Subcontractors or Employees: What’s The Better Model?

Jacob Toler thought he’d found the smarter way to scale: strip out the overhead, rely on subcontractors and keep the business flexible.

For a while, it looked like the right move.

Then the cracks started to show.

Quality and scheduling became harder to control. Customer reviews were scarce. The company expanded into services it hadn’t mastered. Then a serious mistake on a project contributed to a 20,000–25,000 hit, and the business eventually reached a $200,000 net loss.

In this episode of Contractor Evolution, Jacob walks Danny Kerr through how he rebuilt the company, transitioned to in-house crews and created a business that ultimately gave him more control over quality, scheduling and profitability.

But the lesson isn’t that every contractor should ditch their subs. It’s that your staffing model needs to support the company you’re trying to build.

What Contractors Can Learn From Jacob’s Experience

• Choose your labor model based on your vision, and not what looks easiest. Jacob originally liked subcontracting because it meant less overhead and more flexibility. But it didn’t give him the control he wanted over the customer experience. Before choosing employees, subs or a hybrid model, get clear on the brand you’re trying to build.
• Don’t scale something that isn’t working yet. When Red Branch struggled, Jacob initially responded by adding landscaping, pool building and other services. He eventually did the opposite: narrowed the company back down to its core outdoor living and carpentry offering.
• Your field team is your brand. Bringing production in-house gave Red Branch more control over how projects were delivered. Quality improved, schedules became more predictable and positive customer reviews increased.
• Treat recruiting like a system. Jacob built a repeatable hiring funnel: roughly 100 candidates could become 20 shortlisted applicants, 10 phone calls, four or five interviews and ultimately one hire. Instead of waiting for the perfect carpenter to appear, Red Branch keeps its recruiting pipeline full.
• Look beyond the simple subs vs. employees debate. Ask whether customers are happy, whether the business is profitable, whether the office and field are connected and whether the people on site consistently deliver your brand promise.

Jacob’s story isn’t a blueprint every contractor should copy. It’s a reminder to think critically about whether the way you’ve structured your business can actually take you where you want to go.

Watch the full episode to hear how Jacob made the transition that’s best for him. And if you’re trying to build the systems, team and structure your contracting business needs to scale, book a complimentary discovery call with Breakthrough Academy.