On Paying Your Employees and Subcontractors

Man paying with cash As some of you may know, I have been running a fast growing Property Preservation repair business since 2007 that does approx $2 million dollars worth of Property Preservation repair work per year. Our office/ management work is efficiently taken care of by 1 full time and 2 part time employees and then we outsource 100% of all the actual repair work to our network of subcontractors.

This is not the management system I initially started out with. Like most small construction businesses, I was wearing several hats – hell, when I first started I wore ALL the hats: owner-operator/ accountant/ inspector/ estimator/ contractor/ subcontractor liaison/ babysitter/ etc.

Out of necessity and desperation, my business has evolved into something that I never would have expected. To this day, I have not figured out any easier or better way to manage this operation with as much efficiency. And just a quick FYI. My subcontractors get paid more than 90% of their peers within each of their respective businesses.

My philosophy is that business owners ABSOLUTELY MUST pay a person enough so that they can support a family, rent or mortgage, insurance, and recreation. Just to give you an idea, a couple years ago when I was running my own crew, I paid my unskilled helper $22.00 per hour and he was simply an unskilled laborer with an automobile and no tools (well actually he had a cordless drill that I gave him). But he was great at what he did and he ALWAYS showed up.

In fact, ALL of my subcontractors are GREAT at what they do. Here’s a little secret. Most people are only moving at 20-30% of their full speed and if you can find a way to motivate them and also pay them quickly, their output will be the same as if you hired 3 regular guys. I’m not kidding, either.

To be continued…

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3 thoughts on “On Paying Your Employees and Subcontractors”

  1. We have been in business for ten years and have seen lots of changes in the industry. We have always paid our guys hourly, but are in the process of switching them to a commission type of pay. How do you pay your people? We are hoping to go to all subcontractors but that seems to be a sticky issue. Any advice you have would be great.

    • Amazing insight! I have been holding back due to the uncertainty of subcontracting 100% of the labor and still making a decent profit! Also I have a concern on hiring someone on for an hourly position but the work will be on call. Hopefully I can find reliable people!

  2. I am desperate to hear more! We haven’t even gotten started yet, still waiting on insurance, (BTW)- any advice on insurance?


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