Using Subcontractors to Achieve Business Success

Diversification is a common dream, but some companies find that when they need to serve customers in ways that are outside their typical offerings, bringing subcontractors into the fold is a better fit

Using Subcontractors to Achieve Business Success

A subcontractor for Drain Services of Fargo, North Dakota, works on a line replacement project. Drain Services practices a business model that relies largely on subcontractors.

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In this industry there is oftentimes a push for diversification. A desire to be a one-stop shop and be equipped to handle anything a customer might need. But that approach isn’t the right fit for everyone. Some companies find success incorporating subcontractors into their regular business practices.

Ronnie Baron doesn’t hesitate to subcontract work to supplement his company’s services when needed.

“The market has changed a lot in the last 40 years,” says Baron, owner of Pro Serve in Prairieville, Louisiana. “It used to be that we didn’t talk to competitors, and now we talk all the time. We realize that our company can’t be all things to everybody, so subcontracting is important to us.” 

Ronnie Baron
Ronnie Baron

Baron says that he finds it more cost-effective to periodically hire subcontractors for services that Pro Serve doesn’t offer, rather than investing in new machines that could very well sit idle after a project concludes.

Campbell Plumbing and Drain Cleaning in Eastlake, Ohio, has regularly used a subcontractor for pipe bursting and relining services to take care of situations requiring a no-dig repair.

“When working with a subcontractor, we include their price in the estimate for our customer and include that in the billing,” says Scott Haymer, one of the company owners. “Although their trucks are clearly lettered, it is clear that they are not the prime contractor. We would prefer to have someone without logos on the truck, but we have to be realistic. The contractor we use is not there to take away our customer.” 

Haymer says that a good reputation and experience are the top criteria the company focuses on when selecting a subcontractor. 

In Colorado, G. B. McHenry III has operated On The Move Septic Pumping Service since 2006, offering drain cleaning, septic service and excavation. In recent years, McHenry has subcontracted to provide pipe bursting and relining to his customers who want to avoid dig-and-replace repairs. 

“We kept running into situations where it was not cost-effective to do opencutting because of landscape issues and rising permit fees required by the city,” McHenry says. “We also had situations where the lines were too deep. We had a project where the line was 17 1/2 feet deep, and we would have had to close down two roads.”

McHenry says more customers became interested in trenchless service offerings and asked if his company could provide them. If his company did not provide it, then the client would simply have gone elsewhere, McHenry says. So he decided to go the subcontractor route and found a Mr. Rooter franchise in Colorado Springs. He then visited several different work sites to see firsthand the work they were doing and how they interacted with customers.

“That is a big thing — how they treat the customer,” McHenry says. “We are protective of our customers.” 

The subcontractor will act under the license of On The Move Septic (the prime contractor), and submit a bill to McHenry. On The Move Septic will do all the required excavation and the reclamation. When the job is finished, On The Move Septic takes a small markup, but its profit is primarily in the necessary excavation work on the project — the work it is equipped to handle.

“We have built a rapport with our customers, and we will always do the best thing for them as far as product and price are concerned,” McHenry says. “If we need to sub out a service, then we will sub it out. That is how we have built the business — through our relationships where they trust us when we do the job.”

Kevin Cameron goes to the extreme with the subcontracting model for his business, Drain Services based in Fargo, North Dakota. He doesn’t keep any full-time employees, and instead he only works with subcontractors.

For example, Cameron will bid, say, a sewer line replacement job that entails master plumber connecting work along with more rudimentary day-labor tasks. He then consults a list of subcontractors with whom he has worked and makes calls until he lines up a “crew.” Cameron is on site throughout the job as contractor, foreman and, if need be, laborer.

“I am on every job site and can operate every single piece of equipment we need to use,” he says.

Cameron supplies any heavy equipment needed — the mini-excavator, the pipe bursting components — and the subs bring their own hand tools and supplies.

“Basically, all the equipment on the operations side is the company’s,” he says. “They bring their knowledge. 

“My labor is done by my subs. I’m contributing skills that I have while minimizing my liability for their work. It helps me control the work that’s getting done on a site. I can focus on doing my side of the job.”

Cameron has a network of eight subcontractors he relies on. To avoid spreading his subs and himself too thin, he runs one project at a time, though several estimating jobs usually are in the works. Each subcontractor has a specialized set of excavation or pipe lining skills, but each is also broadly experienced enough to be familiar with a range of tasks. That way, the crew is able to back one another in different phases of the work. 

The model also off-loads to subcontractors the responsibility for training themselves in the latest sewer repair techniques or for other continuing education.  

“If I want to offer more services, I can get training at my own pace and then roll out the services at my own pace,” Cameron says. “I don’t have to drag a crew through the training process and hope they are learning it as I’m learning it. That’s their responsibility.”



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