Subcontracting – Renting Your Revenue
What You’ll Learn
- Set subcontract work cap at 20 to 25 percent
- Use subcontracting to get cleaning experience
- Win direct contracts with the building owner
Short Summary
Subcontracting can cover empty days in the schedule for a small cleaning company. When most work comes from a prime contractor, the company does not own the job. The prime contractor sets the price and the terms. The building owner pays the other company, not the sub. That makes income shaky and slows building equity for the owner. Keep subcontracting close to 20 to 25% of total work. Use sub work to build cleaning experience on real sites and crews. Put most focus on signing direct contracts with the owner of the building.
Frequently Asked Questions
What is subcontracting in commercial cleaning?
Subcontracting is doing cleaning for a company that owns the contract. The building pays that company, not the sub.
How much sub work is too much?
More than about 25% is risky for many companies. It puts price and terms in someone else’s hands.
When does sub work make sense?
Sub work can help build cleaning experience on real sites. It can also cover empty days while direct jobs grow.
Why does a direct contract matter?
A direct contract lets the company set price and terms. It also helps build equity in the business.
How can a company move from sub work to direct work?
Put more time into bidding jobs with the building owner. Keep sub work under the 20 to 25% cap.
Transcript
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[Screaming] Well, hi there. Welcome back. Dan again from CleanGuru.
Subcontracting: I need to talk about it again. It’s not that I’m against subcontracting completely. We’ve talked about this. If you’re looking to gain some experience in cleaning, you’ve never been in it, and it really could help. If you’re looking to do some cleaning and maybe get some recommendations or referrals because you do a nice job, I can understand having some subcontracting if you need to.
But if you’re making subcontracting—doing subcontract cleaning for some other company’s contracts that they hold with a building owner—then you’re really renting a business. You’re renting revenue. You’re not building your business. You’re not building equity. You’re renting revenue because you don’t hold the contract. You don’t have that contractual relationship with the building owner. You can’t control the price. You can’t control the terms. You could be let go. You could be dismissed from your position of being a subcontractor. You don’t control an awful lot.
Is it the worst thing ever? No, but like so many things, it’s important how you use it and how much you use it. So again, we’ve talked about maybe 20–25%. My business partner Tony and I, I don’t remember if we ever did any subcontracting where we took someone else’s work and did the subcontract cleaning for them. That doesn’t mean it was right or wrong. You may want to do some, but if it becomes most of what you’re doing—the foundation of your work is doing cleaning for some other cleaning business, some prime contractor, with contracts that they have with the customer—then you’re really not building equity. You’re really renting revenue.
It’s something to think about. Till next time, remember: you can do this. You can.
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