Canadian Electrical Industry News Week

Beehive Electric

Sponsored by Schneider Electric

April 16, 2018

Owning your own business is something many of us have dreamt of doing. Who wouldn’t want to be their own boss? It is a valid question that many entering the electrical trade consider. However, dreams tend to create an image that doesn’t always suit reality. The fact is owning your own small business requires an exceptional amount of work and determination. And even that may not be enough. In Canada Statistics show that 96% of small business survive the first year, 85% survive for three years but only 70% make it to five years.[1] In all about 7000 small businesses in Canada close each year.[2] Electricians are highly trained individuals within their field. They receive significant hands-on training in trade school, but that training does fail to fully provide an understanding of the business portion of running a company. In the digital era there are a lot of online resources available to help individuals in this respect, but filtering through them to find a trustworthy resource can be difficult. This is why partnering with a manufacturer that provides not only technical support but also business tolls and advice, like Schneider Electric, can make dealing with the business side of your company easier.[3]

Surviving in the residential electrical market involves a lot of out of the box thinking and as we have said and can’t stress enough, hard work. To gain insight into the various challenges faced by small electrical contractors EIN sat down with Steve Beeby, Master Electrician, and owner/operator of Beehive Electric, as small residential electrical contracting company based in Elmvale, Ontario.

Steve is a very open individual that truly loves what he does and is proud to own his electrical contracting business that has seen a growing client base in recent years. This is due in large part to Steve’s drive and focus on making his business a success. In discussion with Steve we hit on a number of topics that weigh heavily on the minds of small residential electrical contractors. But first we learn a little about Steve and his company.

Steve began his career in the industry when he was in his mid-twenties. He admits it wasn’t the easiest decision to make knowing that he would be taking a pay cut from his previous employment to begin his education and time as an apprentice but thinking about the long haul he made the decision to invest in his future and began to pursue his dream.

Throughout his apprenticeship he knew he wanted to go into business for himself and can recall that at times when he expressed this it was met with a degree of disbelief from his colleagues, which only served to fuel his ambition.

While obtaining his licence Steve worked in residential, commercial and industrial sectors. And after obtaining his licence he continued working in the industrial sector for several years. Knowing he wanted to launch his own company Steve obtained his credentials as a Master Electrician and initially launched his company as a side business. However, due to unforeseen issues with his current employment Steve made the decision to go into business for himself full-time.

So, with his wife Morgan the two left Southern Ontario and moved several hours north to Elmvale, where Steve began driving his new business in the residential electrical contractor market. He admits it has been tough, and at times very frustrating. Running your own business in this market is not as easy as one might initial think, it is in reality the things you don’t necessarily consider when starting that can have the biggest impact on your business model.

Being a Master Electrician doesn’t prepare you for all the financial obligations involved in operating a business, not to mention the time involved in not only efficiently completing jobs but inspecting and quoting new jobs, overseeing all the necessary permitting requirements, dealing with distributors and inspectors and generally just doing all the necessary office work involved in running a business. Being a small business owner and operator is definitely not your 9-5 job. This again supports the point made that partnering with a manufacturer can be of significant benefit. Schneider Electric recognizes that being an electrical contractor is much more than just technical and product knowledge, its about self marketing, best practices in cost estimation and how to properly deal with customers. Angel Pedrosa, marketing Director of Retail at Schneider Electric notes that “Schneider has redesigned its Contractor Partner Portal to offer not only product information but also business tips, tools and advice.”

We asked Steve if he still thought it was worth it to run a small business with all the additional work and hours you have to put in. He smiles and says that sure, there and times that he has thought about how much easier it would be to work set hours, and that occasionally perhaps his wife might also appreciate that. But in the end, like most electricians, he has pride in what he has built and the services he offers and with his client base consistently growing he wouldn’t go back on his decision for anything.

What type of electrical work are you most often engaged in?

Beehive electric is primarily engaged in the residential electrical market, which Steve notes is quite saturated in Ontario. He admits when he first moved Elmvale it took time to get traction with the high number of residential electricians that were operating in the area, many of whom were well established, some for generations. Undaunted Steve began advertising and taking what jobs he could, and in a short period of time his philosophy on serving the needs of the customer and his personal work ethic began attracting new clients.

The rebounding economy also helped, and Elmvale is well positioned geographically, allowing for work in growing areas such as Wasaga Beach and the Greater Toronto Area.

Having moved from a major metropolitan area to a small town do you recognize different challenges and market trends when considering the two regions?

Steve has a unique position in that he has and does continue to work in both the residential electrical market in major cities and in small towns and rural areas. This provides a valuable insight into the market and how it operates in different geographic areas and how population density affects the residential electrical market.

As we mentioned the market is quite saturated and competition for work is a major concern for residential electrical contractors. New contractors face competition from established businesses in a market that is already stretched.

Steve also identified that there is a strong element of competition when it comes to pleasing the customer, which can become difficult when a small electrical contractor like Beehive Electric is in competition with larger electrical contractors.

Work takes time and jobs pile up and it is not always easy to promise a short deadline for a job if you have only one or two electricians. But turning down a job is also not an option, particularly in small towns where reputation is so important. So, remaining competitive in terms of time frame is a concern, and one that Steve is addressing by growing his business to include a journeyman and second apprentice.

Cost is also a major competitive factor that weighs heavily on electrical contractors, particularly when bidding on a job. The goal is to make money but also be competitively priced which can present issues for someone like Steve who works in various geographic areas. Like absolutely everything pricing varies by area. Costs for electrical work within a major city tends to be higher than in small towns and rural areas. This further creates competition and difficulty for electricians that have taken on jobs that may require a fair amount of travel.

Customers also vary and are interested in different products and services. A new home build in a high-end area focuses more on smart technology and low voltage products and potentially renewable energy while some builds and renovations in other areas are primarily focused on initial cost savings. Steve also notes that he has some customers that are resistant to new technology and products out of potential health concerns with products that relatively new to the market.

What are some of the biggest industry developments affecting your business model and are you concerned about future trends and their affect?

Steve is not really concerned about the changes within the industry having a major affect on his business model. He identifies that it is essential to be flexible and prepared to take on any residential electrical job. He admits there is a necessary learning curve when considering new technology and trends, but it is vital for electrical contractors to adapt with the industry and technology, especially with changes happening as fast as they are.

Niche markets are arising that threaten the traditional role of the residential electrical contractor and the ability to adapt will ensure competitiveness with niche markets involved with modern technology. With our discussion surrounding modern technology we asked Steve his opinion on the affects that things such as home solar units, EV charging and in general the rise of the Smart Home is having on his business. These sectors are rapidly growing and offer new avenues for residential electrical contractors and Beehive Electric is ready to rise to the challenge with new technology Steve enthusiastically notes. The industry is growing, and he intends to stay on top of modern technology, even if that means new hires and expansion, which is on the horizon already for Beehive Electric.

Inevitably the discussion of available products led to purchasing influences. Steve was very open regarding this and noted that there are several factors that influence his purchasing, and that often it is dependent on the specific job, its location and the customer. He admits he has had customers in the past request specific product lines and in other cases cost is the greatest influence for his customers. Steve, like most contractors deal with several distributors to get his customer the best cost for products, and he notes that often the same or comparable products can have quite different prices at different distributors.

Most interesting to note though, and a key factor for a small electrical contractor is convenience. Being the operator as well as the owner if he is on-site and needs a product he essentially must shut down the operation to go and get the part. This shutdown can be extremely expensive as work has stopped and there are additional costs involved such as fuel and vehicle wear. Therefore, a major influencing factor is the convenience offered by companies such as Ideal Supply that run regular deliveries to job sites. This service is especially beneficial to small electrical contractors as their time is extremely valuable.

Finally, we discussed what’s next for Beehive Electric. In a word “expansion” said Steve. He has been extremely successful in penetrating the local market and is now at a point where him and apprentice are unable to keep up with demand. Steve is currently looking for a Journeyman and another apprentice to bring on.

EIN is grateful to have had the time to sit down with Steve and have him discuss his business and a number of the concerns affecting small electrical residential contractors. Considerations such as competition in pricing and time, the involvement required to be an owner and operator, the concerns with products and job efficiency have all been identified and are certainly not localized to Steve or his company. These concerns are affecting small electrical contractors across the country, particularly as technology changes and niche markets are demanding shifts in the business model and services provided by residential electrical contractors.

Therefore, partnerships are more appealing now than ever as they can provide aid and new avenues to make sure residential electrical contractors are positioned to compete and adapt to the market. Partner opportunities such as those offered by Schneider Electric proved direct access to training modules designed to help expand your business and provides offers and solutions that helps give your business a competitive edge.

Watch a portion of the interview with Steve Beeby Here

 

[1] https://www.thebalance.com/why-do-small-businesses-fail-2948582

[2] https://www.thebalance.com/why-do-small-businesses-fail-2948582

[3] https://partner.schneider-electric.com/partners/Menu/Registration?country=CA&language=en_CA&BT=LC&AF=LC1&pf=CA-LC-LC2&osi=EF_APR_EN

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Electrical Industry News Week

This special weekly newsletter has the broadest reach of those that are involved in all aspects of the electrical industry including electrical construction and maintenance professionals and electrical specifying engineers across Canada. EIN is designed to provide electrical professionals’ insight and intelligence on those developments in the industry that effect design, specification, installation of electrical equipment. From corporate news to new technologies and insightful opinions EIN will become your first read in the electrical industry in Canada. Published weekly – every Tuesday
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