Secrets to subcontracting success

The job of a subcontractor sounds simple enough – do the work that someone else acquired and get paid.

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September 10, 2015

In reality, the subcontracting game is anything but simple. Recruiting and retaining quality subcontractors in an industry with variable and unpredictable working conditions is a never-ending challenge.
 

Life as a sub.

A subcontractor is an individual whom a company pays to complete a specific job for a specified price. This person typically carries his own insurance and workers’ compensation, and completes work in his own unique way to fulfill the obligations of a contract held by the company.

I can assure you everything I know about working with subcontractors stems from my own experience working as one.

Acting as a subcontractor allowed me to acquire work that I wasn’t necessarily able to obtain on my own and scale my business quicker without adding sales and marketing costs.

However, my experiences were similar from season to season. I was given loads of work with little expectation around how and when to complete that work. I attended to the work with the same quality I would expect for my own company, yet never saw the fruits of my labor through timely compensation.

Unfortunately, subcontracting became more work than it was worth. I felt unsupported and misguided. Therefore, I made it a point to bring a solid framework to subcontracting. The secret is to offer the things that are not often afforded to subcontractors in this industry: clear expectations and timely compensation. For instance, an ad could look like this:

We are looking to grow our team! Do you have what it takes? Now Hiring: Snow plow subcontractors who own their own truck and plow Get paid EVERY Friday. Guaranteed pay in writing!

Find the right help.

The first line of business is recruiting and hiring subcontractors. Having the ability to recruit and retain great subcontractors is a surefire way to scale your snow business without having to invest large amounts of capital. Subcontractors can also give you the ability to expand geographically into surrounding areas that your company could not service efficiently.

At Callahan’s, we make our expectations clear even before subcontractors apply for the gig. The job description provides detailed information about what we are looking for in a subcontractor, the scope of the work and what subcontractors will need to be successful and stand out from the competition.

We strongly consider a subcontractor’s ability to be responsible, dedicated and efficient. A subcontractor should have a strong work ethic, a desire to succeed, and be willing to provide exceptional service.

Finding the best subcontractors can be tricky. Historically, I have found that the best subcontractors are those who come from seasonal industries such as masonry, roofing and lawn care firms that only offer summer services. Oftentimes, these companies have key employees who have a desire to remain employed through the winter months while minimizing their unemployment fees. In addition, forming a business relationship with non-competing seasonal contracting companies that already have commercial auto and liability insurance can be a smart way to recruit quality subcontractors.

A word from the wise: when screening and interviewing subcontractors, be sure to do a little homework on your potential subs. I strongly recommend checking multiple reference sources such as the Better Business Bureau, Google+ and Yelp. A strong review rating across these platforms is usually a good indication of the type of work the sub will perform. While reading the reviews keep in mind that an occasional poor review is not a deal-breaker.

Pay special attention to any negative reviews you come across and note whether the contractor responded professionally and made every effort to fix the problem rather than make excuses. Sometimes a negative review handled the right way may be a far better indication that your potential subcontractor stands behind their work and is a true professional.

If you have been in business long enough, you will get a negative review or two, but how you handle it sets you apart. The subcontractor who will go out of his way to make things right is a subcontractor you want on your team.

Each subcontractor, once hired, is required to sign an employment contract which clearly outlines:

  • Job description
  • Chain of command
  • Expectations for performance on-the-job
  • Route sheets with budgeted manhours to be met
  • Timing of service
  • Directions on how to complete and submit standardized work logs
  • Penalties for failure to service properties
  • Details regarding payment for service
  • Grounds for termination

     

Details matter.

Your contract should be drawn up based on your specific service needs and the expectations you have for your subcontractors. I would highly recommend hiring an attorney to review your agreement to ensure it is legally binding and structured in such a way that the Department of Labor recognizes these individuals as subcontractors and not employees of your company.

Be crystal clear about payment schedules and penalties for failure to complete work. If any issues arise with a subcontractor, it will be regarding payment. The biggest issues usually arise after a sub has have failed to perform the agreed upon work and still demands payment for services not rendered.

Make sure when reviewing the contract that you have subcontractors initial next to any penalty clauses and emphasize that they are required to complete the entire scope of the work for full payment. If you include penalties for non-performance in your agreement, make sure they are clearly stated and documented so that both parties understand and agree to them up front.

Being proactive with expectations and non-performance penalties will help ensure a good working relationship with your subcontractors.

In addition to the expectations outlined in the contract, you should also clearly outline when they are on call, how quickly they must respond to a snow or ice event, what happens if their equipment breaks down, who is responsible to cover the work during the breakdown and what insurance is required. Leave nothing to the imagination when working with subcontractors. You won’t be sorry if you have clear expectations and pay your subcontractors in a timely fashion for the work they complete.

Working with subcontractors in this manner has served my company well. Through the years, I have relied on subcontractors to service more than 600 residential driveways per season, which has allowed our company to concentrate on commercial snow removal, which yields larger profit margins.

This approach of using subcontractors in residential plowing has allowed our company to scale our operations quickly and has taken the strain of major capital investment out of the equation.

Be open, honest and clear about your expectations for subcontractors and you will take your company beyond where you ever thought it could go.

The author is owner of Callahan Lawn Care and Property Maintenance. He has been in the snow business for more than 15 years.