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How to start an auto electrical business
Your guide to setting up your own auto electrical company.
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If you're at the point in your auto electrician career where you want to go solo and you're wondering what to do next, this is the guide for you. Perhaps you're not sure what equipment you need to invest in, how to register your business or which legal documents you need.
Read on to get answers to these questions and more, so you can get your auto electrical business up and running.
What's in this guide?
What is an auto electrical business?
An auto electrical business is a motor vehicle service that installs new electrical parts, or repairs and maintains electrical wiring and components in cars and other vehicles. Auto electricians evaluate vehicles with diagnostic testing equipment to check for faults, and they fix equipment such as mirrors, transmission, ignition, air conditioning and immobilisers.
An auto electrical service can be operated either from a static location like a workshop or as a mobile business that comes to people's homes or provides roadside repairs.
How to start an auto electrical business
From creating a business plan to getting your legal requirements in place, there's a lot to cover when launching a new business. Follow these steps to get started:
- Develop a business plan. First up, you need to get your vision for your venture down on paper. A business plan will lay out your estimated expenses, market research, services you'll offer and pricing models.
- Decide on a location. If you're going to operate from a workshop, you will need to find a suitable commercial space that you can either rent or buy and that is convenient for customers to get to. Alternatively, you could provide a mobile service and send auto electricians out to homes and offices.
- Create your brand identity. Your brand will be reflected in your business name and logo as a first impression for customers. Think about your target market and what is unique about your service. Once you've decided on a name, you'll need to register it with the Australian Securities and Investments Commission (ASIC). You can then create a logo either with the help of a graphic designer, or through one of these online graphic design tools and services to reduce costs.
- Choose a business structure. In many cases, operating as a Sole Trader or Partnership is an easy and cost-effective structure to consider. However, there are advantages to registering your business as a Company, such as protecting yourself against the company's future liabilities and involving external investors.
- Consider loan options. You may need to apply for a loan to cover some of the initial outlay in setting up your business. If you're not able to get a business loan, other options include a personal loan.
- Meet your legal requirements. It's a good idea to have a Service Agreement in place before you get started. If you're renting a commercial space for your workshop, you might like to speak to a commercial lease lawyer.
- Hire staff. You're likely going to need a team of auto electricians to effectively run your business. You'll need to budget for this and decide who exactly you'll want to take on, including mechanics and administration staff. It's worth setting up an Employment Agreement from the get-go, so you and your employees are on the same page.
- Market your business. These days, one of the quickest and most effective ways to reach customers is through the Internet. There are a myriad of both free and paid ways to advertise, from setting up social media pages on Facebook and Instagram to sending out email newsletters to your customers. Setting up a website will help you establish a base where customers can find you online. To build traction from the start, you could post your services on free marketplaces like Airtasker and Oneflare.
What you need to get started
There's a lot to think about when first setting up an auto electrical business. We've broken down the process into categories below, including the equipment and software you'll need and how to find customers.
Skills and knowledge
Most self-employed auto electricians have at least five years' experience in the industry and some nationally recognised qualifications behind them. We discuss the key qualifications you'll need a little later on.
Being an auto electrician is a customer-facing role, so great communication skills and a friendly personality will help you along on your way to success. As they say, your reputation speaks for itself and happy customers are likely to recommend your business to others.
Apart from the technical and personal skills, you'll also need to get your head around how to run your business. While your business is in its initial stages, you're likely to be a one-man-band. Building business knowledge will take some trial and error as you develop marketing skills, financial management and administrative expertise.
Courses and qualifications
You'll generally need to qualify as an auto electrician before you can open up your own business. Not only will this give you the skills to carry out the necessary work, but it will also give you an insight into the industry.
Age isn't a barrier to qualifying as an auto electrician, but you will need to have your Year 10 qualifications in the bag. Once you have these, you can choose to complete a Certificate II in Automotive Electrical Technology or take an apprenticeship. Both pathways will take at least three to four years to complete.
If you do decide to enrol in a certificate of your own accord, it will cost upwards of $6,000. When you become qualified through an apprenticeship, your employer or the government may pay the fees for you. Typically, you'll also receive an apprenticeship wage throughout the training period.
Online business courses to consider
To help you navigate your way through the world of business, you might think about upskilling with a short online course in business or marketing.
You can study a certificate level course or short course through providers such as TAFE or Udemy. You'll find a range of business courses covering topics such as small business management, market research, digital branding and engagement, and financial planning. Here are some courses to consider:
- Certificate IV in Entrepreneurship and New Business
- Certificate IV in Marketing and Communication
- Small Business Management and Marketing Essentials
- Micromasters Program in Marketing in a Digital World
Equipment and software
You'll need to invest a good amount of money into buying specialist equipment for your auto electrical business. A few essentials include:
- Screwdriver set
- Plier set
- Socket set
- Spanners
- Diagonal cutters
- Wire strippers
- Soldering equipment
- Razor blades
- Wire crimpers
- Electrical tape
- Electrical measurement device
- Test lights
- Multimeter
To help run the behind-the-scenes of your business, you may consider buying the following:
- Laptop or computer
- Stable Internet connection
- Accounting software
- Web host and domain name
- Microsoft Word or Google Docs
- Microsoft Excel
- Mobile phone
- Printer
How to structure your business
The initial stages of setting up an auto electrical business may involve a lot of paperwork. Before anything else, you'll want to register for an Australian Business Number (ABN) and a tax file number (TFN).
Once all of this is in order, the next step is to decide how you want to structure your business and the best fit will depend on your circumstances. Do you want to function as a Sole Trader, Partnership or Company? Here's a quick overview of what each structure can offer you and your business:
- Sole Trader. When you're operating as a Sole Trader, you'll be the only person making the key decisions for your business. You'll also be responsible for any profits or losses your business makes. In terms of tax, you'll need to submit a tax return each financial year.
- Partnership. You can open up a Partnership with a friend or family member. Partnerships have a similar structure to Sole Traders, with the difference being that there are two (or more) people making critical business decisions and who are financially responsible. In a Partnership, you'll need to submit a personal tax return a well as a Partnership tax return.
- Company. Companies are much more complicated business structures. Legally, they are seen as completely separate from you as the director. Key decisions are made by a Company's shareholders who also share in the business's financial responsibilities.
Legal requirements
No-one enjoys the red tape that comes along with owning a business. However, to protect yourself and your business, well-written legal documents are a must. For an auto electrical business, you may find the following useful:
- Cancellation Policy. Implementing a Cancellation Policy can help to reduce last-minute cancellations and no-shows, helping your business to save money in the long run.
- Employment Agreement. If you're hiring someone to work for your business, you'll need an Employment Agreement to outline the employee's rights and obligations.
- Partnership Agreement. If you choose to open your business with a partner, it's best practice to draft and sign a Partnership Agreement. This legal document will outline the rights and responsibilities of each partner while protecting the interests of your business.
It may also be worth speaking to a lawyer from the start to ensure your business meets all the legal requirements. Some lawyers you could speak to include:
- Small business lawyers. These lawyers can help you with all the legal matters affecting small businesses. They'll assist you in drafting and reviewing contracts, structuring your business and complying with consumer and employment laws.
- Commercial lease lawyers. If you decide to rent a commercial space to run your business from, it can be worth having a lawyer look over the contract to make sure all the lease terms are fair and appropriate.
- Business taxation lawyers. As you grow your business, the taxation side of things can become overwhelming. A business taxation lawyer can help you with tax audits, any possible tax disputes or heavy penalties.
Luckily, you don't have to sort out the legal stuff alone. There are plenty of legal professionals and services available at the click of a button. If you simply need help writing up a document, there are plenty of legal templates available online too.
Get access to legal services and documents online
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How to find customers
You need to be visible if you want to attract new customers to your business. This can be achieved through effective marketing and communication. To increase your visibility across the Internet, you need to make sure that you:
- Set up a business website.
- Use Search Engine Optimisation (SEO) best practices and strategies.
- Consider advertising on search engines.
- Utilise social media and search engine business listings like Google My Business.
- Create a flyer or other types of hard copy advertisements and organise letter box drops.
- Network with related services like mechanics or car part stores.
More recently, tradespeople have been using online job marketplaces to advertise their services. These include leading sites such as Airtasker, hipages and Oneflare. The way these marketplaces work is by connecting local businesses with customers in their area.
Generally, on these platforms, people can post a job that they need completing and, if you have the time and the skills to complete it, you can provide a quote for the job. Alternatively, you can post about your services and locals can get in touch with you that way.
Price your services
Many auto electricians operate a simple pricing system and have a fixed hourly rate for their services. Depending on your expertise and experience, you might be able to charge between $80 and $120 an hour, not including materials. Typically, auto electricians also add on a call-out fee for any jobs that require remote assistance.
Every job is different, so you'll need to factor in the size of the job, how complicated it is and the materials you'll need to use. It's good practice to provide your customers with a quote before you begin the job, so everyone knows what to expect.
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Do auto electricians have a good career?
The world shows few signs of losing its reliance on cars to get us from A to B. While day-to-day tasks will require some hard work, auto electricians can receive a good salary in what can be a rewarding career path.
How much do auto electricians earn a year?
Auto electricians typically earn between $60,000 and $100,000 each year. When you own your own auto electrical business, your earning potential could be far higher.
How do I start a successful auto electrical store?
A key factor in running a successful auto electrical store is to provide excellent customer service and to price your services correctly. By providing a fairly priced and high-quality service, your reputation will speak for itself and put you on the path to success.
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