Subscriber Discussion

Subcontracting As A Career?

A good friend of mine is asking me to quit my sales gig and start a subcontracting business. Essentially working for other security integrators doing installs and such.

I haven’t really put the pencil to paper yet to see if this makes sense. Anyone have any experience in this area? I’ve climbed the ladder so in terms of skills, I know what it takes to install a project.

Not sure if there is a big demand for subcontractors though. I know 4 or 5 but they seem like they all work for the same companies.

FWIW, I've had several integrators ask me if I know of other guys that want to do this work. Usually have a hard time finding anyone looking to do subcontract work like that. The guys that you'd actually want to hire are booked solid with their own work already. The ones cheap and available, well, you don't usually want to use those guys.

So, in some ways there may be a viable business out there if you concentrate specifically on this, and can cover enough territory to make it worthwhile. Or, you might find you end up getting a lot shitty low-profit work.

I am presuming here this is for basic installation work.

Being a security subcontractor is the equivalent of running a maid service - could be profitable but requires finding people who are ok with making a near poverty level wage, yet are reliable, have basic technicall skills and will not quit the first chance they get to make a little more.

I also wonder how much scale you would need to be profitable (i.e., total laborers), considering how little companies typically pay for subs, and the resulting low margins per employee one will generate.

Very early in my career, I did quite a bit of sub-contract work, and it was fairly profitable. In order to succeed, you have to be able to charge the right hourly rate. Many prime contractors want you to have your own tools, vehicle, insurance, and bonds and licenses, yet want to pay you as if you were an hourly employee. This is a recipe for disaster.

You need to figure out the minimum salary that you want to earn and all of your costs (including licenses, bonds and insurance) to come up with your hourly rate. Keep in mind that you won't be billing out 100% of your available time, so your costs must be spread out over the actual number of hours that you can expect to reasonably bill (typically 60-80% of your time if you are lucky). If you do your calculations right, you may be shocked at just how high of an hourly rate that you will need to charge to make a profit.

You also need to expect peaks and valleys in your revenue stream. When things start to get slow, the use of subcontractors is one of the first things to be cut, as companies want to give what work is available to their own employees.

If you're a salesman technical enough to do installs, hire yourself out as a field engineer/project manager/troubleshooter. Unless you have a bunch of fiercely loyal, motivated laborers in your pocket that love working menial tasks for low wages, installation subcontracting is not worth the headache, boredom, and powerlessness.

Seriously, when you are a sub, you are caught in the middle... End users/customers griping at you, your prime contractor griping at you, and your own laborers griping at you. On a good day, you don't feel like walking off the job.

I would imagine it has to depend on the area. One of the guys who helped train me as an installer has done sub-contracting work for the last twenty years or so and seems to be doing ok. There are of course ups and downs, sometimes he's way to busy with three or four jobs going on at the same time, and other times he's got nothing. But it works for him.

And one's personality / temperament...

Some people, like the example you give, can deal with it. I suspect for most it would be more hassle than it's worth.

At that point your basically a freelancer, no? I mean if you are simoly hiring yourself out.

Many years ago I ran an installation department where most of our labor was sub contract. We paid by the device so the harder / faster they worked the more they made. We booked those crews of independent business people (licensed small businesses with insurance) based on how well they completed work on time and without returns. Many if those guys ended up owning their own security companies and as long as they were not direct com

Greg, good feedback. How many problems / issues did you experience? For instance, was it common for people to complain about factors beyond their control holding them up? Were many motivated to leave for the 'comfort' of an hourly wage?

I didn't get to complete from my phone so I'll finish and answer:

as as long as they didn't compete directly with us. Some built companies and others sold the accounts routinely to national companies supplenting their income.

We used the same people who installed to our methods and the really good guys expanded to more than one crew. The "good" guys were pretty steady and the regular guys got only the impatient overflow.

Managing these crews crews was a full time responsibility with procedures and policies. It worked great and allowed us to operate service people as full time employees and a single company crew for specialty installations.

Being a sub which I also did was another story. uou can make a living better than just an employee if you are good and can negotiate.

I've been approached to subcontract quite a few times. Usually by other companies with an "in" on a project they weren't comfortable doing themselves. Usually the other guy wants to add way to much markup. Always surprises me that people think their "relationship with the customer" is worth tacking 30% on to a project where they don't plan on actually doing anything. I think the fact that it has never worked out indicates different.

Good comment. The only time I have seen it work is in government projects, where huge companies have pre-competed contracts, and the government customer is essentially forced to go through, allowing them to take quite a chunk out of the project and then sub it out to specialists who can actually do the work. Their justification is that they are 'project managing' it.

I believe it. The laws of common sense do not apply to governement work.

I believe that there is money to be made in subcontracting. The amount of money depends on your local and what you are certified in and have to offer. Mom Pop alarm systems and bid business are not going to pay as well as higher end CCTV and Access Control work.

I've been using subcontractors for a number of years and could not have survived with out them. All of the work was Government, large commercial or industrial projects. I relied very heavly on them and trusted them to professionally do the work. Never once did I beat up a sub to try to get a lower price but on occasion I would tell them I thought their price was too low in light of the risk involved.

If you are in sales, you understand relationship selling. It's the same in suncontracting.

That's good on you. I've never had a prime tell me my rate is too low given the job.

There are two discussions going on here. Electrical Contractors use small companies and even large companies to fill in the technology gaps as a sub. It happens all the time and subs attend major job walks to meet the prime bidders, not to win the project. Those are long time projects. I was discussing long term relationships with single customers such as being a sub for ADT / SIEMENS etc. I have done both with good success but chose a more stable route for many personal reasons.

As for telling someone they charged too little, it's just good business. If they suffer because you wanted to make a couple of extra bucks then the work will be inferior and they may not complete the project. I was quoted hourly by a sub and instead of rejecting his bid we went over what the typical pricing structure was for piecework and how it would affect him. He changed his pricing and has been a friend for many years.

After over 18 years with one company I did just switch jobs moving to selling for my favorite subcontractor. I do intend to do more subcontracting for security companies. I see a real need for someone to just do a quality installation making start-up and servicing much easier for the integrator. Where I worked and what I'm finding most is the guy's that are factory certified and good at programming the system don't want to install or pull cable. I agree with the comment about getting slow and keeping the work in house. Unfortunately it seems to just make the integrator less money and the subcontractor out in the cold making no money. Not sure how to combat that other than to diversify. Our main work is data infrastructure so we are able to ride out most downturns in security. The reason we are so successful in data is the standards and doing things the same over and over. All the guys get really good and are efficient. In security all the systems and companies are so different on how they want things installed it’s very hard to become good at one thing. I hope to bring some commonality to the installs so we can become more efficient and make more money. The key to success is like anywhere else better installs in our case for less money.

Not sure where your focus is however my company performed subcontracting work for ADT and Pro1 on the alarm side. The only reason we did well was my son I trained was exceptionally fast. His production output was above average with minimal call backs.

You need to have a large investment of cash and have the market to support your effort most companies pay net 30 or later. We knew our competition and our contract installation price was high per piece/job that is very important. Installation managers if they can as mentioned will in some cases throw you under the bus. They did when we took on installation of residential CCTV which we fought for and ruined our relationship consequently.

We closed down our sub work as it proved to be a 6 day week event and the cost factor on us to high a price to pay even though good money was there. It generates a lot of paper work if not signed or turned in on time no pay. We had 130 monitored accounts of ours to service which was not considered in the initial thinking.

Provided you're a licensed security integrator you could focus on banking companies like Diebold and service contracts. Grocery and department stores require lots of maintenance on the camera systems. There are great opportunities for dealer programs with national alarm companies where you sell their contracts worth a mention.