Are You Less Of A Contractor If You Sub Everything Out?
One contractor seems to think so...
“It is not a trend, it's simply a lame category of builder that is trying to be the "business man" builder; a middleman, if you will.”
A trend I have definitely seen in the past several years is that many more contractors have moved away from using employees for their production work and are using sub contractors to get the work done. These contractors are often referred to as “paper contractors”. Some say using subs is the way to go, others disagree completely. Contractors as well as home owners both have varying opinions on the use of subs, that’s for sure. But, they do get to make their own decisions on which way they want to go.
Regardless of personal preference, does choosing one way over the other make you more or less of a professional contractor? Assuming you run a legal and legitimate business I don’t thinks so. I have personally worked with and or have interacted with contractors using both methods. With the right business systems in place a contractor can do a great job for his/her customers using either method and can make a good profit for the business as well.
Then, in a LinkedIn discussion about markup posted by Gerry Gerber, I found a comment that really stopped me in my tracks. The discussion was posted to the Contractor Talk Group. The commenter seems to indicate that contractors without employees, those subbing out all of their work, are not good business owners. From his comment I also assume he thinks of such a business model a “ponzi scheme”. In fairness to the commenter I suggest you check it out to get a full context of the discussion and his comment before you make your own conclusions.
As an FYI, I tried to leave a comment myself but the discussion group leader must be moderating the comments before they get posted. As of the publishing of this blog my comment hadn’t yet been posted, although many others had been. I offered my opinion about this practice in a previous blog post.
Here is the portion of the comment that jumped out at me:
“The only reason you find the need to rely more on subs to do the lion’s share of work is that you are not able to do it yourself or run a company that can do that in house. I imagine that you must consult with others that fall into this same category in order to claim that it is a trend. It is not a trend, it's simply a lame category of builder that is trying to be the "business man" builder; a middleman, if you will. It's one who wants a large percentage of revenue and profit, but can't do any of the work. I've seen plenty of them in my day. Most are semi-retired builders...or living off their wife's income in between ponzi schemes. In my opinion, that is a poor business model for the client; too much overhead and not enough production or control of the project.”
So, what about your opinion?
Do you agree with commenter? Do you see it differently?
Everyone’s entitled to their opinion and business owners can decide for themselves how they want to run their businesses. I hope you will offer your opinion. I also hope you will do so professionally.