Should you subcontract?

When you’ve got too much work on your plate, you may start thinking about farming out work to subcontractors. It’s tempting to look at the work available and consider that you could still mark it up and make money for doing nothing. However, the realities of hiring subcontractors should not be taken lightly.

In hiring subcontractors, you become a project manager. You’ll be entrusting projects to someone other than yourself. If you’ve got specialized knowledge or you thrive on control, this may be challenging for you. It can also be a problem if the subcontractors you hire don’t deliver as promised. At the end of the day, you’re still the one responsible for meeting your client’s contractual obligations.

You’ll also need to pay your subcontractors. If your client fails to pay you — on time or at all — you’ll still need to write cheques to the people doing work for you. Make sure you have money in the bank — or a good line of credit — or that you’ve established pay timelines that allow you to have money in hand before you pay your subcontractors. Don’t try to squeeze your subcontractors by delaying payment. They may refuse to deliver projects until paid — and they wouldn’t be in the wrong.

In hiring subcontractors, you’ll need to spend administrative and project management time. You’ll be dealing with both the client and your subcontractors. Be sure to mark up your subcontractors’ time so that you cover this.

That being said, hiring subcontractors may be the smartest thing you could ever do. Just don’t assume it’s easy street.

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