Set Some Basic Rules with Subcontractors


Have you ever had a client request a service that was outside of your expertise, but you decided that you would give it a try anyway to make them happy? Did you ever do something for a client only to wish you had never agreed to it? Even worse, did you lose money on the service? Did you want to jump off a bridge when it was all over? If so, then maybe you should have called in a subcontractor. If you can get the right sub, you can get the job done for your customer, have it done right by someone who is skilled in that area and make money on the deal. Sounds easy right? Um, not so much.

So here is the real deal on working with subs: They can be great assets to your company and make you look good in the eyes of the client. But they can also get you fired and make you look like a fool in the eyes of your client. In respect to subs, I have worked with the good and the not so good. Here is what I have learned along the way.

Start by determining which jobs are not right for your company to perform. My company specializes in landscape maintenance and we want to do it at a high level, so we rely on subs for services such as turf fertilization, irrigation and snow management. We rely on a subcontractor for turf fertilization because they are experienced, trained and licensed to perform the service. They also have the right equipment to do the job right. The same goes for irrigation. As for snow removal, that’s a whole other discussion.

After you have decided which tasks you are going to sub out, the next step is finding good partners to do the work. Remember, subcontractors are not the same as employees, and you cannot treat them as such. They are independent contractors who are performing a service for your clients on behalf of your company. Keep this in mind when you are interviewing another contractor to work on your projects. Hire contractors with the same high standards and policies that your company practices. For example, if you require your employees to be in uniform and look professional on the job, you might not want to hire the sub that comes in with dirty, torn up jeans and a T-shirt with the sleeves cut off. Finding good subs takes time, but they are out there.

When working with a new or unfamiliar contractor, follow up and go over the completed project with the sub — at least for the first few projects. Make sure everything done under your company’s name has been completed to your satisfaction. If it has not, establish a timeline and expectations to finish the job to your and the client’s satisfaction. You may want to keep your client in the loop. This depends on the circumstances and the client, of course.

When it comes time to pay subs, make sure they understand the terms of your agreement. I work with several subs that want to be paid as soon as they finish the job. In my business, most of the time this scenario will not work. Most of my customers want 30-day terms. I make my subs aware of that and that I will pay them in 30 days as well. It keeps things fair, and from a cash flow standpoint it just makes sense.

Working with other contractors is just like any other win-win relationship. Both parties must establish a mutually beneficial relationship and both have to make sure the client receiving the work is satisfied and happy with the work. If you can accomplish this, then everybody wins.

Quick Reminders for Working with Subs

1. Mark up subcontractors’ prices 10 to 25 percent.

2. Have subs sign an agreement/contract.

3. Make sure subs have (and show you) proof of insurance and workers’ compensation.

4. Make sure subs are licensed and bonded.