It's a debate that has raged since installed sales began to take hold in our industry: Do I use subcontractors as installers or should I hire an in-house crew and start from scratch? As complicated as it may seem, the decision really boils down to two things: economics and the size of your program.
Let's start with economics. If you're in the start-up phase of your installed operation, it is far less expensive to use subcontracted labor. You don't take the HR hit with insurance, taxes, and related benefits, and you can begin the program without any unnecessary overhead for tools and equipment. Another benefit is that by using subs for your labor force you can look closely at their individual work, work ethic, quality control, and attitude toward your customers—without making the investment you would in full-time employees. If, for example, you immediately hire an in-house install crew and for whatever reason they don't work out—their quality is poor, their work ethic is lacking (leaving the job early, coming in late, etc.), or they don't follow up with your customers—you're out the cost of recruiting, hiring, and equipping the crew. And now you get to start over.
On the other hand, if you can identify three or four crews that will work with you on an occasional basis, you can monitor them closely for all the above issues. Then when the time is right to hire an in-house crew—you know which one to go after.
And how will you know when the time is right? When you've got enough steady business to keep a crew busy for 50 weeks a year—it's time. Even better, when you anticipate that happening, hire then. Don't wait too long or you may end up over-promising on work and under-delivering on service. My opinion is that if you control the labor, you control the quality of the product you sell. You will also provide a higher level of service to your customer by having the labor accountable to you for the quality of the job.
If you're not staffed fully when the time comes, your internal customer service could suffer as well. Your salespeople will grow discouraged at not having sufficient labor to take care of their customers and will shy away from selling your installed service.
I'm not sure that the products you offer have any bearing on your labor decision. OK, maybe cabinet installs are more easily facilitated with subcontractors initially than internal labor because of the complexity and frequency of the jobs, but products like siding, insulation, framing, windows, and doors, all can be installed equally well by subs as by employee installers. In either case, you should be monitoring the work for quality control.
The debate over whether to use subcontractors or in-house installers will most likely rage on forever. Some have even found a way to balance the advantages of both, including a number of mature installed sales operations I know that have a very strong employee installer base and that during the busy times of the year will turn to subs to help with the overflow.
The main thing to remember is that the customers you serve really don't care, as long as you get the jobs done for them in a timely manner, on or under budget, and on time. That's really the core issue—how your individual yard can be most efficient and produce the best product for your customers.
Mike Butts is director of installation services for United Building Centers. 507.457.8453. E-mail: mike.butts@unitedbuilding centers.com