by Mike Walter – “Multi-Op Corner”
Recently on this website, Ric Hansen wrote a piece entitled “Sub-Contracting Doesn’t Have to be a Nightmare.” I’d like to use this space to refute some of his points.
Mr, Hansen and I both write for this great blog site as well as for The Disc Jockey News, and I respect his opinions and certainly the thoughtful manner in which he expresses them.
But in this situation, I think he’s just got it all wrong. So, when Mr. Hansen starts his article with: “Call me crazy, but I cannot figure out why anyone would want to be a multi-op DJ company” I say: ok Ric if you insist: “You’re crazy.”
We Agree On This Point
Mr. Hansen’s first point is about how expensive buying and maintaining gear can be. We actually agree on that. It’s one of the reasons I encourage my staff to buy their own equipment. Not only do I not have the cash outlay for every new DJ, but I know they’ll maintain their gear better than they would if it was company owned equipment. Plus, it enables them to make more money which I believe in the long run will keep them on staff. So on that, I’m with you sir.
Next, Mr. Hansen attempts to use the same argument on talent. How expensive it is to pay employees and their taxes etc. This is why a good business plan is important. Factoring in not just what the employee will make but what it will cost you to pay them (two different figures). Plus in my business plan, there is a section for recruiting and training. These are responsibilities that are allotted for (and paid for). Any good company has this.
But Not On This One
But Mr. Hansen ends this section with a horrible assumption that is the main reason I sat down to write this blog today. He says: “Then, ultimately, they become great performers and decide to buy some gear and go on their own, only to leave you to start all over again.” Whoa there big fella! That’s a huge leap. That’s like arguing against marriage because your spouse is just going to leave you anyway. Do divorces happen? Sure. But not all the time. And certainly not with enough regularity that it should dismiss the whole institution of marriage. And I’ll make the same point about DJs. Do some up and leave you after you’ve put in all the hard work of training? Sure. But enough stay to make it worthwhile for both company and DJ. My staff is a perfect example and I know many other Multi-Ops that would make the same argument.
The “Big” Debate
Mr. Hansen then goes on to say that finding existing talent (sub-contractors) is therefore the best way to go. He refutes all the “horror stories” about sub-contractors by blaming the screening process. I’ll give him that because my strongest argument against using subs has nothing to do with their ethics and whether or not they’ll steal your clients or hand out their own business cards at your events. Forget about those scenarios (though they do indeed exist).
My strongest argument against using sub-contractors is that your company is not creating its own unique brand within your market. If a DJ who goes out under your company name can also be seen the following weekend under another company name (including their own) then what’s so special about you? You’ve become a commodity and you’ll find yourself competing strictly on price and not on talent.
Tread Carefully Here
Mr. Hansen goes on to make some excellent points about how to treat sub-contractors. I use many of the same guidelines treating my own employees (with respect, pay them on-time etc). But in this section he actually leaves a little landmine for himself when he suggests: “Give clear (written) direction and expectations.” I’ve done a fair amount of research about what the IRS uses to define what a sub-contractor is (vs an employee) and following this suggestion would actually leave you woefully exposed.
The IRS has a whole page about this on their website but I’ll extract the important points for you just in case you’re too paranoid to even click on the IRS’s website:
A worker is an employee when the business has the right to direct and control the worker.
An employee is generally subject to the business’s instructions about when, where, and how to work.
To his credit Mr. Hansen advises the reader to “know and understand the legal guidelines for sub-contracting.”
My advice to anyone looking to build a business for the long term, with brand recognition in your area, is to take the slower, harder path of finding your own talent and training them to best represent you. If you need to cover a gig and want to take one more deposit on a day, go ahead and use a sub-contractor that you can trust. It’s not a horrible idea. It’s just not the best way to create a company with a specific reputation for exclusive talent.