Hybrid subcontractor model

Is it right for your business?

If you’re like a lot of business owners, you may be scrambling to bring on new crew members to handle a growing volume of exterior work. While it may feel impossible to look beyond two or three weeks or even a month out as the busy season unfolds, thoughtful business owners need to be looking well beyond that and to consider how they’re going to handle things if work slows in the winter. Will you cut loose team members only to go through the whole exercise of bringing on people again next spring? Or will you consider a new approach to hiring … specifically, a hybrid subcontractor model?

A hybrid subcontractor model is one where you have both in-house W-2 employees and subcontractors to turn to on an as-needed basis.

With a team of trusted subcontractors consistently at your allocation, you’re able to take on projects that either aren’t a core focus for you and your team, and/or could complete projects that you otherwise wouldn’t be able to do with just your W-2 crew.

It’s a great way to build up your bank account during your busy season and have a nice cushion of capital heading in to the slower season, or to help navigate your slower periods by profiting on work that you would otherwise refer out. Imagine the financial difference if you could net 20–40% on projects that you would have turned down.

How can this be beneficial?

There are two main ways in which subcontractors can be an asset to you and your business:

1: To do projects that are outside you and your team’s expertise and core focus. For example, if you frequently turn down projects related to drywall repairs or hanging, finding a reliable sub who specializes in this work could be a great way to supplement some additional income rather than just referring it out.

2: To do projects to meet deadlines that you and your team could not meet. For example, if by August you’re fully booked for the exterior season with your crew, using a subcontractor to complete the work in the final months of the season can increase the cash reserve in your bank account. Heading into winter, you’d profit on work you would have lost to a competitor because you couldn’t get to it this season. Imagine heading into winter with that income in your business bank account!

What’s the downside?

I know what you’re thinking: this sounds too good to be true, and you wonder what the catch is. We advise our clients to really make sure they find good-quality subs who align with their values, quality and beliefs. Every relationship must be a win-win for both parties, and this is no different. Another challenge can be managing production at a much larger level if you are used to only overseeing two crews totaling six painters. Remember, you’re better off testing the water with one, maybe two sub crews, and growing from there as you find your true capacity.

Who’s a good subcontractor?

Anyone who is great at what they do and provides good customer service but hates the business aspect of marketing, estimating, scheduling and financial risk. They exist, you just have to find them. Many of them will make just as much if not more money working for you as a subcontractor than what they’re pricing jobs at currently.

How much do you pay them?

A good range is 35–50% of their portion of the total job cost. Their pay should be based on how reliable and trustworthy they are and if they have insurance or not. The more you must ‘babysit’ them, the more you should be making on the job. The more independent they are, the more you can afford to pay them. Regardless, you should always check in on their jobsites. Once a day at a minimum and two to three times a day the first few projects they work on with you.

It’s important to make sure that you or your production manager is always there when they finish jobs to do a walkthrough and to collect final payment from the customer. This ensures that the quality of the work is up to your standards and that the customer is happy. While this model may not be for everyone, it can make a big difference in how easily you navigate your slower seasons.

CHRIS MOORE has spent the last 10 years advising painting business owners in a variety of areas. He owned his own painting business before transitioning to a full-time business consultant for the painting industry. EliteBusinessAdvising.com