Suggestions for paying an owner/operator

[bearmtnmartin]

I started a new branch of my business a year ago. I hired someone to take the operation over and grow it. The deal was that I would provide my customers and leads and refer all jobs of a certain type to him. In return, I would pay him all the hourly revenue from the jobs until the business was up and running, at which time I would start clawing some revenue back.

So that time has come. The business is doing quite well in terms of making this guy a lot of money. The downside is that although he is supposed to be a self employed sub trade, my office has ended up doing a lot of clerical work for him because he is not good at it. As well, I do all the invoicing of the clients and it is on my head to collect the money, or take the hit if they do not pay. He does provide his own vehicle, fuel and tools, but buys supplies on my accounts. I recieve the markups, not that they amount to much. He also sets his own hours, which are fewer than I would like because he makes so much money that he is no longer hungry.

I am looking for suggestions as to what would be a fair split, and also for a way to put a bit more of the pressure on him to ensure a bill is paid.

Thanks for the help.

 

[grass-scapes]

Bill for accounting time, and any other time associated with operating HIS branch of the business, and send him the rest. That seems fair to me.

 

[bearmtnmartin]

So what's in it for me then?
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[grass-scapes]

ok...Bill HIGH for your time. Take a rebate (kickback) of a certain percentage....say....10%

Its kind of hard without knowing what was in your original signed agreement. You do have one of those...right?

 

[bearmtnmartin]

The question is how I determine fair compensation for a subcontractor. Its my business. I bring everything to the party and if he doesn't work out I replace him with someone else. The reason for owning, operating and growing a business is to make money. This new branch of my business is not supposed to be a workfare operation. Its sole purpose is to make me more money. So I need to determine what is a good split, so that the subcontractor remains happy and motivated to grow MY business, while limiting my exposure to liabilities that will loose me money.

 

[snomaha]

We expect our subs to price projects we present them very competitively - depending on the project we will bill out 10% - 30% above the sub price. Is there another company in your area already established that you could sub these jobs to? My experience has been that a subcontractor will never grow your business - if he could do that why does he need you?
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[wbw]

It is hard to put the genie back in the bottle. If starting from scratch I would say that you charge your overhead on a prorated basis to this business. Then every time he gets a dollar you get fifty cents (or whatever you thinkis fair). Whatever you do keep it simple and straightforward.