To sub, or not to sub

Artful_Gardener(Z4 CO MTN)February 24, 2005

I have a 3 yr old Landscape Design and Installation company. Each winter I try to figure out how to reduce headaches and increase profits. Getting the business started from scratch has been a challenge, and not especially profitable, but I do love many aspects of it and my customers seem to love my work.

With a $300K annual volume and average annual growth of 29%, I've found I'm not able to effectively handle all the sales/design/bidding/mgmt/field supervision aspects. My strongest skills are in design, sales and customer interaction, and I'm trying to figure out how to do more of that, plus have a little time to write a newspaper column and do some teaching. And make more money this year!

Employees and keeping labor costs in line are always my biggest challenges, and the source of lots of my headaches, even when they're good. I feel to keep growing I would need a top notch foreman or ops mgr to handle most of the field aspects so I can do more of what I do best. Of course they're hard to find, plus that would really increase my costs.

My alternative is doing away with all employees, and using a sub to handle all the installations, which would make my life easier. I just don't see how I can make much more than 5% on my projects this way, and I'll likely be spending nearly as much time in the field, so I'm not sure this is a viable option. Any recommendations you can make would be appreciated!

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Been there, tried that.
The most cost effective and headache free solution that has been working exceptionally well for me is to have found a business partner.

Your stengths and my strengths mirror one another. So I looked for a partner that could fill in my areas of weakness or areas that I did not want to handle by myself anymore.

The hardest part, is finding a compatible partner.

Fortunately I met the man who makes all my dreams come true... business wise.
But don't tell his wife that !

    Bookmark   February 24, 2005 at 11:25PM
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This is a very common theme. I sound like a broken record, half of the time. Managing help is the biggest obstacle in going from ideas to reality. Most of us enjoy designing, selling, and interacting with clients. Quite honestly, it is theeasy part. The hard part is getting things built because it requires people and equipment. That is the comodity that is not a dime a dozen. Those that can do it are in the drivers seat. They are in control of buying and marking up materials, providing and making money on labor, and have to deal with all of the other contractors, utilities, physical surprises on the site,... All of the greatest designers in the world are worthless if the design can not get built.

The idea of hiring a contractor as a sub usually comes with a number of assumptions. The first being that they are eager to work and will welcome work from a designer because it will help their business. The second is that even though these people are tough people managers, they will eagerly do everything your way. The third is that because the job is yours, the contractor understands and accepts that you are going to make the money on the marked up material and he will make the money on getting the work done. The fourth is that you understand that #3 won't be acceptable, but that the client will be eager to pay a mark up on the whole job for the priveledge of having you do the design work. The fifth is that subbing a contractor to manage the part of the job that you can not manage makes you an effective manager of the job.

Before you get into the head of the contractor, what do we hear over and over again on this and other forums from homeowners that want to hire a contractor? They don't return my phone calls. They don't seem interested in my project.

Now, try to get into the head of the contractor. He has experience doing this kind of work and the ability to get it done. Although maybe not specifically trained in design, he has done installation for years and can put together at least a reasonable designed landscape that he is in total control of. He can plan to use materials that are readily available, efficient to install (if he has his crew does the same type of work over and over it is faster), he knows what plants he can effectively mark up and have a good survival rate, he can control the sequence and timing of everything on the job in conjunction with his other jobs. Now compare that to having to be respond to a designer who is going to inherently interfere with timing, technique, material procurement, and profit. Why would a contractor want to do that?

Now get in the head of the client. If someone before you, as the client, can show you a portfolio of built work that he (he or she) has taken from design to construction for the previous clients and will design your project, price it, supervise it, and see it through completion you will feel pretty secure that the process will move smoothly. The cost of the job is materials, labor, and profit for the contractor who is also the designer. Because the design work is often the marketing tool for a design/build contractor, the design cost is only for the design since the job is already managed in house and therefore substantially less than if done by an independent designer.

As a client, do you honestly believe that you would rather have an independent designer add to the cost of the construction cost and add another level of management between you and the contractor? Most hate the process of selecting and hiring a designer and do not wish to go through it all over again when it comes time to hire a contractor. If all things are equal, they are much more likely to hire one person that they can deal with from start to finish, they would like to do it as cost efficiently as possible, and they would like to avoid any unknown variables (such as a subcontractor).

Those are my observations. Many of which a lot of people will disagree with. It is just one view from a person that has been in many different roles in this business.

    Bookmark   February 25, 2005 at 8:28AM
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I enjoyed reading your post and agree with everything you said.
That is one reason why I believe a Design + Build firm is a happy medium for everyone involved.

At my small firm we offer one stop shopping or what one might call a 'packaged deal ', and find that this is very comfortable and cost effective for the client as well as for our small firm.

My partner never has to worry about where the next job is coming from, he doesn't has to concern himself with coming up with the design, drafting it up, submitting & going through the arduous design review process, figuring out what type of plants or finish materials to use.
That process is already done by the time he's setting up the port -a- potty on the job site.

We do our cost estimates and bidding together which is great because we double check on one anothers numbers .

During the design review process I bring my building partner in to meet the clients so that they can established a good trusting relationship even befor the port-a-potty is set up on site.

Because there are two of us overseeing the project in our areas of specialty the client has access to two people at any time during the project who know exactly what is going on.

I've worked on all sides of this professional coin, and have found that the Design+Build set up is a great working situation to be in.
It works great for us and our clients.

    Bookmark   February 25, 2005 at 11:08AM
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Artful_Gardener(Z4 CO MTN)

Well, you are all confirming what I believe as well. It's really my spousal unit who wants me to change my business to sub out my work.

I have a good potential sub, but all I can see is the potential pitfalls you all describe. I like the control of handling the install too, and I sell my entire company and how special both our designs and installs are.

With a sub, even though I have their assurances they will plant to my specs, those who are more construction minded want to throw things in the ground faster than I do.

Has anyone had good experiences using a sub and operating as one seamless operation?


    Bookmark   February 25, 2005 at 2:24PM
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Cady(6b/Sunset34 MA)

My solution was to get engaged to the guy who knows how to do the installation and contracting. ;) Now he's going to show me how to drive a Bobcat. No more having to sub...

    Bookmark   February 25, 2005 at 2:58PM
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Perhaps ... just perhaps ... your suffering from a bit of pre season anxiety disorder ... ?

In other words it would be very nice to go off and write newspaper articles and still have a sucessful business that generates 300k a year and grows at 29% a year ...

BUT ...

it's not going to happen. Don't give up the ship now you have come to far ... 300K is a pivotal number. Don't miss the boat.

Good Day ...

    Bookmark   February 26, 2005 at 10:55PM
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On a different note ..

I know VERY large pool companies that sub out all of thier work .. they are run by well paid .. well trained managers ... they make very large sales volumes ..

But no one ever has anything good to say about them ... many of them are a very large source of liability ... every summer there are holes all over the valley that supposed to be pools ...

Yeah ... there are good local companies here that build for example big 50 acre parks .. big hotel landscapes .. you know volcanoes ?? .. caves ?? .. Vegas kind of stuff for several million dollars and sub out much of the work but these are big projects with lots of different trades ...

It's hard to sub out landscaping and still make a profit unless your building very complex jobs with multiple trades.

Do your projects really have a high level of complexity ??

Good Day ...

    Bookmark   February 26, 2005 at 11:12PM
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miss_rumphius_rules(z6 NJ)

I don't have as much experience as most of the other voices here, but I work a bit differently. Since I do not want to manage 'employees' and have not yet found the a contractor who is a perfect fit, I have aligned myself with two smallish contractors who do high quality work. They refer me for design and I refer them for build. I administer the job and provide quality control, we schedule it together. Obviously, the contractors make more money than I do, but they also have much higher overhead and risk. For specialty features such as fine woodworking I work with yet another contractor--although there's a long, long wait for that one...

    Bookmark   February 27, 2005 at 7:45AM
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Hello miss rumphius ...

Sounds good ... like a tropical forest ... there are many ways to make it work.

Good Day ...

    Bookmark   February 27, 2005 at 11:35AM
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Artful_Gardener(Z4 CO MTN)

Thanks everyone for your feedback - you guys/ladies are great. Just discovered this website and already feel at home.

Pass along more of your thoughts, if you've a mind to.

MIZD (is that what they call you for short?) your design+build concept sounds like what I was considering setting up. Can you tell me more how it works? I want a partner like yours! I'd be a little leery, though, I've done so much work in getting this bus started I think any actual partner would need to buy into it - after all, the hard work has been done.And then you lose control. How did you overcome that? Where did you find your partner?

Laag - I'm in full agreement with you. If I were a Landscape architect, perhaps I could make a living and sell myself as a designer. Three or four firms in our area do. But a portion of the design I do is on-site, makes it much harder to communicate to a sub. Plus, as you said, I wouldn't hire a designer who wasn't responsible for the work, why would anyone else?

Mohave - you are so right, I'm anxious about this season. Soudns like you've been there. Won't start for another month, and I'm already waking up in the middle of the night. This is a financial make it or break it year for me.
Love what I do, and want to do it better this year! And thanks for the reality check, I do tend to try to do waaaaay too much, and it is possible my multiple goals are a tad ambitious.

Everyone - I have a good sub I currently use for all my irrigation. He is reliable, returns calls, customers like him, and he does very good work, although he's not the soil prep and planting nazi that I am. He's better at managing a crew than I am - his Spanish is better, he's come up with a great way to handle overtime, he's better at controlling labor hours and tracking exact materials used than I. He has his own work, but wants to grow and is eager to take on mine as well. He'd hire my foreman and crew on as part of his crew.

The problem is I know I'd still spend a lot of time working on each job - finding prospects and selling, design and specs, layout on site, quality check, all customer interaction, billing, etc. - you know what I'm talking about. And his crew would not be able to wear my company shirts so I'd lose some identification there. I just don't see how I can structure the financial end of it to make an acceptable profit for myself. Any ideas before I go ahead and re-hire my crew? Still have some time to get creative.....

Also a bit curious - are most who write in here owners or employees? Bigger or smaller companies?

    Bookmark   February 28, 2005 at 7:23PM
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