<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=351166518341071&amp;ev=PageView&amp;noscript=1">

Why Your Trade-Based Business Needs to Change it’s Hiring Policies Immediately

Apr 16, 2019 10:52:00 AM / by Lee Goudzwaard-Vaught posted in small business advice, landscaping accounting, construction accounting

We’re in the midst of a construction boom. That’s great news for any trade-based businesses like construction companies, electricians, or plumbers, but here’s the thing -- finding the talent to match the demand during these booms can be a huge challenge for any employer. There are just so many variables to weigh out. How many people can you employ during these booms? Can you keep a consistent level of quality in your work? How will these extra employees affect your bottom line once the boom inevitably dries up?

A lot of these companies (especially smaller ones) get around this problem by hiring subcontractors who they can hire once, but don’t have to pay when there isn’t more work to be found. A subcontractor can seem like an easy solution because they’re typically cheap, they get a specific job done, and you don’t have to worry about providing benefits for them. Here’s the thing: the over-use of subcontractors is definitely hurting your business.

There is Too Much Risk involved with Subcontracting Your Work

We get that some jobs may require a sub-contractor or two, but using this as your main hiring policy is hurting your business in a number of ways. First, you’re not getting the most skilled trades-people to work for your business, and there is little to no recourse for you if they do a poor job.

Take the idea of a commercial painter -- you subcontract someone to paint rooms for you, only to realize after the fact that they did a bad job and the work was sub-par. This is a terrible outcome and the client won’t accept it. The subcontractor will defend their work (and won’t give the money back). Which means you’ll lose more time and money fixing their shoddy work. Not all subcontractors are like this, of course, but it does make sense. Without benefits or a steady income from their employer, these subcontractors don’t take ownership over their work and don’t feel responsible for the finished product.

The worst part of this is how it only reflects poorly on the business you do with your clients. They don’t see the fact that you hired a bad subcontractor, all they see is your company’s name attached to a poor product or service. In a market where reputation and word-of-mouth can be the difference between success and failure, this is just too great a risk to take.

You Won’t Be Able to Grow When You Need To Because, Everyone Good is Already Gone

Business doesn’t happen in a vacuum, and if you aren’t giving jobs to the best people, then your competitors are. This can create an unforeseen hiring problem for your business during a time when they should be growing. Not hiring full-time (or even part-time) employees means that you may not be able to grow your business because when you get a job you won’t be able to find enough good workers to take advantage of those opportunities.

The companies that grow are the ones who are hiring W2 employees, the ones who can provide benefits and security. Yes, this is more risky for your company, but that risk will pay off in both the long and short term with more and better business.

Why Knowing Your Financials is Key to Good Hiring Practices

As always, it’s important to have your financials in order before you make these new hires. You need to know exactly how much you can expand without jeopardizing what you have, so as to minimize those risks. That’s why it’s so important to have a good payroll service and accounting firm. Not only will they be able to help you formulate a plan for your business and help you decide how much you can grow, but you’ll also never have to worry about your people getting paid on-time. They stay paid and happy -- and so do you.

Instead, you can use your extra time to create better opportunities for your business and focus on finding the best jobs during the boom market. With just a little help and some timely planning, your business can grow the way you want it to -- and you’ll never have to apologize for another subcontractor’s work ever again.

Lee Goudzwaard-Vaught

Written by Lee Goudzwaard-Vaught

Client Development Manager