Depending on your industry, starting and running a successful business may rely heavily on your sales strategy. Here are the pros and cons of using independent sales reps.
Even startups can hire highly experienced independent sales reps
Independent sales representatives tend to be experienced and successful. They also tend to net better sales results than an in-house sales force might. Why? Because they usually have long and successful career backgrounds that include sales experience with large, national firms. This is really cool—it means that you, as the newest, smallest firm in your industry, are able to hire the best and most experienced sales pros in the business!
A huge, hidden advantage of using independent sales reps is that you can learn from them. I could never thank the independent reps I hired in my book business enough! Some became very close friends. They would not only keep me abreast of what was going on in the industry and what my competitors were doing, but they would also give me highly specific advice—watch this competitor for good ideas; try this new packaging; this price is too expensive; you need better sales materials; this book looks like a winner, increase the ad budget. The ideas and flow of information I got from independent reps were incredible! On top of this, they made it a heck of a lot more fun to be part of the industry.
Experienced reps mean less management time for you
Independent sales representatives are usually more experienced than in-house representatives and need less management and direction. If you hire them, you will be less likely to need a sales manager, and they will probably take much less of your time than in-house representatives will.
Sales expenses rise and fall with your sales
This is a big plus for a growing business that doesn’t have lots of cash in its early days, and also helps during downturns.
Independent reps offer longevity
Well-established representatives will be around forever. They aren’t likely to disappear after a few hard months on the road, like so many entry-level salespeople do. Don’t forget, if you have your own sales force, the travel and other expenses alone can be even higher than the salaries.
You can’t completely control independent sales reps
They will only push those products they feel have the best chance of selling and making them money. They will tend to put their best effort into selling the best products from their most established lines.
Beware the “first time out of the bag” syndrome
As a new manufacturer, you are an easy target for the “first time out of the bag” syndrome. The representative will be looking to place orders for your product very quickly after he or she first introduces it. If that doesn’t happen, your product may well not be presented again. Of course, unless you have an agreement to the contrary, which would be unusual in this business, the independent representative you are using may very well be selling your competitors’ products, too!
You should keep in mind that even if you have an established, long-term relationship with a representative, you must constantly “sell” him or her on the potential of both your existing and your new products.
For most small product companies, you are probably going to be much better off using and building a strong network of highly experienced independent reps than trying to build your own in-house sales force. Get to know them, support their efforts, be patient with them, and learn from them.
Takeaways you can use
- For most small companies, independent reps will be cheaper and better than an in-house sales force.
- Always keep selling your reps on your products.
- Benefit from their experience.
Author: Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.