When you are looking to start or grow a pool business, you have two paths to building your team. First, you can be lean and have a minimalist team that leverages subcontractors. Or, you expand your internal resources and hire in-house talent.
Both options are compelling and many large pool companies can attest that your success is not limited based on your choice. However, depending on your situation, one method can be better or worse for a period of time.
In this article, we’ll identify the pros and cons of each method. We will also make a recommendation for you based on some key factors if you’re starting or growing a pool business. As always, get in touch if you have any lingering questions.
Benefits of a Subcontractor Model
First and foremost, nearly everyone sees the monetary benefit with using mostly subcontractors: You have less overhead costs. You don’t need to offer large benefit packages and aren’t on the hook for fixed salaries when sales are low.
Next, you can adapt fast. Being lean, you can survive when times are tough and scale up quickly when times are good. In markets where subcontractors are widely available, you can seemingly sell an infinite amount of pools, and you don’t need to worry about being too busy to build them.
Thirdly, your company can offer a diverse number of services in and around pools. Being able to offer complex, infinity-edge designs and incorporate additional features, such as an outdoor kitchen or pergola, become entirely possible. Then, you can charge an extra percentage by marking up the service.
Lastly, it decreases the barrier for innovation and experimentation. If you see a competitor offering a new style or add-on, you can quickly offer the same service just by hiring a specialist.
Downside of a Subcontractor Model
Of course, the subcontractor model does have some disadvantages, too.
For starters, applying this model makes it harder to differentiate yourself from the competition. In areas where pool companies are composed of subcontractors, every company appears to offer the exact same product.
Also, if a subcontractor makes a mistake, it is not their reputation that suffers. You must honor defects and wrangle subcontractors to come back and fix their work.
Finally, there is no guarantee of efficient scheduling or subcontractor reliability. With your own employees, you set the priority of which customer gets their pool constructed when. However, if a subcontractor gets offered a better paying job, they might not show up.
Benefits of an In-house Model
An in-house model comes with a lot more control.
First, your quality is entirely controlled by the standards you set — everything from the materials you use to the people that build your end product. This may seem less important, but you even have a degree of control over the customer service experience. Subcontractors might do fine work, but they probably aren’t invested in answering a customer’s questions or taking care of their property the way you would want.
After quality, you also can stay better organized and honor your word. When scheduling a project or task, you can confidently plan out each phase to run the way you want it. If a customer is high priority, you can move them along quickly because you know all of your available resources.
Additionally, and partially circumstantial, you can actually become more profitable due to economies of scale. If you’re able to plan several months or even a full season in advance, you can get large discounts from manufacturers and control your costs, as well as price, better.
Downside of an In-house Model
Naturally, the in-house model also comes with its fair share of disadvantages. To begin, you will need to have more money in reserves to start this endeavor and to continue paying out benefits and salaries throughout your journey. Moreover, you are responsible for keeping your talent well-trained and capable of ever-changing best practices and new design skills.
Truthfully, the more daunting piece of this model is still the investment it requires. Unless you are a multimillionaire, even if you desire to have an in-house model, you will likely need to start with subcontractors and slowly acquire various construction phases worth of talent.
How to Decide Between a Subcontractor or In-house Business Model
The first factor to consider is likely something you can’t even control. This is the location of where you wish to set up your pool business. The part of the country that you reside in has a big effect on whether or not you should use subcontractors.
Areas of high pool demand and competition are favorable for subcontractors, whereas in areas where pool builder talent is scarce, in-house employees are better. This is why we typically see largely subcontractor models in Florida, Texas and Arizona. Likewise, the more notable in-house pool builders are seen in parts like New England.
Next up comes capital investment. It’s more common for larger companies to consider using in-house talent to build their pools. When reputation matters a lot, pool business owners tend to consider increasing the amount of things they can control, such as their construction teams.
Ultimately, we think that the best way to run a pool company is by starting with a small yet talented team. For this, everyone in your “crew” would need to understand each phase of pool construction. Then, as your company becomes more popular, you can recruit a second team of “do-it-alls” that would complement your first crew. This would allow you to scale up, but not have any excess employees when times get tough because everyone can do everything.
Kelly Michael Skelton has been in the pool industry since 2014, most notably at SSG Pools outside of Boston, and he has managed content and media operations across numerous industries. Along with teammate Scott Pancake, Kelly runs Backyard Assist, a media site that helps homeowners tackle questions and challenges in their backyard.
This article first appeared in the November 2022 issue of AQUA Magazine — the top resource for retailers, builders and service pros in the pool and spa industry. Subscriptions to the print magazine are free to all industry professionals. Click here to subscribe.