Subcontracting

[jake65]

what do you think about working with other service installers or subcontracting? I will start with the first couple years as just a mow and blow lco but would advertise other services as well. I don't have the equipment or the know-how to perform these services yet. I will eventually like to learn several of the services on my own. But just starting out, I would have to sub them out until I knew that trade. I was thinking if I found one contractor per service, like lawn renovation, one for hardscapes, one for fertalization an so on... This way i could advertise these services as well. This would allow me to get my foot in the door with my mowing service and still collect either a finders fee or a 10-15% fee added to the service i contracted out. I would get references from each of the service providers and use just these people for work to be done.

Just a thought!

[Ric3077]

I do this with fert and all other chemical jobs. It works out great because I use my time for what I do best, but can offer my customers a complete yard maintenance package and I get a piece of the pie.

[Doc Green]

How much do you make off subcontracting out and what keeps that company from cutting out the middle man?

[Uranus]

Thats called networking. we all do it unless we are an all in one company. You need to keep those contacts cuz they have the know-how and will help you grow.

[Prestige-Lawncare]

Thats called networking ...

There is the key word to many, many questions. One of the big keys to success in any business is networking ... one of the most useful business practices you can learn and utilize.

:weightlifter: :weightlifter:

[Uranus]

There is the key word to many, many questions. One of the big keys to success in any business is networking ... one of the most useful business practices you can learn and utilize.

:weightlifter: :weightlifter:

Use it wisely, if you dont you will fall hard on you face. For the kids out there it can be summed up as making friends in the business and keeping them. Networking is the biggest asset for your business. Just dont be an a$$ to other companys and don't make them feel like you are taking advatage of them and you are golden.

[qualitylawnmanagement]

I do subcontracting on fert cause he has been my dads buddy for years and does great work for us and I don't have to mess with taking the test. But a couple years down the rd I might get out of subcontracting and do everything myself.

[jake65]

you have to figure I will be doing the advertising for the contractors too. I figure if your they are bidding a $3000-$4000 job, $300 or so bucks as my fee added to thier bid is not going chase the customer away if they know the contractor has a great reputation and references. you might ask , why would a customer go through me to get the job done rather than go directly through the contrator in the first place? Well, I havn't quite figured that one out. It may just give the customer the option and the peace of mind knowing they have one company to provide all thier services. Because , from the customers perspective it just one company performing the services. But, from my perspective its several. I would think pricing becomes more competitive in the mowing services than at the larger paying services. like I said, if the contractor has great references a couple hundred of dollars will not scare them away. I see in the mowing services a $25 lawn will be undercut by $10 and the home owner see's an instant savings. Not to sure of the quality they'll get!! bottom line, i think networking with other companies can be a healthy option. Yes there will be some contractors who will not want to develop business relations and thats ok, but for the small timer, developing relations would be beneficial.

[Ric3077]

Jake check your PM's and call me

[Allure]

I agree 100% about the networking & developing relationships with other contractors. I just had my sprinklers winterized & i asked the guy if he would be interested in working with me if the need arose because i was impressed by him & his attitude.
The one concern i have had about subcontracting is how do you convince the customer to continue to pay you for a service you don't do yourself when they see the sub show up in his truck with his company's name on it. what keeps them from eliminating the middle man & calling the # on the subs truck the next time.

I learned the value of networking from my best friend. He built a successful computer co & graphic design co through networking. he has never spent a dime on advertising. .

[PaperCutter]

If you want to hire subs, there a couple things to think about.

1- If you are doing it to help your relationship with the client by being full-service, all the contracts need to be between you and the homeowner, and you and the sub. Any issues with the job, you're the first point of contact. Also, the homeowner pays you, and you pay the sub. In this arrangement, you can get a bid from the sub, mark it up to whatever margin you want to make, and present your own bid to the client. Good potential for profit, but you own the problems.

2- If you want to screen and find the contractor but have the client deal direct, then it's more of a referral arrangement. Some guys may be willing to pay a finder's fee, some may not. Because I'm still in the process of getting my license, I cannot legally GC large installs so I have my design clients deal direct with the installer. The installer then marks their job up 5% and pays that to me, but they get a lot for that 5%- in addition to the laydown referral (if I tell my clients to use Jim's Landscape, they'll do it), I provide the contractor with all construction, grading and layout drawings accurate to 1/16", I hold the client's hand throughout the process, and I go out to the site and set grades, make field adjustments, whatever, at each stage of construction. If I was just giving these guys referrals and walking away, they'd probably tell me to get bent when I ask for 5%.

3- If you're referring people to YOUR clients, you'd better screen them well. If a contractor stands me up for a meeting he's done- if he'll treat the guy handing him a $50,000 job where every detail is figured out like that, he'll never get the chance to screw my client. I toss his business cards and move him to the "scrub" folder in my Outlook.

Speaking of, if anyone knows of a skilled and reliable deck builder in the Piedmont of VA, please let me know!

4- If a sub screws up, what is your recourse? If they feel they lowballed your job and they pull off to do something else, make sure you're not left holding the bag. In some cases you can backcharge subs per infraction, but if they rack up too many backcharges they'll walk away.

5- I don't know the laws in your state, but make sure you have the proper licenses for running subs. In a lot of states if the contract is with your company and you're responsible for the job, you need to have a contractor's license to do the job. If you're subbing maintenance stuff that doesn't require a contractor's license, you're in the clear.

6- If you get guys interested in working with you, you can do a non-compete agreement where they agree that if you approach them to bid a job, they will not approach that same customer without you for 12 months, or whatever you can agree on.

Sorry for going long; I'm in the process of restructuring how my company does things, so I've been thinking about this a lot.

Dave

[Frontier-Lawn]

As of right now the only thing i sub out is jobs for concrete curbing & trees i dont want to trim (hight reasons).

[Team-Green L&L]

Subbing work provides for 35% of our overall profit margins, but it took alot of bad apples to gather a good network of professionals that would come to a satisfying arrangement in payment. Now we use a detailed payout scale that ends up paying the sub for their work and their sale (if it was only a referral) and leaves us ahead 5-10% per job.

Treat your subcontracting department as just that...an entire dept. and it will grow in line with your business growth.

[Briarpatch Joe]

When you let SUBS on your sites, the owner will start dealing with then direct and leave you out of the picture.