Nine top tips for choosing and using a commercial agent

Handshake over signed agreement

If you want to tap into new markets or you are struggling to find the time to devote to sales, a commercial agent - someone who will sell your product or service on your behalf - could benefit your business. Many firms find agents a cost-effective way of accessing sales expertise, contacts and customers

  1. Find a commercial agent. You can find likely candidates from databases held by Chambers of Commerce, trade associations and organisations such as the Manufacturers' Agents' Association. You may need to pay a fee. You could also talk to agents at trade exhibitions, or ask for recommendations from contacts and advisers.
  2. Be sector specific. Don't be afraid to ask agents about their experience, knowledge and understanding of your sector. Balance the benefits of someone with a strong trading history in your sector with the benefits of using an agent hungry to establish themselves in it. Check their portfolios to ensure they aren't representing potential competitors.
  3. Check them out. Carry out credit checks and seek bank and trade references for prospective agents to ensure they are financially secure. Ask for references from existing customers as well - and be sure to follow them up.
  4. Introduce yourself. Always interview potential agents face-to-face. It is important you work only with an agent with whom you can develop a good relationship.
  5. Agree the relationship. You will want to agree where, how and to which customers a commercial agent can sell your product or service. Discuss these matters fully with candidates, as well as the nature and frequency of contact you expect. The terms of your relationship need to be recorded in a contract, along with dispute resolution procedures and get-out clauses.
  6. Agree payment terms. Whether payment is wholly or partially on commission should be written into the contract. Balance the benefits that incentives such as bonuses bring with the loyalty that a retainer engenders.
  7. Think about the future. You might want to include a restraint of trade clause in your contract. This can restrict the activities of an agent after the contract ends in order to protect your business.
  8. Understand your obligations. You should be aware that the law gives considerable protection to self-employed agents. If you want to terminate a self-employed agent's contract you must give up to three months' notice. Even then you may have to pay compensation.
  9. Take advice. A solicitor specialising in commercial contracts will know the duties and responsibilities that should be included in an agent's contract. It can be an expensive mistake to cut corners by doing things yourself.

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