If you want your company to grow, it's important to build relationships with key subcontractors. By Walt Stoeppelwerth
Historically, few full-service residential remodelers have hired subcontractors for anything more than plumbing, electrical, and HVAC work, trades that require licenses in most states.
Larger specialty contractors may have used subcontractors to install roofing, siding, and replacement windows, but the number of high-end design/build companies who used subcontractors for tasks other than plumbing, electrical, and HVAC has been small. In fact, most small remodeling contractors haven't used subcontractors at all, unless it was impossible to get away from the licensing laws.
New alliances
These days remodeling companies are re-thinking how they use subs. One big reason is that the shortage of qualified craftsmen gets worse every year. What's more, the growth and complexity of remodeling work is increasing at such a rapid rate that it's difficult -- if not impossible -- to hire and train crews to handle all the functions in a large project. Another reason is that more and more products require specialized training for correct installation.
This trend is already prevalent in the home building industry. Over the past decade, home builders have begun to use subcontractors for almost every installation in a new house. Even the small builders who often sell houses to provide themselves with a framing and installation job are learning that many subcontractors are needed to finish the house.
Home builders will tell you they use 20 to 40 different trades to construct a house from start to finish, depending on its size and complexity. In remodeling, a total house renovation or large addition could easily require 20 or more subcontractors.
All this means you need to have a method of finding, screening, and qualifying subs in almost every category of your company's business in order to be successful and grow. Don't just put your project out for bids by subcontractors and take the lowest price. That makes no more sense for you as the remodeler than it would for the homeowners who are selecting a contractor for their project.
The better approach is to develop a list of your most common projects and ask subs to submit prices based on normal, sunny conditions. Then sit down with one or two of the best licensed subcontractors whose prices are fair and who meet your customer satisfaction and availability standards. You may select one or two subs to work with in each trade -- perhaps one larger company and one smaller firm that might be less expensive and more flexible on your smaller jobs. Not requiring subcontractors to bid every job reduces their advertising and sales and marketing costs, which can be reflected in their prices to you.
Most successful remodeling companies have used this approach and have developed real relationships with quality subcontractors in every category. Besides cost and availability, these relationships can bring other benefits. For example, many larger subs who specialize in electric, plumbing, HVAC, flooring, or painting and wallpaper have showrooms. Remodelers can send their customers to the showroom to make selections.
In for the long haul
Electrical, plumbing, and HVAC companies have been more affected than any other segments of the home improvement industry by the new market truth that you cannot make money selling product alone, but only by selling service (installation). Almost all of the successful outfits are making most of their profits providing ongoing maintenance and maintenance contracts to customers. Remodelers would do well to capitalize on this development and find ways to be involved with their subs in this aspect of the business.
--Walt Stoeppelwerth is a publisher of management and estimating information for professional remodelers. (800) 638-8292; [email protected]; www.hometechonline.com.
