Factsheet 1: Becoming a Sales Agent – The Bare Facts

What is a Sales Agent?

A Sales Agent is a self employed salesperson who works, usually alone, for perhaps several non competing companies. The Sales Agent obtains orders for those companies and is paid commission on those orders.

The Sales Agent usually works in a specific area of industry and within geographical limits. It is usual for the Sales Agent to keep his agencies within the same industry. A major advantage is the ability of a Sales Agent to offer his customer a range of products rather than the single product that an employed salesman can offer.

How do I become a Sales Agent?

You can start tomorrow. You may operate under your own name or you may trade as a company. It is not necessary to register the company if you do not want to form a limited company. (speak to an accountant on this).

If you use a name other than your own you are described as xxxxx, (your name), ‘Trading As’, xxxxx (your company name). In all circumstances you must inform your local Inland Revenue Office that you have commenced trading, (sorry but the dreaded Self Assessment comes in).

Will I make it as a Sales Agent?

Most important is that you have some sales experience. It is near impossible to learn to become an effective Sales Agent whilst learning to sell. Selling is about taking the hard knocks and not becoming disheartened. Being a Sales Agent is even more so because if you don’t sell you don’t eat. If you are not afraid of having variable earnings and are determined you can make it a success, you will.

What about commission?

We have known commission rates to range between 1% and 150%. It will depend on what you sell. If you are selling quick turnover, high volume, repeat order products around 5-10% is the norm. If you are selling high value items with long lead times, or services then 20%, even 30% is commonplace. You may have to wait a long time for the sale to mature and you are at greater risk of losing the order.

Set up costs

Not a lot, if you already have transport to get you to the customers. You will need a telephone and some headed notepaper. If you have a computer this will save on this cost and also make letter writing and accounting less costly. Things like visiting cards are usually supplied by your principals, but you may wish to project you own image as an independent agent by having your own printed. Resist the temptation to print these on your computer. They usually are cheap and look it.

Where do I find agencies?

The major place to find genuine agency opportunities is AgentBase. Many ‘so called’ agencies are advertised in local and national newspapers but beware. Some of them are ‘Pyramid Schemes’ and some need you to put money in etc. AgentBase publishes a regular digital magazine carrying adverts from Principals seeking Sales Agents in all industries. Adverts are also featured on their website. AgentBase membership is FREE and confidential. Once you are established many agencies are passed on by word of mouth from other Agents who work for the same Principals as you do.

How many agencies to hold

Initially only one or two until you have gained some experience. Once you feel comfortable with the concept of being your own boss you can expand your number of agencies gradually but do not collect agencies. The optimum number is probably around 5. Remember each one has to be serviced and all Principals seem to want you to spend all your time pushing their product. Too many agencies can call your integrity into question. Too few and you may not be able to earn enough to survive. Another important consideration is spreading your risk and not having all your eggs in one basket.

How about job security?

Becoming a sales agent means you are starting your own business, so it’s not a ‘job’ as such. However there is still a surprising amount of security. There is a piece of legislation called ‘The Commercial Agents Regulations 1993’ which dictates that you must have a contract with your Principal and that contract must have certain protection and obligations for both parties enshrined in it. Copies of this can be obtained on the HMSO Website, Free legal advice and many other benefits for members are afforded by joining AgentBase.

Conclusion

Most Sales Agents consider themselves to be at the pinnacle of their sales career. They rely on their professionalism, salesmanship and customer relations to earn their living. In return it is theoretically possible to enjoy an income far in excess of that usually earned by a paid salesman.

The only limit to the size of their earnings is the amount of time, effort and salesmanship they put in. Not for them the petty squabbles, rivalry and jealousy that arise when such earnings are within a company structure.

Apart from the potential earnings the satisfaction derived from being the boss and running their business their way must be taken into account.

 

Excerpted from the book: ‘How To Be A Freelance Sales Agent’. by Terry James. Additional content and editing by Paul Brown, MD of AgentBase.