A small electrical contracting business can be fairly low cost to set up, particularly if you already own some of the tools and equipment you'll need. So you may not need to borrow any money to start up your business. However, many new businesses do need to raise money to cover:
- the initial start up costs such as premises costs, tools and equipment, vehicles, basic materials, business stationery and so on
- working capital
There will almost certainly be a period during the first few weeks of trading when your electrical business is becoming known to customers and the amount of work you have to do is building up to its full potential.
During this period you may still have to cover expenses such as:
- wages (and your own living expenses)
- rent, rates and utilities such as heat, light and telephone if you have any premises
Because your income from electrical work may not be enough to cover these outgoings during the early days, you will probably need to set aside some cash, or 'working capital', to tide you over.
If you need to approach the bank for a loan to cover your start up costs and working capital, leave this entry in the cash flow empty until you have completed the rest. This will give you an idea of the shortfall between income and expenditure.
If your figures show that you're likely to need to borrow money, it's wise to check at an early stage in your planning that funds are available on terms that are acceptable to you.
Grants and other funding
You may be able to get some help in the form of a grant, for example to cover the cost of training for an electrical contracting or small business management qualification.
If you're registered with CITB, the skills body for the whole of the construction industry, then you may be able to get a grant to help with the cost of training your employees and developing your business. Grants are available for:
- training apprentices
- qualifying young workers
- qualifying your existing workforce
- training technical, management and professional staff
- developing your business
You can find out more about the CITB Grant on their website.
You can get information on grant aid and other types of funding available throughout the UK from the business finance and support finder tool on the Gov.uk website.
Grant aid varies considerably around the UK and some assistance may be available in your area to help you start up your business.
It is also worth contacting the business support unit in your local council if it has one. Sometimes local grants are available for things like helping new businesses in economically run-down areas. You can also use the tool on the Gov.uk website to help you identify any suitable sources of local and regional funding.