It’s Only Common Sense: So, You Want to Be a Rep?

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I hear you’re tired of working for someone else. You’re following rules that you don’t believe in, and doing things someone else’s way when you know a better way. You have a bunch of customers who just love you and would probably follow you wherever you go or whatever you do.

And yes, you want to sell more than what your company has to offer; you no longer want to be restrained by the limited capabilities of one company. You want to sell a complete portfolio of product solutions. And, of course, you love the idea of being on your own.

And there is the money. Oh, the money. The deal you have now is not bad. You have a solid base and a decent incentive package, but you’re never going to get rich on that. You hear that the reps you work with and compete against are raking it in. As far as they’re concerned, the sky’s the limit for what a rep can make in a year if you get out there and hustle. A rep gets paid very well for his efforts, and that’s what you want to do.

But (and it’s a pretty serious “but”) you must take a few things into consideration before you take that giant leap to independence. Here are seven things you need to consider when planning your new rep company:

  1. Money. You should have some money in the bank. Some reps say you need up to a year’s worth of income before you even think of starting your own firm, and some say two years’ worth. Otherwise, what are you going to live on? There is one thing you can do. You can approach your current employer and offer to convert your deal with him from a direct employee to a rep situation if they are willing to convert your accounts to rep accounts. This is a logical move and most of the time a win/win. The company doesn’t lose you but they do lose your overhead, your expenses and benefits package. Most of the time they will agree. But you must make sure that they understand they will no longer own you. You will have other non-competing lines going forward. That change could be bumpy at first, but it can also be the one way you can launch your business comfortably.
  2. The next step is to decide who you are going to represent. If you have made a deal with your current employer, then that is one principal you have lined up, but what about other lines? If you are in the board business, you must consider lines that are non-competing but synergistic with your approach to sales. I recommend the following PCB lines for anyone going in the rep business selling printed circuit boards: first a domestic quick-turn prototype, and a military house, a solid flex and rigid-flex provider, a domestic 2-8-layer house that is very competitive, and a reliable offshore house. I would also consider having a small contract manufacturer as well.
  3. Be sure all your principals are well-run, well-financed and customer-focused. This is critical. You want to spend your time selling, not apologizing
  4. Make sure that you feel a sense of partnership with your new principals. You want to make sure that they respect their reps and know how to work with them. It would be a good idea to check in with some of their other rep firms to see how they have been treated.
  5. The contract is very important. Study it carefully and make certain that you can live with the terms. Don’t be afraid to push back if there is something you want changed. This is the time, not after the contract is agreed to and signed. Things to look at include terms of termination. They should be at least 90 days, and this means you will be paid for every single order booked right up to the 90th termination day. Also, check out the payment clause. When are you getting paid? If it is after the principal receives his money, then make sure it is as soon as possible after he receives his money from the customer. In fact, try to get payment on shipment if possible. That’s the best deal you can make.
  6. Who is going to be part of your firm? Are you going it alone for a while, or are you getting together with a couple of associates? True, there is power in numbers, but there is also expense in having one or two other people and their families to feed, especially during the start-up phase. Choosing a partner is like choosing a spouse; proceed very carefully.
  7. Develop a marketing plan. Yes, a marketing plan. You already know how to sell, but you must know how to market your firm. How do you plan to get your name out there so people will know who you are? Most reps don’t have a marketing and branding plan. It’s a big mistake.

And one more: develop a reporting plan for your principals. The biggest problem between reps and their principals is the lack of consistent communication. If you develop a bi-monthly written report of your activities for each of your principals, they will love you for it. It’s good for them and it’s good for you as well. I would recommend you also set up a weekly call with each of your principals as well. I promise that they’ll love you for that.

And one last thing: Forecasting. Yes, you must forecast not only for your principals’ sake but for yours as well. How can you possibly consider successfully running a business without a forecast? It’s only common sense.



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