Contractor Cuts
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Contractor Cuts
Mastering Subcontractor Onboarding
Successful contracting businesses need strong partnerships with subcontractors and vendors, which starts with a proper onboarding process designed to create long-term, profitable relationships for everyone involved.
• Two main categories: day-to-day crews (smaller operations handling labor) and larger vendors (established companies with their own processes)
• Large vendors require basic information collection, W-9s, and Certificates of Insurance with your company listed as a holder
• Smaller crews need in-person meetings in proper settings to establish true partnerships
• Skills assessment helps determine what subcontractors can do profitably and enjoyably
• Job timeline discussion explains pricing and profit structure transparently
• Subcontractor agreements cover payment terms, on-site behavior, client communication protocols, and warranty expectations
• Work orders should specify exactly what work is to be done, when to complete it, and payment amounts
• Consider allowing a one-month trial period before requiring insurance
• Proper documentation protects both parties and prevents misunderstandings
• The goal is setting foundations for relationships that will last 10-20 years
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Welcome to Contractor Cuts. My name is Clark Turner. Thank you for joining us again. So this week we are doing another Coaching Cuts episode where we're gonna be covering onboarding vendors, whether it's subcontractors or vendors or different companies. We're gonna define them and then talk about how to start the relationship, how to bring them into your ecosystem to be able to grow your company, have these partnerships with these other subcontractors and vendors to where you're helping them grow and, at the same time, helping your company organize and be able to grow what you're doing. So today we're specifically focusing on how to onboard them, how to bring them in, how to have the conversations. What do we need to get from them? What information should we gather? So, yeah, let's start by defining what a subcontractor or vendor is.
Speaker 1:So in my mind there's really kind of three different, two main sections that I would section people off in, and in those I'd have a couple of different subcategories of those. So one side is the subcontractors that are one-man shows, one-off guys, hired help, hired labor. It could be one general crew. It could be an electrician that goes and runs his own stuff. It could be a guy with his cousin and his brother and his aunt that all work together and they're on a team and they come and do 50% of the work that's on your job sites, or they do the demo and some of the framing. Then you bring in some guys for sheetrock, whatever it is. It's those one-off trades or the multi-general crews that we're hiring that are little mini companies underneath you that you're helping grow. The other category are more what I consider vendors, which are dumpster companies, the large scale HVAC company that's got 40 trucks on the road. The appliance people that you buy your appliances from that might deliver them for you. Larger scale vendors that you're still going to use as subs, but they have their own processes that we have to abide by, and so those onboardings are going to be a little different than the day in and day out guys that are going to be doing a lot of your standard, more of the labor on the job site.
Speaker 1:So let's define the two how do we onboard them and what's the difference of those, as well as what's the best practices in onboarding? So let's start with the vendors, because those guys are pretty easy and a little more basic of an onboarding. Those vendors, the larger scale companies that have processes that you're not hiring the owner of the company, but you're really hiring a project manager or an account manager. Maybe our tile refinishing company is a very large company that comes in and does that for us. We're not talking to the owner of the company, we're talking to a sales manager that is sending out their trucks to come do stuff like that. So those type of vendors we want to do a couple things.
Speaker 1:Number one subcontractor agreement we still want to put in place. We're going to say, okay, who is in charge of our account? Who are we contacting? I need to get the information of how I submit orders and work requests from you. Who am I sending it to? Is it a different person every time? Is there a general delivery box that we can put in as our main contact? I want to gather phone numbers, contacts, names of the people that will be managing my account If I have issues, if I have payment problems or they're not depositing my checks, who do I call? So, though, I need all of that information.
Speaker 1:I want a subcontractor agreement, and half the time we're crossing out some of the stuff in it, but I want to walk through what it is and how we hire our subs and how they operate, to make sure that we can work in sync together. On top of that, we obviously need their W-9. We need to be a holder of their COI, their Certificate of Insurance. They handle that all the time. You just tell them this documents under a vendor put an expiration date to where you get reminders, and they get reminders that you need a new year's COI from them. It's really cool. There's a lot of stuff we can do on that side, but for the most part this is going to be a phone call and a couple emails and really just a conversation of how do you guys work and how do we get you out to the job site.
Speaker 1:I want to make sure you're not quoting my client jobs and prices, but that we can work well together on it. So that's more of the vendor side. It's pretty basic and it's more a transactional. I'm buying something from you, you're supplying something to me. It's less personal, less we're doing this, building this together. We're in a partnership, and it's more of okay, I need a dumpster, I need a 30 yard dropped off on this day. This is the price, this is how we pay, this is what you charge and all of that stuff sorted out on the front end. If you have an office manager, they are the point person for this. Usually you're going to be your own office manager, so I will have a folder or a way that. Okay, I know that I need to check off W-9, insurance paperwork, subcontractor agreement form for those clients. Again, they're going to handle that pretty easily, but making sure that you get those before we start going is so important to make sure that our taxes are filed properly, as well as our insurance and everything else is covered, all right.
Speaker 1:So let's move on from that section of vendors that we use. Let's go to the day in, day out general crews, electricians, the guys that usually own the company, or one level down. You might have an electrician that owns a company. He's got three guys that work for him, but they're smaller and we're working together and that's my go-to company. Those companies I'm going gonna do a different onboarding process than the big guys. For those, my goal is to sell them on a partnership with us. I wanna make them more money and if we can work together to help them make more money, then we are going to make more money together.
Speaker 1:So this type of a meeting is not over a phone call, this is. I wanna be in person. I don't want to be on the job site. I don't want to be standing behind my truck talking to them when they're trying to jump in and start doing the sheetrock on the job because we're wasting time. I want them to come to my office, sit down and let's have a conversation Now. I know a lot of you guys don't have offices, not a problem. Bring them to Starbucks, bring them somewhere that you can sit and talk. Worst case scenario you're doing on a job site but don't do it standing in the living room. Come out to your truck, drop your tailgate, sit down and say listen, let's have a 20 minute meeting, let's talk through how we operate. I want to make sure you get paid, I want to make sure you understand everything that is expected out of you, and you know my goal is to help you be efficient on these job sites so you can make a lot of money with us and we can have a really long-term partnership. So location is important how we're having it, where we're having it.
Speaker 1:After that, I'm going to sit down and I've got five to six pieces of paper in front of me that I print out for every single one of these. If you're in my coaching program, I suggest put it all in one document, print it out. We've got one document that we hit print on every time we want to do an onboarding meeting. I'm going to run you through those documents that you have to have If you're not in the coaching program. Write this down, create your own. If you want these. I will give them to you, just give me a call. We've got all sorts of levels of coaching through our foundations program. It starts at 500 bucks all the way up through full scale, me being on your executive team. So we have all different levels of that. Either way, they come with all this paperwork pre-made for you. We customize it for your company. But if you're not in the coaching program, you're not ready for that. So reach out, give me a call. I can help you build yours and maybe give you a couple of cheat sheets. So, anyways, let me run you through these paper, the paperwork that I would print out for every sub that I want filled out.
Speaker 1:Talk through, walk through with everybody. The very first thing I'm doing, let's walk through an onboarding meeting. I'm sitting down with the crew, I'm introducing myself and I'm starting a sales pitch for a partnership I start talking to them about hey, listen, this is how we operate. I'm not here to demand you to do all this stuff for me. I want to make sure that you're covered. I want to make sure you're getting paid for what you do and that we make some good money together.
Speaker 1:And so I start with my skills assessment. I have a document that has probably 20 different line items on it, from kind of general trades that you can do all the way down to more specific stuff. So the general top 10 are demo framing, that sort of thing, drywall, general plumbing and electrical, and then down at the more specific is is you know, full electrical, full plumbing? Kind of tell me about what you can and can't do. So there's 20 different skills that are on there and there's two columns that are blank beside each skill, one column. I tell them listen, you're going to rate these.
Speaker 1:Let's say I've got 20 work orders sitting on my table. All 20 of these, all of these are separate work orders. Which one are you picking up first? Which one can you do really well quickly and make a lot of money doing it? Out of these 20 things, what's the first one that you would pick to do. They answer me we put a one by that one. I say, okay, that one, you finish. What's the next one you're picking? I'm not looking at which one you're best at. I'm looking at what should I send you. If I've got 20 jobs and each one has a specific thing on it, which job should I send to you? And if another crew has it, which job should I send you second? And what's the third and what's the fourth? So I want you to list one through 20, ranking these skills. Your 20th skill you might be great at. You're not saying that you're not good at that skill. You're saying here's a great example.
Speaker 1:I can do sheetrock really well. I can put up sheetrock, put it in, float it, mud it, do everything that I need to do. You are going to. It's going to take me six days to do three boards of sheetrock in a room. I am a perfectionist when it comes to it. I am high, detailed. I'm going through muddying it perfectly. I can't just blow and go and make. You know, put sheetrock up in a room.
Speaker 1:So sheetrock will be my number 20 on that list. I'm really good at it. If you hire me to do it, it's going to look perfect. I can't make money doing it because it takes me so long. So being ranked 20 doesn't mean that you're not good at it. It means, hey, I can't make money, I'm slow at it, I'm new, I don't really know that skill or, honestly, I'd rather do these other things. Let the HVAC guy do HVAC. Let the electrician come and do that. I don't want to touch that, I don't want to electrocute myself. I'm going to put 20 on electrical. I could do it. I could run a home run if you need me to. I don't want to. So I'm going to list that low on my rankings.
Speaker 1:The next thing I'm doing in column B is saying, okay, now we're going to go through all of these skills and give me a one to 10 and let's talk through them. So let's talk demo. What are you? Most people are 10 on demo. I can do demo, but they might be ranked low. They don't want to do it, that's you know. I'm highly skilled. I don't want to do demo. That's a waste of my time. You can't pay me enough for it to be valuable enough for me to do demo for you. Great, let's have that conversation. I'm still going to put you at a 10 on that one, but it's ranked as your 18th, 19th or 20th line item. Next one down. Let's keep going through. And so we start. I wanna get one through 10.
Speaker 1:If someone puts a 10 on Sheetrock and they do a terrible job of installing drywall in my property, I'm gonna say, hey, if that's your level of 10, finish. You're not gonna do any other work here because that's what you think is a 10. So I tell the guys that too in the meeting I say if you are not a 10 at something, it's okay. It doesn't mean you're not getting it. If you rank yourself a seven on sheetrock and I walk in and it's a seven out of 10 job, that's what you told me it was and that's what I should expect out of you, that's okay. That's the level of expectation you're setting for me. And when I give you a work order for it, maybe it's an investor property and I want to pay a little less and you're fine with doing it and we can get it in and out and a seven out of 10 is fine, perfect, we're good, you're going to do that work. So we're going to talk through all of these and they're going to rank them one to 10. If they're terrible at something, put a one by it. I'm not going to have you do it. All this to say is we want a full skills assessment.
Speaker 1:This is the longest part of the onboarding, because this isn't just going through 20 line items. This is sitting down and talking through what they're good at and what they're bad at. They start war stories. They start well, I did this and this one guy and this client. That's what you want. You want to have that conversation where we're talking, we're interacting.
Speaker 1:I'm pulling information out of them to understand hey, this guy gets it, or the way he's talking is, I don't think I want him to be my crew. He's talking about how he cussed out this client and that he was great at this, but nobody thinks he can do it. Well, all of those conversations I'm looking for red flags or green flags. Hey, this is a company crew I want to work with. Okay, I won't assign them any plumbing because he's terrible at that, and that's fine. He said that. That's good to know. Put that in my brain. It's on his assessment. I'll put it in his folder.
Speaker 1:All that being said, though, I now know who I should and shouldn't do for the work as well like assign work orders for as well, as I'm getting a full picture of talking about their skill, their trades, right. I had a guy talk you know he's a carpenter and you know this was the skill assessment was good because he wanted to do more than just carpentry, kind of want to do a handful of stuff for us. But when he starts talking about the type of cuts he does and how he requires a certain level of wood, he's not going to Home Depot to buy his any sort of wood from there because nothing Like when he gets in that level of detail, I'm like okay, high end, a little more pricey, which I'm okay with because I'm going to use them on my high end projects, right. So these conversations really help you start identifying what you need to know about the person, just by having conversations about this skills assessment. So skills assessment page very important, like I said, we've got a copy of it if you need it, but absolutely use it when you're onboarding a sub.
Speaker 1:Next piece of paper that I pull out, it's called our job timeline. It is the way that I describe to a sub how we price what their job is and what my job is. On this job timeline. What we do is we lay out and say, okay, listen, here's a normal job. You do estimates, we do marketing, we find the client, we do estimates, we revise estimates, we pick up materials, we line up the crews, we get everything set and ready. We get them out of the space Now. Then we bring in labor. Labor gets done. During the labor there's some change orders, there is some dealing with inspectors. Potentially the work finishes. We now have to do final walkthroughs. We do sending invoices, collections, getting the money. All of that stuff is what has to happen on the job and what the client's paying for.
Speaker 1:And so I draw it out on the timeline and you've got in blue all of the things that need to happen and in red the labor. And so I say to the crew I say, listen, this job let's say it's a $4,000 paint job On this $4,000 paint job, this labor part that's red is what I'm paying you for. I'm paying you $3,000 of the four for this. All of the stuff in blue is what you're paying me for. Everything that I'm doing in the blue finding, estimating all of this, picking materials out, meeting and spending all of that stuff you're paying me a thousand bucks for. So we as partners are doing this paint job for $4,000. You're getting 3,000 for the labor, I'm getting 1,000 for doing all of this work.
Speaker 1:So when I send you a work order and you show up on the job site and I say, hey, here's a $3,000 paint job, and you look around and say I'd probably charge $4,000 for it, I say yeah, we are charging $4,000. You're right, we are charging $4,000. You're paying me to do all this other stuff. You're not having to go home, shower, go out, do an estimate at 8 pm at night, get to work the next day. You aren't having to do everything.
Speaker 1:If you are really good at doing labor, getting it done well, getting it done quickly, efficiently, with a high quality, you're going to make some good money with us. If you like to talk with the customer, if you like to do the front end stuff, pick out materials, the design thought, all of that stuff that we do, if you enjoy that, don't be a sub for us. This is not a good partnership for you because you're not getting paid to do that stuff. You're paying us to do that stuff. That's our cut of the pie, and so we lay that out on this timeframe and show them. Listen if I can line you up. So you're doing labor, backed up to labor, backed up to labor, in the same amount of time that you're doing all of the contracting stuff with dealing with the client, dealing with all the stuff I listed, you're going to make more money back to back to back labor and I'm going to make more money back to back to back dealing with the customers, as opposed to me going and selling a job, then going out and doing the work and coming and trying to do an estimate. It is more efficient, it is assembly line style to where I'm doing this and then I pass it to you, you do the labor, pass it back to me and we get the job done. So I'm trying to set this up as a partnership, which it is. I'm not. This isn't a lie, this isn't a line. This is me saying we're partners in this. This is your piece of the pie, this is my piece of the pie and this is how the pricing works. I'm setting the tone for why they're they're getting pricing they're not just going on and bidding jobs for me and how we operate and what they should expect price-wise, as well as who's doing what on our job sites.
Speaker 1:Next we go in from the job timeline to our subcontractor agreement. In that subcontractor agreement I've got two other documents hidden in it printed out, which is our work orders as well as our end of the day procedures, which we'll talk about. So our subcontractor agreement talks with them top to bottom, start to finish, of what I expect out of them, what they should expect out of us, what the warranty is, what the pay structure is, how they get paid, how they have to go back, how we try to exit jobs, what they have to wear on our job sites or really what they can't wear on our job sites where they park on our job sites, everything that we cover in the client engagement agreement with the homeowner. I then go and the other side of the client engagement is a subcontractor agreement where what I'm talking to my subs about, what I'm promising them and what I'm requiring them to sign and agree to, how we operate, is what I've promised the client on the client engagement agreement. So when I'm telling the client, hey, you cannot talk to my subs, don't get their numbers, don't have conversations with them, any questions direct to me I then go to my sub and say, hey, you have full right to not talk with my client.
Speaker 1:You're getting paid by the job, not by the hour. Don't spend an hour and a half walking the client through the property talking about what you're doing. That is an hour and a half of your wasted money and wasted time because I'm not paying you extra for doing that. Also, you're agreeing to not talk with my client because you don't know the full scope of what me and them are talking about. So they might be going behind my back trying to catch me saying something or catch you doing something and trying to have those conversations with you. Don't have those with them. You're agreeing not to give them your phone number, your contact information or any sort of conversation. Now if they say, hi, hey, good morning, good to see you guys, that's totally okay. I'm not saying don't be kind. I'm saying don't have conversations about the job site, about pay, about the work you're doing, about things that are failing outside of the work you're doing. Don't point out issues on the property.
Speaker 1:We cover all of this stuff in the CEA I'm sorry, in the subcontractor agreement, and so we talk through exactly how they should be acting, what our promises are, how they make the most money with us. We should pull out the work order when we get to that spot. We show them how the work orders look, how we have timestamps on each line item, as I want this to start Monday the 5th and go through Friday the 10th, and blah, blah, blah. And so every line item has its own defined time of when you need to start, when it needs to finish At the bottom, how much they're getting paid for it. You can add you know the. I show them that there's a lockbox code, usually on these, that sort of thing that's. That helps them understand what they're receiving.
Speaker 1:Now I hear all the time from my coaching clients hey, well, I, you know, my crew doesn't have email. They don't have email, that's fine, I don't care. Let's set them up a Gmail for free. Let's download the free app on their phone and let's get them an email. They don't need to look at the work orders. This is our agreement that I'm sending this work order. So if they try to sue me, put a lien on the house or anything else I've got in writing.
Speaker 1:We talked about this. You get paid what's on the work order. You don't get a penny over unless I change the work order. So don't do the work until you get a new, revised work order. Don't do work if we talk about a price change until you get a new, revised work order and we're agreeing to this in writing. And then, if they don't want to look at the work orders, that's on them.
Speaker 1:I'm organizing my company and my systems around how I'm going to protect myself, my money and my reputation. And if they don't want to abide by the work orders, no problem, I'm going to send it to them. Give me any email, I don't care if it's a AOL email from 30 years ago, it doesn't matter. I need some email that I'm sending you your work orders that we've agreed on. So that way we've got our locked in price and there's no. Oh, I thought you say you'd give me 500 extra for this, or I thought you told me that you wanted me to do this.
Speaker 1:All of that uncertainty and unclarity that happens through phone calls and text messages and conversations of price change and scope change have to go away. You can't scale a company that way. So the work order system that we use that I coach hard on is we send you the work order with a price on it. This is what you're doing. This is what you're getting paid. Don't touch anything or talk about anything that's not on the scope. You're agreeing to do all of the things on the scope for that price. There's not a price change unless we discuss it and you get a new work order.
Speaker 1:I explain this and I show them the work order. We have the conversation, they get it. I agree. They ask questions like well, what if I show up and I can't paint the house for $3,000. Great, call me, let's have the conversation. Maybe I missed the bid and we need to have that conversation. I promise my clients that I won't change the price once we start. If we haven't started, you can call me and say hey, Clark, $3,000 makes sense to paint this house for the walls, but we got trim ceiling. The doors are black and you want to go white with them. I can't touch this house for less than six grand. Awesome, good to know. I didn't price out the doors, the windows, the trim, the ceilings. I didn't price out doing all that. So let me have that conversation with the client to see if we need to do that and give them a change order for that right. So I explained to the subs how to manage the jobs, how to manage their money, how to get money out of me and what my expectations are for that. And we have that conversation during the sub agreement and then at the last, the last piece of paper that I give them is a W-9. Obviously, that needs to be filled out In the sub agreement.
Speaker 1:We're asking, we're setting up the insurance requirements. I'm not going to spend too much time. We've talked about this before. But we don't require our subs to have insurance for the first month. We say listen, come on, test us out. If you like it, if you like working here, then you go get some insurance. If it's worth the money, go get some insurance. But we need insurance by the end of the first month. We require it because it makes our insurance a lot cheaper as well. As they mess something up, it's getting claimed on their insurance, not ours. So we pay them a little more for that as opposed to paying five times the price for our insurance.
Speaker 1:But, that being said, it lists out how we get their COIs, what they need to do, what's required and on that piece of paper they can give it to their insurance agent and say I need these levels of insurance and I need ProServe or the company that you're working at, the general contract company, add it as a holder on my COI. Which one thing, side note. You need to be added as a holder, not just get a copy of it. So if they send you a copy, it could be a fake one, it could be one. They've got apps that generate them. That's not okay, because even if it's a real one and they cancel next week, you don't know that they canceled and they're not covered anymore. So what you need is to be a holder. That means when they cancel, you're gonna get notice from their insurance company saying hey, this crew of yours stopped paying their insurance and it's canceled, so they're not covered anymore. That's what being added as a holder does for you.
Speaker 1:So anyways, I digress, going back into the onboarding. The whole goal of this meeting is to sit down. Take 30, 45 minutes relate to these crews. Now the skills assessment. I'm not doing that with my electrician, I'm not doing that with my plumber. That's more for my general crews. But the goal is to understand what they can do, what they can't do, how they operate. Are they on time? Are they going to abide by our agreement? Do they understand what the agreement is? All of these things are helping us set this beginning of our relationship to where they're here for the next 10 to 20 years, working as a sub for us, making good money, as well as helping us make more money and build a reputation.
Speaker 1:So if you have any questions about subcontractors, onboarding paperwork, anything else, if you disagree with anything I've said in this, please reach out to me. Proshruck360.com. Go to the contact us, send me an email, let me know. I'd love to have a conversation. Also, I know it's five months away, but we are starting to prep for our planning retreat in January. If you are interested in coming on it, please reach out. I'd love to have a phone call with you. Also, we are giving away three free coaching sessions for anyone that is coming on the retreat, if you sign up for Early Bird, because what we're going to want to do is help close out this year strong and then be prepped so when you come on the retreat in January, you are going to launch into 2026. That's the goal of this.
Speaker 1:Why we do these retreats is we look at what happened last year, what went wrong, what went well, and then we plan out the next 12 months. If that is something that you need to do. Please come on this retreat with us. We'd love to see you there Again. Go to proshark360.com. You can go to contractorcutscom. Get more information and set up a phone call with me to hear more about it as well, as I want to hear about your company. Make sure it's a good fit for you and if you want to come, we'll get you signed up, all right, thanks so much, and we'll see you guys next week.
