If you can't afford to employ a dedicated sales person but want to target new markets, a commercial sales agent could be the answer. Naomi Marks explains how an independent specialist can help you expand into new markets and territories
A commercial sales agent is a self-employed sales person who will sell your goods or services in return for commission. Businesses usually appoint agents because they need specialist help reaching markets in a particular sector or geographical location.
"They suit businesses where personal selling methods are preferred to arms-length sales channels," explains Paul Brown, managing director of sales agent consultancy Agent Base.
"Agents can also help those with a fragmented customer base," he adds. "Many small firms use them to access domestic markets, but they can be particularly useful in selling abroad where different languages and customs can be an issue."
Sales agents as a cost-effective solution
Sales agents can be a cost-effective means of reaching a wide variety of markets.
"A lot of small businesses don't have the budget to justify employing a full-time sales representative," says Brown. "It can cost £50,000 to £100,000 a year to keep one rep on the road. With a sales agent, if you sell nothing, it costs nothing. The cost is always in line with the profitability as they only earn commission."
An agent's main asset is the customers that they have relationships with. "Most agents have several hundred customers that they have been dealing with for years and they can put your product directly in front of them," explains Brown.
However, he warns that managers who find it hard to relinquish control may find the relationship difficult. "Agents will not deliver a company script or wear the company shirt," he says. "They do not want to field constant calls from owner-managers. Most agents are running their own business and don't want to be micro-managed."
TransferWise - manage multiple currencies with ease
Don't put up with high bank fees and rates when you do business outside the UK. TransferWise's smart multi-currency account lets you make and receive payments in up to 40 currencies, at a fair and transparent exchange rate.
Enjoy much lower rates than the banks or PayPal charge, and get paid in USD, Euros, GBP or Australian dollars with no fees at all. It's the cheaper way to get paid when you make sales abroad - open your free account today.
Finding the right sales agent
It is essential to interview shortlisted candidates. Weigh up whether a potential recruit has a good reputation in your marketplace, knowledge of your sector and a portfolio of existing clients.
"You need to be sure the agent's customer base is congruent with your target market and they have a portfolio of complementary, non-competing products," advises Brown.
As self-employed intermediaries, sales agents usually make their money from commissions on sales, although some may receive retainers or expenses.
Importantly, European law gives sales agents considerable protection so a contract must be drawn up by a solicitor. "By default, agents have a lot of rights - similar to those of employees, so you need a formal contract," says Brown.
If it all sounds rather daunting, Brown advises you remember the plus points of using a sales agent: in essence, getting your product into the hands of many potential clients you may never otherwise reach. "For many businesses, there isn't really an alternative," he concludes.
Always take legal advice if in doubt.