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  • For those who subcontract mowing....

    what's your going percentage ratio?
    80/20?
    90/10?
    85/15?

    What rate seems to keep everyone happy?

  • #2
    I base all my subcontracts at a 28% markup. And to keep it affordable to the end client I also make sure I receive a discount on their rate, since I brought them the work.

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    • #3
      What is your view on when you should sub-contract out mowing?
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      • #4
        RitchieM....sorry, but you lost me with the mark-up / discounted rate thing.
        Guess I'm looking for "it's a $50 cut a little out of my area....but there are guys right around there looking for extra work".....what is a fair rate to pay the crew cutting it for me? 80% ($40)...85% (42.50)?
        I'm just looking for opinions (to add to my own). I mowed years ago full steam and was able to quit my job and start my own business but took on a lot of work at 70/30...I got the 70%. I found that to be too low. It still paid but was too low for nice profit especially when I had 2 trucks and 3 guys working for me.

        Now, the guy subbing out all the mowing (I think it was about 200 accounts at that time).....that's roughly $200,000 and he kept 30% of that each year so he was pulling in $60k without touching a blade of grass.

        Steve,
        I'm working on increasing my own account list, along with having the ability to take a little time off and sub lawns out to a responsible lawn guy for a week or two to go out of town, etc. I'd actually like to build the account list up and do exactly what the guy did for me years ago....except I'd bump my percentage up to keep the guy I'm subbing out the work to happy.

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        • #5
          Very interesting!

          What do you feel is the benefit to doing it that way versus having employees do the mowing?
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          • #6
            Very interesting!

            What do you feel is the benefit to doing it that way versus having employees do the mowing?
            Steve,
            The main benefit right now is I can actually RUN a business instead of creating another job for myself. It fits into how I want my life right now. I could do what I did....go buy more expensive equipment....maybe, possibly, hopefully, find an employee who is actually responsible, actually has a driver's license, will actually show up for work, or I can build the business again and find a few good people already in the business who are looking for extra work. If residential yards average $1000 / year, if I can sub them out at 80/20 then every 5 I acquire is $1000 in my pocket. I can still deliver customer service and do everything else that I would do with a crew of employees, with no major equipment / employee issues and no major overhead costs besides the usual insurance, advertising, etc.
            I did it for 5 years as the guy getting the work sub'd to him so I know the ropes and know for a fact that it works, can be done and has been done and is still being done very profitably.
            If I need to jump in and help out, I've got some gear and can do that but I want to run the business, not create a job for myself.

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            • #7
              VERY CAREFUL on who you sub to. I just started out last year and when I got a little over my head I subbed out to a guy, (though I was still making profit on the jobs I subbed him to do ) just to catch him trying to steal business. Damn snake that he was, hurt a little. Subbing is nice because they provide their own equipment , just be careful not to sub out and find out your not doing it because they provide equipment but YOU provided THEM with clients in fact!

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              • #8
                well, I just received another opinion from a guy with an extremely large mowing company and he's telling me I should never take less than 40% if the sub is using his own equipment......so 60/40......which doubles my 80/20 opinion.....hmmmm.....

                I'd love to hear more opinions on this one. Feel free to chime in.

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                • #9
                  well, I just received another opinion from a guy with an extremely large mowing company and he's telling me I should never take less than 40% if the sub is using his own equipment......so 60/40......which doubles my 80/20 opinion.....hmmmm.....

                  I'd love to hear more opinions on this one. Feel free to chime in.
                  only a fool would take on subcontract work when he has the ability to do the equipment to do it and the address of the customer that could give him the job for long. So either you have a fool for an employee or a competitor at your customers house.
                  I am the owner of www.AllOutdoorParts.com an online mower parts distributor. I am also a Briggs Master Service Technician and Expert Certified Mechanic for Kohler. If my posts helps you please like my facebook page at www.facebook.com/alloutdoorparts

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                  • #10
                    VERY CAREFUL on who you sub to. I just started out last year and when I got a little over my head I subbed out to a guy, (though I was still making profit on the jobs I subbed him to do ) just to catch him trying to steal business.
                    What was he doing? What should others who try to manage their business this way, look out for?


                    The main benefit right now is I can actually RUN a business instead of creating another job for myself. It fits into how I want my life right now. I could do what I did....go buy more expensive equipment....maybe, possibly, hopefully, find an employee who is actually responsible, actually has a driver's license, will actually show up for work, or I can build the business again and find a few good people already in the business who are looking for extra work.
                    That is a very interesting plan. Have you thought of maybe helping other small business owners, manage their business? Could something like that work? Where you take a % to handle all the office work and other services? Or no?

                    Maybe you could look into property management, where you offer many services to a client and sub them all out.
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                    • #11
                      Wandfsmall.....

                      After clarification from the large mowing company....80/20 seems reasonable.

                      #1...I've found residential customers are very loyal. A sub trying to 'steal' a client will immediately lose ALL the business I have given him. If someone is out there looking for work, being the sub can kick start a business. I know...I've done it. I don't see how it's foolish. If I give a guy 10 - $40 yards a week to mow, he's making $320/week off me. If he has half a brain, he won't try to steal $40 and lose the $320. And I don't have any employees at this time so I'm not sure where that came from.

                      Plus, a hard working guy looking for income to support his family......has the chance for xtra fill-in work.......seems ambitious to me.....not foolish. Do you do it forever? Nope....unless the yards are nicely priced and the sub is happy with the 80% and no hastles to go with it with billing, etc.


                      I did it with 25 customers of my own and 85 given to me to subcontract. It allowed me to buy another F250, another trailer, a couple mowers and quit my full time job and started me into self employment for 5 years. The rate I was taking was a little too low but it still supplied cash flow to take winters off (while plowing snow), gave me a hell of a 5 year ride with a lot of fun and experience. At those #'s....a sub has 25 - $35 yards...that's $875/wk. If he wants to do what I did.....say I give him 75 - $35 yards to cut...that's $2625 @ 80% is $2100/wk....he's now making a hair under $3000/wk. If I sub them to him at 85% ($2230/wk), he's now at $3100/wk. I believe for that, he can be self employed. Now, for every new customer he gets on his own, he can give one back and I'll find another guy to cut it. At that scenerio, 15-20% and I'm making $394-$525 week. There is no reason to stop growing and continuing the process.

                      That was why I was asking about a rate. Like I said, my rate was just a tad too low but was looking at maybe 80/20 or even 85/15. Back then, I would have been just a little happier with that rate based on the quantity we were mowing so my rate question was just to get a few more opinions so I could weigh my choices.

                      Steve,
                      No interest in property management......5 years of mowing 100+ a week....the lawns are where my experience is.....plus, it's a way to establish the business back to high profitability without the massive overhead.

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                      • #12
                        wandfsmall,

                        just re-read your last line about 'fool for an employee'.....now i understand what you were saying........but i disagree.

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                        • #13
                          wandfsmall,

                          just re-read your last line about 'fool for an employee'.....now i understand what you were saying........but i disagree.
                          I did not intend to offend you that is just my opinion.

                          I left the family business for a few years working as a robotics engineer for a company that made cell phones. They had subcontracted to a few other companies in the past and they ended up starting cell phone devisions themselves. By the time they shut down all manufacturing in the us had stopped, they were not the dominating company in the cell phone market, and all of the subcontractors had cell phone devisions that were outperforming them.

                          Your subcontractor will figure out very soon if they are smart that they do not need you, and will approach the customer to steal your business.
                          I am the owner of www.AllOutdoorParts.com an online mower parts distributor. I am also a Briggs Master Service Technician and Expert Certified Mechanic for Kohler. If my posts helps you please like my facebook page at www.facebook.com/alloutdoorparts

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                          • #14
                            again, if he approaches my customer........he's lost everything. Lawn customers are extremely loyal to the great service they get from their lawn guy. I have absolutely no....and i do mean absolutely no loyalty to a cell phone company. It's a totally totally different market.

                            thx for your comment.

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                            • #15
                              if he approaches my customer........he's lost everything.
                              The thing I wonder is this. It seems it is hard enough to stop employees from taking on side jobs when you are not there to supervise them.

                              How will you deal with the sub-contractor taking on side jobs with the customer?


                              I left the family business for a few years working as a robotics engineer for a company that made cell phones. They had subcontracted to a few other companies in the past and they ended up starting cell phone devisions themselves. By the time they shut down all manufacturing in the us had stopped, they were not the dominating company in the cell phone market, and all of the subcontractors had cell phone devisions that were outperforming them.
                              This is a really good insight. To understand this better can you tell us a little bit about why you think they decided to go the route of hiring subcontractors to do the work? And how do you feel they should have handle it instead?
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