So my line of work falls in between IT/Real Estate

  Currently been approached by a large multi national company that wants to hire me as a sub contractor. Since its new (this dept & me) they asked me if I could grow with them. From the looks of it we are only a team of me + 3, and they want to me to grow with them prolly hire 20-30 people in the next 6-8 months. This seriously is a vertical growth model and will scale. Whats the arfcom suggestion from you experienced business owners.

Can you elaborate?

They want you to hire 20-30 for your company to work exclusively for them, or you hire 20-30 employees for them and you manage it?

And what is "between IT/real estate?

Those 2 things have almost nothing to do with each other so a job in between could be nursing, forestry, or baking? Or are you saying that you do both IT work and real estate work?

I will be a sub contractor for all their jobs/projects. So in order to handle those projects, I will have to hire that many people. And its more like Intelligent buildings etc (fiber optics/sensors/power control/phone systems)

Have them hire you and make you a manager.

This sounds like a great way for you to shoulder the legal and financial problems if they fail and cannot support you. Hiring 20 to 30 people in under a year and then having to fire them all if things don't work out for your own single customer is a small business HR nightmare.

As fucked up as it sounds. They can't pay an average salary and hire me. But they will happily pay my invoice even if its 5x the salary  they would be paying, guess an employee becomes a liability but a contractor is on need basis only and more convenient. I am not worried about things going south as this is a multibillion dollar company with extremely deep pockets. Maybe arfcoms favourite

You're answering your own question. They don't want the liability of hiring one single person... but they want you to take the liability of hiring g 20 or 30 people. What does this tell you about their long term confidence in what they are asking you to do?

That's what I figured.

They have deep pockets because they get guys like you to shoulder the overhead

I want to tell you a couple little stories. I'm not saying not to do it, but keep these stories in mind.

1. I managed a dairy service and construction company in texas, we also had a branch in kansas. When we opened in texas, the area was young. A family owned dairy farm from out of state bought 2 spec dairies we built and said they would grow considerably. They would be the largest milk producer in the world within 10 years.

They spent upwards of 800 million dollars on new dairies including the largest single site facility in the world. That single site dairy milks 42,000 cows in 5 parlors, along with 5,000 calves and probably 25,000 heifers.

We grew with them. At one point we were doing about 2 to 3 million a year in construction for them and about 300,000 a month in repairs/upgrades/supplies. The whole time we are trying to pick up more business (they were about 50% of our revenue) but they constantly question if we can handle their next job bc we are doing other things also. On top of that they tell dairies they will fire us if they hire us, bc they need to come first.

They decided to go direct and handle things in house. We found out when their first truck of chemical showed up. No notice, nothing. We shut down and I moved to kansas to run our kansas dealership. We told them we were going to have to shut down and their response was "that happens in business".

2. I moved to manage our original dealership in kansas. We had a big (not as big as the tx dairy) customer that put us in the same boat. We had a contract with them for 300k a month. 3 of our subs went out and took the account from us and went to work for them as employees. The dairy tore up the contract and said "meh, sue us". Suing them would be instant death. No other customer will touch you if you sued one, bc they want the option to tear up a contract.

My boss tried to sell me the business at many points in texas and kansas but I didn't believe the business had any value bc of dead inventory and the fact that it relies on about 12 customers to function. Our relationship became toxic and he fired me over it. 6 customers fired them when I left as service quality decreased (i'm not "that guy" that thinks they can't live without me, but that appears to be the case). The 2 best techs left also.

I went to work for that big dairy that tore up the contract 3 years before. I did the same thing to their chemical supplier that was done to me in texas. I went direct to their vendors and they lost 250k a month in sales. So they cut a deal with one of the 2 chemical vendors I used at my last company and took 3 more dairies from my old company.

My new boss wants to start doing work for other dairies now and I also thought about starting my own company when I got fired. If I went head to head with them for 12 months they'd be finished. I am partner in multiple other businesses so I don't have the time or the hunger to do that. For the first time in the 20 years i've been around that company (my dad was there 10 years, I was there 9) I don't think they are going to make it. They are down to less than 12 people. Based on what i know about their sales, i'd be shocked if they don't have negative cashflow of 40k a month.

On top of the valuation issues, my boss at the old company also fired me bc I was adamant that this behavior was reckless and I had a new business model to help us diversify and would have made us 40-60k a month on the bottom line more than our core business. When he fired me, I implemented that model (on limited scale due to capital constraints) and i'm doing very well.

That's my story about putting all your eggs in one basket. There is always another mean kid want to stomp the shit out of those eggs.

If you do it, make sure you have no negative equity in infrastructure and you're making profit commensurate with the truly enormous risk of depending on 1 person. Some pencil pusher in an office owns your soul at that point. That pencil pusher determines whether you keep your house. He determines whether you send your kids to college. He determines whether you're marriage fails. He determines whether you can retire one day or you will die penniless.

Some guys in the oil field have made millions in those situations, others have lost everything. I hope it works out for you.

Don't worry, you don't know him. You never will. But he owns you. You'll think about that nameless man every night when you sleep.

I will NEVER put myself in a position. I saw the writing on the wall at my last job for years. I ran the company and was the face. I plowed every dime I could into my investments so when I got fired it wouldn't matter. I literally would get a big bonus for 20 or 30k a few times a year and would invest every dime. I drove an old beater and had a very modest house that cost me 250 a month.  

I'll work a few more years at my new job then i'm done. I went under once at 20 years old. I hope that never happens to you. Between what I invested and time to dig out of the hole, I lost 10 years there. I had saved and operated a business since I was 12. At 22 I dug out to the point that I didn't have a negative net worth. I was worth 0 dollars. Just like when I was 12. That reality hurt. I nearly killed myself. I was on the fast track and I lost it all.


EDIT - Another side note. That large dairy in texas wanted a friend of mine to spend 6 million expanding their heifer yard even though the dairy planned on quitting him within 12 months. He was a lawyer by trade and very sharp so he didn't do it. He saw exactly what was happening.

Sorry to ramble.

On a side note, I used to hire a LOT of subs in construction.

I had as many as 20+ guys working for us at times, subs but they worked solely for us. Often times we had more subs than employees.

Why?

Work is slow? Cut em loose. No biggie. Then I didn't have to liquidate tools, pickups, cut office staff that handled them, cut managers that handled them. Made it very very very easy to let people go with 0 effect on the company.

I don't like using subs but my boss got to the point that he wouldn't even hire employees other than in the office, everyone else he wanted as subs if possible. He would have the whole company be subs if he could.

Swear to god, the millionth time thank you. Afrcom has never disappointed me. Thanks a ton for the insight. Now just to figure out the right way to go around doing it. And yes this is just one egg in the basket.

A few things to think about. Do your business model based on leased pickups,  cheap tools as much as possible,  lease any high dollar tools.

Anything you buy needs to be able to be paid off quicker than it depreciates and still make a cash profit after servicing debt. At the end if you liquidate you want to walk away even with the bank not in the negative.

That's the only way to make it work.  Never get in the spot where you say "if this lasts another _________ i'll do well". It should be "if it ends now,  i did well".

When i wanted to diversify, my boss borrowed another 1.8 million to try and get more of the shitty low, margin slave work we already had. It failed and sales decreases. He hit an extended market downturn and changing local market with triple the debt. That's a position you don't want be in. We had less debt back when we had 3 locations and 80 employees.  Now its 1 location and 15 employees.

Honestly, my work evolves around deployment so I just have to provide expertise and labor. My plan is to setup inhouse sales team and bring my own business and in the long run become a reseller instead of depending on them or at their mercy for projects.

@Fella

You seriously have some life experiences. I feel like such a child.

And Fella is a rather young guy. He's had quite a few life lessons early on.

I wont delve into it too far as this is a financial forum but i would do things differently if i had to go back. I had no childhood at all and no social life for years. I was an honor student and scored over 30 composite on the act test but while my buddies where in college i was living by myself in a camper in bumfuck new mexico, texas, etc managing construction sites. I worked 50 on 12 off on a regular basic. 140 hour weeks. 3 or 400 days in a row until my health gave out.

I worked harder instead of smarter until i got married. I gave up everything for my career. I didnt really know any different. My dad was very harsh so i grew up thinking 7 days a week of work and 4 hours of sleep a night was not only normal but the bare minimum you could do to exist as a human.

I can live like a baller in my rural area but ill probably never have a family and my first marriage failed in epic fashion. All my friends are busy with their family stuff and im socially awkward with people my own age so i struggle to meet new people.

Everything you do has a price. I dont really have regrets but moderation could have helped me.

I can very much relate to your story. I owe you drinks whenever I am up in KS or you come down to DFW. Hit me up brother.

Ill keep you in mind. I was planning on going to dfw next year for one of those nascar driving experience days. Im not into NASCAR but i love fast stuff.