Electrician Made Redundant So Started Business

Electrician made redundant

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.

Not a bad little number to land

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

I had a few grand in my back pocket and set out to buy my first work horse

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?

Electrician Made Redundant
After not being paid for 5 months, the first thing I bought was a Tag Heuer watch

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!

#redundancy #employment #businessstartup #danstheengineer #AtTheConstructionSite

Tips On How To Prevent Non Payment

How To Prevent Non Payment

Tips on how to prevent a non payment for construction works. Many tradesmen are knocked for money or receive late payment for work they have carried out. Here are some tips on how to prevent non payment.

Most tradespeople at some point will encounter a non payment or or being knocked for money for works they have carried out. It happens regularly to many for less than £100 to tens of thousands of pounds.

Chasing money and invoicing seems like a chore, but it doesn’t have to be.

Having been in contracting since I left school and involved in the whole process from quotation to invoicing, I have first hand experience and have been involved in working directly for Mrs Jones, the consumer changing sockets to 6 figure blue chip projects.

I have suffered non payment and each time I had to learn why it had happened and how to prevent it happening again. My largest non payment was £60k for a retail shop fit out for a main contractor. Fortunately, I was able to recover the financial set back, but many wouldn’t.

I am here to share my experience, tell you about how I learnt from my mistakes to help you.

Not being paid for work carried out can have a huge impact on somebody’s mental health and cause issues with their home life effecting loved ones.

Let’s have a look at my top Tips On How To Prevent Non Payment

How To Prevent Non Payment

1. Choose Your Customer

Many seem to think that anyone asking for a quote and orders work is a client and guaranteed revenue. Yes, they can order work and yes, if they agree to works they are entering a contract. But, it doesn’t mean you will be paid.

Carrying out vetting of a client is a very easy step into increasing the chance you will be paid.

If you are working for commercial clients such as Limited (Ltd) companies, you can carry out credit checks on them. There are a number of credit services such as CreditSafe or Experian where you have the ability to look up and monitor companies financial movements. Some services and packages allow you to monitor directors.

These services notify you if a company has a bad credit rating and will highlight if the risk is high or if there are any changes within the companies that you might want to look into.

Carry out FREE searches on Companies House

You also have the ability to search Companies House where businesses have to file financial information. There is plenty of information that you can look up on Companies House to ensure they client is who they say they are and usually you can view their financial history. Unless you have knowledge on reading accounts, you may struggle to interpret some of the information so a service mentioned previously would really be beneficial.

Working directly for a landlord or a consumer such as a homeowner may prove a little trickier to credit check and vet. However, I feel the risk can fluctuate depending on where you sourced the work and whether they are willing to pay a deposit.

We shall cover deposit payments in a little while. Where the client came from is important. If you source your work from Checkatrade, you will be getting a Checkatrade client. This is someone who uses Checkatrade as a way to find tradesmen. There will be a reason someone uses Checkatrade over the other review sites. Likewise if you source work through Which Trusted Traders, you will receive a Which client. This is often someone who does their homework, and takes note of Which’s guide on employing a trades person. If you source your work through Facebook, you will get yourself a Facebook client. This is someone who searches Facebook for tradesmen.

Ask yourself, what type of person searches each of the platforms to find a person to work in their home. There is no doubt a relation between the type of client each platform attracts and their buying behaviours will reflect on the risk of payment.

You have a choice who you work for and more important who you attract. Attracting the right customer is something I work through with my clients that I business coach!

2. Detail your quotation

A quotation is a legal document. It includes what your work involves should the client agree. If your quotation (your legal document) contain a narrative that can be interpreted incorrectly, legally you are open to abuse.

If you quote in detail what work you are carrying out such as each item showing what brand you use, how you do it and the location, there is no argument from either party should a payment dispute occur.

One electrician came to me recently and told me he sends quotes via text message. It would be a few short sentences and the price. The works and how they are being carried out is totally open to interpretation and abuse.

I believe it is important to ensure both parties of the agreement are crystal clear on what both receive. Writing “Install 4 twin sockets” isn’t good enough. I understand detailing a quote takes up more time, but it will save time further down the line in the event of any problem. You can quite easily create templates as well to increase your efficiency and reduce time spent on writing quotations. I am certainly not suggesting breaking down the cost of each item, just ensuring they are written down.

3. Provide your Terms and Conditions

Not only does the quotation form part of the legal document, so does the terms and conditions. These are to protect YOU and the client. It is what both parties agree which forms part of the contract.

Many contractors terms and conditions are poor and open to abuse. Many don’t even have terms and conditions.

I get asked all the time if I recommend employing a solicitor to create terms and conditions. I would suggest it is a good practice because they are able to create a document in legal terms to protect you . However, it can cost an arm and a stick and I have found in the past that you will be expected to alter terms and conditions to suit a particular client or contract.

It is okay to have a simple set of terms and conditions. I share and provide resources to my clients who I coach.

It is vital to have the client accept the terms and conditions. It would be down to you to prove they have read and agreed to them. A verbal instruction is a contract but could be tricky to prove in court so in writing is far better. You could email a quotation along with the terms and conditions and ask the client to respond by accepting the quotation and agreeing to the terms and conditions and quoting the quote number and total amount.

You could have your terms and conditions stated on your website and a link sent to the client.

4. Consider taking deposit and/or staged payments

As mentioned earlier, it is important to vet and assess who you work for. I believe it is perfectly reasonable to expect some deposit payment at the beginning of a project because there will always be some form of expense to you.

In the early days of running my business, I never asked for deposits. I started to because I had a few non paying clients and changed my procedures. I immediately found the type of client who had a problem with paying for deposit was usually the type who would argue the final invoice.

Someone once said to me “Why would I pay you £500 when I don’t know you?”. I responded with “Why would I do £1,000 worth of work for you when I don’t know you?”.

A deposit is fair for both parties. I also assured my clients that I can be found all over the internet, my reviews were fantastic and I was very easily available on social media which helped provide trust into my clients or potential clients.

Stage payments are vital for larger projects to aid cash flow. Even on a smaller scale I think it is fair to request staged payments such as every two weeks or monthly if you can finance a month. Some contractors do not do this at all.

5. Do a bloody good job!

“Every contract to supply a service is to be treated as including a term that the trader must perform the service with reasonable care and skill”.

Section 49 of the Consumers Rights Act 2015

If you provide the client with the work you promised, there is no argument for not paying. This of course doesn’t prevent a non payment client, but is certainly helps.

Section 49 of the Consumers Rights Act 2015 states “Every contract to supply a service is to be treated as including a term that the trader must perform the service with reasonable care and skill”.

If you do perform the service with reasonable care and skill, the client has a right to dispute full payment for the services you carried out! Yes!!! You read correctly. It is completely open to interpretation from a consumer when they owe you money.

Of course, you could probably argue your case but being proactive about non payments is far better than being reactive.

I would recommend getting reviews once you complete work or at least ask for feedback. If the client states they are happy, this could go in your favour if a case ever went to court.

Plus, I personally feel we should always strive to provide the best possible service we can.

6. Detail your invoice

An invoice forms part of the trail of documentation for many reasons including HMRC and accounting. I have seen no end of invoices that say just “Electrical Works” as a description. For some clients, this may seem acceptable, but imagine if you work for a client who has multiple invoices to pay each month and perhaps many electrical invoices to pay each month.

The invoice should correlate with a payment, but more importantly the client should be able to approve what they are paying for.

I recommend on your invoice besides the usual information, you provide a quotation number, worksheets to prove completion of the work and even certificate / report numbers. Always ensure you write the date the works were completed. The invoice date might differ to the completion date.

It is also vital to make it clear on your invoice how the client can pay. This should be set out in the terms and conditions they agreed originally, but don’t forget, sometimes the person paying isn’t always the contact who you liaise with for doing the work.

Listing the payment methods is vital. They won’t pay if they don’t know how!!!

7. Make it easy to pay

Us humans typically like the path of least resistance, just like electricity.

Us humans typically like the path of least resistance, just like electricity. Being paid via BACS online bank transfer is often best for you because you get the money sent straight to your bank. However, it can be a pain for a client to make a BACS payment.

I think you should consider taking card and credit card payments and even PayPal. It is so easy to punch in the card details and pay via card. There are so many different payment solutions. Some contractors use card machines so you don’t leave without being paid. This could work in some situations but if you work for landlords you might not see the landlord. There are also payment methods done online.

As soon as I offered the easy payment methods, not a single invoice has taken longer than 24 hours to be paid.

I use Stripe card payments and PayPal and even though BACS is my preferred because it costs me nothing, I don’t mind paying the small fees Stripe and PayPal charge because it provides me with quick and easy payments. Originally I accepted BACS only for my business coaching, but as soon as I offered the alternative methods, not a single invoice has taken longer than 24 hours to be paid.

I refused to accept cheque as a contractor because there is a lot of admin time involved in cashing the cheque at the bank. And my bank charged me for the pleasure! It is a very outdated method of payment.

8. Invoice quickly

Get into the habit of invoicing quickly. The quicker you invoice, the quicker you can get paid! It is a simple formula.

Often, I used to send the client the invoice BEFORE we started so they can pay a deposit and they have the information ready to pay when the work is complete.

It is important to make sure the client gets the invoice quickly so it is fresh in their minds once the job is complete to approve payment.

Many contractors who invoice at the end of the month and spend a day doing so. 30 days is a long time to wait for money so if you invoice immediately, you will improve your cash flow. This is why I think the use of invoicing software should be considered.

9. Use invoicing software

The days of manual invoicing are pointless. If you only send a couple of invoices a year, sure, sending invoices manually makes sense. However, there are so many low cost solutions that even the self-employed working for one organisation should consider invoicing software.

The benefits of invoicing software are:

  • Quick invoicing
  • Easy record of incoming and outgoing payments
  • Many can integrate with payment methods such as card payments
  • Can be used for accountancy to satisfy HMRC and companies house
  • Saves time!!!!!

I use Zoho Books and although it works perfectly for me, I am in the process of trying out a few different types of software and will create a blog post soon on what I recommend for contractors.

What I love about the software and many will be similar, is that I can invoice in seconds. If someone places an order, I can add them as a contact press a couple of buttons on my mobile or laptop and POW! Invoice sent.

The client can then pay me via my payment methods and when they do, I get notified of a payment. I also have a dash board which shows outstanding payments and can press a button to send a gentle reminder that payment is overdue.

The software records my invoices and I can upload my business expenses very easily.

Saving time in business is vital. The more time you have as a business owner, the better. Invoicing is an important but a task that might not be best use of your time. If you grow and have staff working for you, paying somebody else to invoice might be the solution but it might be just as cost effective using clever software to do most of it for you.

This then allows you to spend more time managing your team, marketing, networking or creating sales.

10. Communicate

Communication is arguably the number 1 most important thing in any relationship whether it is a business, friendship or intimate relationship.

A client should be kept informed throughout the whole process of the project you are doing for them.

Don’t forget, communication is a two way thing. You can talk to the other person and listen when they talk to you.

Lack of communication is a very easy way for a break down in trust or interest. If you want to be paid it is important to maintain the relationship.

I truly believe that if you have a good relationship with your client, they are more likely to pay because they have an emotional attachment. Whereas if you lack that human connection, there is less of an emotional tie which does play a part in their moral decisions. Of course, this isn’t the case all the time.

11. Go legal

Unfortunately, contracting can be full of conflict and legal disputes. As a business owner you have to be willing to face this at some point in your business journey.

Don’t ever be afraid to engage with a solicitor and take legal action against somebody who owes you money.

I would always advise to use legal action as the last resort because it can be very stressful and there’s still no guarantee of getting paid.

There are also alternative methods to consulting a solicitor such as a debt collection company.

In either case, it is important to maintain your documentation for the project from client enquiry, to quotation, to certification, to invoice. I am soon offering memberships on my website where you can download a folder system on your computer to record and update the all important documents required for every job you do!

If you are interested in the membership, let me know below:

JOIN THE CLUB!!!!

Fill out the form to sign up to our mailing list where you will receive an update of the membership when it is up and running!

You can watch my YouTube video on my Tips On How To Prevent Non Payment below!

I hope these tips on how to prevent non payment have been useful. Feel free to comment below to let me know your experience or if you have any questions.

Written by Dan Jackson AKA Dans the Engineer in Bali, Indonesia

Disclaimer: All content within this blog post and website is the opinion only of Dans the Engineer and should you choose to take any of the advice or information given, we accept no responsibility for any loss you may occur.

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