Forum Discussion

ReddyPro's avatar
ReddyPro
Contributor 2
2 months ago

Painting Company here: Employees or Subs?

My Texas painting company has been operating with employees since we started.  We offer benefits, WC, of course pay taxes, etc.  Employees are expensive.  Strangely enough, I have also found employees often are harder to keep motivated without constant oversite - they get the work done, but often not as fast as subcontractors, so that cuts into profits as well.

I understand that a lot of franchises, like That 1 Painter, and CertaPro, have managers who are employees, but their laborers are 1099 subcontractors they basically treat like employees.  The subs wear the company shirts, and work to the company's standards and the managers pop in here and there to check on them.  This way the company avoids paying taxes, benefits, etc., and if they are low on work, they have no obligation to keep paying their laborers.  This all sounds really nice.  With how expensive my labor force and overhead are, I find it hard to be competitive against other companies with a subcontractor business model and still remain profitable.

Any other painting companies or similar businesses - what do you guys do?

general hiring tips
painting
subcontracting
  • Allie's avatar
    Allie
    Contributor 2
    4 days ago

    Hi! I'm sure you already know this- but I wanted to offer a word of caution in this area. The IRS is cracking down on businesses misclassifying employees as subcontractors. I've attached an article below. It sounds like the companies you mentioned above are really toeing the line. 

    https://www.irs.gov/newsroom/irs-reminds-business-owners-to-correctly-identify-workers-as-employees-or-independent-contractors

  • Hoffmanpaints's avatar
    Hoffmanpaints
    Contributor 2
    11 days ago

    We try and educate our customers on the importance of hiring a licensed contractor that carries the proper insurance. We provide the link for the CLSB so they can verify for themselves. We also say we will match or beat competitors pricing when comparing apples to apples. 9 times out of 10 the bid that is cheaper than ours is unlicensed or listed as having no employees therefore exempt from WC. We use that opportunity to tell they why they are cheaper and how it puts them at risk. Some customers care about being protected and some just want the cheapest price. 

  • ryaantuttle's avatar
    ryaantuttle
    Jobber Ambassador
    15 days ago

    GREAT QUESTION!!

    We ran an employee based model for just about 3-years and until we pivoted to a sub-contractor model....


    It took us that time to really figure out what would work best with trying a different mix over that 3 years.

    As we scaled from 110 jobs the first year with an additional 60 monthly maintenance member visits to, 440 jobs and an additional 875 monthly maintenance member visits 2 years later, the ONLY way we could compete or keep up with the demand, was to build new systems/processes to find, hire and retain new team members.

    We could then run the business from the office by mixing that with automations and integrations with Jobber. I sold both vans with ALL tools inside a few months later. The business scaled past seven figures while giving us our life, time and profits back. True story.

    Don't be afraid to try something out of the box and/or be judged by other companies, people or customers.

    We have been successfully receiving 5-Star reviews for 6 consecutive years now. 3 of those years I've never even been to one of those projects. 

  • bedellmgmt's avatar
    bedellmgmt
    Jobber Ambassador
    23 days ago

    You are on the right path by trying to maximize your profit, just make sure that you aren't opening yourself to any issues from a legal standpoint.  Every state is different and SOME larger outfits in any industry will sometimes dabble in "grey areas" of legality because they have a bit of an upper hand navigating getting through the legal system without taking a loss. Like my mentor Dr Jim Schultz says, "For every gimme, there's a gotcha!"  Just food for thought!!

  • AidenStrehle's avatar
    AidenStrehle
    Contributor 3
    31 days ago

    I get where you’re coming from. I run a landscaping company, and my core mowing crew and landscaping crew is made up of employees for consistency. But for my tree work and fertilizer divisions, I subcontract everything to keep costs down and stay flexible. Employees can be expensive and need more oversight, but they help maintain quality where it matters. Subs are great for specialized or seasonal work, but there’s always a trade-off with control and consistency. I think having subs is a great idea, you just have to create a relationship with your sub-contractors where you hold them to a higher standard. Maybe a mix could work for you—keeping employees for key areas and using subs where flexibility matters most. It’s helped me stay competitive while managing overhead. If you are to use subs, I would make sure you still have a lead person in charge, just so you know all the work is high quality and still being done in a timely matter.