Know-How Exchange : Advertising/PR

My first thought was consider hiring someone to do production and you remain the salesperson. However-- since you found the perfect fit, that is wonderful.

First the easy questions-- Most salespeople do get commissions on recurring jobs. They are paid by the accounts they bring in, not just projects. They'll be doing the maintenance to keep those jobs coming!

Next- -how are you structuring this person? Are they going to be an employee or independent rep? I say this because they'll be working out of their home. They may like the tax benefits of being independent. I also own an independent rep agency-- salespeople who have got a taste of working straight commission would never want it any other way.

下一个——你setti什么目标ng for this person? Independent or employee, when you turn the reigns over to a salesperson, you need clear performance goals. If you do not have these in place, no matter what you pay-- you run the risk of overpaying for under performance.

With them working out of their home, do you have a process to inspect what you expect as far as activity level? Before you hire them, have a ramp up plan.

With performance goals in hand, activity goals to get there, and knowledge of where your profit lay-- you will be able to figure what you can profitably pay this person. Salespeople are profit centers and a typical salesperson generates profit to support themselves and I've read up to 5 support people. Since you are a two person company-- you will be able to share more. I am also assuming this person, being in the industry, will become profitable quickly for you.

Maybe Carol's folks prefer working on straight commission, with maximum pressure on results, but not everyone is comfortable working that way. I believe that it is possible to set up a part-time arrangement which involves some sort of guarantee...

... for example, if the averages for your industry are that a full time person gets a certain base pay, plus health insurance, plus expense money... it would be possible to structure a deal where you have some guarantees. If you want a third of a person's time, some would consider it logical to pay a third of the expenses of a full time employee.

If you are a very large company, there are benefits to "manufacturer's rep" type arrangments, and there are benefits to employee type arrangments - and there are many other possible arrangement (e.g. resellers). I personally believe that small companies should have the option to have an "employee" type of relationship, even if part-time.

There are reasons that not everyone sells thru manufacturer's reps. There are reasons that many, many companies in your industry and in other industries pay a base in addition to commission. Before structuring a straight commission deal, I'd try to understand what those benefits are... and I'd try to determine whether or not those issues are important to you.

I have spent ten years struggling to convince the world that a part-time "base plus bonus" relationship makes sense for some small companies. Maybe it makes sense for you.

你不必是一个制造商的代表——是paid strictly on performance-- or to be an independent contractor-- or employee. I don't think the business this poster has would ever be for a manufacturer's rep. Good salespeople really don't need a guarantee. What they need is good back up support, a unique selling proposition and a good product.

I don't know of many who offer benefits for part time employees. I also didn't rule out base plus commission in my post. That is why I said to put the performance goals and profit percentages on a spreadsheet and decide what you can pay that person. I didn't rule out combination.

There are no guarantees. You can pay a salesperson a base of 50K, or 5-- the bottom line is if they aren't paying for themselves, overhead and making a profit for you --they need to be replaced. The number is insignificant with the right performance goals in place, and they are making plan. However, for the poster to be solvent, you have to do the math to understand and plan for the cash flow.

Carol
Sell Well and Prosper tm

Why don't you ask the new salesperson what their asking salary is (knowing it'll be plus commission)? Did you interview other candidates about what they are making to get a gauge? Monster.com has a "what are you worth feature" -- its based on geography (cost of living).

Carol
Sell Well and Prosper tm

By the way, still put this down on a spreadsheet. Present them the base, but a realistic expectation of how much total they'll be making with the performance goals attained. You'll also have to have a method to deal with expenses-- especially if this person will be working from home. (phone, mileage, parking, postage)

Good Luck, Carol

Lots of discussion so far... but I think many important points have not been covered. For example, how long are you planning to stick with this person?

Will you ask this person to handle some of the smaller accounts, so that you can focus on the "big fish" (if so, this is an argument for a base plus commission arrangement - it would be unfair for you to unload smaller and unqualified accounts and tedious tasks on a straight commission person).

If you pay expenses, you may begin to run afoul of the IRS "20 point test" (there is a link to more info on this on my web site). Are you willing to let the person be truly "independent"? If not, you will probably want an "employee" arrangement. And, unless the person is independently wealthy, it will hurt their credit score to move from full time to part time, and from an employee to an independent contractor... they may be much more comfortable with a "part-time employee" relationship than an independent contractor one.

For example, will you be integrating info from these efforts into your CRM? How?

In short, I believe that overpaying the person should be the LEAST of your worries. They say the most important hiring decision you will ever make is your first employee... you will need to put energy, thought, time, and money into this to make it successful. Done properly, with a sufficient investment on your part to give a high chance of success, you will lay a foundation for future growth.

Done in a haphazard way, you are probably throwing your money away.

Carol has described metrics, and certainly they have their place. But I believe you can look at more numbers than just sales - you may want to define some "interim" goals such as numbers of appointments, numbers of qualified folks added to the mail list, etc.

卡罗尔说,好的销售人员不“需要”一个base, and that is true in some cases (e.g. clearly if a sales cycle for a product or service is 6 months or more, most folks need a base or draw or something). Well, maybe this person you are discussing does not "need" a base or "need" air conditioning, or to send his or her children to college, or to take a vacation. But maybe they want those things. Maybe it is not enough to satisfy the minimum short-term needs - maybe you need to make a sufficient commitment (in time and money) to give this person a reasonable chance of success, so that they will feel comfortable leaving the security of a full time position to bring their Rolodex and experience and a high level of enthusiasm to help you grow.

If I could offer general advice, I would say that you need enough cash in the bank to pay this person's base for 6 months. We all want this person to get up to speed faster - and probably they will. But a six month commitment on your part will probably give this project over an 80% chance of succeeding.

My post says to define activity goals as well as performance goals. In fact, with a new salesperson, my ramp up plan focusses totally on activity. In sales, opportunity volume x win rate = volume.

I didn't think you were going to make this person independent-- I thought you decided to make him/her an employee. Some expenses still can be paid and be an independent contractor.

I'd just create the spreadsheet for this scenerio. Two things are the goal of this exercise. You are going to offer a base-- but you want to make it clear that this is only part of the compensation package. You dont' want the person to feel its base plus commission and the commission part is optional. You both need a realistic picture of what this person can accomplish and what they'll be paid. 2nd, I want you to understand the cash flow.

Do you still want the person to work out of their home, or your office? I wouldn't change compensation if they are using your office at this time. Nothing is set in stone, you can change a package at any time. I thought this person wanted to work from home.

Yes, if you pay a base typically commission is less. Like I said, the # is insignificant, they have to pay for themselves and be a profit center for the company.

Its really not that complicated. You are hiring an experienced person, so the ramp up period shouldn't be long. You will be able to tell by the activity level if this is going to work in the first 90 days. Sounds like he/she knows the business, can get more for your services-- they'll be profitable soon.

Base with later draw is a great idea. Even if you do base for 6 months, do a 3 months review of what's working, what is not working. Be candid. (A great book on this is Execution, The Discipline of Getting Things Done, Larry Bossidy and Ram Charan) Evaluate that the effort and pipeline is there so they can be profitable after 6 months. If not, part as friends. When the draw kicks in, raise the commission. In my agency, one of the companies has a mix of employees and agents. The agents don't get a base, a few expenses, and twice the commission of the employees-- if that helps give you a guideline.

In my mind, your priorities are to do the spreadsheet so you know exactly at what volume that person becomes profitable to you. Build the ramp up plan.

Carol
Sell Well and Prosper tm

hello Jeff,

Almost a year ago you were thinking about hiring a part-time salesperson. I'm curious if you ever did this. What were the results? Is the person still working with you?

I would love a chance to discuss this by phone. If you'd be willing to discuss your experiences, please send me an e-mail. You can find my e-mail address on my profile page by clicking on my username.