Electrician made redundant so started business. HELP! I got made redundant as an electrician. This post is about my experience of being made redundant and taking the opportunity to set up an electrical contracting company.
I remember it well. I was 22 years old working away from home on an 18 month project in Nottingham and we got called to the office at short notice on a Monday.
Everybody within the company was there. There were many concerned faces and a lot of confusion. You knew something serious was happening because why would every employee be called into the office on the same day? The management were all quiet and looking down at the floor. The atmosphere was intense.
Then we hear the words “You’re being made redundant”.
You could see on most peoples faces that they were worried. Worried about money and worried about what they were supposed to do next! Some had worked for the company for a very long time since leaving school and didn’t know any different. It was the end of an era for many.
I’m an electrician. I’m a good electrician. What am I worried about being laid off for?
Was I worried about being made redundant?
Was I worried? Nope. I was as cool as a cucumber. I’m an electrician. I’m a good electrician. What am I worried about being laid off for?
The company had been going for over 50 years. It was well established and made a good name for itself in various sectors, primarily working on petrol filling stations. Guys who had worked there for 20 years were laid off. Just like that with no warning.
When the 2008 recession struck, the industry changed. Nobody wanted to spend money. It was a worrying and uncertain time. In my career it was the first of its kind and my god it affected a lot of people. I know so many people who were made redundant and businesses that went bust. Some trades people were out of work for over a year!
However, the company I worked for were busy. Our clients still had projects starting and all in all I saw many buildings being constructed, particularly in London. My hours didn’t decrease at all. I suppose there must have been changes within the company itself but due to my work ethic and making myself available at any time, I believe I was at the front of peoples minds when a job came in because I was more capable than most. I would work anywhere, do anything, at any time. Forgetting employment law for a second, if there was a list of engineers and they had to choose a few to get rid of, let’s just say I would be high up the ‘safe’ list.
At the time of redundancy in June 2010, I was working on a new build house. It was enormous and high end. It was a fantastic project which I was running. I had spent nearly a year there and Nottingham felt like my second home. We made friends up there, went to BBQ’s, went out drinking in town and started to get to know the area.
Electrician made redundant in the middle of the recession after buying first home
The previous summer I had just bought my first home; a right dive but due to the recession, prices were low and I got myself a bargain. One that I planned to refurbish. I used to get home Friday evening from working away and got straight to work on my house by stripping back the walls, rewiring, and erecting stud walls. Life seemed busy like normal. I was thoroughly enjoying myself.
When we were told on the Sunday to come to the office the next day, I suspected something like what would happen but the unknown didn’t bother me. I enjoyed my Sunday, had a roast and drinks and slept well.
When we were told the ‘bad’ news I instantly felt sorry for the many people who were out of jobs. After all, many of them were my friends. We were told that the company relied on a bank overdraft of £70k due to the directors borrowing money to buy the company from the previous owner. Allegedly, due to the recession, Barclays bank pulled the overdraft whilst the company was heavily into it and went into administration even though they had plenty of work including purchase orders and contract maintenance. It’s disgusting really to think a bank doesn’t care in the slightest about an individual but is always happy to take your money and gamble with it as they wish. Sorry, did I say gamble? I meant invest. Or did I?
I got made redundant and I was working a couple of hours later!
What did I do after being told I am redundant?
My old contracts manager pulled me to one side and said “do you fancy starting up a new company?” I thought he meant work for him, but he wanted to start a business with me. I didn’t expect that in the slightest. I told him I’d let him know tomorrow. There was a lot to think about, I didn’t know the first thing about business! I was just an electrician. He told me we have to act quick. He was due to send a couple of lads to a pre-planned shut down that Monday night for a very good client and didn’t want to let them down so I agreed to help out. I literally drove home, had a bite to eat and went back out to work. I got made redundant and I was working a couple of hours later!
News travels fast. I had three job offers by the end of the day! That is the exact reason why I wasn’t worried. I knew what I was worth. I am confident in my ability and skill and know how to land on my feet. I have always put myself out there. Although the offers were fantastic which I really appreciated, I thought I’d try my luck and take up my old boss’s offer.
I went from electrician to company director over night!
There you go, I had set up my first business
The following day we met up and made an action plan. Our new Limited company was incorporated! I went from being an electrician to a company director over night.
Funnily enough I had already thought of the name and made the logo a few months prior. I wasn’t planning on leaving my old company but I am always coming up with ideas and potential plans. I don’t think my new business partner was too impressed with the name at the time but quite frankly he didn’t have much of a choice. We were working to make things happen on a tight time frame.
That day we asked 3 of the best engineers from the old company to work for us. They all agreed and were all in work by the end of the week. Two of them still work for us. The other retired whilst working for us.
We concentrated on contacting the clients who were good payers. After all there were a load of clients who needed work doing. We hit the ground running. We had no option but to learn to run before we could walk. The Nottingham project was still unfinished and they needed an electrical contractor to complete so we simply took over as our new company. One of our guys was already working on the job underneath me so it was perfect. He took over running it.
A lot of people put great trust in us and I am forever grateful.
A lot of people put great trust in us and I am forever grateful. Believe me, I had to do my fair share of what I call juggling but I am am honest person and I feel honesty goes a long way. I delivered all of my promises.
Managing cash flow is so important in construction
The issue with starting up a company at such a rate is cash flow. Contrary to belief, it takes a lot of cash to run an electrical contractors. The bigger the jobs you take on, the more cash you need and bigger the risk. Good luck trying to get a bank loan at that time! I had to finance it somehow. This is where suppliers are more important than you may think. Most electrical wholesalers are fair sized companies with serious amounts of financial resource. They need it to buy in bulk to reduce their costs to maximise margins. Many will be supplying projects with hundreds of thousands of pounds worth of goods.
Two wholesalers in particular were willing to supply goods with very kind credit terms. Again, these people knew us. We had purchase orders from clients, most of which were clients regarded as financially safe so it was enough to satisfy providing credit. I also struck a deal with two large clients that they would purchase the materials direct from the supplier and we would supply labour only. They get reduced cost of works due to zero mark up from us on materials which formed the bulk of the cost. Everyone was happy. It would allow us to trade for a couple of months without having to buy materials.
Paying for labour was a different story. I had about £15k in the bank which I was using for my home refurbishment (this was before having kids by the way. Young free and little responsibility. Well, until this point). I set aside some money for setting up the company and to buy a van and the rest was there to last for a while because I didn’t know exactly when I was next getting paid.
Buying my first van
The week we started up, I literally searched on Auto Trader for a van, went with £4k in cash and was on mission to get one that day. I succeeded! The first van was the best of a bad bunch of second hand white vans that were being sold by Derek Trotter like characters.
Two of our new guys plus my business partner worked for the last company for about 15-17 years and were given VERY generous redundancy pay. That really helped because they didn’t need paying immediately. The other received help from family until we could pay him, but he was the first to be paid. Again, very grateful to those people who trusted me.
I cancelled gym membership, Sky and anything that I didn’t NEED to reduce my outgoings. I was screwed over by redundancy because you are only paid an amount from the age of 21. I was 22 and had worked for the company for 3 and a half years so was only entitled to redundancy for one year’s service which was a few hundred quid. Plus they only pay a set amount per week as a maximum regardless of your wage. Because I was working away, I had accumulated a large amount of expenses and I had worked a lot of hours that month so I was totally out of pocket. I didn’t even get paid expenses. I can’t help but feel my whole life I have worked my arse off, always paid my taxes, yet penalised more than others regarding any form of government benefit. I can see why this country is a complete mess because the less you work, the more you are entitled to! The system isn’t for people like me.
The money started rolling in
We started getting paid for work and the priority was to pay the guys who worked for us and suppliers. We had to make do with what we had including old laptops that were slower than a snail, working from our cars, and making it up as we went. Our office was a shed in the back garden using a shitty old Samsung printer that someone donated to us. God I hated that thing. It barely worked. I wanted to beat it with a stick on a regular basis. Times were tough! As soon as money came in, it went straight back out paying someone we owed in priority order or equipment that we needed to complete jobs.
Initially the business had been financed through generosity and trust. I didn’t have to dive into my pockets too much at first (later on I had to make investments into the company), but due to the nature of the business start up and the need to finance the cash flow, I couldn’t pay myself for 5 months. Yes 5 whole months of no pay! I was scraping the bottom of the barrel. The guys had to be paid before me and we owed suppliers. There literally wasn’t money in the bank to pay myself! I was at breaking point but the money started rolling in and we got paid for a couple of large jobs. I got paid 5 months of pay in one go just before Christmas!
What did I do? I went out and bought a £3k Tag Heuer watch!
I didn’t get paid for 5 months. What was the first thing I bought when I was paid? A £3k Tag Heuer watch!
That watch had sentimental value for obvious reasons but I recently sold it to buy a holiday! I bought it as a present to myself for the hard work I had put in. It felt good at the time and it was a great watch but I wouldn’t do the same now. Did the £3k watch bring me much joy? Not as much as I value experiences with my beautiful wife and children, but my goodness I loved that watch! These days I’d choose family experiences over luxury consumables any day of the week. Life changes, ey?
Managing finance was vital
Besides the watch purchase, I made sure I was careful with money personally and within the business. Cash flow is key, without cash in the bank it wouldn’t have worked. We started investing in plant, equipment, vehicles, technology, training, etc… But all in priority order.
A business lesson I learnt was that you don’t necessarily need your own personal cash to fund anything. You can use money that belongs to others. I want to strongly follow up that statement with – don’t just gamble with someone’s money with little care. It has to be in their interest, often with a larger return and make sure you take extra care when it belongs to someone else. Debt isn’t necessarily a bad thing. Just make sure you’re on the right side of your debts and always pay your debts. Christ, I sound like a Lannister from Game of Thrones!
Debt isn’t necessarily a bad thing. Just make sure you’re on the right side of your debts and always pay your debts
I have never been a fan of banks,I always had terrible experiences with them. It is funny; when I first started up they made it very difficult in the beginning but as soon as they start seeing tens of thousands, then hundreds of thousands, they all of a sudden want to know you and feel they can interfere with your business by pretending to be a helping hand. Everything they offer you is for them, not you. Arguably, terms from every money lender will suit them more than it will suit you, but banks are just greedy. They do as they wish with your money, dictate to you how much they will guarantee, offer poor interest and as soon as something goes wrong on your part, you will be nailed. Yet we all need money to survive that runs through banks.
It was a very challenging time for everyone. The guys who worked for us were experiencing change. They went from job security in a well established company to a start up growing company which was running around like a headless chicken. Sometimes it’s the small things in operations that are taken for granted like not having phone parking set up working in London. It can completely mess up your morning trying to organise it, but we pulled through every challenge one way or the other.
How was home life starting a business?
Home wasn’t great either. I was working crazy hours, then getting home and working on the borrowed laptop. My partner at the time wasn’t very supportive at all. I won’t go into much detail but the relationship went sour very quickly. We didn’t last long after being together for almost four years. I believe everything happens for a reason! I enjoyed being single for some time, then later went on to meet my future wife and mother of my kids. It all turned out for the best and I wouldn’t be who I am today without my wife.
After trading for 6 months, we were awarded our first major maintenance contract with a large client. That was no easy task! It took a lot of running around and proving what we were worth. It even cost in the beginning because we had to neglect a couple of jobs to attend emergency call outs and attend site surveys at a couple of hours notice. The risk paid off! Once we started our first major contract, although hard work, it was all uphill. Our name was on the map. We could afford to rent an office in Sutton, Surrey, were paid regularly and we soon became a professional business.
Redundancy? Probably one of the best things that happened to me!
Want to find out more about my career progression? Click here.
Written by Dan Jackson AKA Dans the Engineer originally in Kent on 20th June 2018 and re-published
P.S. I appreciate my situation may differ from many other people. Being made redundant can be awful and very unsettling. I believe in continuity of personal development, always learning and aiming to become the best at your job. That way, in the event you are made redundant, you provide yourself with better chances and choices than those who do not. Don’t ever be scared of change, embrace it!
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