Tips and Tricks to Being a Great Subcontractor
The subcontractor is in a tricky situation; they act as their own boss while still being under the orders of the general contractor. This provides some unique challenges for the subcontractor that can be difficult to maneuver around.
To help avoid these sticky situations, here are some tips and tricks for the subcontractor:
1. Create detailed contracts with the general contractor
Disputes often arise between the general contractor and subcontractor not only about how the project should be executed but also disagreements down the road about what was previously “agreed” upon in the original contract. The most effective way to settle disputes before they occur is through contract. Creating a detailed contract allows no room for debate or miscommunication about expectations, which saves time, improves efficiency, and avoids ambiguity.
2. Understand subcontractor’s rights and responsibilities
The subcontractor is liable for the scope of their work and the safety of their employees. It is vital that subcontractors obtain the proper insurance as well as understand what they are responsible for in the eyes of the law. At the same time, subcontractors also have rights that they must be aware of that can protect them against unfair practices by the general contractor.
3. Don’t take on too much
Subcontractors may be tempted to take on any project that is thrown their way. Despite this temptation, the subcontractor must be strategic and methodical when choosing which projects to accept. This selectivity will lead to a better project-to-subcontractor fit, which in turn will lead to higher productivity and quality that will be recognized by general contractors. Construction technology can aid in estimating which may help determine if the project is reasonable to take on given available resources. If the subcontractor finds himself being overwhelmed with the amount of qualified projects that come his way, mobile technology may be a viable option as it allows for streamlining normal practices and frees up time for the subcontractor to focus on the important aspects of a project.
4. Go above and beyond
The best way to grow the subcontractor’s clientele is to improve customer relations. Every industry faces a greater profit margin from a repeat customer rather than a new customer, and the subcontractor is no exception.
When working on a project for a general contractor, doing something beyond the bare minimum requirement shows the general contractor that you care about the project and that you are a good choice for future projects they might have. Each job that a subcontractor performs should act as an interview for future business.
5. Brand and promote your business
The subcontractor firm must also invest a percent of its profit into marketing and promotion.
Marketing and promotion can include sending mail, items, thank you notes, or any form of promotion to previous clients to keep your name top-of-mind. Aside from direct advertising, which can become costly, the subcontractor should also work toward developing their brand. Creating a brand means you're building an identity and includes creating a logo and consistent messaging to potential clients. Having a brand also means understanding what differentiates you from the competition in your same area of expertise. Begin by asking the most personal question of "why would a General Contractor or Owner contract with you against Acme Corp down the street?" "What are your three or four differentiators and make sure they speak to your buyer!"
Subcontractors should also ask previous clients for referrals and create a word of mouth promotion that is highly credible. Nothing amplifies your brand more positively than the voice of customers speaking your praise, which will bring in business for your firm.
6. Don’t go around your general contractor
The subcontractor is responsible to their general contractor and is acting as an extension of them. Therefore, the subcontractor must not talk to the project owner about any disagreements or suggestions without going to the general contractor first. They must also ensure that they produce quality work that reflects well on both them and the general contractor.
7. Make sure funds are sufficient
The subcontractor is required to incur his own costs to complete a project and is later reimbursed. Because of this, the subcontractor must make sure that he can afford to cover labor, materials, travel, etc. up front. If the subcontractor fails to correctly estimate the project costs and do not have the means to incur the payments, the project schedule will suffer, and the general contractor will not be pleased.
Because of the nature of this work, the subcontractor must make sure that he is keeping a record of every cost incurred. It would be useful for the subcontractor to invest in a project management solution that will allow him to fill out reports as expenses occur and can keep his documents in one centralized place. Detailed records of a subcontractor’s expenses may also serve as a way to qualify for tax deductions.
8. Create a business plan
Nobody can run a successful business without a proper business plan. A business plan allows the subcontractor to be able to set clear and concise goals and look toward the long-term growth of the company. This business plan should force the subcontractor to consider factors that otherwise may have been glazed over such as: who is my target market? Who is my competition? What are my sales goals and how will I reach them? How much money do I need to cover expenses? Knowing the answer to these questions will allow the subcontractor to be prepared for whatever will happen in the future and have a plan in place to react.
The bottom line for subcontractors:
Don’t make your job harder than it needs to be. Be organized, methodical, and knowledgeable in all business practices and use these tips and tricks to outsmart the difficulties that subcontractors often face.