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Discussion Starter · #1 ·

I ran my painting business as a 100% sub operation. A lot of people hate this idea and say the quality of work stinks but I don’t agree. I think if you set up contracts right, pay people well, and have checks and balances it can work out best for both sides.

I would be interested to hear everyone’s views on this.
 

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I agree Nathan. In the cleaning business there are many areas this fits expecially in specialty cleaning. For example clean rooms, stone restoration, wood refinishing ect. It is done all the time by major contractors.
Randy
 

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Nathan,

...I'd be interested in hearing more about how you ran this operation. If you've gone into your system on your other site, etc., please paste it here, or if not, please note some things that made what you did successful. I'd also be interested in hearing what your greatest problems were, and your strongest points. Would like to know tips on how you sold this to the customers, and whether or not they were leary. Do you feel a biz that runs subs will sell better than and employeed-biz?? For painting, what would you consider the average margins to be for an owner with a couple/few crews, as compared to a guy like you running multiple sub crews?? Drastically lower margins, etc?? WHat percentage was your adv. budget??? If you ever get a chance to asnwer these Q's, I'd certainly be appreciative.

jf
 

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Discussion Starter · #6 ·
Sorry, I missed this before Jon. I'll work on some thoughts for you on what worked well for me.
 

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Please do Nathan, as painting falls into the same realm as what I do. ....and I've got HOURS of reading ahead of me over on contractortalk. AWESOME site!!
 

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Discussion Starter · #8 ·
....and I've got HOURS of reading ahead of me over on contractortalk. AWESOME site!!
Thanks Jon... it's a great site that I wish more knew about.

Before I say anything about using subs I'll tell you that you may want to talk with a lawyer before using them. There are a lot of rules and if you break them your subs can become employees without you knowing it and then your liable for taxes and a lot of other stuff.

I used subs for 100% of my work. The guys I used got 95% of their work from me so they were dedicated to my company. They used all their own equipment, vehicles, and so on. The only thing I provided was the paint which they picked up on my paint account at Sherwin Williams and gave me the receipt for tracking at the end of the job.

I sold them on the idea by finding great painters who just were not good at sales. I think this is a common problem. People are really good at what they do so the venture out on their own however the lack the skills to succeed. I filled in the gaps for them.

I provided them great jobs, great pay, and no head aches. In return they pumped out great jobs quickly and we both made money.

I don't really know how to go over the whole process but everything in my business was computerized. We showed up, measured the house, and printed off a professional estimate and other docs right on site. The process was automated and also spit out a subcontractor agreement that listed what needed to be done and how much the job paid.
These guys used me for most of their work and knew I paid well so they took the jobs without even asking to see the job first but that may take a while to get to that point.
I also gave them a final payment form and a CLIENT SURVEY for the client to fill out at the end of the job. These two documents where perhaps the most important part of the process. The final payment form had a required field that asked if the job was completed to the clients satisfaction. That way the painter could solve any problems before leaving the site. Also, the client survey form allowed me to get an idea of what the clients thought of my subs. If they got bad marks then I didn't' use them again.
I can tell you that almost all my jobs had all 10s on the survey. People were very happy with our company and the process.

In the end the painters made more than they ever had before because I paid them by the job instead of by the hour. Because I found great subs they made a ton because they were fast and yet did great work. These guys loved our company and wanted us to succeed so they watched my back as well.

I know a lot of people don't like the idea of using subs but I cannot imagine finding a better way to run my business. The only down side is that I made a little less than I probably could have per job however I could run more jobs at once with less headaches so it was a win win for me.

Honestly, my subs loved it... my clients loved us... and I had a pretty good time too. :thumbsup:

Feel free to ask more questions and I'll try to answer. Hope that made sense but it's hard to summaries. It was about 2 years of planning before I sold the first job so there is a lot behind this.
 

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Awesome, thank you. Let me stew on this for a few hours and organize the questions I'd like to ask. thanks again (like I said before, I've been reading thoughts on the other site as well.....GOLDMINE)
 

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I love the idea, Nathan and since I have added interior painting to my winter repetoire, this is a good post..very informative. I guess my first questions is... why are you no longer involved in this?
 

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Discussion Starter · #11 ·
I love the idea, Nathan and since I have added interior painting to my winter repetoire, this is a good post..very informative. I guess my first questions is... why are you no longer involved in this?
There is a long answer to this but it comes down to the fact that we decided to move to a new area and I wanted to give my website business a run for the money so I took a desk job so I had more time to focus on it. I really love running these sites.

If the web doesn't turn into a full time business within the next year you can be that I'll be running my painting business again very soon. :jester:
 

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Discussion Starter · #12 ·
I love the idea, Nathan and since I have added interior painting to my winter repetoire, this is a good post..very informative. I guess my first questions is... why are you no longer involved in this?
Let me also say that this can work with several different types of businesses. Not just painting.
 

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Discussion Starter · #13 ·
(like I said before, I've been reading thoughts on the other site as well.....GOLDMINE)
Thanks, hopefully this site will be the same type of resource for the cleaning industry as that site is for the construction and remodeling industry :thumbsup:
 

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Thanks for all this info Nathan. Okay, here are some questions, I know you are busy so I understand if the answers are brief.

1) At the closing table customer asks, "so are you guys employees of your co? You don't use subs? Will you be onsite to oversee the job?" Your answer was/is:

2) I understand the legal aspect, I've discussed this with my lawyer, bookepper, acct. Were you ever audited? DId you find this system to be a major red flag?

3) What type of comp. program did you use that essentially qualified all of the sub work for a job once you were printing out the on-site bid?

4) Did you ask subs to "bid" the jobs, or did you say, "this job pays X"?

5) How were color changes/work order changes dealt with? Most of this negotiated out before starting the job?

6) Were you the point man the customer dealt with, or the lead sub? Didn't like color, they call you??

7) Did you allow them to wear company shirts, logos, etc. from their Co., or just nothing? Were they allowed to "upsell" a customer? Would you penalize for this? How was it handled? What if neighbor walks over wanting a bid??

8) I believe you sold your biz?? Do you feel it held more value due to the subbing system you used?

9) What kind of margins were you hitting? Say, what would you have hit if you had a few crews of your own, and what margin would you hit if everything was subbed??

10) How were their payments scheduled?? % down?? % at satisfactory completion (customer satisfaction form you mentioned)? Or paid when you got paid??

Okay Nathan, ten questions should be enough to get you started,:) Believe me, those were after reducing my thoughts:) I'd certainly be indebted to hear your answers. Thanks a lot for taking the time, jf
 

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Discussion Starter · #16 ·
Sorry, busy day so these answers are going to be somewhat short but I wanted to respond ASAP.

1) At the closing table customer asks, "so are you guys employees of your co? You don't use subs? Will you be onsite to oversee the job?" Your answer was/is:
Most people never asked me but when they did ask I told them that I used subs, and after I explained to them how it worked they usually had no problems with it.
I just told them that it didn't change the quality of work only how they were paid and that it gave me a motivated work force. Also, I made sure they knew that the subs had the same qualifications as my company did such as insurance and so on.

There was a long explanation here but once I got done they usually liked the idea. :thumbsup:
2) I understand the legal aspect, I've discussed this with my lawyer, bookepper, acct. Were you ever audited? DId you find this system to be a major red flag?
Never god audited and never had any problems... maybe I would have if I was audited?

3) What type of comp. program did you use that essentially qualified all of the sub work for a job once you were printing out the on-site bid?
Not sure how to answer this one. I'm a computer guy so I used computers but that isn't to say you couldn't come up with a paper system.
Also, not sure what you mean by "qualified all the sub work?"

4) Did you ask subs to "bid" the jobs, or did you say, "this job pays X"?
I did all the bid/estimates and they just got the job description and payment amount on paper. The first time they saw the job was when they pulled up to do it.
I did have one guy who wanted to see the job first but after that they were always pleased and trusted me from then on.
5) How were color changes/work order changes dealt with? Most of this negotiated out before starting the job?
My subs were all very professional because they knew they would be rated at the end of the job. They also had to call me about change orders because the check would be written out to my company. Anyways, if it was small I usually just told them to bid what they think is fair and I usually paid them the whole amount unless it was a big change or addition. If it was a big change or addition I would go out and bid again or reschedule another work visit.
6) Were you the point man the customer dealt with, or the lead sub? Didn't like color, they call you??
Both, the clients could always call me or they could talk with the sub if they had a quick question.
7) Did you allow them to wear company shirts, logos, etc. from their Co., or just nothing? Were they allowed to "upsell" a customer? Would you penalize for this? How was it handled? What if neighbor walks over wanting a bid??
No, they did not wear company shirts from any company, I would just pick up some free Sherwin Williams shirts and give those to them.

Their job was not to sell anything that was my job. However there were change orders of course. I never had a problem with this because my subs were so pleased with the process but they knew from the beginning that if they sold their own services on my job then I would not use them anymore.

I just made my expectations clear and they usually worked with me on this.
8) I believe you sold your biz?? Do you feel it held more value due to the subbing system you used?
This is a long story but the short version is that right as I was moving and about to sell a large nationwide company came after me because they said my company name was a trademark violation. It killed the sale and I was pretty much left with nothing. Sucks but what can you do.
I still have all my systems and I will either use them in Texas when I get there or if the web works out for me I'm going to sell it online to people somehow.


Anyways, I'm not sure there is more value for a sub system business and most would probably see less because I had no vans, equipment, or anything to sell. It was just my company name, systems, logos/print material, and laptop.
However I see more value. A lot less upkeep and other headaches when done right.

I designed my company as a franchisee business and it was run that way. I just never got there. It was designed for low start up costs which was what I had. However my desire for a nationwide franchisee is part of what got me in trouble with another company that shall remain nameless.

9) What kind of margins were you hitting? Say, what would you have hit if you had a few crews of your own, and what margin would you hit if everything was subbed??
My goal was 10%. There is a lot behind this that I'll try to come back to later. The 10% goal was while using sub sales people too. The profit margin was much higher when I ran it myself.

10) How were their payments scheduled?? % down?? % at satisfactory completion (customer satisfaction form you mentioned)? Or paid when you got paid??
I did 30% down and 70% on completion unless the job was huge. I usually stayed away from really large jobs though. Just not my niche. I made the most money off of small exterior repaints.



Hope this helps. I will say that most people kill themselves looking for the right employee but will hire a sub without giving it the same thought. You have got to find the perfect subs for this business to work.
 

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Nathan,

...I'd be interested in hearing more about how you ran this operation. If you've gone into your system on your other site, etc., please paste it here, or if not, please note some things that made what you did successful. I'd also be interested in hearing what your greatest problems were, and your strongest points. Would like to know tips on how you sold this to the customers, and whether or not they were leary. Do you feel a biz that runs subs will sell better than and employeed-biz?? For painting, what would you consider the average margins to be for an owner with a couple/few crews, as compared to a guy like you running multiple sub crews?? Drastically lower margins, etc?? WHat percentage was your adv. budget??? If you ever get a chance to asnwer these Q's, I'd certainly be appreciative.

jf


Great Question John! :thumbsup:
 

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How did you market your service?

How did you answer technical quests re: technique, deglossers, primers, faux finishes etc?

Did you use union painters or was the only criteria that they were insured?

How did you find the right subs?


How many crews were you able to run? In the event of a no show, what would you do?

Did you make the subs adhere to NCC's?
 

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Poor Nathan, LOL:) Maybe you could heckle some of your buds at the other site to come over and help out answering.

....You mentioned you wanted to "sell" at some point this info, I assume you mean as some sort of purchased-package/management package?? My dilemma is two-fold: I don't wanna be blasting you for answers if this is something proprietary that you plan to make a buck off of someday, I totally understand that. Problem #2: I want answers NOW! But I can appreciate if you don't want to give all your secrets away, that's business. I feel there is definitely something there to sell for you, just don't know what. Book?? Not enough people to buy (imo). Training package?? More likely? I guess obviiously you could jump back into painting with your system and try to franchise immediately.

Curious........said you got shafted by a Co. and wouldn't allow you to sell your biz....would the initials be CPP?? Wondered, because they use a model similar to what you are offering (from my limited knowledge).
 
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