Sub-contracting Nightmares

Discussion in 'Landscape Lighting' started by steveparrott, Dec 16, 2006.

  1. steveparrott

    steveparrott LawnSite Bronze Member
    Messages: 1,276

    I've heard of a few cases recently where a lighting contractor gets so successful that he starts to sub out some jobs to other contractors. In two cases, the results were disasterous. Both these contractors lost control of the sales process, never got paid for materials bought and couldn't pay their distributor's bills. Both contractors went from being successful to deeply in debt.

    Any words of wisdom on how to prevent this?
  2. Charlie Sierra

    Charlie Sierra LawnSite Member
    Messages: 29


    I am not in the lighting business but can tell you my experience with subcontractors as a general rule:

    1. Vet them thourouoghly.

    A friend of mine who is a competent GC subbed out a hardscape job and it went South fairly quickly. He got lucky: after his sub screwed the pooch, he broke even but was still well behind schedule.

    My friend checked a few references, looked up the commercial paper and everything appeared to be in oreder.

    The trouble was that the gent in question had done business under another name with another phone number so a BBB complaint check did not reveal two or three botched jobs.

    Look real close and hold any sub to the same standards you hold yourself.

    2. Always pay your subs.

    I have a stack of unpaid invoices over several years that have set me back a bit. I took my revenge at the County Clerk's office but I still have not collected on most of them but have a hook in the crooks.

    A pissed off sub an wreck your business in a hurry.

    Happy Christmas,

  3. Flow Control

    Flow Control LawnSite Bronze Member
    Messages: 1,267

    I can give a little insight related from a personal experience that I had via an attempted merger and also where I got screwed out of money after being subbed out.

    Last Year:

    I attempted to merge my company with another company, thinking that they were both similar in business stature. (Which was a huge mistake since what he said his revenue was and what it actually was was not even close.) The main reason for me to attempt this was I don't like doing sales and the hours associated with them. So this will relate to your "losing control of the sale process" since there was no structure when it came to selling, collecting, and paying expenses related to each job (parts, labor, etc) well what happened was money was being paid to suppliers, labor and overhead but we could not track the micro aspect of using job #1 money to pay for job #1 bills if that makes any sense. And after the season was over we had an outstanding balance (large too) at a supply house. Well after months of talking with the guy I attempted to merge with, whom collected half of the money taken (49% to be exact) he basically said F the supply house and F me (at that time I had paid 50K more in bills related to expenses and collected 51% of sales) because he said it did not matter that I had paid more and since there was still an outstanding bill that I was 50/50 responsible, image that I had paid 50K more in expenses and have all of the paper work to prove it but since there was still a balance I was supposed to pay 50% of that. Well F that I got a lawyer into the mix since our talks were going nowhere. And get this we had a meeting with the supply house and agreed that if company A was responsible for X% of sales then they should be directly responsible for X% of bills, makes sense to me and we agreed to it. Well that only lasted a few days after I proved the the other company that I had paid my % of debt and he had not. Well basically what happened in my opinion is that after everything was over I got screwed out of additional monies, as did the supplier while this other company basically dodged his responsibilities enough he could use the money that he saved to buy a BMW if he wanted. All of this was a direct result of "losing control of sales process" and having NO structure in place for responsibilities or duties of individuals.

    Steve it sounds like your example is too similar to the one that I had mentioned above in a round about way. My question to you, if the company selling the job collected on the job and paid the sub for the work and the sub cashed the check how the the company that sold the job still in the mix?

    After putting 2+2 together I learned that he had borrowed a LARGE sum of money from his father and had been using the money that should have been used to pay expenses to pay back his father, guess losing face in the family is worse then with a business.


    I learned that after losing about 30K with two companies. One should always lien a com job and have the supplier put a notice of furnishings and even lien a residential if possible. One should not just take it for granted if you see another company working in an area that they are reputable. One should check with the county courts for lawsuits and the BBB. Taking the extra time would have saved me 30K.
  4. Pro-Scapes

    Pro-Scapes LawnSite Platinum Member
    Messages: 4,180

    I have subbed out work (hardscapes and a few large trees ) with zero problems. Of course im on the paying end of that deal

    I get subbed for mowing 10 apartment complexes. We always get paid... sometimes its a bit late but always paid. However our contract ended in Late october and they decided to maintain it themselves thru the winter then our contract is supposed to be resigned in the spring. With the contract being upand no further work scedualed we still have not recived our final monthly check. Subbing can be good but be sure to treat it like any other client contractor relationship.

    We took a large sod install on a sub deal and they didnt wanna issue a deposit. We declined to start the job until a deposit was issued. If I got burned at least I got my costs up front and it wont sink my business.

    ALWAYS have a signed agreement of whats expected of all parties. As far as a lighting contractor subbbing out work thats a tough one. He should of added crews he could supervise. instead of subbing it out if he was growing that much. I guess it depends who your subbing it to and if they are honest and knowledgeable.

    All to many GC's think the can do anything. Anyone can set bricks in a pattern and call it a hardscape and it may look ok at first but you got to be positive that its going to be done to your standards.
  5. High Performance Lighting

    High Performance Lighting LawnSite Senior Member
    from So Cal
    Messages: 326

    There are a few things that don't sound right in this scenario.

    #1- If in fact those contractors were so succesful to start with then they obviously didn't get that way by their sound business practices. Like not getting paid up front for materials and then getting so deeply in debt that they couldn't pay their bills.

    #2- Their temporary success didn't come directly as a result of their passion for the process or they surely would not have let things get away from them like they did.

    #3- As a result one would question how successful these contractors were if they couldn't dig out from a situation such as this.

    I can tell you from my own experience in this field that I have met alot of all talk no action contractors in my day. I can remember going on vacations sponsored by manufacturers that would bring together some of their most succesful contractors or at least that's what the assumption was. Then you'd hear about how that contractor was no longer in business or they were having severe financial crisis to the point that they couldn't afford the plane fare the following yr. to one of those said events.

    You show me a contractor and I'll show you someone whose half full of crap. That includes the likes of yours truly. I'm a legend in my own mind.
  6. Flow Control

    Flow Control LawnSite Bronze Member
    Messages: 1,267

    One of the "Best" LCO's in this area that do it all: lawns, hardscaping, irrigation, lighting, concrete, pools, etc.... that get top dollar for there work are on COD status at there suppliers.
  7. bobw

    bobw LawnSite Senior Member
    Messages: 807

    Running a business and putting stuff into the ground are two separate things. Just because you're good at one doesn't mean you're good at both. And the worst part is, you can be successful even if you are lousy at putting stuff into the ground....but not the other way around
  8. Flow Control

    Flow Control LawnSite Bronze Member
    Messages: 1,267

  9. Pro-Scapes

    Pro-Scapes LawnSite Platinum Member
    Messages: 4,180

    Thats not really a sub contracting problem but poor business managment. All too many business owners think since they own the company all that money is thiers. To easy to splurge on something on the company when a fat check rolls in.
  10. Flow Control

    Flow Control LawnSite Bronze Member
    Messages: 1,267

    It is in reference regarding a post on this same thread. It was the thread by Bob and it basically says what you just said.

Share This Page