As a business owner, there might come a time when you will want to take on bigger projects and increase your revenue. Realistically though, your large-scale project might require more than your individual skill set. And that is perfectly fine! You do not have to know everything, and the best leaders are the ones who know when to ask for help. 

From planning to execution, several specialized tasks require trained professionals. So, when it is time to hire outside help, a subcontractor is one of the best resources you can utilize. It is a common misconception that contractors/subcontractors belong to the construction business. In reality, there are an array of industries that employ subcontractors.

If you are interested in subcontracting to keep the wheels of your business turning, read on to find out:

• What is a subcontractor, and what do they do

• Pros and cons of hiring a subcontractor 

• Tips for hiring the right subcontractors

What Is A Subcontractor?

A subcontractor is hired to fulfill the specialized requirements of another’s contract. Most subcontractors are self-employed and hired on a project-by-project basis. One of the benefits of being a subcontractor is the liberty to choose the projects they want. You will hear contractor and subcontractor interchangeably, but they are not the same. 

Contractor vs Subcontractor:

To comprehend the difference, you must first understand what a contractor does. An independent contractor is a hire who is not a full-time or permanent employee of your business. Contractors are hired by people or organizations for their expertise in their field. They are given the contract of overseeing individual, large-scale projects.

A subcontractor is someone the contractor hires and pays to work on specific parts of a project. This is typically done for specialized skills the contractor cannot fulfill. They can also reach out to subcontractors if the project is too large and requires extra support.

Subcontractors: What Do They Do?

• Let us take the example of a contractor hired to complete a construction project. While they are well-versed in their field, they will not be able to complete the entire job themselves. Therefore, the main contractor will bring in individuals on a contractual basis. These specialize in skills like electrical, interior and exterior painting, installing tiles, etc.

• You can also hire subcontractors for some of the more routine or monotonous tasks. This will help you devote more time to profitable pursuits and growth.

• Subcontractors often have their own equipment for completing tasks of various projects. Depending on the contract, they might be responsible for bringing their own tools for the job.

• Being specialists in their field, subcontractors work with minimal supervision from the contractor. They must keep track of their documentation, papers, and expenses.

• A subcontractor is very rarely in contact with the client. They are only liable to the contractor for the completion of tasks.

• A subcontractor's contract won't last for the entire project. This is because their skillset is required only for a particular task.

• It is crucial to employ reliable and hardworking subcontractors and efficiently manage them. We will talk more about subcontractor management later.

Industries That Employ Subcontractors:

• Construction industry: Subcontractors are needed for installing tiles, drywall, plumbing, painting, excavation work, etc.

• Healthcare industry: For roles like nurses, medical technical professionals, administration workers, etc.

• Financial industry: For functions like accounting, budgeting, banking advice, and more.

• Information Technology: Subcontractor roles include software engineers, cloud engineers, and cyber security technicians, among others.

• Sales: There are many contract jobs in sales, from customer service representatives to cold call specialists.

• Food service: Here, subcontracting work could include caterers, restaurant managers, food service specialists, etc.

Pros Of Subcontracting 

Are you running a small business? Always look for things that can benefit you and the best interest of your business. So, how are subcontractors useful in helping you seamlessly complete your projects?

1) Subcontractors Help Widen The Scope Of Your Project

One of the biggest advantages of subcontractors is that they bring in a diverse skill set. Think of it this way - you want to expand your clientele, so you take on more projects. The more you take on, the more varied the scope of each project will be.

You might not have the capabilities for all tasks of the project, but subcontractors do. So, you need subcontractors to help tackle that specialized task. And they need you to keep getting a continuous stream of jobs.

2) Subcontractors Are Cost Effective

Subcontractors are cost-effective because they are generally cheaper than full-time employees. Plus, they help an expert complete a project on time without the need for other incentives. Think about it:

• You do not have to provide employee benefits.

• You do not have to spend money on onboarding or training subcontractors.

• You can also keep equipment costs low since most subcontractors have their own tools.

• Subcontractors are temporary employees. So, once their job is complete, you do not have to pay them a monthly salary.

• Subcontractors work on an hourly basis, so they are exclusively paid for fixed hours.

• Most subcontractors work more than one job, so efficiency is critical for them to keep up with the gig economy.

3) Subcontractors Are Flexible

Again, most subcontractors are a part of the gig economy. They do not always keep to a set schedule because they make their hours. Running a small business can be unpredictable, so you never know when you need an extra set of hands. Subcontractors are more readily available when you need them the most. 

Cons Of Subcontracting

True, there are some great benefits to hiring a subcontractor. But before you go ahead and make a hiring decision, you need to be aware of the risks of subcontracting.

1) You Aren’t Aware Of The Work Quality

We did mention that subcontractors can help keep your costs low. But hire the wrong subcontractor, and you lose more money than you can make. A common challenge you might face is hiring a subcontractor who works well for your business. If the work is not up to the mark, you have to spend more time fixing the job or run the risk of dissatisfying your clients.

Thus, hiring subcontractors requires research (a lot of it). You have to be sure that you are hiring reputable and trustworthy subcontractors.

• Check with other contractors in your network about a particular individual’s work. 

• Have a prequalification process in place to check their expertise

• Ensure that you set clear deadlines and rules in your contract before you start. This way, you can reduce the risk of subpar work.

2) Subcontractors Are Not Responsible For Your Contract

When you land a project, the sole responsibility of completing it within the deadline lies on you. Based on these timelines and tasks, you might hire a subcontractor. But if they cannot finish the job according to these parameters, your business is on the hook. This can also happen if:

• The work they do is not up to the standards you have promised.

• They show up late to the job.

• Or sometimes, if they do not show up at all.

When your subcontractor does not behave professionally, it becomes difficult to fire them due to your contract. The burden then falls on you to find a new subcontractor when you are short on time.

Tips To Efficiently Manage Your Subcontractors:

When it comes to subcontracting, you take complete ownership of managing and planning. Subcontractors are only responsible for executing. As there are certain risks to hiring a subcontractor, you must have a plan in place for seamless task flow. Here are some tips to keep in mind while managing subcontractors on your project:

• The key aspect is to keep communication lines clear. For a collaborative effort, ensure that your requirements are clear to the subcontractor. Document communication if needed.

• Getting subcontractors on a project means handling a lot of paperwork. Stay on top of all documents, including contracts, expense sheets, time sheets, and more.

• Create fixed deadlines and ensure that subcontractors are aware of them. It is crucial for your project to stay on track.

• For multiple subcontractors, use project management software like Monday.com or Trello. This can help create structure and processes for your labor force. It can also minimize your day-to-day involvement in managing tasks.

How To Hire Subcontractors:

Hiring the right subcontractor might take some effort, but it is well worth it in the end. Consider the following ways to find and shortlist the ones that are the best fit for your task.

1) Job Listings:

Create a job post for specific subcontractors and outline the responsibilities of the task. Be sure to list the qualifications and other requirements you are looking for. You can even lay out details about your company. This will help candidates see the kind of company they are working with and how it will add to their experience.

• Once done, you can post this job ad on social media handles and the website of your business. You can also boost the ad by putting in some money. This allows you to set target parameters and ensure your desired candidates see the ad. 

• Consider joining Facebook or LinkedIn groups related to your trade. You can post your listing here and are more likely to organically find interested candidates in these groups.

• You can always post your ad on job sites like Upwork, Craigslist, Indeed, and more. The search intent is high on these platforms, and you can be sure of generating a few good leads.

2) Referrals:

Relying on one method alone is never enough. Reach out to your network of professionals who have been in the industry for a while. Talk to other contractors in your area or ex-colleagues. The chances of them connecting you to skilled subcontractors are high. This is because they would have employed the services of these individuals at some point in time.

Seeking referrals from known members of the industry also helps you find the best of the lot. As these subcontractors come with genuine reviews, you can be assured of the quality of work.

3) Get Expert Help:

If you want to subscribe to the services of an expert, you can try staffing or recruitment agencies. They often have pre-screened candidates on hand for the domain expertise you require. They even take charge of administrative and other overhead costs, reducing your burden. It's a great way to access resourceful subcontractors without the hassle of it all.

Apart from these, there are also new solution providers that offer guidance in finding your ideal subcontractor. We at Hoist extend similar services to our business owners in the painting industry. As a company that helps owners launch and grow their businesses, we connect all our partners with expert coaches. They help guide you on several nuances, including how to shortlist and onboard suitable candidates. But that’s barely scratching the surface of what we do! To learn more about our features, head to our website today.

Subcontractors: What You Need To Know

When you need subcontractors, understanding what they need to have in hand can be helpful. After all, knowledge is power. Before bringing a subcontractor to the team: 

• Have a contract in place to illustrate responsibilities, pay, and hours

• Provide necessary tax forms

• Outline that subcontractors should supply their equipment

• Check proof of insurance (when necessary)

• Check for licenses (this is necessary only in certain states)

You should maintain these processes so that everything remains compliant during your project. It’s never a bad idea to protect your business and team.

Conclusion

In the end, subcontractors are not full-time employees of your business, even though they report to you. To reduce hindrances, it is best to maintain a positive chain of command at work. Remember that you are bringing outsiders into your business. Developing a trustworthy relationship with your subcontractors can promote respect and hard work. Subcontractors can benefit your business. So, follow the tips mentioned above, and you can find the ones that can take your projects to new heights.

If there is a business project in your future, Hoist is here for you. Head over to our blog to learn more about the nitty-gritty of running your business.‍

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