Advice on paying subcontractors

[Coel]

Hello,

I am in the process of setting up my first business (an online one) acting as a nationwide broker/agent.
I will be charging the business doing the work an introduction fee / commission.

I wanted to know if the following option was viable.

The idea would be to have the customer pay my introduction fee upfront on my website.
The customer would then pay the remaining balance to the business doing the work directly, once the job had been done.

Do I need to be aware of any pitfalls / legal responsibilities as I am trying to remove myself from any liabilities if there is any damage done by the subcontractor.

Would I need contracts in place and if so, what subjects would I need to cover.

Thanks for any help!

 

[Mr D]

You are charging the business doing the work and you are charging the customer up front too?

 

[Newchodge]

What kind of work are you talking about? Is it in the construction industry?

And absolutely yes, whatever model you are using you need contracts.

 

[Mark T Jones]

You would need a set T and Cs that clearly define your role - presumably it’s a finders fee and you are introduction only?

I’m struggling to think of a situation where I personally would pay a fee to be put in touch with a trade, but if your research shows there is a market for it then go for it!

 

[Coel]

Hi @Mr D - For example:

The business charges £100 for a job to be done.
I will take 10% as a commission, so £10.

When the customer is about to pay they would see something like.
"£10 deposit to be paid today.
The remaining balance of £90 to be paid at completion."

They would then pay the business the remaining £90 directly.

Is this viable?

 

[Coel]

What kind of work are you talking about? Is it in the construction industry?

And absolutely yes, whatever model you are using you need contracts.

Hi @Newchodge Thanks for the reply.
The subcontractors would be offering collections of rubbish and garden waste.

Can you tell me what would need to be in a contract if I were to do it this way?

 

[Newchodge]

Your contract would have to cover everything that is in the relationships between you and the workers, who won't be sub-contractors, as then they would be contracting to do work for you.

You would also need a contract between you and the customer, so that they know exactly what they are getting for their money - which will be a bare introduction with no undertaking that the workers will be licensed, efficient or anything else.

Given that there are numerous people out there offering garden and rubbish disposal and they are easy to find, why do you think people will pay you a finder's fee? Especially if you will not be responsible for the people you find?

 

[Mr D]

Hi @Mr D - For example:

The business charges £100 for a job to be done.
I will take 10% as a commission, so £10.

When the customer is about to pay they would see something like.
"£10 deposit to be paid today.
The remaining balance of £90 to be paid at completion."

They would then pay the business the remaining £90 directly.

Is this viable?

And the contractors also pay you a commission for the introduction?

By the sound of it that's the only commission the business would pay - the customer and the business would be able to deal directly after that.

I'm struggling to see how you'd get business to start. Besides being able to find such businesses on the internet and in local free papers, there's newsagents windows and personal recommendations by friends. What need for an introduction that adds to the cost for the customer and takes from the business?

 

[mattk]

Ask yourself this question. When you have employed a handyman (electrician, plumber, decorators etc.) have you ever had to pay a deposit or do you pay the full amount on completion?

Your suggestion does seem a strange way of doing things. I certainly wouldn't pay a deposit for a handyman type job.

I think your realistic options are taking the full payment and then give 90% to the supplier or allow the supplier to take the full payment and then give you your commission.

 

[Prime81]

I don't want to put your idea down but me and my brothers and sisters just go on Facebook and ask people for quotes for things like rubbish removal, painters etc. Take some photos and you can get a price over the internet with people recommending workers they have used.

 

[JEREMY HAWKE]

Even old skol people like me take to social media of we dont have anybody that is available from the normal people I know
I cant see who would use this

 

[deanpunchard]

Hello,

I am in the process of setting up my first business (an online one) acting as a nationwide broker/agent.
I will be charging the business doing the work an introduction fee / commission.

I wanted to know if the following option was viable.

The idea would be to have the customer pay my introduction fee upfront on my website.
The customer would then pay the remaining balance to the business doing the work directly, once the job had been done.

Do I need to be aware of any pitfalls / legal responsibilities as I am trying to remove myself from any liabilities if there is any damage done by the subcontractor.

Would I need contracts in place and if so, what subjects would I need to cover.

Thanks for any help!

Perhaps I'm confused with your terminology.

So what you want to do is setup a waste collection services, where you are "the website" and you then subcontract the work out?

If so, why not simply do as others do. Get customers to submit a job, you send a price back. The customer accepts (queue the contact), the work gets done by your sub contractors, and the customer pays you. (You could have customers pay upfront, which is fine, but splitting the invoice is a huge inconvenience for someone paying £100.)

You then pay your subcontractor 90%.

That's all between you and your customers.

For you and your subcontractors you need to remove the end client completely out of this. They don't care, so long as the job gets done. So how you pay them (weekly, monthly, per job), recruit them (do they need to pay to be a sub contractor, or do you pay them?) is up to you and your contract.
You'll also want to think about how your business is fronted. Do the sub contractors need to wear your business clothing? Or are you clear from the go that it's all sub'd out? What's to stop the sub contractors handing out their own business cards, and undercutting you?

 

[Newchodge]

So what you want to do is setup a waste collection services, where you are "the website" and you then subcontract the work out?

I think you are missing out the part where the Op wants to have no responsibility for any problems. What he wants is to take a fee for telling potential customers which waste disposal contractor to use.

 

[estwig]

Let's not mince it around, it's a daft idea that hasn't got any legs!

 

[Chris Ashdown]

How are the quotes for the work being done
Do you look at the work and make a quote and then find a sub contractor who will do it for you at that price, or does he contact the customer to make a quote and then cut you out

Alternatively you hire them and become responsible for their PAYA and also you NI contributions and pension arrangements

Wh guarantees the work and ensures its not dropped in some layby

 

[Karllacey]

Guys, I do not think you are right here at all saying it is a daft idea. Justeat, Insurance Brokers, Football agents, even Yell.com...all the same thing.

He is acting as an intemediary for the clients and customers, no different from what any of those above jobs I mentioned.

This aside one of the posters made very relevant comments which is Deanpunchard. You do need to get your proposal right in your head, there is also the contractual agreement between you and the contractor and then there is the NDA between you and the contractor. I suspect they would also need to complete a pre-qual with you and provide you with insurances (like a letting agent would). I think your best bet would be to follow the letting agent model - there is a however...

And it is a massive however which you need to consider:

You really are up against competitors such as Checkatrade, Ratedpeople, mybuilder and whatever other things are out there. There are other factors such as getting business, do you sit on your hands and wait for it? or do you door knock. If so, is it worth it taking 10% off the top of a £40.00 job (sorry just a guess)

Food for thought, it needs to be financially viable proposition.

 

[estwig]

Guys, I do not think you are right here at all saying it is a daft idea. Justeat, Insurance Brokers, Football agents, even Yell.com...all the same thing.

No they re not the same, two are directories and two are brokers, completely different.

The op is proposing some kind of mish-mash of the two, for rubbish collection of all things!