they rarely had value to anyone but us. They weren’t truly desired, at least in our market.  

Electrical is something people need and not something people want. Sure, you can get into fancy fixtures, strip, lighting, lighting control, etc., but that’s only a small percentage of the job — and where you find all your headaches.

The Future of Digital Lighting & Control

As a custom integrator, lighting is in demand. Effective communication, education and showcasing the value proposition of LED light fixtures in conjunction with integrative control systems are the keys to overcoming challenges and closing sales in this specialized market. Join us as we discuss the future of digital lighting and control with David Warfel from Light Can Help You and Patrick Laidlaw and Mark Moody from AiSPIRE. Register Now! 

The Reality of the Electrical Business

What you need to know before you get started in electrical work is that the everyday electrical is inside the walls, forgotten, and that work is given to the lowest bidder that can do it the quickest. We learned that the few builders that appreciated our quality of work and our approach still found it hard to pay the premium or hold off the drywaller for us. 

Our other discovery was on the P&L. Vastly different ratios are in play regarding margin and profitability versus time (I call it hourly profit, or HP). I won’t get into the math as many of you already understand it, just know that the electrical business is a 10-to-20-point game and it uses 5x-15x more manpower-per-revenue dollar than we are used to.

The bottom line is you make a small amount of money, with a much larger effort. There are only two ways to win at that game, and both presume you make very few mistakes that eat your profits.  

Ways to Profit with Electrical Work

The first way is to leverage economy of scale, standardization, and rigid processes. Do as the big electrical companies do. Have 50+ staff doing the same thing every day. It’s not exactly like the custom market and it’s certainly not as much fun.  

The second is to stay very small with absolutely no overhead, and have your wage be your profit. In our industry, we call that a trunk slammer. In the electrical business, that’s just called an electrician.  

Read the Room Before You Try Branching Out

I’m not looking to discourage integrators. If you are thinking about getting into the electrical business, I do encourage you to take a very serious look at your market and the competition. If you see an opportunity to open an electrical division, my advice is to keep it separate. Keep your overhead low and stick to the same blueprint as your competition.

However, don’t do something just because you want to do it better. Do something because your market wants it to be done better. Your customer must see the value and want to pay for it. You can’t talk them into it. And you certainly can’t do it for free just because you think it’s a good idea. 

 You Can Also Become Business Partners with Some Really Good Electricians

So, how do we now collaborate in harmony with the electricians? The same way we did 12+ years ago — partner up with the good ones. 

That’s the answer. Find electricians that share your values and goals. The ones that care for your common customer and have a passion for quality. Make sure they never want to get into “the techy stuff.” They should be masters of their business and understand the value of partnering with the same. 

TOM REDHEAD is co-owner of SuRe Innovations in Saskatoon, Saskatchewan, Canada. 

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