Self-employed as an electrician - how do you set up or buy your own electrical company?

One way to find work and earn money as a self-employed electrician is to set up your own electrical company. You can either start your own electrical business from scratch or buy a ready-made one. For the latter, there are special websites where fully equipped electrical businesses for sale are listed – just like electrical appliances waiting for a new home.

Do you want to become self-employed as an electrician? Then there are a few important things to consider. From business registration to legal requirements and customer acquisition – we give you a compact overview of the key steps to becoming a self-employed electrician and successfully navigating your way into the trade.

Estimated reading time: 11 minutes

How do you set up your own electrical company?

The market in Germany is buzzing – and not just from voltage. With strong demand and the electrical industry growing steadily, there’s never been a better time to start your own electrical company. A well-positioned electrical business in Germany can seriously spark success. Just keep in mind: it’s not all plug-and-play. Real success depends on solid market research and your ability to hire qualified electricians who know their way around wires and watts. In short, if you want to shine in this field, these are the key success factors for electrical companies.

What are the requirements for setting up a company?

For the founder of the company, certain personal prerequisites must be met. These include

• Self-motivation: Starting a business is not an easy endeavour and there are many hurdles to overcome. In order to tackle these, there must be a corresponding will and desire to succeed.
• Ability to communicate: Relationships with customers must be established. A network with other companies and suppliers is also important. But all of this also means that communication is required.
• Organisational talent: Projects have to be planned and implemented. Day-to-day business has to be managed and all this has to be done with a team.
• Willingness to take risks: You are taking a financial risk not only when you set up a company, but also when you take on projects. It must be possible for you to do this without the emotional burden becoming too great.
• Entrepreneurial thinking: As an entrepreneur, it's all about profit and this must be understood as such. Finally, specialist knowledge must also be available. Training as an electrician is therefore absolutely essential.

Now you're probably wondering whether you can start your own business without a master craftsman title. The short answer is: yes – but with limitations. It’s possible either by partnering with a certified master craftsman or by working in one of the so-called licence-free trades. There are also certain jobs for electronics technicians that you can take on without the title.

Starting your own company - what are the steps?

To get started, you still need your own market analysisThis will allow you to see whether it is worth taking the step into self-employment as an electrician and in which area it can work best. You must have a business plan and register your business. You also need to register with the Chamber of Commerce.

The startup costs costs for an electrical business vary, but experience shows they are around 80,000 €. This includes the capital requirements, the business registration fees, and the contribution to the Chamber of Commerce .

For the new company, the right legal structure for your electrical business can be chosen. There are, for example, the GmbH, the UG, and the GbR. You also need to have at least a basic understanding of taxes for electricians. Income tax, corporation tax, VAT (sales tax), wage tax, and trade tax are particularly relevant for you. The exact amount of these business taxes in Germany depends on various factors, including the legal form of the company.

Nowadays, setting up a company is easier than ever. It can be done online in just a few days. There are established portals and specialised lawyers to ensure that everything runs smoothly from the outset. The same platforms also offer support with tax issues and other aspects of setting up a company.

Should You Buy an Established Electrical Company?

If you want to own an electrical business without having to build and set up everything first, there is another way than setting up. You can also simply buy a fully equipped business and then offer your electrical service. This means you get everything you need. You have the business premises and the workshop, you get the company's vehicles and you may even be able to take on the employees.

Is there a catch? Not in principle. You just start at a higher level. But you need to know a bit about running a business. The whole thing often costs a little more, but in return you not only get a registered business, but also all the things necessary, like computers, tools and premises, that are important for a business to function.

In theory, you don't need a master craftsman's qualification here either. However, you are then obliged to hire the appropriate specialist staff as quickly as possible - unless you take on this task yourself in the company. To do this, you must do the following:

• Go to the relevant sites and find the various adverts of companies looking for a new owner.
• Find your dream company and reach out to the seller – but don’t dive in headfirst. Make sure to get a clear overview beforehand.
• Have all the important figures shown to you and think about whether they make sense for you. This applies both from a purchasing perspective when buying an electrical company – for example, whether you’re getting enough equipment, tools, and materials for your investment – and from a business point of view. Here, financial due diligence is crucial: check what obligations exist for the business, what the customer base looks like, and what potential the location offers for future growth.

In principle, the aim is to find out whether the company is doing well. If this is the case, then it is worth taking over the business. In this context, you should clarify above all whether the owner of a well-running business is simply retiring or whether an entrepreneur wants to leave a sinking ship. Make sure that you also take over the contracts of the suppliers and the customer base with the business. No other arrangement should be made here.

Is it worth having your own electrical company?

Regardless of whether you are setting up a new business or buying one, it is always right to ask whether it is worth owning your own electrical company at all. The answer to this question can be found by looking at the economy.

The electrical industry in Germany has a robust dynamic in terms of innovation and growth. This suggests that many customers will continue to flock to electrical companies in the near future.

Turnover in the electrical industry is increasing. At the same time, the proportion of skilled workers in this sector is also increasing. In 2021, around 20 billion euros were invested in research and development in this area. Over a period of 5 years, 7,200 new patents were registered.

For 2022, the turnover of the entire electrical industry was 225 billion euros. The export value amounted to 245 billion euros. In the same period, the number of employees rose by 2.7% to 898,000 workers. In 2022 and 2023, more than 62,900 students were also enrolled in electrical engineering and electronics degree programmes.

The turnover of a small to medium-sized electrical company is typically between €50,000 and €5 million per year. This shows that, both from an economic perspective and an individual business standpoint, owning your own electrical company still offers strong profit potential – especially for those looking to succeed in the small electrical business sector.

1. The market analysis

Regardless of whether you want to set up or buy your business, you should always start by analysing the market. This will help you to recognise whether it is worth taking the step into self-employment in a particular region and what opportunities are available to you there.

A market analysis begins by defining the target area of the market. In other words, based on age, income and certain behavioural characteristics, you decide who you want to target with your company's offer. Do you want to help families repair or extend existing electrical wiring at home? Or would you like to help on construction sites and lay cables? Would you like to support industrial companies with your service? Would you like to become a subcontractor?

Based on your target market, you should determine how big your market is. This means that you need to research and analyse to what extent your offer will be in demand and what turnover can be achieved with it. You should use data from the present as a basis for estimating future revenue. It's not about making a profit, but about creating realistic forecasts.

The next step is to analyse the competition. Are there other companies operating in this field? What market share do they have, what turnover do they generate and what are their successes? Annual reports and other sources on the Internet can be used to assess what barriers the market has for new companies and what strengths are in demand and what weaknesses the competition has.

After this you should do the customer analysis. Focus on the customers who could generate the most revenue for you. Research their wishes and needs so that you can prepare for them.

Finally, analyse the market potential. Analyse the current situation and past developments. From this, you can deduce what opportunities and profit prospects are available to you.

2. The financing of an electrical company

Financing is a particularly important point when setting up or buying your own business. This must cover both the investment for the opening and the purchase itself as well as the running costs of the initial period.

Financing can be obtained from these funds:

• Equity: This gives you independence, but you also bear the risk entirely on your own.
• Bank loans or other loans: This means you are dependent on convincing others of your vision. However, you do not lose all your money if the business does not make a profit as planned.
• State subsidies: Certain conditions must be met for this, but the sum does not have to be repaid in every case.
• Investors: You allow others to share in the profits of the business in return for their money. In return, they bear a considerable part of the risk, while you have less money in your own pocket if you are successful.

Absolutely do not plan with the last cent in your pocket. Be aware that it will take longer, cost more, and be more complicated than expected before your business becomes profitable. This period needs to be bridged, and this risk must be covered.

3. The hiring of employees

It is particularly important to have qualified employees if you want to buy an existing business but do not yet have a master craftsman's qualification. Of course, you also need to hire the appropriate labour if you need it.

Hiring employees may seem simple at first glance, but various labour law provisions must be observed when hiring electricians or staff for your electrical company. This includes the following steps:

• A payroll accounting system must be set up
• The startup registration with the employers' liability insurance association (BG) must take place to ensure compliance with health and safety regulations
• You must familiarise yourself with the protection against dismissal-regulations in terms of working hours and minimum wage

Whether you set up your own electrical business or take over an existing company depends on your goals, your experience and your willingness to take risks. Setting up a new business gives you maximum freedom, but requires more time and capital investment. Buying an existing business can make it easier for you to get started - with an existing customer base, established structures and faster revenue generation. Both paths lead to self-employment - the important thing is that you are well prepared, fulfil the legal and professional requirements and start with a clear plan.