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There’s a difference between a business that’s working and a business worth building. For Mike Sanchez, owner of Southedge Painting and Contracting in Greenville, South Carolina, the subcontractor model was the former. So he changed it.
In this final episode of the Work Series, Mike walks us through Southedge’s transition from a sub-based workforce to a full team of W2 employees, the reasoning behind it, the commitment it required, and what it unlocked for the company’s culture, customers, and long-term vision.
A Decision That Wasn’t Forced
What’s remarkable about Mike’s story is what didn’t happen. Unlike businesses that change models under financial pressure or operational crisis, Southedge’s transition was entirely proactive. When Molly asks whether something was broken with the sub model, Mike’s answer is direct: “Nothing was necessarily broken.”
The sub model had real advantages. Equipment costs stayed low. Gross margins were locked in. Recruiting was easier, a sub with a van full of ladders practically qualified himself. None of that changed overnight.
What changed was Mike’s clarity about what kind of company he was actually building.
The Paper Contractor Problem
The clearest articulation of why Mike made the switch comes when he describes what bothered him most about operating as a primarily subcontracted business.
“What I didn’t want to do when I’m building this company is to become, like, a paper contractor, where we’re just a contractor who markets and sells the job, and then just kind of, you know, gives it to another business to do the job.”
“If I have, like, a company meeting with all my personnel, and everyone in the meeting is basically a sales guy or a production guy, like, nobody in the meeting knows how to paint, and nobody in the meeting paints. It’s like, we’re a painting company.”
For Mike, the issue wasn’t operational, it was foundational. A painting company where no one in leadership can pick up a brush isn’t quite what he came to build.
The Long Game: Legacy
There’s one driver Mike identifies above all others when explaining the W2 decision. Not schedule control. Not culture. Legacy.
“If you just have a bunch of subs, it’s like, what do you… what would you be selling the business to? Or… it’s just, like, transactions, you know? It’s like, these subs can leave tomorrow. There’s no organizational knowledge.”
For a business owner with three young kids and a growing market in Greenville, thinking about what the company looks like in twenty years isn’t abstract, it’s the whole point. W2 employees build something transferable. A roster of subcontractors, at its core, doesn’t.
How the Transition Happened
The decision came in the summer. From there, the approach was deliberate and respectful. South Edge finished out the season with their subcontractors, giving them, as Mike put it, “plenty of runway” and gradually hired W2 employees through the fall. By December, they stopped using subs entirely, a natural cutoff since interior winter work went to employee crews anyway.
The harder part was the internal commitment that came next. Mike frames it as a glass case with a fire alarm: “There’s a, you know, like, little fire alarm thing, glass there, it’s there, it’s not to be used…It’s not to be used, and we haven’t used it.”
That commitment matters. The temptation to reach back for subs when a schedule tightens or a customer pushes a deadline is real and resisting it, Mike says, is what forces a business to find better solutions rather than defaulting to old habits.
The Financial Picture
One of the most useful insights in this conversation is Mike’s breakdown of how the two models actually compare financially. His conclusion might surprise people who assume W2 automatically means thinner margins.
“It’s exactly the same. So, we were always at 50%, whether we’re doing this or that.”
As long as employees hit their budgeted hours, the payout structure is essentially identical to what they were paying subs.
Where the W2 model creates a real financial edge is in crew composition. By mixing a job leader, a lead painter, and an apprentice on the same crew, Southedge captures margin on the apprentice’s lower rate while still delivering quality. Crew splitting, sending part of the team to power wash the next house while one painter finishes a job, compresses hours further. When trained job leaders handle their own walkthroughs and closings, the field manager’s bandwidth expands significantly. As Mike puts it, Southedge is on track to hit roughly $3 million with a single field manager because that manager isn’t starting and closing every job himself.
What Customers Are Saying
One conversation with a customer helped cement the decision for good. A homeowner called after a job, one where a sub had quietly left mid-project to go do an estimate, leaving the crew a man short. No uniforms. The customer’s feedback was straightforward: “I was sold something and I don’t think I was given that.”
That feedback became a reference point. Today, Southedge’s Google over 240 reviews tell a different story. “They’re all just talking about the painters,” Mike says. Customers name individual team members. They recognize the shirts, the vehicles, the faces. The company feels like a company.
The Vision
Mike knows exactly what success looks like for Southedge and it’s a very specific image.
“How I know I built a great company is if, you know, if a painter’s going to a paint store, and he sees one of our guys wearing a shirt, and he’s like, dude, how do I get hired on?…that’s how you know you built a great company, when, like, good craftsmen are, like, knocking down your door to come join it.”
That kind of gravity, where the best people want to be part of what you’re building, is something the W2 model makes possible in a way the sub model simply can’t replicate.
What Mike Would Tell Another Owner
For owners considering the move, Mike’s advice is sequential and grounded. Don’start W2, start with subs to dial in your sales process and build consistent volume first. The W2 model requires a promise: “If I make a commitment to somebody to say, like, hang up your hat. Don’t run a business yourself. If you want to come over here, I’ll keep you busy, I’ll give you a great opportunity, and we can grow something together” and that promise needs a solid foundation before it can be made and kept.
Once the pipeline is steady, make the move but make it with full commitment.
Southedge Painting and Contracting is four years old. The W2 model isn’t the fastest path, but in a city growing as fast as Greenville, it’s the one that builds something worth handing down.