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Do you want to grow your business or do you want to control everything? Because when you bring in subcontractors, you don't get both. That's the topic of the day. We're going to be talking about general contractors versus subcontractors. And stay tuned. Welcome to Profits with Pajak, the podcast where we talk about business strategies and financial insights for the green industry. I. Hello, I'm your host, John Pajak. And today we're going to be talking about subcontractors. And I'm going to hit it not from an aspect of theory or what you might read in a book, but from actually living both sides of that same coin. I've been the subcontractor, the guy that shows up, you do the work, you send in proof to the contractor, and then move on to the next job. I've also been the general contractor, you know, the one that's responsible to the client and is relying on someone else to execute the work while under my name. And let me tell you, those two are completely different worlds. So let's break this down a little bit. You know, a lot of times guys think subcontractors are the shortcut to. To growth. And, you know, they think, well, man, I'll just sell the job, have someone else do it, and scale this thing up. Or on the flip side, they're like, I don't want to deal with customers. I just want to do the work. And both of those mindsets are valid, but they're just incomplete because subcontracting is not just about doing less work. It's about shifting where your responsibility lives. So let's. Let's look at this in a couple different parts. The first part, let's look at the subcontractor perspective. Okay? Now I'm going to give you some reasons why being a subcontractor can be really good. Because when you're subcontractor, life could be a little bit more simple for you. You literally just. You show up, you do the job, you document the work, and you get paid. That's it. You know, of course, it all starts off with a contract between you and the general contractor. Okay? But basically, basically, after that, it's pretty simple. You don't have to sell the job or chase leads or handle billing and collections or even deal with the complaints. One of the biggest advantages is you're kind of protected by the scope of work. This is why having a good contract between the general contractor and the subcontractor is so important. Because if a homeowner walks up and says, hey, while you're here, can you just do this real quick? Right? The infamous words like, while you're here, do that. Can you do this real quick? You know, the real quick part always gets you. It's never real quick. But anyway, the thing is, you could confidently say, well, I'm, you know, that's not in my scope. And you'll have to talk to the boss. You'll have to talk to the contractor. A lot of times, most clients don't realize that they're working with a subcontractor. They just think, oh, I hired this company. And that's why a lot of times you don't even have to say, hey, go talk to the contractor. You could say, hey, talk to my boss. Because technically, the GC is your boss in that aspect. And when you have that, there's no emotion, there's no pressure. And for the most part, a lot of subcontractors, it's not awkward to them because a lot of them don't have good people skills. But, you know, some other really good positives is, you know, it's less stress from client relationships. You know, No, a lot of times you don't have marketing costs or lead generation that you have to pay for. You're more focused on the productivity and the efficiency of the job. And being a subcontractor, I'm telling you, it's really ideal for highly skilled operators that have weak or, you know, lesser people skills. And a lot of times it's consistent work, especially if you're tied to a good contractor. And here's something most people won't say out loud. Some of the most talented guys I've ever seen, they struggle financially. And it's not because they can't do the work, but it's because they can't communicate or manage relationships or sell the work themselves. So subcontracting gives those guys a lane where they could still win. Now, of course, to every coin, there's two sides. So we were talking a lot about all the. The positives of being a subcontractor. But there are some downsides to being a subcontractor. You know, you don't control the schedule fully. You know, a lot of times you have to. This is why I said the, the. The contract that you strike between the general contractor and a subcontractor is so important because you might have. You might be agreeing to get this done within, say, a week's time or two weeks time, and maybe you're already busy with your own work that you have as a subcontractor. So you have to make room for that in your schedule. So you can't, you know, you're agreeing to get it done within this time frame, within the scope of work. Okay. You're relying on someone else to feed you work. You know, if it's a lot of subcontractors, they, you know, they don't really get recurring work, they get projects. And if you're constantly jumping from project to project, you know, and your contractor isn't good at keeping you busy, you're, you know, maybe you think, hey, this is great, I could just wait for this guy to give me some work. You're still relying on someone else to feed you work. Other things that we don't think about is, you know, you're capped by someone else's pricing structure. You know, if the, you know, definitely you, you. There is, there's some room here. But a subcontractor generally does have a cap. You know, I've done this myself where I was a g. You know, when I was a general contractor, I would know the price range that I could still work in with my customers saying, yes, they, they're going to get this done and I could still make a little bit of money on it. And then the, you know, the subcontractor gets his fair share. And I mean that really, like, it's not just, you know, they're doing the work and they get the bulk of the money. But, you know, there's some things that we have to do. I'll talk about that in a little bit here. But on the other side of the coin, as being a general contractor, it's like, yeah, we're, there's going to be X amount of dollars that we're going to say, this is what you, we're going to agree to do this work for this much. Okay. Another downside of being a subcontractor is a lot of times you don't build a direct client relationship. It's, it's not, you're representing the contractor that you're working for. So it's not always going to be like, oh, I love this company. And they're going to be like, oh, no, you know, the, the client is going to remember the contractor that they were, that they hired. They're not so much always going to remember the subcontractor. The guys that maybe pull up in a, just a white truck with a trailer and a skid steer or something, you know, so, you know, that's another kind of downside. And frankly, you're replaceable if another sub comes along and they're doing good work and they're willing to do it for cheap, you know. But I think the biggest downside of all is you're not building your own brand. Now I know, you know, I've hired subcontractors that come out. Their trucks are all labeled up and everything. But you know, as the general contractor, we're getting the praise. We're not, they're not saying like, they just say, hey, your guys are great. Oh, okay, thank you. I'll, I'll make sure I pass that along. You know, I'm, I'm aware of these things. You know, even when I was a subcontractor, they, we didn't really get any. We weren't building our brand, even though we were completely in our uniforms. Our trucks are all tagged up, all the things, you know. But you know, essentially working as a subcontractor, you're not building your own brand, you're building someone else's. Now let's look at the other side here. We're looking at the general contractor perspective, okay? And I want us to talk about why. Using the subcontractors could be really powerful for you. And as a general contractor, subcontractors could really unlock a lot of growth for you. You can sell more work than you could physically perform yourself. You could expand into services that you don't specialize in. You basically avoid hiring, training and managing employees. And you could take on larger or more complex projects. You know, for example, like we still do full lawn renovations, but I subcontract the dirt work. Why? Well, because I don't own the equipment. I don't have enough. I don't have the manpower for it, and I don't do it often enough to justify it. And these guys already have the machines, the experience and the systems. And here's the key. It's a lot of times it's often cheaper and more efficient to hire a pro than trying to become one. You know, they get their rate, I get my margin, the clients get the results, everybody wins. And you know, there's other reasons, other advantages to being a general contractor. You know, your reduced overhead compared to having employees. This especially if it's project work, you're not taking them on your payroll. It's just a one time fee. It's like whatever the subcontractor says. Okay, I estimate it's going to be this long unless it's a time and material job. But you know, if it's they, we do like a simple bid and say, okay, it's going to be this one inclusive price, then that's just a line item. You know, for me, you're not paying any payroll taxes. Your benefits are long term liability. The subcontractors taking that on. You have the flexibility, scale up or down very quickly. And one of the other things that I like is that you have access to specialized expertise. You know, I'm not an expert in, you know, irrigation. You know, it's pretty simple, but at the same time, there's a lot of stuff that I don't want to deal with. So that's why we subcontract irrigation guys, you know, they do, they have all the equipment to install it without tearing up the lawn. All, you know, all the things. But you know that, that those are some of the really good benefits of using a subcontractor as a general contractor. But there are some bad things. There's, you know, just tell you some of the hard truths about using a sub. And I'll tell you what, this is where a lot of guys struggle. You lose control because, you know, you got to remember these are not your employees. These, this is a contractor. This is another contractor. So, you know, you can't dictate exactly when they show up. You can't tell them, oh, you got to be here from seven to three. No, that's out the window, okay? You can't control how they perform every detail. You got to just say, this is the end result that we need to do and let them do it the way they're gonna do it. You can't tell them what, what tools to use, what equipment to use, whatever. You can't micromanage their process. They are not your employees. And I will tell you, if you're a micromanager, this will drive you insane. One of my good friends, excellent guy, excellent foreman, right? He was a foreman on the job, actually, the general foreman. So he had control over a lot of different crews. But he was a bit of a micromanager. And, you know, when we had different trades come onto the, onto the job site, it would drive him absolutely nuts because he could not tell them how to do anything, you know, and it was just like they were there. We, you know, let's just say we dig the hole and the, you know, electricians had to come in and put it. Rerouted an underground buried line or something. He couldn't tell them what to do. He's just like, all right, we dug the hole for you. Is that good? Yeah, that's good. Okay, let me do my job, you know, so anyway, a lot of times this happens, you know, when, when things start to break down between a general contractor and a subcontractor, it's mainly because of pure poor communication between you and the sub. And it's. A lot of times this starts with a vague or an incomplete scope of work. You know, missed timelines and inconsistent quality. Those, those could be problems. When a subcontractor doesn't. When a subcontractor doesn't represent your brand very well. That's. That's a. Always a butting of heads in a conflict. But. And, you know, one of the big ones that most people ignore, from my experience, is their behavior reflects on you. So even though they're an independent, even though I said, hey, you know, the subcontractor doesn't necessarily get the roses they deserve, you know, but if they're rude and they're loud and obnoxious and everything, the client sees your company name versus them. So we're going to take a quick break, and when we come back, we're going to discuss a few other things. All right, so we, we left off with some of the communication gaps. And I'll tell you, I lived this in construction, you know, before I had my lawn care company and was doing well, you know, I worked in construction for multiple years. And the thing is, you know, a lot of times it's always like a general contractor hires all these other subcontractors. We're all working on the same build, the same job, but, you know, you've got multiple trades on site, different companies, different scopes of work. And then the client or the higher up comes up asking questions, hey, what's going on with this? And the cool thing is, as a subcontractor, a lot of times you could say, I don't know, that's not my scope of work. You need to talk to them. And, you know, you're referring to the gc, right? But the thing is that, you know, if you're using contractors, I'm talking more of like, industrial commercial work. You know, when it comes to homeowners and people that are in the lawn and landscape industry, a lot of times if you start saying that type of thing, that disconnect can really confuse clients fast because they don't understand that, well, maybe your scope is irrigation. While, you know, they're more focused on the retaining wall that's being built. You know, if, if they ask the irrigation guys, they'll be like, I don't, I don't know. I'm here to Put the water where it needs to go, right? You don't want to confuse them, but the key thing is to have a lead person that you can direct them to, making sure that even though you're dealing with different companies, making sure that, hey, the boss, you know, the big head honcho, we could refer all these things to him. And that way, your clients start feeling a certain way. Let's just put it that way. So anyway, getting back to the hidden value of a general contractor, and I want to say this because it needs to be said very clearly. The general contractor is the buffer. You know, if you're the general contractor, you got to take on these hats, right? You got to wear these hats. You're the communicator. You're the problem solver. You're the relationship manager, and you're the peacekeeper. You smooth everything over. I know you hired all these people so that you didn't have to do so much, but those are your responsibilities now. Because, let's be honest, there's gonna be some contract, some subcontractors working for you that are absolutely incredible at their craft, but they're terrible with people. You know, I have worked with guys who do the amazing work, right? But if a client pushes them the wrong way, man, they snap, they pack up, and they leave, because that's not their lane. They're not there to negotiate. They're just sitting there going, you know, let's just go back to irrigation systems and stuff, right? I've had guys that just do that, and they do not want to be bothered by anybody. They just know what to do. The pipe, you know, they yearn for the pipes. They yearn for the trenches right there. That's their job. They go out there, they install the irrigation lines, set up all the heads, set up the system itself, do all the electrical workers, you know, that it goes with it. That's all they want. That's all they care about. Somebody starts talking to them, and they will. They got a chip on their shoulder, okay? As a general contractor, you got to see this. You got to step into that, in between that and act as the buffer, okay? So there's some colorful language that a lot of the subcontractors use. People that aren't so savvy with other people. Some people are okay with that, other people are not. And this is what happens all the time. Like, I've had. I've been on jobs with my company, and they ask for the. The guy's number, you know, the subcontractor's number, and Like, I think I could just work with them directly. The next time we pop up, I'm like, you sure can, but I don't think you could handle the mouth on this guy. You know? You know, the clients. A lot of times I'll just give you their number so I could go direct. It's like, well, yeah, you can, but, you know, they do work for me. You know, it's. And you're not trying to hide anything, but honestly, this has happened to me where that subcontractor isn't built to handle clients. I know that sounds so weird. And it's not gatekeeping. Okay? But, like, literally, I had one guy that was working with me, not for me, but with me to do some very specific things. And he just didn't have the bandwidth to have consistency in his business. He didn't know how to handle clients. He would just, you know, put them on, let him ring to voicemail, and get back to him, like, three weeks later. You know, he didn't have the communication skills. He didn't. You know, a lot of times he was very abrasive, you know, when he would talk to somebody on the phone, because he would just be like, hello? What? Yeah, I could. Listen, I'm busy right now. I need to leave me a voicemail or text me. No, I don't. I. And then he would just hang up on people. I mean, the dude was like. Like, does fantastic work, but just does not. It's like oil and water, you know, it doesn't mix very well. So his, you know, potential clients that never worked with them before, I don't even know why. Sometimes I think back, I go, why did I hire this guy? It's because he did really good work. He just didn't want to deal with anybody. A lot of times he was really offensive, too. But, you know, and the other thing is, this guy just had no patience for any kind of, you know, customers asking questions or if they were a little bit difficult, he would just pack his bags and go. He'd be like, here's the bill, and leave the job half done. You know, so that. Anyway. But anyway, you know, like, I understand the relationship that he would have with these people. So I'm kind of like, nah, I'm not gonna do that. Basically, I'm. I'm protecting the client's experience. And, you know, in a sense, I'm actually protecting the subcontractor, too, because if I could take that off his. His plate, then he doesn't have to worry about being Mr. Cool as a Cucumber, you know, even though he's a hothead. And I'm also protecting my reputation because, again, I've, you know, slid those numbers to people and then they're like, yeah, we're, we're going to stop working with you as well. It's like, wait, what happened? Oh, you know, we called so and so, and he was supposed to be here. He never showed up. He never did never talk to us. And then, you know, one day he just showed up out of the blue and started doing the work. And we had, because we didn't have any communication. We had already had somebody else do it. And then he started, you know, flying off the handle at us. And, you know, if you're, you're working with those type of people, then I just think it might not be the best fit for us to work with you too. It's like, oh, all right. So anyway, long story short, you're protecting three things. You're protecting the client experience, the subcontractor, and your own reputation by gatekeeping the difficult subcontractors. But, you know, since we're talking about how the client sees all of this, you know, a lot of times clients like general contractors, because it's one point of contact. It's, you know, think about this. You know, if you're out there mowing, if you, if you're the type of guy that has a business that fits a lot of contracts, categories now, you could do this all in house where, you know, you're doing your mowing, your fertilization, weed control, your aerations, your irrigation blowouts and startups and etc. Etc. Etc. A lot of people like dealing with a business that can handle all those things because now they're not like, well, I got to call the irrigation guy. And then I got to. You get what I'm saying? Most of the time when you have that one point of contact, you, you know, you have clear communication problems get handled very quickly. And a lot of times they feel like it's less stress when they just deal with one company that could do everything instead of managing multiple companies that do this or that or the other. And, you know, they don't want to juggle like the dirt guy, the lawn guy, the irrigation guy. They just want one person, and that's you. So, you know, if you don't do all that work, but you still want to maintain, like, hey, we were problem solvers and we're going to use subcontractors to, you know, solve that issue, then, you know, that's. That's a key thing for those, those clients that like working with a company that's kind of like all inclusive, even if you're not all inclusive. But, you know, there are some client concerns with subcontractors, you know, because sometimes they're like, hey, who's actually doing the work? Because, you know, John, I know, you know, I know your guys, trucks, I know your uniforms, but these guys in, you know, blue uniforms and they're in white trucks. They, they're not marked and they're just on the lawn, what's going on? You know, you know, and they ask, why is somebody else showing up? And you know, sometimes they don't really think this too much, but, you know, am I paying extra for a middleman? You know, and this is where transparency matters. So if you're going to be using subcontractors, it's very important you explain the situation to your client and just say, they work with us. They're a preferred, they're our preferred vendor for this type of work. They do excellent work and don't worry, all the billing and everything comes through us. If you have any issues, you contact me. You know, it's, it works out. So anyway, if you're going to use subcarren subcontractors, here's how to do it, right? You define the scope of work very clearly. Everything goes into writing. So before your client, before you even pitch anything to your client and you're trying to get subcontractors on the job, you got to make sure everything's in writing. You understand? You identify. There's no, no gray areas whatsoever. It's just very clear what their job, what their duty is. You got to vet your subcontractors too, because a lot of times, you know, we always look at the skill level of people, but professionalism does matter too. I, like I said, I had the irrigation guy that did really great work, but he was very hot tempered and would fly off the handle. He liked me, he dealt with me. He was good. But at the same time, there was a couple times where he got snippy with the client and it didn't look really good on our, our part. So, you know, it was kind of a situation where it solved itself. He ended up, you know, going out of business. You know, he still did great work, but he got tired of it and he just went and got a 9 to 5. So they're kind of like, whoo. You know, dodged a bullet there. And I got another subcontractor that handles that type of stuff. We don't even bill with them, I just refer to, you know, like for irrigation work, I just refer a completely different company. But anyway, if you're going to have subcontractors, you got to make sure you set your expectations up front, you know, especially when it's a new, new client. Right? Okay, what's the timeline? How are we going to communicate? What are the standards of the job? You got to, you got to put all those things into writing and make sure that both parties agree on it before you move forward. And essentially, you have to make it understood that you own the relationship with the client. You are the face of the project and you have to act like it when somebody is representing you. And maybe it's not in the best of light. You have to, you know, then communicate with them and be like, listen, if you guys could stop swearing like, you know, sailors while you're on the property or, you know, tearing stuff up. I mean, a lot of times these projects are not that long. They're only there for maybe a day, maybe a couple weeks, depending on what the scope of work is. But, you know, you want to make sure that there is some sort of terms of conduct that they should follow. Again, it's not your company. You're. They're not your employees. But you, you know, there are some repercussions. You know, guys were running around like law, you know, lawn pirates without their shirts on and, you know, swearing like sailors. There's freaking yelling across the lawn, like calling each other bad names and stuff like that. You could, you know, it's not like you could fire those people, right? But you could say, like, look, if this doesn't turn around, we're not going to do any more work together. You talk to their boss, you know, you don't talk to the subcontractors employees, right? They don't go, hey, Dan, put a shirt on, get the cigarette out of your mouth and stop swearing. There's a two year old looking at you out the window, right? You, you can't do that. You gotta, you go to talk to Dan's boss, maybe like, Frank, frankly, your guys are out of pocket. I need you to do something about it because the client's complaining to me. You got to let you know there's a whole chain of command, so it's a little bit different. But the thing is, you got to own that relationship with the client, even if it's bad. You have to put, like I said, you're the peacekeeper, you're the buffer. You're the one that's going to be like, you know, I understand that we're going to make this right. And the other, the last thing is you can't and you don't micromanage. I kind of hit on that in the last topic. You know, Dan's being different. Right. The thing is, if you need that level of control, you're just going to have to hire employees instead. Because I'll tell you, as if you're trying to micromanage, your reputation of that is going to get around very quickly with other subcontractors. And, and they won't work with you because if they're, you're trying to micromanage them, they're going to say, it's not worth it. I'll. I'll work with another company or I'll get the work myself. So anyway, some actionable steps that you could take right now, if you are interested in playing either one of those roles, is decide which role you want to play. Do you want to be the producer or the relationship manager? Do you want to be the subcontractor doing all the work and honing your skills and doing all the right things that, you know, that you're known for and doing? Or do you want to be the general contractor who wants to step away and just say, I'm going to let these guys do it, but I'm going to manage that, that account. I'm going to make sure the customer gets what they want. And. And if you're using subs, you definitely need to tighten your scope of work immediately. This not only helps the situation when you use subs, but it actually helps your business as a whole because now you're thinking differently. It's like, okay, you know what, When I do this, when I have a subcontractor, why can't I apply this to my guys, my employees, the way we do our work? Yeah, let's tighten that up. Let's just, you know, get better systems in our own business. And then the last thing I want to say is, you, you should build a short list of trusted subcontractors and not just find a guy. And it just be like a revolving door. It's like, well, this time for irrigation work, we're going to use this company. And then, well, next time we'll use this guy because he's more of a freelancer and he's, you know, his schedule's more open. Or, you know, vice versa. Whatever, whatever it is. Just, I would start doing that now. Like, even if you never decide to actually use a subcontractor, it never hurts to be able to refer people to them, especially if, you know, they're doing good work. So subcontracting is not good or bad. It's a tool. And as a sub, you know, basically, I've found when I work as a subcontractor, you get simplicity and focus, but, you know, you trade less control and ownership for it. Now, as a general contractor, you know, you get scalability and opportunity, but you actually add more responsibility and you have less control. And the key is knowing which role is going to fit you best and building your business around that decision. So here's the thing. Just take a look at your current operation. You know, are you trying to control everything or are you trying to grow? Because the path you choose is going to determine how you build your business moving forward. So with that being said, I hope you enjoyed this. I know there's a lot of information here. I like to share my personal life experiences and anything to try to help you. This is a topic that came up because I had somebody DM me about that and I thought, you know what? This probably good episode for everybody. So with that being said, I hope you enjoyed this. God bless. Keep pushing through and we'll catch you on the next one.