Sounds like you are doing all the right things and it is paying off. You mentioned that you work with graphic designers for the artsy part. Could you offer any advice on finding the right partners for the parts you need to subcontract? Also how do you handle the financial side--do you pay them, and include their fees in your bill to the end client? Now that you have grown your business to where you no longer have *deadbeat*clients I guess the worry about not getting paid and being left responsible for the designers bill is not a problem.
At the moment, our deal with all of our subcontractors is that they get paid when we get paid. If we get money up front, they get money up front.
It's not easy to convince someone to work that way, but we started with a few good people who were just starting out and willing to take those terms and it worked out for us (and for them). One thing I wanted to do was pay them a little more since they were taking as much risk as us. So we asked them to add 10% to 15% to their standard rates.
As far as our clients are concerned, we do everything in-house. So their bill reflects the final price we negotiated with them. And we pay our contractors once we receive payment from the client and we expense the cost. I'm not really a "financial person", so we have a book keeper to handle the taxes and stuff. But the system works well for us.
Occasionally, we run into a situation where we have to pay a contractor a significant amount up front for a project (specialized contractors we've never used previously). When that happens, we pass that along to the client.
I should mention that we never "stiff" a contractor. On the few occasions where a client has "skipped town", we have paid the contractor off from other work and we write it off as a loss. Occasionally, it does happen. But it's a rarity for us now. There have been a few incidents where we (and a contractor) have had to wait 2-3 months for final payment. But again, that's a rarity. And we always try to shoulder that ourselves as much as we can. The last thing I want to do is burn a bridge with a good contractor.
One thing I HIGHLY recommend is that you pick up a copy of "Business Contracts for Dummies". It includes a CDROM with several useful contracts that you can modify and use. We NEVER do any business without a signed contract. It also helps provide a larger sense of "professionalism" when you present the contract to your client. They feel like you not only know what you're doing in your expert field, but also you know how to run a business and you'll be around to support them.
--Dave
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