Hiring a salesperson

[andre]

I was considering looking into hiring a sales person to increase business. My thoughts were 100% commision since I cant afford to pay a salary. I was wondering if there was anyone doing something like this and if so, what type of lead source were you using and were there good results and what type of percentage were you paying. My thoughts were in the 5% range. I would appriciate any advice

[njandpa]

Just a couple of thoughts. Your sales person would basically work for free until a sale is made and you are paid? Under your % if the sales person sold for you $500,000.00 in sales you would pay him $25,000. There should be more profit in there to increase the %.
Keep workin at it and you'll figure it out.

[andre]

Yes I know, this is why I put it out there to get some feed back. I thought maybe a part time person. The truth is I am a 2 man shop and can't afford a salary plus commission person but need to keep the flow of business comming. I'm tired of the up and downs and am looking for a way to increase what I am doing. I dont do commercial business, I have not taken the time to develop that approach. So I am doing some head scratching

[andre]

Maybe a 10 percent comission would be more appropriate for a 100 percent commission job.

[andre]

Steven, I respect your opinion and it seems you have some experience with this. But personaly no one will ever run my shop but me.
I think some of the issues you discussed could be handled with non-compete clauses in an independent contractors agreement.
And personally I was thinking of hiring a smart and pretty young lady. Maybe I could find a smart college student who could make some calls part time and just do some lead generation.
Just thinking out loud and thank you for your response

[CajunCNC]

Good luck . . . .

Steve :-)

[dakers]

Steven, you said some great things.
The problem our company would have hiring a sales to go out and cold call and bring in new business is:
1. training on what to recommend to customer if you are a custom shop that works with a variety of methods and materials.
2. A good sales person can sell alot but he needs to know our company can deliver what he sells and on time with quality during peak seasons. That is a problem for us and i think the really good sales people want to hook up with a company that has great volume potential so they do not have a cap on what they sell and how much they make.
3. Will the local market support the sales person
4. will i provide leads and advertising
5. will we be competitive so he does not lose sales just because i have to add more money to job to pay sales person.
6. car and insurance expense, phone expense. that can eat up a sales persons commission to some extent.
7. can the person hold out long enough for his efforts to start paying off. He can see alot of people in 3 months and hardly make any money. so he quits then even a year later what he did generates work.
How would you pay him for repeat work where the customer contacted the shop and not the sales person. Non compete agreements, etc.

i am speaking of my business not yours. We have paid sales people a draw plus expenses and even the best of them have gotten discouraged over 12 months because we have so many issues that require knowledge in the custom sign business. the permits and zoning issues are a mountain for us to deal with before a sale or sketch can be made.
I would think your business is easier because of that. We had one guy who is now making over $100,000. a year selling life insurance and he could not make more than $1,000. a month selling signs. He tried very hard and had some good sales in the beginning. I am interested in this subject.
We are probably going to do more direct marketing and really focus on who we want to sell to and what we want to sell. I am not a sales person but i wish i could do what Steven suggests. that would really help us.

[woodworx]

Sometimes the easy answer isn't the best. In addition to that, there might be more than one answer depending on the type of company you run, and the kind of person you are.
I am reminded of the old hiring adage that states, "Only hire someone who can do your job better than you." For some it could be easy, but most likely the task is much more daunting than one can imagine. Again wouldn't it be easier hire a pretty little girl to run the phones? Most likely not. Then your payroll goes up. Now you have more work to do because that girl needs a paycheck.

In the end, isn't it about getting more money in your pocket with less work?

#1 determiner in how your business grows is the sales you bring in.$$$ Which coincidentally is a direct reflection of what kind of person you are and how determined you are to make what you want of your company. Do you think you can find someone who more determined to make your company grow than you? I would strive for as much control as of your future as possible. Don't put your business in someone else's hands. You could loose it faster than you know.

In developing a business, you also need to develop a business system which can operate even if you are not physically there. We all took our first steps in automating our business by buying a bot. Now don't you wish there was a bot to do your payroll, sales, marketing, and estimating!

Think about how much time you put into learning your own business. You are the master of your company, and you decide how much business you can handle.

[CajunCNC]

Having sold on salary plus and straight commission before, the below represents my opinion only. If you hire a "straight commission" sales person you have no way to demand loyalty. How do you know when he finds a prospect he will bring it to you and not one of your competitors?

Then you have the old "house account fight". This will of course require you to divulge your entire customer list and pricing structure to your new employee. You really want to share that info? When he and you part ways, will he use that info as bargaining chip to get a better gig with a competitor? Also, the first time he comes in the door with an "order" from an established customer you are not going to want to share. You will assume you would have got that sale anyway. That's a regular fight that gets very intense with a straight commission salesperson almost daily.

You have to remember, this person you hire will become the new face of your business, good or bad. If he handles business poorly it will hurt you. If the customers he gains like him, they will follow him, regardless of who he is selling for. It will be him they trust and feel they can count of. Sales and service/production have always been at odds with each other. When he makes a sale and all goes well, all the customer will hear is how he handled and managed their order personally. When things go badly, he will be telling them what a bunch of idiots they are at the shop, (your shop). He has to keep himself looking good to keep that customer happy.

Is this person you hire capable of becoming a competitor?

My advice, hire or replace one of your people with someone that can run your shop ! ! ! You go out and sell, you go out and firm up existing relationships. The new guy will never set foot in your existing customers office, they would be a house account, no commission there . . . Those accounts while slowly disappear . . This way you can come and go, free to check on your shop's operation and develop new accounts.

[andre]

Justin you make some good points. You guys are obviously doing some big business. Maybe I am over reaching. I have owned the Bot for going on 3 years and have taken on big jobs that I would not have before. I'm sure you did not get to where you are now overnight, I'm trying figure out how to grow forward. I'm certainly not going backwards, business has increased each year. I have a pretty good idea on how much work I can handle, now I just need to get that work. Any ways I make progress even if its slow.