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pros and cons on subcontracting?

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  • pros and cons on subcontracting?

    Does anyone have any pros or cons about sub contracting? I have a possible chance of getting as many clients as I want through a business that already has clients. I would be the sub on as many yards as I want. All I would have to do is mow/trim the yard. Does anyone have any thoughts about what I should watch out for or ask about?
    Thanks.

  • #2
    When it comes to a scenario like this, the sub does not get paid unless the parent company gets paid. If the customers are slow to pay, the sub will be slow to get paid. Bottom line, have a contract in place guaranteeing that you get compensated within a specified time window following each yard you maintain. DO NOT lump them all together, and bill them as one. You need to bill each one separately. Also, if you choose to accept payment as "net 30", you and the parent company need to agree that it means that you have RECEIVED payment within 30 days of completion. If the payment is mailed to you on the 30TH day, and you don't get it till day 33-he's late. Have late fees in your contract. One more thing.....because this guy is soliciting you, make sure he agrees to YOUR contract and not the other way around. Best wishes.
    integritylawnpro.com

    Comment


    • #3
      I learned something years ago, as the market crashed that I believe to hold true to this day.
      The late 90' were good for business, there was more jobs then contractors.
      Then guys started pushing the limits large companies started allowing 30,60,90 day net. Oh man I got contract i am safe, ok I will do it.
      This is where you are, almost to good to pass up.

      I landed a 3 year,3 million dollar contract through a home building firm in Tennessee, they had one heck of a track record. 1-3.5 million dollar floor plans on 350-500k 1/4 acre lots, we were rolling.
      Year 1 was gravy, bought 4 asv loaders and harly rakes to handle the work load.
      Year 2 went fine and we got word the ecconomy could crash and our advisors suggested we watch ourselves.
      Then it happened!
      We invoiced 5 jobs done and was paid for 3,the next month we finished 6 and got paid 4. In a very short time we was in debt 4 jobs, the vendors was in debt and it happened.
      We charged out a months worth of jobs and the card was
      Declined,$ 250,000.00 on a card, at one job??

      I personally made calls to this client and
      Asked about the payment, it took 180 days to receive full payment on a handfull of jobs that were 30 day net.
      Turned out in court they had subed the jobs to us and
      they had not been paid either as contracted and it snowballed.
      Did we survive ? Yes, did we learn valuable lessons?yes .

      Now before you think it can't happen to you, I assure you it can.
      We had the money to move on, many didn't. After that single intervention
      We sold several high dollar machines, stoped lanscaping large jobs entirely
      And stoped any form of credit.

      Now I know your at a much small dollar loss if you hit a
      bump in the road but consider the
      resources you will need to make those dollars, you may already be at a higher risk of failure then you know.

      Comment


      • #4
        I learned something years ago, as the market crashed that I believe to hold true to this day.
        The late 90' were good for business, there was more jobs then contractors.
        Then guys started pushing the limits large companies started allowing 30,60,90 day net. Oh man I got contract i am safe, ok I will do it.
        This is where you are, almost to good to pass up.

        I landed a 3 year,3 million dollar contract through a home building firm in Tennessee, they had one heck of a track record. 1-3.5 million dollar floor plans on 350-500k 1/4 acre lots, we were rolling.
        Year 1 was gravy, bought 4 asv loaders and harly rakes to handle the work load.
        Year 2 went fine and we got word the ecconomy could crash and our advisors suggested we watch ourselves.
        Then it happened!
        We invoiced 5 jobs done and was paid for 3,the next month we finished 6 and got paid 4. In a very short time we was in debt 4 jobs, the vendors was in debt and it happened.
        We charged out a months worth of jobs and the card was
        Declined,$ 250,000.00 on a card, at one job??

        I personally made calls to this client and
        Asked about the payment, it took 180 days to receive full payment on a handfull of jobs that were 30 day net.
        Turned out in court they had subed the jobs to us and
        they had not been paid either as contracted and it snowballed.
        Did we survive ? Yes, did we learn valuable lessons?yes .

        Now before you think it can't happen to you, I assure you it can.
        We had the money to move on, many didn't. After that single intervention
        We sold several high dollar machines, stoped lanscaping large jobs entirely
        And stoped any form of credit.

        Now I know your at a much small dollar loss if you hit a
        bump in the road but consider the
        resources you will need to make those dollars, you may already be at a higher risk of failure then you know.
        Tough break. I have known so many guys down here that share your story word-for-word. One guy had an excavation business grossing 8 figures annually. Today, he is working in retail.
        integritylawnpro.com

        Comment


        • #5
          The other thing I wonder about is how much would you be getting on these yards as a sub-contractor and how does that compare with how you would charge normally if the job wasn't sub-contracted to you?
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          • #6
            I understand doing this if you are very small and trying to stay busy while starting out...but don't let this stop you from picking up other business...also, I wouldn't do it for a huge corporation..but maybe a smaller business where you can be in direct contact with the owner....I have a company that fertilizes all my properties for me...years and years ago they did maintenance... still had about 30 commercial contracts but wanted to be done with maintenance....they gave me all the commercial accounts...I do them for the same price and they cut me a check every month...never any problems but I also know the owner well, have lunch with him every month (where he hands me the check) and this company does about 8 million a year on just fertilizations...they aren't a builder (I hear they are the worse) or a really sketchy company.

            Comment


            • #7
              We stoped as soon as it hit and went a different direction. If not we would have went broke as several companies went flat bankrupt .
              It is different now for certian.
              I can recall weeks back then when
              We would deposit 10'000.00 in the bank on a monday and be
              overdraft by Friday.

              We never got poor but the sting is still there.

              Comment


              • #8
                Thanks for the reply all. I hope to meet with them this week and hopefully something will come out of it. I will make sure that I am taken care of even if they are having problems with the client. I do know the company is not a small one and I am sure they will be on top of things.
                All I would have to do is mow/trim/blow the yards. They will take care of the fertilizing, weed control, and any other items that I don't feel like doing. But then again, they are willing to give me whatever I want for work. Including extra stuff like mulching, dethatching, aerifying, and bush trimming.
                I will make sure I have some kind of contract between the two of us and make sure that I get paid even if they are not.
                I will always advertise for clients and sign on clients of my own. And yes, I am small. I do this as a part time job just to earn extra cash. But I am also not afraid of working.
                I am also curious as to what the difference in price is or if they just charge a certain percentage of what I would normally bid the job for... If I am asked to bid on the job, I will make sure I add in the percentage so I am not going backwards. I will not do it for free.

                Again, thanks for the input. Any more is highly appreciated.

                Comment


                • #9
                  I look forwards to hear more about how that meeting goes and what you decide to go with. So keep us updated.
                  - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                  Download your Free trial of Gopher Lawn Care Software.

                  Comment

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