Have contracts in place when selling installed decks
If you’re a retailer who is thinking of going into the installed sales side of decks, there are really two ways you can do it. You can hire your own employees to build the decks, or you can work with subcontractors. I’ve found that a lot of lumber dealers are working with subcontractors to offer installed deck sales.
You probably already have a good base of customers who could become subcontractors. You likely already know which of your customers would do the best job. If you can team up with them and feed them leads and let them act as your subcontractor, it’s a win-win situation. They don’t have to go do sales calls, and you’ve got the customer already in your showroom.
You’ll want to keep a few things in mind, however.
Contracts are necessary because your insurance requirements are going to change. You may need to be licensed by your state or local municipality. For example, here in Minnesota, we need to carry a license and we need to show that we have proper worker’s compensation and liability insurance packages.
You’ll also want to make sure that you have two specific types of contracts. One set of contracts is for the homeowner purchasing the deck, and the second set is for the subcontracted deck builder. Good, detailed contracts protect the interests of everyone involved.
As an installed sales company, we have a contract that we sign with every homeowner. The contract addresses basic things such as the name and address of where the deck will be installed. It also includes the types and quantities of material involved. Very specifically, we document exactly what is going to be installed. We don’t just say we’re installing a treated wood frame. The contract should spell out specifics such as “SYP #1 KDAT frame with Brand A hangers, built to code” for example.
We also make sure to address how and when we get paid, and what happens if we don’t get paid. Here in Minnesota, we’re required to inform them of the state’s lien law. We break our payments out into four 25% increments, due at time of signing, first day of work, last day of work, and two weeks after work is done. Delaying the last payment gives us time to have the inspections done and to address any last-minute issues. It also takes a little pressure off the consumer and lets them know that we’re with them long-term, that we’ll make sure it’s done to their liking before collecting our last payment.
We’re also specific about our performance standards. For example, if you’re installing composites, you know that the product is designed to expand and contract. It’s a good thing to say in the contract that you warrant your decking against expansion and contraction, but only more than a half inch. Anything less than that is normal product performance and not warrantied.
You may also want to warranty against cracks or splits greater than 3/8″. A product may crack or split, but rarely more than 3/8″, so you don’t want to be responsible for cracks or splits less than that.
We do two types of contracts with our subcontractors. The first is an annual contract that says a subcontractor has to work in a certain fashion and is responsible for certain bills. We work with the state department of revenue to make sure the contracts are compliant. The contract also says that a subcontractor has to carry worker’s compensation insurance. It says they’re required to clean up after a job and that they’re providing the warranty on installations. It’s a blanket contract that we review each year.
Every time we give a subcontractor a specific job, we add an addendum to the blanket contract that goes into detail about the project. The job contract spells out which design is used and which products are installed. It will include all responsibilities for the specific job. The job contract also states that the subcontractor is not allowed to purchase products from another dealer, with the exception of small items from a retailer closer to the jobsite if it saves time and money. The job contract will address the payment amount and schedule specific to each job. We make sure that we have the subcontractor sign off on the job contract for each specific project.
If you put a lot of thought into an installed sales program, I think you’ll be pleasantly surprised at the results. Your sales will increase and the knowledge of your staff will grow because they are working in detail with the homeowners and deck builders.
As with any contract, there are a number of things to consider, and of course, this is just an overview of how I do things at The Deck Store. You’ll want to consult a local construction attorney to make sure you’re covering your bases on your contracts.