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By Jeff Simon
Two key questions.
If you are interested in becoming an Independent Sales Representative, there are two key questions that you need to ask yourself:
a. Do I have the financial stability to go 2 – 3 months without receiving a commission check? When a principal is looking to outsource their sales functions, they are either looking to enter into other territories or need assistance to service and improve existing client relationships. Question 1 is of particular importance for a new and untapped market. The reality is that there is a sales cycle associated with all products which, most often, span weeks or even months. Principals will rarely pay commissions based on unfulfilled orders. Payment schedules can also typically range from COD up to Net 45 days. Including the time to make the first sale, delivery, payment to principal, and commission check mailed, it can be several months before you receive your first commission check.
b. What Industries Do I Have Experience In? Principals expect prior experience with a certain product range or industry type. This holds true in virtually all industries. To start out successfully, it is important for you to have contacts to make initial presentations. Principals may be willing to give you a line but without experience, it can take a significant amount of time to develop sales.
Start Your Business.
As an independent rep, you should start your own business (LLC, S-Corp, C-Corp, etc.). There are many advantages ranging from tax benefits to liability protection. It is suggested that you speak with an accountant to determine what the best option is for you. Most accountants or lawyers can help set up the business for you. There are also many online sites that can perform this function (depending on services provided, typical pricing ranges from $100 – $500). Example: www.bizfilings.com
Rather than sending out a Resume, principals will be impressed if you have put together a business plan which will detail your goals and objectives. The best thing about being an Independent Sales Rep is that there are only two primary functions: Sales and Customer Service. The principal takes care of all other aspects which include manufacturing, research and development, quotations, invoicing, shipping, and quality control. The business plan doesn’t need to be long but should detail simple points such as:
a. Industries Covered
b. Territories Willing to Cover
c. Revenue Sources
d. Preferred market segment
e. Sales focus (OEM’s, end users, distributors, resellers, etc)
f. Product/Service focus
g. Organization structure – Will you be alone or do you plan on having employees?
* Will you be a home-based business or will you have an office?
* Will the office have storage for consignment or warehousing?
i. Policies and Procedures
Finding Lines Available.
With steps 1 – 3 behind you, your objective now is to find product lines. A few sources include:
a. Trade publications and trade web sites.
b. Trade Shows
c. RepHunter.net at http://www.rephunter.net
Landing that Line.
After you have identified several lines available, it is important to research the company and get a good understanding of their products and needs. Fundamental needs include the following:
a. Principals are looking for reps to help develop a relationship between themselves and the client. The basic focus is building strong relationships.
b. Principals want their reps to be professional and prepared. For new reps, a marketing plan can really be a big advantage.
c. Principals need to know that you will be giving their products time and that you are prepared to cover the required territory.
d. In the absence of an established revenue stream, principals need to know that you are financially stable. The last thing they want to do is spend time and money over several weeks to wind up having their rep drop them for financial reasons. By conveying your goals to meet these needs, you will stand a better chance of landing that line to represent.
The Sales Process
We break down sales into two primary functions:
We consider the process of getting good face to face sales time with a new customer as 50 percent of the sales effort. For many businesses, the purchasing power can fall on one of several positions. In a manufacturing facility, for example, purchasing can be the responsibility of Purchasing, Maintenance, Engineering, Plant Managers, Store Room managers, Inventory Control, Office Managers, etc. One of the hardest things to do in a complex business environment is to get the right people to listen to your presentation.
The Sales Pitch.
At the start, this is an area where the tools available to you become most valuable. For any new rep, the absolute best resource to help you become successful is to bring in your principal’s sales manager. While this method may not be practical for all cases, it should be considered where applicable. Long term, it will be your responsibility to perform sales presentations. For the first few months, however, the principals will be very happy if you can set up sales presentations which will maximize their time and efforts. It serves as an excellent method of training and will show your principal that you have the ability to get to the right people. Having your sales manager make some initial presentations will also help improve closing rates and shrink the overall sales cycle. The other advantage includes credibility.
Set up a web site.
It’s easy and a great way to promote your new business.
Keep your new principals happy.
The best way is to make sure they know you are actively promoting their products include:
a. Write Call Reports.
b. Get quotation requests.
c. Ask lots of questions.
d. Request travel time with your sales manager, if applicable.
About the Author: Jeffrey Simon (firstname.lastname@example.org) has over twenty years of management in operations, financial, project management, and software development. In 2001 he joined Matthew Tronnier to found RepHunter, Inc., (
), which matches companies and independent sales representatives.