Not sure if an independent sales rep is right for you? Here you’ll learn the benefits of hiring one, and why you, as a small business owner selling product to retailers, can make more money from an independent rep than from hiring your own sales staff.
In the early stages of your product sales business, you were probably able to manage the few accounts you had. But as you grow, you want to be in more stores and in more territories. It’s more than one person can handle. But maybe you’re not yet ready to hire a full time sales staff, as that can be expensive (and you need the office space to accommodate them). Don’t worry; full-timers are not your only option. An independent sales rep may be just what you’re looking for.
What They Do
The independent sales rep is a successful business’ best kept secret. They work on commission and may already have great relationships with potential buyers. They may sell products related to your industry, but they’ll never sell a competitors’ product. So if you want help selling combs, they may sell another brand’s hair dryers. This puts them strategically in a good position for you, as you may find it easier to get your products in stores where the rep is already selling other types of products.
Independent reps are self-employed and work for you under contract, so you don’t have to pay for their benefits and insurance. This alone can save you thousands.
Aside from not having to pay for a full-time employee a year-round salary, despite sales being up or down, independent reps provide other benefits.
- If you’re having trouble breaking into a particular industry, or making nice with a specific retailer, a rep may have the key to open that door.
- Reps know what’s going on in your industry, probably better than you. They can provide insight into what the competition is doing (or not doing) to give you competitive advantage.
- You can hire reps in other parts of the country to expand your reach beyond where you can travel on a regular basis.
How to Know if You’re Ready
Still not convinced? Ask yourself these questions:
1. Am I leaving money on the table because I can’t service a wider sales region?
2. Would adding a rep substantially add to my revenue?
3. Does the cost benefit make sense versus hiring a full-time salesperson?
4. Would hiring a rep take my company to the next level?
If you answered yes to these questions, start shopping for a rep. Start by asking others in your industry if they have any recommendations. You want someone who is already comfortable working in your area so the relationships are already established.
Taking the Leap
Once you find a few qualified reps, interview them each thoroughly. Once you’ve made your choice, put together a commission sheet so he clearly understands how much he can make on each sale and everything is up front and open. Next, draft an independent sales rep agreement that outlines the responsibility of both parties.
Every six months or so, evaluate your rep’s work to ensure he’s getting you the sales you want. Set up an evaluation program where you look at several things to ensure he’s doing his job:
- Is he getting you in new stores or areas?
- Is he increasing sales over time?
- Is he submitting regular sales calls reports?
- Can you follow up with people he’s met with to survey them on the work he’s doing?
It can be especially hard to oversee a rep who is located across the country. And as you grow, you should add on more independent sales reps in different regions or industries. At this point, it may be time to hire a regional sales manager who can physically be closer to your reps in a different part of the country. With several sales managers, you can effectively manage a network of independent reps without traveling constantly.