First-time salesman

[Coco]

Dear all,
I've come to this site since I am in desperate need of some advice. I have several years of experience with a particular instrument and recently contacted the makers of that instrument to ask them if they would be interested in representing them in the continent that I live (which is different than the continent where they come from). Turns out that they are very interested to establish "a cooperation" with me.

Now I had assumed that if I were to work with these guys I would have a contract, regular pay and reimbursement for traveling in order to find clients.

But they ask questions such as such as if I would start a company to be their official agent and what sort of commission would I expect? The instrument in question is a huge investment for any particular client and each one costs thew equivalent of 2-3 years of regular pay.

What to do?

[billbenson]

Your going to have to give some more details for us to help you much. What's an instrument? Guitar, test instrument, financial instrument? What do you mean by continent? Are you in the US, if not where.

Assuming you are in the US are you a direct employee? If so they will pay you salary or commission or both. It sounds more like you will be a manufacturers representative in which case they probably won't help you with travel expenses. They will just pay you a percentage of each sale.

[huggytree]

why not ask them what they meant?

id ask for more $$ than your currently making......

find out how much travel you should expect

living on commission only is a scary thing...they have all the advantages and you get none

[J from Michigan]

Huggytree is right, commission can be scary. Scary yet thrilling at the same time...
You can go a week without making a dime, and you can make thousands by noon on a Monday... that's the "carrot on the stick" that keeps you going.

As others asked, I'd like to know the product, but moreso, the logistics.
- Do you have the product in stock, or would it have to be sent to the customer?
- Would you order the product, or would you simply be the Agent handling the agreement for the Principal?
- Are you fronting the cost until you actually make a sale?

[mettro2]

Sounds to me that you are expecting to be an employee and they want you to be an independent representative. From what I understood from your post, they probably don't want to take the risk themselves of investing on an operation in a new continent. If it is impossible for you to invest on the operation yourself, you should do some market research of your continent and try to sell them the idea of taking that risk.

[crm]

Yes, usually you'd be running your own business, paying your own way and get paid commission. It's fairly common. Trying to do this for a big ticket item could be tough, but it can be done! My thoughts are:

You're probably going to have to handle servicing (maybe onsite?), and warranty issues. If the product is technical, this one could be tough. If the customers depend on it for their daily business, you might need to have a "lend" product to tide over customers while their other unit is being replaced/repaired.

You may be able to ask the manufacturer for a unit or two on "lend" while you're getting up and running. It's worth asking the question. Another alternative is getting the products on lease through a finance company, that way you avoid the upfront cost and just pay a monthly figure. Make sure you shop around though, some leasing products can have high interest rates. Also, arrange with the finance company so that you can offer leasing arrangements for your customers! win-win!

Make sure you get EXCLUSIVE RIGHTS!

When you're selling it, get customers to commit to half up front deposit, and tell them that it'll take x weeks for delivery (then order from the manufacturer). Get favourable credit terms from the supplier (90 days?). At least then you might have some padding for handling cashflow for such a big ticket item. Be careful if you decide not to take a deposit, customers could back out and then you're stuck with a unit and a bill with no one to pay it!

I would recommend getting other similar arrangements with competing manufacturers. Putting all your eggs in one basket could be a big risk if they pull the pin on you. You'll have to have something in the agreement to cover you if they themselves decide setting up in your country is a good idea. This may happen if you're successful, the manufacturer might see dollar signs from all your hard work and decide to cut out the middle man.

I'd also collect a number of smaller ticket, related products to sell to the same customer group.