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How to start a profitable Electrical Shop Business in India?

If you are thinking of starting your own business, you should definitely consider starting an electrical shop business.

In India, the construction industry is growing very rapidly. As a result, there is always a demand for electrical products.

This article will give you all the information you need to start an electrical shop business, such as investment requirements, marketing, sourcing materials, and profit margins.

Electrical shop business

How to start an electrical shop business

To start an electrical shop, you must have complete information about this business. You should have technical knowledge about all the products sold in an electrical shop. You can only gain this knowledge if you have worked in a shop before.

In addition, local electricians and electrical contractors are the main customers of an electrical shop, and you must maintain a good relationship with these professionals in your area. You can give them a commission for the sales they bring in.

Demand for this business

Since there is demand for some kind of electrical item every day of the year, an electrical shop business is one of the safest businesses.

In addition, since most electrical items do not have an expiry date, the problem of dead stock is also less. However, you should have the correct information about the current trends.

For example, if you stock up on a lot of a product because a particular design of that product is in high demand right now, the price of that design will decrease significantly after six months when it becomes outdated.

Therefore, even though there is no problem with the expiry date in this business, you should pay more attention to the trends when purchasing inventory.

Location and space requirements for this business

Locations with a high scope for new building construction works are the ideal locations for this business. Electrical shops are also in demand in residential areas when renovation work is done, but it is difficult to depend on renovation work as it happens once in a while.

You can start an electrical shop in a minimum of 300 square feet of space. In general, the rent for such shops is between Rs. 10,000 and Rs. 20,000, depending on your location.

No need for any special permits

You can easily start an electrical shop with just GST registration and a shop and establishment certificate. These vary from one state to another, so you can get more information by consulting your nearest chartered accountant.

Purchasing Materials from Distributors

In an electrical shop business, distributors are very important to source materials for your shop.

To get the contact details of any brand’s distributor, you can call the company directly. You can visit the company’s official website to get the company’s toll-free number.

When calling the toll-free number, they will provide you with the contact number of the distributor of that company in your region. It is always best to purchase products from the company or authorized dealer only.

At first, you will have to purchase the materials with full payment. No one will give you inventory on a credit basis for a new business.

After you start your shop for 3-4 months, if your track record is good, you may get an opportunity to purchase products on a credit basis. Generally, electrical products companies give a credit period of 30 to 40 days. This credit period may vary from one company to another.

Investment Required for Electrical Shop Business

electrical shop business cost

To start an electrical shop business in India, you will need around Rs. 6 lakhs of capital.

This amount depends on the size of your shop. If you are planning to open a large shop with a lot of inventory, you may need more capital.

The breakdown of the above amount is as follows:

  • Inventory purchase: Rs. 3 to 4 lakhs
  • Shop interior works: Rs. 1 to 2 lakhs (furniture, racks, signage, etc.)
  • Licenses and registrations: Rs. 5 to 10 thousand
  • Marketing expenses: Rs. 10 thousand
  • Shop security deposit: (varies as per your location)

Ongoing monthly expenses include stock purchases, utility bills, staff salaries, etc.

As this business typically takes six months to get established, it is advisable to have sufficient working capital on hand to cover the shop’s expenses for the first six months

Profit Margin in Electrical Shop Business

You can expect a profit of 10 to 20% on sales from an electrical shop business.

This margin may vary from one product to another, from one brand to another. Branded products generally give a lower profit margin compared to local products. It is best to have both branded and local options in your shop.

If your shop rent is Rs. 15k to Rs. 20k, and you do a daily turnover of Rs. 10 to Rs. 15 thousand in your shop, you can successfully run this business. You can further increase your income with customized services, installation services, etc.

Also Read:

How to open a Hardware Shop in India | Complete Guide

Building Materials Business | Complete Guide

Marketing Your Electrical Shop

When you first start your shop, you can start marketing by distributing flyers, listing your business in local business directories and Google Maps, and networking with electricians and electrical contractors in your area. You can also offer commissions to these professionals to drive more business to your shop.

Once your shop is fully stocked, the quality of your products and your pricing strategy will be essential for reaching people. Offering good quality products to customers and setting your prices competitively will help you build word-of-mouth, which is essential for this type of business.

Products to Sell in an Electrical Shop

Here is a list of some items that you can sell in an electrical shop in India:

  • Lighting products such as LED bulbs, fluorescent bulbs, CFL bulbs, etc.
  • Wires and cables such as electrical wires, power strips, extension cords, etc.
  • Switches and sockets such as light switches, fan regulators, wall sockets, etc.
  • Electrical hardware such as conduit pipes, cable ties, junction boxes, etc.
  • Power tools such as sanders, drills, saws, etc.
  • Hand tools such as wrenches, pliers, screwdrivers, etc.
  • Other electrical items such as ceiling fans, batteries, exhaust fans, etc.

This is just a brief overview of the information you need to start an electrical shop business in India. If you find this information helpful, please share it with your friends.

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