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Old 08-12-2017, 10:04 AM   #1
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Default How much in sales do your subs bring in?

This question is for those of you that subcontract out your work.

How much in sales (not profit) does your average subcontractor bring in?
Related Questions
-Do you use them year round?
-How many guys on their team?
-Residential or Commercial?

My company does a mix of residential and commercial and we subcontract 100% of our work, our typical sub brings us about 200k in sales per year if they work with us year round, with a crew of about 3-4 painters. That's the average but we have some with larger crews that do more and others that are one man bands that do less.

Another question:
-How many subs are you hiring at any given time on average?

Last edited by RH; 08-12-2017 at 02:30 PM.. Reason: Removed link to business located in post
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Old 08-12-2017, 01:27 PM   #2
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im curious why you sub everything and dont run employees
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Old 08-12-2017, 04:04 PM   #3
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Easier to run the business with subs. Its what Uber does, taskrabbit, etc.

Revenue/Profit are easier to predict since every job will cost me exactly the same (63% paid to the sub, the sub buys material).

Quality is rarely an issue: every customer fills out the satisfaction form at the end and ranks the painters. These forms are evaluated to see if the sub needs help improving in any area. And bonuses are given for high ratings. I copied this technique from CertaPro. Not to mention, the sub only gets paid after we get paid, so if they were to do a bad job, they dont get paid.

We only hire subs that have experience working for the other big painting companies in our area.

Less paperwork too because they are not employees, they are subs who work with us for a large part of the year but they take breaks/vacations whenever they want, they choose what days they work or dont. This has also never caused a problem as they give us notice when they cant work.
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Old 08-12-2017, 05:23 PM   #4
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Quote:
Originally Posted by Oscar V View Post
Easier to run the business with subs. Its what Uber does, taskrabbit, etc.

Revenue/Profit are easier to predict since every job will cost me exactly the same (63% paid to the sub, the sub buys material).

Quality is rarely an issue: every customer fills out the satisfaction form at the end and ranks the painters. These forms are evaluated to see if the sub needs help improving in any area. And bonuses are given for high ratings. I copied this technique from CertaPro. Not to mention, the sub only gets paid after we get paid, so if they were to do a bad job, they dont get paid.

We only hire subs that have experience working for the other big painting companies in our area.

Less paperwork too because they are not employees, they are subs who work with us for a large part of the year but they take breaks/vacations whenever they want, they choose what days they work or dont. This has also never caused a problem as they give us notice when they cant work.
So I guess what your saying is that you're not really a contractor, but more a quasi employment agency?
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Old 08-12-2017, 05:39 PM   #5
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Well I see what you mean but using the word employment misses the point, we do even less than that! We dont employ, we just contract.

We're more of a platform for self employed painters to get jobs. We handle the lead acquisition, estimates, database management, payments, contracts/warranties, scheduling, and the painters take care of production. Most of them tell us they make more money working for us than they do on their own since all they have to worry about is logging into our vendor app, seeing what jobs are on the schedule, accepting them, follow the scope, and get paid.

Nothing wrong with the tried and true employee model (its what our subs use with their helpers) but its a lot easier to scale with subcontractors. With that said, finding good subs is the hard part.
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Old 08-12-2017, 07:02 PM   #6
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You're on a slippery slope operating as you do. The Federal Gov. and the Courts are catching on to the game, and aren't liking how it's being played!

http://www.msnbc.com/msnbc/fedex-los...gainst-drivers
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Old 08-12-2017, 07:07 PM   #7
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Quote:
Originally Posted by Brushman4 View Post
You're on a slippery slope operating as you do. The Federal Gov. and the Courts are catching on to the game, and aren't liking how it's being played!

http://www.msnbc.com/msnbc/fedex-los...gainst-drivers
That's sort of what I was thinking when I first read this thread. Perhaps the OP can enlighten us as to the legality of what are they doing.
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Old 08-12-2017, 09:28 PM   #8
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Sounds like sorta-pro....

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Old 08-12-2017, 10:07 PM   #9
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Interesting responses.

So not many sub based businesses here? I guess this forum is geared more toward painters/self-employed.

In response to the reactions, there is nothing even remotely illegal or "sorta pro" about subcontracting, it is done by virtually all large contracting firms. Many markets are almost 100% subcontract based, such as exterior multi family remodels. And I think usually the biggest local residential companies are too, but I dont know that for sure, it definitely is true in my area though, by a long shot, and probably most of the southeast, I dont know about up north or west coast

What is illegal is when businesses mis-classify employees as subcontractors, but someone who makes that mistake really shouldn't be in business. Its not rocket science, subcontractors must be treated as subcontractors and not employees. Even if this wasn't the law, its still the easiest way of going about it.

The downside is you are able to do less custom/special jobs, as not all your subs will have the training to do faux, custom stripes, etc. Here the smaller companies usually win out. And, if you are only painting less than 20 houses per month, its probably not worth subcontracting as the margins tend to be less than if you use employees, but it will take up more of your time (I was using employees when I started).
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Last edited by Oscar V; 08-12-2017 at 10:08 PM.. Reason: spelling
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Old 08-12-2017, 10:57 PM   #10
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Hey, if it feeds your family then it doesn't matter what We think about the business model. I'd say most of us are either self employed or work for a painting contractor. Personally, I work for a gc specializing in residential remodels, restos and general residential construction. I run the paint division of that company. No stranger to the sub game and I understand the reasoning.
I've considered subbing out some things on a few occasions, still may do so in the future for all the reasons that it makes since to do so.
That being said, our subs set their prices we add mark up. Doing it this way, for us anyway, allows us to pay the subs what they're worth and releases them from the pressure or inclination to cut corners due to low ball pay. It also keeps our market competitive and the quality standards high. If we told our electricians That we bid a job at let's say $1000. He gets $640, and has to provide the materials he'd be trying every which way he could (hiring illegals, etc.) To make 10% profit. $64.00. And wouldn't be able to unless he himself was making <$10/hr.do you want an electrician worth $10/he wiring your home with crap products and as many shortcuts as he could find while you're paying top dollar for it? Imo, it's predatory toward ignorant hos...
Sorry, I just don't have a lot of respect for sorta pro. It's the how's and subs that get screwed.
Like I said though, if it feeds your family, more power to ya...i just wouldn't expect a warm response from those of us who know what the competition is offering.
I could be wrong though.you could have something better going on and I'm just making assumptions based on experiences that I've had.
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Old 08-13-2017, 11:08 AM   #11
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Our work group often hires trade contractors who use subs. Questions:

1. How do you screen the subs to make certain they're employing documented workers

2. How do you determine if they are paying prevailing wage on projects that require it

3. What is your method of quality control

4. How do you determine if your subs have workman's compensation

5. What type of safety training are you responsible for them to have

The problem I have with service contractors who subcontract, is that they present themselves as a competent and trustworthy company that will provide a quality service, only to see they often send out a crew with a beat up van with workers who can barely speak English. The confidence level immediately drops. And its not a matter of bigotry, it is more about competency.

When someone can't speak English, and they're in an environment where safety is largely communicated in English, it adds stress to the facility operator who has to over see the work and safety. And typically, the initiating contractor is no where to be seen. I'm really not comfortable with that situation, but it seems to be the direction a lot of trade contractors are going.

Thanks for the opportunity to reply to the subject.

Last edited by CApainter; 08-13-2017 at 11:11 AM..
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Old 08-13-2017, 01:41 PM   #12
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Don't use subs. Don't trust them. Then you have more paperwork to deal with as well.

$0.00 is what they cost me and $0.00 is what I pay to them.
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Old 08-13-2017, 02:42 PM   #13
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Quote:
Originally Posted by woodcoyote View Post
Don't use subs. Don't trust them. Then you have more paperwork to deal with as well.

$0.00 is what they cost me and $0.00 is what I pay to them.
I don't necessarily mind if we hire a contractor that uses subs. It's a business model that a lot of companies employ successfully. After all, this is a site that encourages successful businesses. Right? But what I don't like, is the way the sub model is used to enrich the self employed who often have at best, mediocre competency in the business they're in.
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Old 08-13-2017, 05:45 PM   #14
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@lilpaintchic

I agree subs need to paid well which is why we are always reviewing our current prices to make sure they are fair. As a company, we only make about 12% after taxes, so its not like we take a lot from the subs. We give them as much work as they can handle so they dont have to worry about sales. Before working for us, our subs see our prices and they decide if they like them or not, most do and are able to make well over $200/day after paying their 1 or 2 helpers. This is with consistent work, only time they dont have a job to do is because they are taking a break, not because we didn't have work for them.

@CApainter

Great questions! I'll provide my answers in order.

1. When a vendor accepts a job, they sign the subcontract agreement that includes all of our terms/conditions. Meeting certain state/federal regulations is part of those terms.

2. We dont do government work (yet) but if we did, the answer to the first question would apply, I assume we would have to do more than just that though...again we dont do that type of work, and we have a lot of growth to do in residential so no plans for public work in the near future.

3. We have area account managers that check in on jobs and provide occasional field support to vendors and customers. But the best method is that we are very picky about the subs that we hire, and they are rated by the customer on every job. Subs need to get consistent 4.5 and up on satisfaction forms to stay active with us. Many of the sub based franchises do this exact method (though we are not a franchise and I dont hugely like the franchise model). Also, the subs only get paid after they upload a picture of the sign off sheet (different from the satisfaction form) to the app, they walk the house with the customer and have the customer initial beside each line item (room) on the sign off sheet and sign the bottom confirming they are 100% satisfied. Office staff reach out to customers as well.

4. They cant be active on our vendor database unless we have their certificate of insurance with our firm listed as a certificate holder on file, we require workers comp, general liability, additional insured, and some other add ons. We only accept the files from their agents, not themselves, and our database automatically alerts us of soon to be expired certificates. Beside these, we require a few other documents (w9, running subagreements, etc)

5. Similar to answer from question 1 (plenty of safety requirements, OSHA compliance, etc in the subcontracts) and answer 3 (spot checks from area project managers).

Just to clarify, we do have employees, just not painters. Our employees are account managers and office staff.

6. Our subs speak English, the only time we are Ok with limited English subs is on certain types of commercial jobs where our account manager is regularly active, but even here, they speak good enough English. Residential jobs get our top subs, either natives or very fluent English speakers. The vans are sometimes a bit old yes...but I wouldn't say beat up, none of our subs are in heavily dented or visibly damaged vans.

@woodcoyote, I agree, you need to be picky about hiring subs. But believe me, and the many other contractors who have been doing this for decades and selling millions per year on subcontracted jobs, there are some amazing subs out there that are just really great people. All of my residential job class subs I trust with my wallet. Great people. Not sure what you mean about the paperwork though, our office employees cost us much more in HR than our subs.

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Old 08-13-2017, 08:43 PM   #15
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The vehicles and appearance aren't necessarily a deal breaker as long as the work is being performed safely, compliantly, and within the job scope parameters. It's good to know that you have the resources to over see the projects performed by your subs.

I probably would be pleased with your service.
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Old 08-13-2017, 09:44 PM   #16
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So exactly what is the intent of this thread?
As a sorta new member we do want to welcome you, your questions and your experiences.
However, the questions you've posted appear to be of the red herring sort....
Again, I could be quite wrong. If so, please accept my apologies.
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Old 08-14-2017, 10:59 AM   #17
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@lilpaintchick

I just wanted to know what the average sales per residential sub is, we are considering hiring full time sub recruiters for new cities and how much to pay them, which will be based on ROI, ie sub sales. Not sure what mean about red herring questions, this thread went off topic from the start, but only because I was answering questions not related to the original topic.
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Old 08-14-2017, 12:16 PM   #18
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Quote:
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@lilpaintchick

I just wanted to know what the average sales per residential sub is, we are considering hiring full time sub recruiters for new cities and how much to pay them, which will be based on ROI, ie sub sales. Not sure what mean about red herring questions, this thread went off topic from the start, but only because I was answering questions not related to the original topic.
It seems you are looking for a bench mark. Unfortunately, it appears not many members here work as subs for a corporate painting firm. If they sub, it's likely through a building general contractor.

Are the cities you're planning on expanding to, within a geographic location to your headquarters, or are you looking beyond that? It looks like you're going to have to do a lot of analysis in order to get an average ROI. Good luck!
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Old 08-14-2017, 03:18 PM   #19
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You just have a different business model than what we typically see and in the op there were several questions that appeared to be baiting (imo) upon topics that are typically frowned upon here. I don't recall what the exact questions were as they have been edited out.

Good luck finding the information that you seek, though I doubt that you'll find it here as most of us either hold,or have held, a brush in our business dealings. I'm not saying you have or haven't, just indicating the majority mindset within this forum (that I've experienced anyway).
And just as a question, that $200/ day after he pays his help (are they legally employees or ???)....your sub gets to pay lni,taxes,ins, materials, etc out of that, right?

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Old 08-14-2017, 03:35 PM   #20
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I'm more interested in your marketing strategy to get that much work.

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