Subcontracting all work on commercial maintenance contract

Discussion in 'Business Operations' started by gll, Dec 11, 2007.

  1. gll

    gll LawnSite Member
    Posts: 32

    I recently became a snow removal sub for a company that has the landscape maintenance contract with a coporate office complex. He did some hardscape work for them, then had the opportunity to bid on the maintenance contract, which he won. He does none of the work except for snow removal. This got me thinking that this might be a great way to do business, bidding on commercial contracts and subbing everything out. After doing a search on lawnsite, I realize that this is hardly a new concept. But my question is, do any of you do this as the primary revenue for your business? Also, in PA where I live, do you need a GC license to do this? What are your thoughts, both pros and cons, on this concept? I would appreciate any input on this topic.
     
  2. gll

    gll LawnSite Member
    Posts: 32

    50 hits and not one reply. Come, on. Doesnt anyone have any input on this?
     
  3. Gbug

    Gbug LawnSite Member
    Posts: 57

    I'm actually going to be doing something very similar. In the past I worked in the field with my employees, now I'm moving towards contracting all the maintenance contracts out. We will only be doing residential though. I will be advertising and selling the contracts, then my contractors will take care of the mowing and fert.

    The only thing I really have to worry about once I sign the customers up is customer service, quality control, and billing. Luckily, I already know a few companies that I have contracted temporarily in the past that I trust to handle all the work. From what I've looked at, I will need to be making 17-20% gross profit over the contractor fees. The only real big expense is the advertising budget. If you're starting out without a customer base, advertising will take a huge chunk out of your gross.

    Also, the nice thing about contracting, is that you don't have to worry about employees, workers comp, or insurance(just make sure your contractor has insurance!!).
     
  4. gll

    gll LawnSite Member
    Posts: 32

    Thanks for the reply GBug. Do you know anyone who has already had success with this concept? Did you have any difficulty finding contractors who would be willing to work for 20% less than what they could get for the job if they were working directly for the customer themselves?
     
  5. Gbug

    Gbug LawnSite Member
    Posts: 57

    Well, I'm lucky enough that I already know of a good contractor. He goes to my church and helped me in the past when I broke my leg.

    The best way to find a contractor is to call a company when you see their truck's at a jobsite and like their work. Just ask them if they do contract work. If they do say yes, then you can start talking numbers with them. Usually, contractors will give you a lower rate, with the expectation of more work coming. You may have to call around a little before you find the right company for you.

    In order to be profitable working with contractors, you have to have lots and lots of volume. Since you're only taking a little off of each job, you're gonna need lots of work. I don't know if it is possible to be completely successful contracting all work in the maintenance business. It can however be something you can do while you explore other business opportunities. I'm moving towards exclusively contracting all work out because I can do that while working on a double major at business school. It's just a matter of finding time to take care of customer service and sending out bills. If you can hire the right people, this type of business can run almost entirely on its own.
     
  6. gll

    gll LawnSite Member
    Posts: 32

    Sounds like a good idea. Let me know how that works out for you.
    I was thinking about starting out small, subbing out small things like tree work, installations and maybe some snow removal. I currently have about 50 res. customers but I would like to acquire some commercial accounts soon. I would think there would be less hassles subbing out work on commercial jobs, residentials are so picky. Also, revenues on commercial accounts can be alot higher which would translate into more profits for you. Keep me posted on how you are doing with this. Two people brainstorming on the same idea can sometimes produce great ideas.
     
  7. Stillwater

    Stillwater LawnSite Platinum Member
    Posts: 4,842

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