The Benefits of Subcontracting | How to Start/Run a Successful Commercial RealEstate/Construction Business

The Benefits of Subcontracting

Subcontracting is one of the fastest ways to start becoming a millionaire in many fields, including ours. Suppose you have two $25,000-per-month contracts and you subcontract the jobs out to another qualified cleaning service. You will pay the subcontracting company about forty percent, or $30,000, each month to do the cleaning in the two buildings. The good part is that you will make a profit of about $20,000 per month (the difference between the

$50,000 you will be paid for the two contracts and the $30,000 you will pay the subcontractor for cleaning the two buildings), while not having to work every day on these jobs. That’s not a bad return! Subcontracting these two buildings gives you the freedom to develop new bids for future contracts and work on other jobs, rather than being tied up working five-days-a-week on these jobs.

With these two jobs covered, you will have time to reach out to many more property managers and clients and line up additional jobs for you, your staff and your good subcontractors. Although you need to oversee the work time to time of your subcontractors, using the sub still saves a lot of travel time for you and your staff. The extra time you gain allows you to do extra cleaning in the contracts you do not sub out. That may be important to you and the customers your company does clean for, because you give more attention to their properties and their needs. Always take good care of your clients and your subs. By hiring good subcontractors, you may be walking away with your business bill payments, a company car payment, some company savings, and/or a business mortgage. The more subcontracting you can do, the faster your income will grow.

Another way to use subcontractors is for specialty work that you don’t have time or expertise to do. For instance, if you have a yearly contract that needs some floor work, you can always call a floor subcontractor to strip, wax, and buff the floors. This frees your employees to service other contracts or buildings. When it comes time for the high windows to be cleaned on your contracts, you might subcontract the exterior windows to a qualified subcontractor who specializes in high -window cleaning. More often than not, you will be giving your subcontractor the opportunity to make a significant amount of extra money for just a few days’ work. If you are bidding $5,000 to do a few exterior windows, you can pay your subcontractor $3,000 for two or three days’ work and still make $2,000 yourself. This is a decent amount of money in two days. Again, all you did was set things up with a phone call to a window subcontractor you knew would do a good job. Of course, if you decide not to subcontract work on a job, it is still your contract, and you can make all of the money for yourself and your employees, as they do all of the work.

Subcontracting can get you out of trouble when you are in a crunch or need help. For instance, if you have a few subcontractors that are already doing jobs for you, they might be pretty flexible when a problem comes up. If you get an emergency phone call about a flooded basement from the property manager of one of your contracted buildings, and it’s one of your big accounts, you’ll want to get out there and take care of it immediately. But what if all your employees and staff are busy on other jobs? They can only do so much. This is the time to call one of the subcontractors already working for you. He or she may need additional equipment like a wet vacuum, mops, and buckets, or may even need to use some of your equipment that’s already in the building. Provide it this one time, they can fix the problem. When it comes to emergencies, it’s OK to share your equipment, supplies and employees with a subcontractor to get the emergency job done. Once the subcontractor fixes the problem, put it in your next invoice as an extra to the property manager quickly, so you can pay the sub promptly for his or her extra work and effort. Even if you don’t make a dime on the flood clean up, the subcontractor made everyone happy, and you are still in good standing with your customer, from whom you will continue to make money. As you will learn, it’s priceless to be able to call a sub in an emergency and make things happen quickly. There are times when your subcontractor may even work a second or third shift job for you while you get a good night of sleep. In the morning, the job is complete, and both you and the subcontractor have made money.

Make sure that you pay the subcontractors well or more if you can, as you may need emergency help again. Whether a problem is big or small, your subcontractors will be able to assist you in taking care of whatever comes up. It’s also important to remember when a person helped you out in a pinch. Find out what the head person’s favorite upcoming movie or sport is, and purchase a few tickets or give them the extra money to do so for them self. You may put out a few dollars now, but they might help your company make thousands of dollars later; it’s just a way to show your appreciation.

Sometimes, companies that are subcontracting for you may not be able to keep all of their employees busy. Usually, these people are looking for work and are very flexible and well trained. You can use them temporarily and/or part time when you need them. They’ll be willing to jump in the van and work for you temporarily until their own boss can put them back to work. Use these good cleaners, for as long as they are available, to help your business. Temporary help is another advantage you get from building business relationships with subcontractors.

Every now and then go to other contractor’s job, when you see the potential subcontractors pulling up in their vans and trucks to start a shift at their building sites, walk over, pass out your business cards and ask them to explain what they are doing on their shift that day. They’ll appreciate that you are interested and asked for their help, and you’ll be surprised at how much help and information you’ll receive when you show respect for them. If you need someone to work part time on some upcoming projects, ask whether they are willing to help you out. Give the workers your business flyers that

explain in detail what you do, and let them know to be on standby for the next job if they are free and need to make some extra money. They’ll soon start to contact you for job updates when their business is slow, just to see if you need anything done. So, subcontracting can help you develop a group of people who can help you out when you need help the most.

Always view any cleaning or construction business situation as a learning opportunity, whether it’s good or bad. Maybe, once you get to know them, your subcontractor’s employees will allow you to visit the building they clean each night. You may find that they have different standard daily procedures than you do for cleaning, or that they have a lot of contracts with other cleaning companies. You’ll now be more knowledgeable about that particular type of sub, and know a little more about the building they’re cleaning. Once you get to know the subcontractors and some of their employees, you might put them on your payroll part-time to supervise a small job. At bidding time, they may be able to give you valuable advice about their particular building, if it looks like their boss or company will not be bidding on the contract that year. Basically, one hand will wash the other. Or should I say, “One hand will clean the other”? Again, this is good clean business, making contacts and networking.

Once you get between ten and fifty jobs up and running, with subcontracted construction or cleaning companies doing much of the labor, you will be making a pretty good amount of money, while you and your staff are still working at or cleaning your other buildings. The more subcontracting you can do, the faster your income grows. Who knows? Maybe one day, with the experience you have had subcontracting, you might even start your own cleaning franchise

business. To start your own franchise business, first do some research and learn how franchises such as the Service Master Cleaning Service and Jani-King work. Find out as many details as you can about the many contracting and cleaning service franchise companies out there. They are hoping you will contact or call, to get there free information package, so they can try to one day sign you up as one of their cleaning franchise partners.

Subcontracts can go two or three ways for you. You can accept subcontracts from other construction and cleaning services, or you can become a large contractor and give subcontracts to good construction and cleaning companies. Your goal in the beginning is to get contracts from a lot of companies for a certain amount of money per year, month, or week. You take this work and either do it yourself or with a few of your employees. I have even been the subcontractor for another (third party) cleaning contractor, when I found that I was too busy to do work I had been subcontracted to do. So I had to sub this work out to one of my smaller cleaning service subcontractors as a third-party joint venture contract and some of my competitor has done the same with my subbed out work. (A joint venture contract is when several contractors join together to make one business venture work for the same customer. In this case, a huge general contractor subcontracted out some work to me. I was too busy to do the work, so I subbed it out to a smaller subcontractor and paid him when I got paid. My small subcontractor did a good job and he made all of us some money, I made some money, and the original general contractor was happy because the work was well done and he made money, so the architect paid the general contractor, and the owner approved or freed up his funds, and paid the architect as we join together on this joint venture.)

Subcontracting is a pretty large business for all construction contractors. There’s a great deal of information about ways to obtain and use subcontractors to help you get rich or make millions, visit: www.construction.com/network/. Again, there is nothing better than receiving a check for $25,000 or more for work that is fully completed, when all you had to do was make a few phone calls, visit the site one or two times, and type up an invoice or fill out a small form or two. Just knowing that a check is coming to you when the job is finished, leaves you with a very secure, satisfied feeling.

It is important that you have resources on hand to provide you with information you need. They will not only help you start your business, but also will continue to benefit you and your business in the long run. So I would like to share several of the written resources that have been extremely helpful to me throughout the years. Please continue to research each week and find more resources on your own. What I can’t list here are the people who have been resources for me. There is a lot to learn from people, as well as from reading, so make use of the written resources that work for you over and over, but also develop human/people resources for yourself. As you start to grow your business, remember to find smart, trustworthy people to learn from and rely on.