Expansion Team
This story appears in the November 1998 issue of Entrepreneur. Subscribe »
You've been growing your company, and it's generating a pretty healthy profit. Your staff of salespeople is doing a good job, leaving you free to run the business. But now it's time to take your product into new areas where your salespeople may not have contacts or knowledge of the business community. Maybe it's time to think about hiring a manufacturer's representative to go out and pound the pavement for you.
What is a manufacturer's rep? It's a salesperson--a free agent who generally handles around five to seven different, but compatible, products. For example, a manufacturer's rep in the juvenile products industry might represent a company that manufactures softgoods like baby blankets, while at the same time selling hardgoods such as strollers and cribs for another company.
Well-qualified manufacturer's reps can increase your company's sales while giving you the freedom to focus on other areas of your business. The key is finding the right rep.
How do you find out who the right reps in your industry are, and how can you successfully hire and keep one?
1. Ask your customers. They may be able to provide names of good reps they've worked with. Also, talk to experienced business owners and manufacturers in your industry.
2. Obtain a list. Try calling such places as big-city merchandise or apparel marts to get a list of names and phone numbers of manufacturer's reps. The reps you contact will either be available to work with you or may recommend someone who is willing to take on another product.
You can also use an independent representative directory for your industry. Most trade associations have access to such books.
3. Advertise for reps. Where? In the back of trade journals, at industry meetings and at trade shows. You can also put the word out to everyone you do business with that you need a salesperson.
When writing an ad, include the basics: "Dynamic manufacturer's rep needed for growing company. Territory: South Carolina. Product line includes . . . Call 555-5555 between 8 a.m. and 5 p.m."
4. Look for reps who have a support staff. Remember, the rep is showcasing your company and your product. More often than not, however, he or she is on the road. Therefore, make sure the rep has hired professional help to answer the phones and take orders while he or she is away from the office.
5. Remember that the rep and his or her territory are a package deal. If you're ready to hire your first rep and you're based in California, you should probably hire a rep that covers the Midwest or the South to get the word out about your product in those places. More than likely, you're still calling on customers in California. As your business grows, you can hire more reps in territories where you want to focus.
6. Get smart about commission structures. Times have changed for reps over the past dozen years or so. Wal-Mart and other big discount houses often work only with reps who deal with them exclusively. Therefore, you may need two reps--one who calls on big stores and another who covers specialty stores only.
Commission percentages depend on what the stores your reps are selling to are paying for your product. Discount chains order very large volumes and pay much less for products than specialty stores that can't carry large inventories. Because the discount houses demand--and get--good prices, there is a smaller profit margin; therefore, less commission money is available for the rep, although the rep usually more than makes up for it with the size of the orders.
7. Beware of hiring a rep who is carrying too many products or selling competing products. What is the ideal number? One vice president of a company in the sports industry told me five to seven different lines was the norm for him. If your rep is carrying 10 or 12 lines, how can he or she do your product justice?
A common problem is reps who carry competing products without letting you know about it. Be sure to ask prospective candidates what other manufacturers they work for.
8. Keep your reps motivated. You're competing for their time, so you need to figure out ways to keep them as interested in your product line as they are in the other ones they represent. New products, great advertising and creative perks keep a good rep happy.
Also, never forget the adage "Out of sight, out of mind." You have to constantly be in contact with your reps. Go to trade shows with them or call a sales meeting to announce a new product or to give some positive reinforcement.
9. Grow your own reps. You may have enthusiastic employees who have been loyal and learned the business from the ground up. Try them out in sales. That's what one successful company I know did. One of its employees moved into sales, and when her husband was transferred to the East Coast, she asked to represent her company's product there.
After a few years of handling just that one company's goods, she branched out and began representing two other compatible products. Today, she's a very respected manufacturer's rep for four successful companies.
10. Be prepared to fill your orders. One of the reasons some companies aren't able to hire top reps is their inability to keep up with the new business. For example, what happens if a rep places an order for 1 million units of your product and you don't have the manufacturing power to fulfill it?
Many reps have been burned in similar scenarios when they've agreed to carry a newer company's line. Just realize this objection may come up when you're trying to recruit a superstar.
11. Monitor your reps' performance through your customers. If you want to know how good your manufacturer's reps are, ask your customers. They're on the front line with your reps every month. Count on your customers to help you both hire and fire your reps. Where can you get a better evaluation of what's really going on in the marketplace?
Hiring a good manufacturer's rep could be your company's first step into a bigger market. Sometimes, business owners take the position that no one can sell their product better than they can. Don't limit yourself with this type of thinking. Your enthusiasm and knowledge can be contagious--just delegate to the right team players. Once you've found a good rep or two, take the time to train them and keep them as motivated as you are. It sounds simple, but it requires dedication, commitment and, yes, sacrifice.
Danielle Kennedy presents sales and marketing seminars and keynote addresses worldwide and is the author of seven sales books as well as audio and video sales training programs. Check local bookstores for Seven Figure Selling and her latest book, Balancing Act: An Inspirational Guide for Working Mothers (both Berkley Publishing Group). Write to her in care of Entrepreneur, 2392 Morse Ave., Irvine, CA 92614.
