An electrical contractor business plan has to answer three questions that most small-business plans never face. Can a licensed master electrician pull permits for you? Will your crews sell enough hours to cover the hours you pay for? And can you carry commercial invoices for two or three months without running out of cash? A lot of sample plans skip all three. They make up a company, assume a 50% gross margin and use round numbers nobody can trace.
This guide goes the other way. It has three parts: a template (each section, what goes in it and what lenders check), an input sheet with a simple method for estimating your own job count, and a full sample plan for a fictional Fort Worth shop. The sample includes startup costs, three years of projections and the math behind each line. The numbers are modeled, not survey averages. The idea is to show how the lines connect, so you can swap in your own figures.
Four changes in 2026 affect the plan:
- Electrical code. Texas moved to the 2026 National Electrical Code for permits applied for on or after September 1, 2026. The Texas Commission of Licensing and Regulation adopted the 2026 NEC as the state electrical code, with a limited exception for certain outdoor GFCI requirements.
- EV charger tax credit. The Section 30C alternative fuel vehicle refueling property credit does not apply to property placed in service after June 30, 2026. Even before that date it only covered property in eligible locations (low-income or non-urban census tracts), so it was never a blanket home charger credit.
- Copper tariffs. A 50% tariff on certain semi-finished copper products and copper-intensive derivative goods took effect August 1, 2025. It applies to goods covered by the tariff classifications, based on their copper content, and most contractors buy from domestic suppliers instead of importing. Treat it as a risk to purchase prices, not as an automatic 50% increase on every cable or component.
- SBA lending rules. SBA published SOP 50 10 8.1 on August 14, 2026, and it took effect October 1, 2026. It applies to applications that receive an SBA loan number on or after that date, and it replaces SOP 50 10 8 (effective June 1, 2025) for those files. The financing section below was checked against this change on October 20, 2026.
Electrical contractor business plan template: what goes in each section
| Section | What to write | Electrical detail that gets noticed |
|---|---|---|
| Executive summary | One page: services, market, funding ask, headline numbers | Revenue per paid field hour, DSCR, commercial share of revenue |
| Company description | Entity, ownership, licenses, insurance | Who is the master of record, their ownership %, workers’ comp status |
| Market analysis | Service area, segments, competitors | Homes by age inside your drive-time radius, permit counts |
| Services and pricing | Menu, flat-rate vs. time-and-materials, terms | Job-level margin, materials markup, deposit and retainage terms |
| Marketing and sales | Channels, budget, cost per job | Cost per lead by channel, inspector and realtor referrals, bid pipeline |
| Operations | Crews, vans, dispatch, permits, inspections | Paid hours vs. job hours, truck stock, first-pass inspection rate |
| Management | Who runs field work, estimating, books | Backup plan if the master of record is unavailable |
| Financial plan | Startup costs, 3-year P&L, monthly cash flow, break-even | Owner pay included, A/R and retainage, cash trough by month |
| Funding request | Amount, use of funds, repayment | Equity injection, collateral, DSCR at market-rate owner pay |
If you are short on time, finish operations, working capital and licensing first. Those are the sections lenders push on, and they are where most electrical plans are thin.
Gather your inputs first
The template tells you what to write. This sheet tells you which numbers to bring. Fill in the right-hand column with your own data and you can rebuild every table in the sample plan from it.
| Input | Brightline (sample) value | Where to get yours |
|---|---|---|
| Average ticket by job category | Service $460, panel $3,500, remodel/EV/generator $2,600, commercial $6,400 | Your last 12 months of invoices, or quotes from three local shops |
| Materials share of price | About 32.5% (materials only) | Supply-house price lists on a sample of 5–10 real jobs |
| Job hours per job type | 2.1 / 15 / 13 / 50 | Your own time records, estimating software, or a trusted foreman |
| Wages and burden | $34 journeyman, $21 apprentice, 27% burden | Local job postings, BLS wage data, a workers’ comp quote |
| Number of crews and vans | 2 vans in year one, 3 in year two, 4 in year three | Paid field hours ÷ (2,080 × crew size) |
| Utilization (job hours ÷ paid hours) | 66% → 70% → 73% | Dispatch records; start at 60–65% for a first season |
| Share of repeat and referral jobs | 45% → 52% → 58% | Zero in month one; grow it only as the customer base grows |
| Payment terms | Residential: at completion. Commercial: about 2 months plus 10% retainage | Your contract templates; ask three GCs how they really pay |
| Loan size, rate and term | $150,000, 10.75%, 10 years | Two lender quotes; current prime plus the lender’s spread |
| Owner’s market-rate pay | $88,000 in year one | What you would pay a master to run the shop, plus your field hours |
How to estimate your own job count
The sample follows four steps, and you can do the same.
- Capacity ceiling. Paid field hours × utilization ÷ average job hours. For Brightline that is 5,750 paid hours × 66% = 3,808 job hours, which matches its 684 jobs (560 × 2.1 + 66 × 15 + 34 × 13 + 24 × 50 = 3,808).
- Demand check. Leads × close rate by channel, plus referrals and repeat work. Brightline’s paid and partner channels bring in 375 jobs and referrals and repeat customers bring in 309, which makes 684. Use a cost per lead from a small pilot ad spend, not a guess.
- Market sanity check. Divide your jobs by the homes (or tenant spaces) in your drive-time radius that fit your services. Brightline’s 660 residential jobs touch 0.37% of about 180,000 older homes. If your plan needs several percent, either the market is too small or the plan is too aggressive.
- Take the lowest of the three. That is your job count. Then spread it across the months using local seasonality and a ramp-up curve, because the first two months are always slow.
Pick your business model before you write
“Electrical contractor” covers five quite different businesses. Startup budget, margins and cash risk change with each one.
| Model | Startup cost | Year-one revenue | Gross margin before owner pay | Cash profile | Fits you if |
|---|---|---|---|---|---|
| Solo master, no employees | $25,000–$60,000 | $140,000–$260,000 | 45–60% | Fast: card at completion | You want to work the tools and stay small |
| Residential service + panel/remodel (this sample) | $120,000–$250,000 | $450,000–$900,000 | 30–38% | Fast, but card fees run about 2% | You’re a master with service-truck experience |
| Light commercial / tenant improvement | $90,000–$220,000 | $400,000–$1,000,000 | 22–30% | Slow: 45–75 days plus 10% retainage | You’re an ex-project manager with GC contacts |
| New construction / production rough-in | $150,000–$400,000 | $900,000–$3,000,000 | 12–20% | Slow; bonding often required | You’re an ex-foreman with builder relationships |
| EV charger / solar specialist | $40,000–$120,000 | $200,000–$500,000 | 30–45% | Fast, but demand now leans on state and utility rebates | Only as a side line in 2026 |
These are planning ranges based on typical small-contractor economics. The solo route is limited by hours. About 2,080 paid hours at roughly 67% billable is 1,400 hours, and at $150 an hour that comes to $210,000 before materials.
Start with licensing
In most states the license belongs to a person, not to your LLC. If that person leaves, you may lose the right to pull permits. Texas is a good example of how this works.
| Item | Texas example | In your state |
|---|---|---|
| Contractor license | TDLR Electrical Contractor license | State, county or city; some cities add their own registration |
| Qualifier | Master electrician of record | “Qualifying agent” or “responsible managing employee” in many states |
| Insurance | Liability minimums set by TDLR; proof of workers’ comp if you have employees | Varies |
| Code edition | 2026 NEC from September 1, 2026 | Adoption cycles differ by state and city |
| Payment law | Property Code Chapters 28 and 53 | Every state differs |
A Texas electrical contractor must employ a licensed master electrician, and the owner can be that person. A master can be assigned to only one contractor unless they own more than 50% of the business. If the master leaves, you have thirty business days to name a replacement. The application fee is $110 and the license renews every year. The TDLR contractor license page lists the current requirements. Contractors with employees must also show proof of workers’ compensation or self-insurance. Texas lets many private employers skip workers’ comp, but electrical contractors with employees are not among them.
Many plans overlook the bench problem. A Texas master license takes 12,000 hours of experience plus two years as a journeyman, so you can’t hire a second master in a month. If you are the only master, you are a single point of failure. Say so in the plan and explain how you will fix it.
Sample electrical contractor business plan: Brightline Electric LLC
Brightline is fictional, and so is its owner, Marcus Hale. Every figure is a modeled assumption. The tables add up, so you can trace each number back to where it came from.
Executive summary
Brightline Electric LLC is a residential service, panel-upgrade and light-commercial electrical contractor in north Fort Worth, Texas. Owner Marcus Hale is a licensed master electrician with 14 years in the trade, the last six running a service truck and estimating for a mid-size contractor. He owns 100% of the company and is its master of record. Brightline needs $210,000: $150,000 from an SBA 7(a) loan and $60,000 of owner cash.
Year-one revenue is $730,600 across 684 jobs. It grows to $1.11 million in year two and $1.58 million in year three. Gross margin before owner pay is 33.8% in year one, and operating profit before owner pay is $123,724 (16.9%). After deducting a normalized, market-rate cost for Marcus’s labor, the model’s debt service coverage is 1.46x in year one, 2.23x in year two and 2.10x in year three. Year-one revenue sits 8.0% above the break-even that covers all costs plus Marcus’s normalized pay, and only 2.5% above the cash break-even that also covers loan payments. That second number is thin, and the plan doesn’t hide it.
Company and legal setup
Brightline is a single-member Texas LLC (the Secretary of State filing fee is $300). It holds a TDLR electrical contractor license with Marcus as master of record. It also carries general liability, commercial auto, a small umbrella policy and workers’ compensation. Marcus plans to elect S-corporation status in year two, once profit can support a reasonable-salary payroll. Check local registration rules before you start work in each city.
The code change matters for bids. In the 2026 NEC, service and feeder load calculations moved from Article 220 into a new Article 120. That is the article behind every panel upgrade Brightline sells, so Marcus budgets for one CE class and a revised estimating template before September 2026.
Market and target customers
Brightline works within 25 minutes of its shop, covering Tarrant and southern Denton counties. In the model, that zone holds about 310,000 owner-occupied single-family homes. About 58% of them (180,000) are 20 or more years old. That is the age bracket where panel swaps, breaker problems and missing GFCI and AFCI protection tend to cluster. Year one’s 660 residential jobs touch 0.37% of those older homes, and year three’s 1,178 touch 0.65%. The plan doesn’t need to win the market, only a small slice of it. You can pull your own counts from the housing-age tables in the Census Bureau’s American Community Survey and from county permit records.
Demand is growing, but not dramatically. The Bureau of Labor Statistics counted 818,700 electricians in 2024 and projects 9% growth through 2034, with a 2024 median wage of $62,350. The shortage helps pricing, but it also pushes up your labor cost.
| Competitor type | How they win | Where they’re weak | Brightline’s counter |
|---|---|---|---|
| Franchise brands | Call centers, brand, flat-rate book | Priced roughly 15–25% above independents in Marcus’s price checks (modeled) | Same-week scheduling, owner on estimates |
| Large local service companies (30+ trucks) | Speed, advertising reach | Commission-style selling, high turnover | Master-led estimates, no sales quotas |
| One- and two-truck licensed shops | Low overhead, loyal customers | Booked out two to three weeks, little commercial capability | Capacity for $5,000–$15,000 jobs and tenant spaces |
| Unlicensed handymen | Cheapest quote | No permit, no insurance, failed home inspections | Show the permit and inspection record; sell to inspectors and realtors |
Services and pricing
| Service | Typical year-one ticket | Notes |
|---|---|---|
| Outlet, switch or GFCI replacement | $195–$275 | Minimum charge covers the truck roll |
| Troubleshooting and repair | $350–$1,100 | Diagnostic fee credited to the repair |
| 200A panel and service upgrade | $3,500 average | Range $2,800–$4,800 depending on meter base and utility coordination |
| Level 2 EV charger | $1,750 | 11 jobs in year one, 2.6% of revenue |
| Standby generator hookup / transfer switch | $3,400 | 7 jobs |
| Remodel, spa and ADU circuits | About $2,800 | 16 jobs |
| Light commercial (tenant spaces, small retail) | $6,400 average | 24 jobs |
Year-one ticket averages by category are service $460, panel $3,500, remodel/EV/generator $2,600 and commercial $6,400. Year two raises them by 3–6%.
The next table prices each job from crew-hour cost. A paid field hour costs Brightline $49.43 for labor, truck and tools. That is $42.93 of loaded wages (journeymen, apprentices and Marcus’s field hours) plus $6.50 of van and tool cost.
| Job type | Jobs | Price | Materials | Permits and subs | Job hours | Labor + truck | Job margin |
|---|---|---|---|---|---|---|---|
| Service call / repair | 560 | $460 | $129 | $0 | 2.1 | $104 | $227 (49.4%) |
| Panel / service upgrade | 66 | $3,500 | $1,330 | $185 | 15 | $741 | $1,244 (35.5%) |
| Remodel, EV, generator, spa | 34 | $2,600 | $884 | $150 | 13 | $643 | $923 (35.5%) |
| Light commercial | 24 | $6,400 | $1,984 | $495 | 50 | $2,472 | $1,450 (22.6%) |
Keep the weighted job margin of 37.7% in mind. It is the margin on paper. Brightline keeps much less of it, and the next sections explain why.
One more number belongs here. Commercial work brings in $128 of revenue per job hour, against $219 for service calls. It fills slow weeks and costs little to market, but it pays the least per hour and the slowest.
Marketing plan
Year-one marketing is $30,000 (4.1% of revenue), plus $8,500 of launch spending in the startup budget. Here are the channels, in the order Marcus expects them to pay off:
| Channel | Spend | Leads | Cost per lead | Close rate | Jobs | Cost per job |
|---|---|---|---|---|---|---|
| Google Local Services Ads | $18,600 | 340 | $55 | 44% | 150 | $124 |
| Google Business Profile and review requests | $2,400 | 310 | $8 | 48% | 149 | $16 |
| Home inspectors and realtors | $3,600 | 104 | $35 | 50% | 52 | $69 |
| Property managers and small-commercial bids | $3,000 | 80 bid invitations | $38 | 30% | 24 | $125 |
| Van wraps and yard signs | $2,400 | n/a | n/a | n/a | n/a | n/a |
| Total | $30,000 | 375 | $80 |
The other 309 jobs (45%) come from referrals and repeat customers. In the model that share rises to about 52% in year two and 58% in year three.
The inspector channel is the one most plans miss. When a home inspection report flags an old panel, aluminum branch wiring or missing GFCI protection, the buyer starts looking for an electrician within days. Marcus offers 12 local inspectors a one-page repair estimate within 24 hours. At these numbers the channel produces jobs averaging about $2,350 for $69 each.
Operations: crews, hours and startup costs
Staffing follows paid field hours, not headcount.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Owner field hours | 1,150 | 600 | 200 |
| Journeyman hours (FTE) | 3,450 (1.7) | 5,300 (2.65) | 6,900 (3.45) |
| Apprentice hours (FTE) | 1,150 (0.6) | 1,900 (0.95) | 3,700 (1.85) |
| Total paid field hours | 5,750 | 7,800 | 10,800 |
| Journeyman / apprentice wage | $34 / $21 | $35 / $22 | $36 / $23 |
| Office | Part-time dispatcher/bookkeeper, $21,600 | Full-time office manager, $40,000 | Office manager $44,000 + estimator/PM $66,000 |
| Vans | 2 | 3 | 4 |
| Job hours ÷ paid hours | 66% | 70% | 73% |
Brightline books residential jobs over $2,500 with a 30% deposit that covers materials, collects the balance when the power is back on, and invoices panel work the day it passes final inspection. Each van carries about $7,000 of truck stock, and Marcus stages panel kits the night before.
Startup costs and funding
| Item | Cost |
|---|---|
| Two used cargo vans (about $39,000 each) | $78,000 |
| Van upfit: shelving, ladder racks, inverters | $10,400 |
| Tools and test equipment | $26,800 |
| Opening truck stock and shop inventory | $14,000 |
| LLC, TDLR license, city registrations | $2,900 |
| Insurance down payments and workers’ comp deposit | $9,800 |
| Software, laptops, phones | $6,200 |
| Launch marketing: site, branding, ad setup | $8,500 |
| Shop deposit and racking | $7,400 |
| Subtotal before working capital | $164,000 |
| Working capital reserve | $46,000 |
| Total startup budget | $210,000 |
Funding comes from an SBA 7(a) loan of $150,000 at 10.75% over ten years (about $2,045 a month, or $24,541 a year) and $60,000 of Marcus’s own cash, which is 28.6% of the total. The tools line covers meters and testers, benders, cordless kits, ladders and arc-rated PPE. The reserve is sized by the stress tests further down, not by a rule of thumb.
Three-year revenue build
| Category | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Service and repair | 560 × $460 = $257,600 | 780 × $485 = $378,300 | 1,000 × $505 = $505,000 |
| Panel and service upgrades | 66 × $3,500 = $231,000 | 92 × $3,650 = $335,800 | 118 × $3,850 = $454,300 |
| Remodel, EV, generator, spa | 34 × $2,600 = $88,400 | 46 × $2,750 = $126,500 | 60 × $2,900 = $174,000 |
| Light commercial | 24 × $6,400 = $153,600 | 40 × $6,800 = $272,000 | 62 × $7,200 = $446,400 |
| Total | $730,600 (684 jobs) | $1,112,600 (958) | $1,579,700 (1,240) |
Commercial work grows from 21% of revenue to 24% and then 28%. Year two is aggressive, with revenue up 52%. That is plausible because year one is only a partial ramp, but it is the assumption most worth stress-testing.
Three-year profit model
Two profit measures show up below, and they are not the same thing. Operating profit before owner pay is the result under the plan’s accounting: Marcus’s field hours are not charged to the job lines and no salary is deducted for him. Economic profit is what remains after a normalized market-rate cost for Marcus’s labor and management. The $88,000 is an analytical figure. It tests whether the business could survive if it had to pay someone to do his job. It is not necessarily a deduction on the LLC’s tax return, and it is not a payroll item while Brightline is a single-member LLC.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $730,600 | $1,112,600 | $1,579,700 |
| Materials | $237,580 | $360,858 | $511,578 |
| Permits and outside subs/rentals | $29,224 | $44,504 | $63,188 |
| Hired field labor (loaded) | $179,642 | $288,671 | $423,545 |
| Vehicles (fuel, repairs, insurance) | $28,400 | $38,000 | $50,000 |
| Tools and consumables | $9,000 | $12,000 | $16,000 |
| Gross profit before owner pay | $246,754 (33.8%) | $368,567 (33.1%) | $515,389 (32.6%) |
| Overhead | $123,030 | $193,384 | $307,642 |
| Operating profit before owner pay, debt service, taxes | $123,724 (16.9%) | $175,183 (15.7%) | $207,747 (13.2%) |
| Normalized owner labor at market rate* | $88,000 | $96,000 | $108,000 |
| Economic profit (after normalized owner labor, before debt service and taxes) | $35,724 | $79,183 | $99,747 |
| Debt service (principal and interest) | $24,541 | $35,501 | $47,458 |
| Economic cash left after normalized owner labor and debt service (before income tax) | $11,183 (1.5%) | $43,682 (3.9%) | $52,289 (3.3%) |
*Year one values Marcus’s 1,150 field hours at $46 an hour plus 27% burden ($67,183) and adds about $20,800 for managing the company. As the owner of a single-member LLC, Marcus would actually take draws, and draws are not a payroll expense for tax purposes. The S-corporation election planned for year two would add a reasonable-salary payroll. Even then, the model’s $96,000 and $108,000 stay as a normalized market cost for his role, not a forecast of his W-2 wages. Debt service is explained in the financing section.
Year-one overhead breaks down like this: part-time office $21,600, insurance $15,600, software $4,200, marketing $30,000, rent $16,200, utilities and phones $5,400, accounting and legal $7,800, licenses and CE $3,600, card fees $13,516 and bad debt $5,114, for a total of $123,030. Year two adds a full-time office manager and a bigger shop. Year three adds a $66,000 estimator/PM.
What the numbers say
Reported margin falls, real margin rises
Gross margin before owner pay slips each year: 33.8%, 33.1%, 32.6%. That looks like a business getting worse, but it isn’t. In year one Marcus works 1,150 field hours, and his labor sits below the line in owner pay, so the P&L flatters the first year. Put his field hours back at market rate and the real gross margin is 24.6% in year one, 30.0% in year two and 31.9% in year three. The margin climbs as hired crews replace the owner’s hours.
The wrench-time tax
Remember the 37.7% job margin from the pricing table? The P&L says Brightline keeps 24.6%. The 13.1-point gap is what we call the wrench-time tax. Brightline pays for 5,750 field hours but sells only 3,808 of them (66%). The other 1,942 hours go to driving between jobs, supply-house runs, callbacks, estimating, training and shop time. At $49.43 an hour that is $95,993, or 13.1% of revenue. It never shows up in a job-level calculation, and it is the main reason first-year plans overshoot.
Here is what an hour really costs in year one:
| Cost per paid field hour | Amount |
|---|---|
| Loaded wages (hired crew + owner field hours) | $42.93 |
| Van and tools | $6.50 |
| Overhead | $21.40 |
| Total per paid hour | $70.83 |
| Per billable hour at 66.2% utilization | $107 |
A $125 labor rate is only $83 per paid hour once you divide by the hours you pay for. Each extra point of utilization is worth about 58 more sold hours, which is roughly $6,700 of operating profit at this mix.
Revenue per paid field hour
Brightline’s year one comes to $127 of revenue per paid field hour. It rises to $143 in year two and $146 in year three. As a rough guide based on numbers like these:
- Under $110: a pricing or utilization problem.
- $110 to $130: normal for a first season.
- $135 to $150: a well-run service shop.
- $160 and up: strong flat-rate pricing and a rich panel and service mix.
Year three: the overhead step
Operating margin falls from 15.7% to 13.2% in year three, even though revenue grows 42%. Overhead jumps from 17.4% to 19.5% of revenue because the estimator/PM and a larger shop arrive before commercial volume covers them. Hire the estimator when you spend more than about 15 hours a week pricing work, and not earlier.
Break-even: one method, three levels
Break-even revenue = fixed costs ÷ (1 − variable cost ratio). The answer depends on which costs you call fixed, so the plan sorts them first. Variable costs move with revenue. Fixed costs stay put for the year, and that includes hired labor, because Marcus can’t lay off a journeyman in a slow week and expect to keep him.
| Year-one cost | Amount | Treatment |
|---|---|---|
| Materials | $237,580 | Variable |
| Permits and outside subs/rentals | $29,224 | Variable |
| Card fees (in overhead) | $13,516 | Variable |
| Bad debt (in overhead) | $5,114 | Variable |
| Total variable | $285,434 | 39.07% of revenue (contribution margin 60.93%) |
| Hired field labor | $179,642 | Fixed once hired |
| Vehicles | $28,400 | Fixed |
| Tools and consumables | $9,000 | Fixed |
| Overhead excluding card fees and bad debt ($123,030 − $18,630) | $104,400 | Fixed |
| Fixed costs before owner pay (level A) | $321,442 | |
| Normalized owner labor | $88,000 | Fixed |
| Fixed costs including owner labor (level B) | $409,442 | |
| Debt service (SBA loan) | $24,541 | Fixed |
| Fixed costs including owner labor and debt service (level C) | $433,983 | (shown as $433,982 in earlier rounding) |
| Level | Formula | Break-even revenue | Jobs (year-one mix) | Plan’s margin above it |
|---|---|---|---|---|
| A. Operating, before owner pay | $321,442 ÷ 0.6093 | about $527,500 | about 494 (41 a month) | 27.8% |
| B. Economic, after normalized owner labor | $409,442 ÷ 0.6093 | about $672,000 | about 629 (52 a month) | 8.0% |
| C. Cash, after owner labor and loan payments | $433,983 ÷ 0.6093 | about $712,200 | about 667 (56 a month) | 2.5% |
The ratio is 60.93% when carried unrounded. If you round the variable costs to 39.1%, level C comes out about $370 higher, so show the exact percentage and the cost breakdown rather than a rounded figure. Levels B and C tie back to the P&L. The margin of safety at B ($58,600) equals economic profit ($35,724) divided by 0.6093, and at C ($18,350) it equals the $11,183 of economic cash left divided by 0.6093. The plan projects $730,600, so the real story of year one is the thin cushion at level C. If revenue misses by 2.5%, Marcus can’t cover both his normalized pay and the loan payments.
Cash flow by month (year one)
Month 1 is March, the launch month. The cash balance includes the $46,000 reserve. The model treats owner pay as a cash draw of the normalized amount and includes loan payments in cash out.
| Month | Revenue | Cash in | Cash out | Net | Cash balance |
|---|---|---|---|---|---|
| 1 (Mar) | $33,406 | $25,592 | $30,400 | −$4,808 | $41,192 |
| 2 (Apr) | $41,174 | $32,333 | $41,772 | −$9,439 | $31,753 |
| 3 (May) | $50,360 | $45,876 | $44,899 | $977 | $32,730 |
| 4 (Jun) | $63,472 | $57,608 | $55,942 | $1,666 | $34,395 |
| 5 (Jul) | $74,538 | $68,134 | $60,931 | $7,203 | $41,598 |
| 6 (Aug) | $81,554 | $76,954 | $69,371 | $7,583 | $49,181 |
| 7 (Sep) | $75,165 | $74,483 | $71,234 | $3,249 | $52,430 |
| 8 (Oct) | $73,828 | $74,828 | $69,069 | $5,760 | $58,190 |
| 9 (Nov) | $62,554 | $65,226 | $67,896 | −$2,669 | $55,520 |
| 10 (Dec) | $55,121 | $59,245 | $63,742 | −$4,498 | $51,023 |
| 11 (Jan) | $59,714 | $60,602 | $61,626 | −$1,025 | $49,998 |
| 12 (Feb) | $59,714 | $59,170 | $63,120 | −$3,950 | $46,048 |
Residential work is paid at completion (97% in the same month, the rest the next month). Commercial billings are collected about two months after the month of work, and 10% retainage is held three months longer. Materials are paid 30 days after purchase. Revenue peaks in the Texas summer and drops by about a third by December.
Working capital: commercial share decides
At Brightline’s mix, the year-one cash trough is only about $14,000 below opening cash. Change the mix and the answer changes quickly.
| Commercial share of revenue | Peak cash drawdown in year one |
|---|---|
| 21% (plan), paid about 2 months after the work | $14,200 |
| 21%, paid about 3 months after | $19,600 |
| 35% | $28,300 |
| 50% | $47,400 |
| 50%, paid about 3 months after | $79,400 |
A plan with half its revenue in commercial work and a “45 days of payroll” reserve runs dry in year one. The statutes help, but they don’t solve it. On private Texas projects the owner must pay the prime contractor within 35 days of invoice, and the prime must pay subs within 7 days of being paid. Interest on late payments runs 1.5% per month, and a contractor can suspend work on the 10th day after written notice of nonpayment. Owners must also hold 10% retainage. Real approval cycles run longer than the statute allows, so the model uses two to three months.
Working capital in years two and three
Profit is not cash. A growing contractor with a rising commercial share can be profitable and still run short, because receivables, truck stock and payroll grow before the collections do. The sample has a monthly forecast only for year one, so years two and three use a year-end approximation. When you build your own plan, extend the monthly model through year three.
The method works like this. Commercial receivables at year-end are about 2.3 months of average monthly commercial billings. That ratio comes from the sample’s $86,000 of year-three receivables on $37,200 of monthly commercial billings, and it reflects the two-month delay plus the retained 10% balances. Truck stock adds about $7,000 per van.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Average monthly commercial billings | $12,800 | $22,667 | $37,200 |
| Commercial receivables at year-end (approx.) | $29,600 | $52,400 | $86,000 |
| Truck stock and shop inventory (vans × $7,000) | $14,000 | $21,000 | $28,000 |
| Increase in working capital tied up during the year | n/a (funded by the $46,000 reserve) | about $29,800 | about $40,600 |
| Memo: extra supplier credit (30 days of materials) | about $10,300 | about $12,600 | |
| Economic cash left after normalized owner labor and debt service | $11,183 | $43,682 | $52,289 |
| Cushion after funding the increase (before supplier credit and income tax) | about $13,900 | about $11,700 |
In year one, the maximum financed deficit is the $14,200 drawdown shown above. In years two and three, internal cash covers the working-capital build, but the cushion is only $12,000–$14,000 a year, before income tax and before any seasonal dip inside the year (profit arrives in summer, while the build goes on all year). The 100% van financing in the debt schedule keeps equipment out of this math. If commercial customers pay one month later than planned, year two needs about $22,700 more and year three about $37,200 more, which is more than the year-three cushion. For that reason the plan adds a $50,000 revolving line of credit, arranged while year-one results are still strong, and treats it as the funding for the maximum financed deficit in years two and three.
Financing: SBA 7(a), DSCR and van notes
Debt schedule
| Obligation | Amount and terms | When it starts | Annual payment |
|---|---|---|---|
| SBA 7(a) loan | $150,000, 10.75%, 10 years | At launch; payments through all three years | $24,541 |
| Van note 1 (third van, with upfit) | $44,000, 9%, 5 years | Assumed to close at the start of year two; full-year payments in year two | $10,960 |
| Van note 2 (fourth van, with upfit) | $48,000, 9%, 5 years | Assumed to close at the start of year three; full-year payments in year three | $11,957 |
| Total debt service | Year 1 $24,541; Year 2 $35,501; Year 3 $47,458 |
DSCR as a modeled metric
Lenders usually want a debt service coverage ratio of at least about 1.25x. The sample calculates its own modeled DSCR like this:
(Operating profit before owner pay − normalized owner labor) ÷ total debt service
| Operating profit before owner pay | Normalized owner labor | Debt service | Modeled DSCR | |
|---|---|---|---|---|
| Year 1 | $123,724 | $88,000 | $24,541 | 1.46x |
| Year 2 | $175,183 | $96,000 | $35,501 | 2.23x |
| Year 3 | $207,747 | $108,000 | $47,458 | 2.10x |
This is the plan’s own analytical measure, and a conservative one, because it charges for the owner’s labor. It is not a universal bank DSCR. A lender can start from tax-return income, add back depreciation and interest, treat owner draws differently, count personal debts and other household cash flow, and apply its own adjustments. The final ratio depends on the lender, so ask each one how it calculates it before you lean on the numbers above.
Coverage looks comfortable, but economic cash left after owner and debt is only 1.5% of revenue in year one. Show lenders both numbers.
SBA rules: what changed and what to verify
These rules were checked on October 20, 2026. SBA published SOP 50 10 8.1 on August 14, 2026 (Information Notice 5000-880695). It took effect October 1, 2026 and applies to applications that receive an SBA loan number on or after that date, so Brightline’s timeline falls under it. A few points matter for this plan:
- Equity injection. SOP 50 10 8 required a minimum 10% equity injection for start-ups. Commentary on 8.1 describes the 10% headline as unchanged for change-of-ownership deals, with new rules on which sources count. Check the start-up requirement against the 8.1 text and your lender’s reading. Brightline puts in 28.6%, well above 10%.
- Eligibility. SOP 50 10 8.1 changes the citizenship and residency requirements for owners and guarantors, which narrows access for some applicants. Check this with your lender before you build the plan around the loan.
- Collateral. Under SOP 50 10 8, loans above $50,000 trigger a collateral review that can reach your home equity. Verify the threshold and treatment under 8.1.
- Loan size. The 7(a) Small Loan program tops out at $350,000, so Brightline’s $150,000 falls inside it. Commentary notes that the small-loan scoring requirement changed under 8.1, so ask how your lender will underwrite a loan of this size.
- Rate. The WSJ prime rate was 6.75% in the sources reviewed in October 2026. The model assumes prime plus 4 points, or 10.75%. Rates and lender spreads change, so recheck on the day you apply. A loan in this size band can price higher, so rerun the plan at 12.75%. The payment becomes $26,611 (+$2,070 a year) and year-one modeled DSCR falls to 1.34x.
Don’t assume any rule from the 2025 SOP is unchanged until you have checked it against the current SOP or your lender’s written guidance.
Tax rules for equipment
100% bonus depreciation is back for qualifying property acquired after January 19, 2025. Cargo vans and trucks over 6,000 pounds GVWR generally avoid the heavy-SUV cap. Brightline’s $78,000 of vans and $26,800 of tools may be deductible in year one, which can create a tax loss on paper even in a profitable year. Read IRS Publication 946 and talk to a CPA before you buy.
Materials, copper and quoting windows
Copper-intensive items (wire, cable, bus, lugs) make up about 25% of Brightline’s materials. The copper tariff mentioned at the top of this guide is a risk to purchase prices, not a fixed price increase. Its actual effect depends on the product’s tariff classification, its country of origin, whether the supplier imports it, and how much of the cost the supplier passes on. Ask your two main suppliers how they are handling it.
To size the exposure, the plan uses a sensitivity case instead of a tariff forecast. A 20% rise in the cost of copper-intensive materials, left unrecovered for a full year, costs $11,879, or 9.6% of year-one operating profit. If you reprice, the loss is about $1,000 for every month of lag. Fixed-price commercial bids are where the real exposure sits.
Brightline’s rules are simple. Residential quotes are valid for 14 days, supplier quotes are locked for seven days before a bid goes out, and every commercial contract carries a material escalation clause. Check current tariff status before you bid large jobs.
Electrification needs the same caution. The residential solar credit (Section 25D) ended December 31, 2025, and the Section 30C charger credit ended for property placed in service after June 30, 2026. Brightline keeps EV chargers at 2.6% of revenue and treats solar as a referral, not a business line.
Labor, insurance and compliance
Brightline pays journeymen $34 an hour and apprentices $21 in year one, above the national median. Burden is 27%:
| Burden item | % of wages |
|---|---|
| Payroll taxes | 7.65% |
| Workers’ comp (estimate; get a quote) | 5.5% |
| Unemployment taxes | 1.2% |
| Paid time off and holidays | 5.0% |
| Health stipend and retirement match | 7.65% |
| Total | 27.0% |
Apprentices hold a TDLR apprentice license and work under a journeyman or master. Don’t pay crew as 1099 contractors to avoid payroll. The IRS test is strict, and electricians working on your trucks rarely pass it. Construction electrical work falls under OSHA’s 29 CFR Part 1926 (Subpart K covers electrical), while maintenance in existing facilities can pull in Part 1910 Subpart S. Require OSHA 10 for everyone and OSHA 30 for leads.
Texas sales-tax treatment depends on the contract type (lump-sum or separated), so settle it with the Comptroller’s guidance before your first invoice. Insurance quotes also depend heavily on your mix of residential and commercial work and on your claims history, so get two quotes before you finalize the overhead line.
Stress tests
| Scenario | Effect on year one | Fix |
|---|---|---|
| Revenue 20% short, labor trimmed 8% | Revenue $584,480; operating profit before owner pay about $49,000, still 2.0x debt service but not Marcus’s $88,000. Cash dips $26,400 below the reserve | Delay the second journeyman hire; draw about $62,000 until volume returns |
| Master of record unavailable for six weeks | Permitted work (65% of revenue) pauses: about $54,600 of lost revenue and $33,200 of lost margin. A replacement master adds roughly $12,000 in recruiting fees | Start a journeyman on the 12,000-hour path in year one |
| Wire and cable cost +20% (sensitivity, not a tariff forecast) | $11,879 if fully absorbed (9.6% of operating profit) | 14-day quote validity, escalation clauses, 7-day supplier locks |
| Commercial customers pay in 3 months, not 2 | Year-one drawdown rises $5,300; in year three each extra month ties up about $37,200 | Mobilization deposits, billing milestones, 1.5% monthly interest clause, revolving line of credit |
| EV and solar work disappears | The EV line (2.6% of revenue) costs about $6,800 of margin. A plan that relied on 10% of revenue from EV and solar would lose about $73,000 of revenue and $26,000 of margin | Keep it under 5% of revenue |
| Journeyman wages +$3 an hour | +$17,500 in year one (14% of operating profit), +$27,400 in year two | Raise prices about 2.5% |
| SBA rate 12.75% instead of 10.75% | +$2,070 a year; year-one modeled DSCR 1.34x | Shop two lenders; ask about fee and rate caps |
Wages deserve extra attention. In metros with big industrial and data-center builds, those contractors bid journeymen away from service shops. Plan for year-two wages above the $35 used in this model.
