Factsheet 7 – What Are The Risks of Being a Sales Agent?

The major way of minimising risk is, like the insurance companies, spreading the risks. Most sales agents represent several, non competing companies, sometimes in the same business area and sometimes spreading the risk even further by taking agencies on in different areas of business. In this way, even if an agency should not work out as you hoped for whatever reason, there are other agencies to fall back on.

The single agency lure.

A major potential pitfall is to concentrate on one agency only. It may be that their service or product is easy to sell and you can make an easy income from them to the detriment of any other agencies you hold.

Consider the following

  • company policies towards agents do change
  • try to have short, medium and long term income
  • get your principles to accept your other agencies
  • be prepared to weed out non earning agencies

It is not uncommon for sales agents to build a companies sales up to a point where it is cheaper to pay an employed salesperson rather than pay extremely large commission cheques.

Another strategy is to spread your agencies over short, medium and long term sales. Too much of either type can lead to risks. For example, short term business is usually quick selling, quick return and highly competitive. If your short term business principal becomes uncompetitive you have already laid down medium and long term strategies which give you time to await his return to competitiveness without losing your livelihood. At the other extreme too much reliance on long term business can lead to large gaps in your income and disappointment when that order you have been working on for many months is cancelled.

Most realistic principles will acknowledge your desire to work for other principals as well as them. Many of them could not realistically expect you to earn a living from their goods or service alone. It means that you will stay with them even if the going gets temporarily hard.


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