Subcontracting Jobs Out
When
you’re looking for a lot of new help because you have too much work at too many
sites, subcontracting is the way to go. You “subcontract” some of your work out
when you receive too many cleaning contracts. Because you can’t do the these
jobs yourself, with your employees, you pay another cleaning company to do all
of the labor, using their own supplies and equipment, and you pay them about
sixty percent of the amount you are paid in your signed contract, for all of
this work that the sub will complete for you. You will get forty percent of the
gross pay without actually having to organize the labor, supplies, equipment,
supervision, travel, time/ hours, or almost anything. You just keep your phone
lines open, so you can pick up your check when the job is done. Then you pay
yourself for doing almost nothing, after you pay you sub contractor. Remember,
however, that you are still 100% responsible for making sure that the job is
done in a way that meets the terms of the contract you made with the owner,
general contractor or manager.
When
you are looking for new subcontractors to help with your workload, it’s
worthwhile to generate a checklist to help you identify a quality
subcontractor, because a good subcontractor is not the same thing as a good
employee. You definitely want the most reliable, dependable, and efficient
subcontractors you can find. These cleaning companies should be trustworthy and
able to complete multiple projects without constant supervision from you and
your staff. Make sure that the subcontractor is in business for him- or herself,
rather than an out-of-work employee from another cleaning company with some
used tools. Of course, they will need to be experienced in their trade,
punctual, and committed to doing quality work. Always perform a background
check on potential subcontractors. It is best if subcontractors have the
following:
• Prior related subcontracting
experience
• Cleaning or construction business
experience and some education
•
An
up-to-date list of references who know the business’ track record, or past
contracts worked on and finished on time
• A supervisor who is able to read,
write, and speak English on your jobs
• Good verbal communication skills,
so that when they talk to your customers there are no misunderstandings,
because they are representing you
• The ability to provide their own
transportation, supplies, equipment, insurance, and tax ID number. If they have
a tax ID number, you know they are in business, not just out of work or
temporally unemployed.
• No
conflicting commitments that might interrupt their subcontracting agreement
with you and your company. Make sure that they are not already overbooked when
they accept your subcontract. You don’t want them subcontracting your work to
another company. Third party subcontractors may not be getting enough money to
do a good job, because the first subcontractor you hired will also take a cut
of the money before paying the third subcontractor.
When
you subcontract out a job, you will not be working on the site daily, so you
should try to check in every day by phone, to make sure everything is running
smoothly. Site visits should take about one hour per building, when you do get
the time to do so. If you are unable to make the visit yourself, you should
send a qualified supervisor or staff manager to take notes on how well the job
is being done, and what, if anything, needs improvement. Keeping your company’s
reputation in mind, make sure your supervisor gives the building the white
glove test as he or she walks through the building with a notepad or a small
tape recorder. Subcontracting means you, basically, don’t have to visit that
job Monday through Friday. However, it is still your contract, in your company
name so try to get out there and inspect. The property manager or owner will
still be holding your cleaning company, under your signed contract, liable for
any mistakes or work not completed by the subcontractor doing the work. So stay
on top of things each day.
Obviously, you need to be careful when you choose a subcontractor. Be sure to always keep your own business insurance up to date, even for jobs you subcontract. Again, the contract is still in your name and you are responsible if the subcontractor drops his or her insurance for some reason, and an employee or person gets hurt on the job. It is also important that you follow the labor laws on wages for subcontractors. This is why it is feasible for you and your company or accountant to check all of the subcontractor’s tax and hiring policies. Employees or ex-employees cannot become subcontractors for you, because you must take taxes out of an employee’s check each payday. This is not so for a subcontract. You pay the subcontractor the amount your contracted to pay (about sixty percent of the contract you got), and your accountant gives them a 1099 tax form at the end of the year for the money your company paid them. The subcontractor, not you, takes care of the taxes on the money you pay out to them. You will probably want to have your subcontractors sign a non-compete agreement. Commonly, a non-compete agreement say the person or sub contracting company will not try to take any of your jobs within in a specified geographic area that you sub to them for about two to five years.
As a rule, you can subcontract out around fifty or sixty percent of all of your buildings contracts, give or take a few. How much of your business you subcontract out is up to you, how many quality subcontractors you can find, and how many buildings you can get cleaning contracts on. You never want to subcontract out all of your contracts. At the end of that two-to-five-year cleaning contract and or agreement, some of your subcontractor, who are your competitors in business for themselves, will try to bid for the contract, and will take your place. Even though you had them sign a non-compete agreement, some subs will try anyway. They will try to acquire that contract when it comes up for bid again, or before, this I can almost guarantee you, as they say, when it comes to money.
If you were to have contracts to clean fifty buildings, you would keep all or about twenty of them for you and your staff to clean. The other thirty jobs you could sub out to your reliable cleaning subcontractors. Using this approach, no matter what happens to your thirty buildings you have subcontracted to someone else, you will still have an income from the ones you did not sub out, so you can always stay in business. Most cleaning subcontractors, once you get to know them, are among the best people in the cleaning business world. They are really honest people who just don’t have the business skills or knowledge to understand and sign a contract, make it work for them without help from, someone like you, and your company. They just want you to keep them working as one of your subs. Some construction or cleaning subs just do not take the time to learn how to bid a large contract or deal with large, or even small, clients, doing all of the paperwork, or working face-to-face with new or long-term business clients. The hands-on part of managing a construction or cleaning business is not for everyone, but we are trying to change some of that with this how-to book, if just a little. Until the change happens, allow subcontractors to work for you and make some money for their company, without having to deal with bidding,contracts and the face to face business parts of this process. Most of these subcontractors will be devoted to you as long as they are working and can take care of their small business and family.
Don’t assume that because a property manager gave you a cleaning contract for the last five years, you will automatically receive the job again next time. As soon as word gets out that a contract is coming up for bid again, everyone, including some or all of the subcontractors working with you, will put his or her business in a position to take this contract from you. Keep in mind that everyone has a right to bid on these jobs; this is business. You have to think about the point of view of your last subcontractor. If they subcontracted to work for you, and their business only got paid $18,000 per month by you, that subcontractor will hope to win the entire $30,000 per month contract. Really, it is only fair for that business to win the contract from you, if you do not keep your competitive edge. Think about it, $30,000 versus $18,000. That’s a big difference in the subcontractor’s monthly pay, so you can understand why he or she will try to take your contract.
Nearly every contract you have or are subbing out was taken from a company that may have had it for years, until you came along with your great bid package. Again, it’s not personal; it’s just part of doing business. You win some, and you lose some. That’s also one of the reasons you never subcontract out all of your jobs. You continue to do the cleaning on some of your contract cleaning jobs yourself, so others are less likely to know when the contract is up or how much you are making from the contract. Your sub contractors are in these building five days a week, they see, know, and hear things about the buildings before you do. Some companies are comfortable with subbing out as much as 90 percent of their building cleaning jobs. I am not. Again, sixty percent or less is as much as I will sub out, using only a few good subcontractors, no subcontractors I don’t know well. You can go to The Blue Book Building and Construction, for your area to get all types of subcontractor information. This will help you find a few thousand construction and good cleaning subcontractors that are willing to help you in a short time.
Subcontracting is a very useful tool. It can benefit
your business in many other ways. For example, by subcontracting work, you free
yourself up for other work opportunities. You can temporarily subcontract that
work and bring a new client on board, building a relationship with the client
without straining yourself or your employees. Your business will continue to
grow if you subcontract some of the work that comes your way. If you want to
make dirty millions the clean way, subcontracting is one good way to achieve
your goal quickly.
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