Wednesday, August 10, 2022
Employees and ManagementSales: To Rep or not to Rep

Sales: To Rep or not to Rep

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Many founders of small businesses will tell you that they are the best person, and sometimes the only person, to perform sales for the company. After all, they came up with the idea, created a business plan around it, and know the numbers behind it that are needed to succeed. Then there are those who realize that they have absolutely no sales acumen and their lack of ability will hold the company back from realizing its full potential. Sure, technology has advanced the way in which companies can sell and market, but eventually, sales representation needs to get beyond the founder of the company.

So where do you start? Many organizations will not have the capital as a start-up to hire a full-time sales rep. Salary, benefits, insurance and other costs could be considerable, even though it may be beneficial down the road. It really depends on how you as an owner feel about how and who you want to position your product or services to. In-house reps surely would be easier to monitor and teach, as they are with you when they are not on the road. This is a big plus. One way to create the scenario where you can hire a full-time sales rep without breaking the bank is by using a commission process with a draw. Reps are permitted to take a draw (or advance) against commissions. For example, you could pay your sales rep a salary of $40,000, and give them a 100% drawdown on that amount. So basically the sales rep would not receive any additional compensation until commissions on sales have reached that $40,000 number. Hybrids of this can certainly be set up by changing the drawdown percentage. After such point, the commission can vary greatly from 2 percent to 20 percent.

Lucky for you, a new study shows that becoming a sales rep is one of the best ways to get out of a stagnant job. The study was published by the Federal Reserve Bank of New York, and concludes that only about one in 20 people manage to move into higher-paying jobs within the next year. Of those that do, many land in various kinds of sales work, including insurance sales, wholesale and manufacturing sales, and financial sales. Also remember that often in sales, people skills can trump that of a college education. Do not be myopic by limiting your search to individuals with advanced degrees.

Another way to obtain sales representation is to hire an outside sales rep, often referred to as a manufacturer’s representative. This person is essentially an entrepreneur as well, who may sell only for you, or may rep other products or services from other companies. Either way, the manufacturer’s rep covers their own expenses and are not on your income statement. However, to get the best sales representation, you have to sell this person on how great you and your company are, as they have limited time in their day to juggle many balls.

If you make the decision to hire a manufacturer’s rep, where do you start to look? Finding the right rep is a difficult task and there are numerous approaches. Today with the advent of the internet and search engines, there are websites such as www.rephunter.net that matches up Sales reps and Manufacturers to each’s specific needs. Whichever way you decide to go, having the right sales rep is a crucial component to your business.

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