In a recent Q&A session, Jesse Weissburg, Co-founder and Chief Commercial Officer at Billd, shared valuable insights into the financial challenges faced by subcontractors when scaling their businesses. The discussion with eSUB explored topics such as the importance of upfront project financing, the necessity of improved documentation and communication, and the role of technology in making smarter financial decisions. Jesse also highlighted common misconceptions about financing and the potential impact of the current economic climate on subcontractors. This session provides a comprehensive overview of key financial considerations for subcontractors in the construction industry.
Billd Q&A Session with eSUB
- Question: (eSUB)
Having worked with hundreds of subcontractors, what are some of the biggest financial hurdles they face when scaling their business?
- Answer: (Jesse)
One of the toughest decisions subcontractors face is investing in growth versus shoring up their business infrastructure. Many contractors want to grow without taking the time to ensure they have the necessary resources for sustainable growth. We often say they "eat themselves to death" rather than starve. It's crucial for them to arm themselves with technology, resources, and the right people to avoid having individuals handle too many roles.
- Question: (eSUB)
How does access to upfront project financing through Billd help subcontractors take on more or even larger job opportunities?
- Answer: (Jesse)
The biggest challenge for contractors is being beholden to unpredictable payments from general contractors. While it's not necessarily the GC's fault due to the layers of stakeholders involved, the inconsistent payment timing makes it difficult for subcontractors to understand their cash flow. Providing subcontractors with upfront financing like Billd for materials gives them more flexibility and control. They can wait the 70 or 90 days for repayment rather than paying out-of-pocket or relying on supplier terms that could lead to supply issues. This keeps projects on track.
- Question: (eSUB)
Why is it so important for subcontractors to improve their documentation and communication processes, especially for change orders and pay applications?
- Answer: (Jesse)
This is particularly crucial for subcontractors in the $5 to $10 million range, as they often wear many hats, handling paperwork after long days on the job site. While it's the last thing they want to do, accurate and timely documentation is essential to ensure they get paid. If pay applications have issues, GCs will likely kick them back, causing delays of another 30 days and creating a huge drain on cash flow. Getting documents in on time is a top priority.
- Question: (eSUB)
Where do you see the biggest disconnects between subcontractors and GCs regarding project financing or payment terms?
- Answer: (Jesse)
Generally, general contractors are larger businesses with more stable cash flow as pass-through entities not paying for materials and labor to the same extent as subcontractors. While GCs may not disbelieve the financial challenges subcontractors face, they often don't fully understand them. When the dynamics are explained, they often gain understanding; however, subcontractors find it challenging to have these conversations because GCs are their customers, and they want to present a strong financial image. This creates a delicate balance where subcontractors want to secure future work and may hesitate to push for quicker payments, while GCs may not fully empathize with the subcontractor's financial position.
- Question: (eSUB)
Billd and eSUB both focus on empowering subcontractors. How do you see the two solutions working together to create strong businesses for them?
- Answer: (Jesse)
Subcontractors often lag in adopting technology and innovation, although this is changing. With advancements in technology and AI, it's becoming essential for businesses to adopt software solutions like eSUB for increased efficiency and profit margins. Automating manual tasks and streamlining processes, especially around documentation, contributes to getting paid on time. Coupling a software solution like eSUB with control over cash flow through a service like Billd allows subcontractors to be proactive rather than reactive in their business management.
- Question: (eSUB)
What's one common misconception subcontractors have about financing that you would like to clear up?
- Answer: (Jesse)
That financing is inaccessible and that there aren't great options available. Subcontractors often face rejections from traditional banks that prioritize deposits overextending credit. Consequently, they may encounter predatory lenders with high-cost, short-term cash access that negatively impacts their margins. The challenge lies in a lack of education about the available and appropriate financing options based on their company size, credit profile, and growth objectives.
- Question: (eSUB)
Where do you see the current economic climate impacting subcontractors' ability to grow or take risks in 2025?
- Answer: (Jesse)
The long timeline of commercial projects means that changes like tariffs can impact material costs for subcontractors. This could affect the viability of projects. While the direct impact on project starts in 2025 might be less significant due to the existing backlog, the price of imported materials due to tariffs is a real concern. The uncertainty surrounding tariffs is a key factor to watch.
- Question: (eSUB)
What role does technology play in helping subcontractors make smarter financial decisions?
- Answer: (Jesse)
Contractors often lack business insights due to a lack of trackability, relying on paper or basic spreadsheets. They may track projects on whiteboards without a true understanding of the financial implications of winning multiple bids. Technology allows them to input data and forecast the impact on hiring, labor needs, and finances. This provides a significant benefit, enabling them to be strategic and look ahead rather than being reactive and living in the moment.
- Question: (eSUB)
Could you share any stories of a subcontractor who was able to level up their business using Billd services?
- Answer: (Jesse)
We've seen many success stories. One of our first customers, a flooring contractor in Maryland, started with $2 to $3 million in revenue and couldn't secure financing. Since partnering with Billd, they've grown into double-digit revenue. By improving their access to capital, they were able to hire necessary personnel like project managers. We often empower contractors to gain negotiating leverage with material suppliers by becoming cash buyers, leading to better pricing and priority service. We also help them by providing pre-approvals, which can be beneficial when starting with a new GC. Having a partner like Billd provides breathing room on payment terms with GCs by providing working capital.
- Question: (eSUB)
What advice would you give to a trade contractor hesitant to explore financial options even when cash flow is tight?
- Answer: (Jesse)
The best advice would be to talk to other business owners, ideally outside of construction and perhaps in the $20 to $50 million range, about how they approach financing. In many other industries, financing is a critical component of funding working capital, unlike the construction industry's heavy reliance on supplier terms and limited credit lines. Contractors may avoid using existing credit due to a fear of accumulating debt. However, debt can be leverage if used effectively to generate more revenue and profit. Hearing from business owners in other sectors who have successfully utilized financing can be more impactful than advice from within the construction industry.
- Question: (eSUB)
What inspired you to co-found Billd, and what was the early vision for the company?
- Answer: (Jesse)
My background is in finance, including a stint at Bank of America where I worked with contractors and saw that banks had little appetite for lending to commercial subcontractors, despite them being good businesses with real needs. Later, at a solar startup, I encountered a similar challenge, and my co-founder and I realized there was a better way to provide financing to contractors. The early vision was to bridge the working capital gap for contractors, who were largely relying on supplier terms. Initially, the strategy focused on partnering with building material suppliers to unlock distribution, a strategy we are now reinvesting in. We quickly realized the need to first prove product-market fit by working directly with subcontractors.
- Question: (eSUB)
If you could trade places with any subcontractor for a day, knowing their challenges, what trade would you choose and why?
- Answer: (Jesse)
That's a great question. I'd want to try something involved in a really cool project, maybe something to do with skiing, like building a ski resort. Trade-wise, perhaps something in the electrical space because it's more analytical, aligning with my background in engineering. It's a tough question, and I'd need to think about it more.
- Question: (eSUB)
What's a hobby or interest outside of finance or construction finance that people might be surprised to learn about you?
- Answer: (Jesse)
I'm currently training my Airedale Terrier puppy to be a service dog. It's a lot of work, and he's not the typical breed for it – he's a very stubborn and goofy 50-pound terrier.
ESUB:
I would imagine you're learning a lot.
Jesse:
Yeah, you learn a lot about behavior for sure.
ESUB:
Thank you so much for your insights and your time today.
To learn more about how technology and financing solutions can empower your subcontracting business, we encourage you to explore the resources offered by both eSUB and Billd. As highlighted in this session, eSUB provides software solutions to enhance efficiency, streamline processes, and improve documentation for subcontractors, which is crucial for getting paid on time. Simultaneously, Billd offers upfront project financing, giving subcontractors greater financial flexibility and control to take on more opportunities and manage their cash flow effectively. By considering the combined benefits of these services, subcontractors can take proactive steps toward building stronger and more sustainable businesses.
