Paul is our production manager. He’s 25 years old and will oversee the painting of 400 homes this year, for over one million in revenue.
For 90% of those homes, he will never even step on their property. He rarely visits job sites. He never paints. And we never get bad reviews.
Our contractors love working for us. We have about 8-12 sub-contractors working for us at any given time, which provides work for 20-30 people throughout the year.
Some of the contractors that work with us are “one-man” crews – they do all the painting themselves. These “one-man” crews finish 1-2 jobs per week for us and can make up to $2,000 per week.
We have another contractor that has 12-15 painters working for him. He does 7-10 jobs per week for us and he doesn’t paint himself, just manages his crews.
… And we have the in between contractors who do some painting and have small crews that help them.
Question: Why sub-contractors and not employees?
- Paperwork is much easier with subs than employees. You don’t have to worry about withholding money for taxes, unemployment, etc… You just have them fill out a W9 tax form, and pay them the amount you agreed to on the job.
- Training. You don’t need to train a sub – you just need to find one that is already experienced.
- Equipment. You don’t need to buy ANY equipment. Sub-contractors are business owners and already have all necessary equipment.
- Business owner vs employee… I’d rather work with a business owner any day of the week. You can expect more from a sub than you can from an employee. Our subs talk with the customers once the job is started, they do the final walk around, and even collect the final check.
- Set pay on the job. If your employees take way too long on a house, or they’re smoking cigarettes all day, you have to pay them. With subs, you agree on the price before they start and you pay them when they are done. It’s a contract for a total payment, rather than an hourly wage. This guarantees your margins.
- For more about why to use subs, watch this video.
Question: How do you find a sub-contractor?
- Post an ad on craigslist in the Job Offered → General Labor section… Something like this: “Foothills Painting is looking for sub-contractors to work with. Our business is growing in Northern Colorado and we have a lot of available work. We are looking for a long term partnership with a contractor who does quality work. Must have insurance and all necessary tools and equipment. We pay the second the job is done, we have consistent work, we pay fair. If you’re interested, please contact Eric”
- Start receiving calls from contractors
- Send them a picture of a house you have and the details about the job. What kind of paint, one coat or two coats, etc… Also tell them how much you are willing to pay them for materials and labor and ask them if they are still interested.
- At this point, some contractors will say the price is too low or they won’t be interested. That’s ok. You are looking for the right fit, and not everyone will be the right fit.
- If they like the price, set up a time to meet them at the job site.
- Meet them at the job site, look at the job, agree on a price, set a date to start the job. Let them know that if everything goes well, you’ll have another one ready right after this one.
- Start the job. Monitor the first job closely – maybe even check in once a day or something.
- If the job goes well, give them another job. After a sub has done 4-5 jobs for you, they are solid and you have a reliable crew.
Once you have a reliable sub, you shouldn’t ever go to the job site.
Paul meets our subs once a week and gives them all the jobs they are going to do that week. He lets the clients know when the painters will arrive and he tells the painters when to start. They show up, they paint the house, they collect the check. Then they meet with Paul and give Paul the customers payment, and Paul pays the sub.
That’s how our whole production process works.
Question: How much do you pay your sub-contractor?
Answer: Fairly. We pay our subs 50% of the total price. But if our prices were lower, we couldn’t do that. For example, we bid a house for $3,000. We pay the sub $1,500. If we bid that same house for $2,500 we would have to still pay $1,500.
So the percentage is not the key here. The total amount is the key.
But you CAN charge double what you have to pay a sub. When I started my business, I was paying my subs 70% of the job so I could have lower prices and be more competitive. As my company grew, I got more references and credibility. Then I started to raise prices, and I paid my subs 65%, then 60%, then 55%, and now we are down to 50%.
Not because we pay our subs less money, but because we charge more for the work we do. And we can charge more because we are a bigger company, customers know us, and are willing to pay more for a large reputable company.
See… when you have great contractors who are great painters, then all you need to learn how to do is sell paint jobs. That’s what we’re best at.