[johnkeegan]

Would some employees be a greater benefit to our company as a subcontractor than as an employee? I don't offer this question in the typical sense, i.e. that I'm trying to avoid the costs of worker's comp./ UI/ matching SS-Medicare/ benefits etc. I mean that we actually encourage them to start a legitimate business and we hire them to do "specialty" work that they are good at (and seem to enjoy). And, I would expect they would work for others as well.
I mention this because sometimes we have a long tenured employee that gets frustrated by the lack of advancement in a small company (we tend to have short "ladders" ) and eventually this frustration spills out into the workplace and burdens everyone.
They may be hard working and detail-oriented but they believe their tenure entitles them to be constantly treated as priveleged and above other equally hard working employees. In a small company of 3 or 4 full-time employess this creates problems.
But as a sub they could feel like "King of the Hill" everyday (without burdening the rest of us). They could be free of the constraints of being an employee of a small company and my company could utilize their expertise and skills, without the baggage.
Of course, they would have to agree to not "steal" my existing customers and have their own insurance etc. And eventuall they (or I) would outgrow the arrangement. I might add to that there would be very little start up costs at their end and they can easily work alone. But it might be a way to honor their years of hard work and ease them into their own business. As a business owner myself, I don't begrudge anyone that and I don't fear the competition because I've got all the work I can handle.

[Stonehenge]

Hmmm..... I'm conflicted about that idea. If they jumped out of the gate really quickly, you might be out of the loop in getting services from this employee.

On the other side, the employee would get a taste of the "real world", having to sell his own work, bid, have to deal with cash flows and customers...might decide he had it pretty good with you after all, and ask to return, but a bit more humble.

Hmm... Interesting. Not sure where I'd fall on that one.

[ianc]

I closed the payroll about 7 years ago and have most of my old employees are now sub-contracting for me. Within the last 2 years have sold off most if not all of my trucks and equipment, The difference now is that I know with certainty before I start a project what I can make because the intangible LABOUR cost has been defined (nailed)

Advantages
-absolutely nails your labour costs
-cost gremlins are slowly diminishing (trucks/fuel/fuel)
-can bring in specialty companies with the right fuel for site-work and base-prep and then package a defined task such as eg. Grade/Lay/Cut/Tamp/Sand a paver driveway, this way your Ex-Employee/SubContractor only requires small tools (Tamper/Saw) to complete the project.
-I encouraged one Ex-Emp/Sub to buy a roll-off truck and offered a letter to his bank explaining the how much work I had for him and the truck.
-also have one guy that purchased a fully equipped Kubota tractor/backhoe, I pay him $60.00 when he is operating the machine and $18.00 when he is out of the machine working, I get a bill every 2 week period, Hired him for 8 weeks in the spring and this fall for 11 weeks, no wasteful hours only production
-the Ex-Emp/Sub like the fact that I have the materials onsite ready for them, and they earn more $$ with less administration headaches and quickly realize they have a good deal taking on my projects and can earn better then their own projects (because they are only starting out)



Disadvantages:
-once they get themselves established they will have more of their own projects and you take a back seat to their other clients
-in Canada you still require that your sub-contractors comply with Workers Comp (WSIB), and can withhold $$ until the documentation (clearance) is presented, Otherwise you being the General contractor are on the hook to the WSIB folks for the labour portion
-takes some time to understand that you are writing larger cheques to these Ex-Emp/Sub but the fuel/equiptment/smalltools/employes are now there headaches.
-have to spend time in packaging these tasks into nice tight clean projects

~ian