Sales Representative

[studentlawn]

My company isnt very large, but im looking to expand. I was thinking of letting a sales representative handle all my customers. I want to hire someone (a marketing major in college) to basically go get customers. I plan to put out alot of advertisements. Every contract he gets signed from my advertising he gets 1% of contract signed, small portion but all he does is have to go to the door and give estimates. He would then knock and neihbors doors and offer discounts. He would also be going around the to business' and offering service. For every contract he got signed cold turkey, I would give him 10%. I think this could be a great way for him to make some money, for my company to generate some customers, and a nice way to take a little load of my back. Im deciding wether he should also be in charge of customer satisfaction as well.

Sam
Has anyone done anything like this?
If so how did you pay your sales rep?

[Mudmower]

If he is going to be bidding for you,........train him well!!!!!! What if he totally screws an estimate and signs them for a year. I would not be real comfortable with this unless I trusted their judgement. Things could go bad pretty fast.

Jim

[DFW Area Landscaper]

I totally agree with mudmower. Your sales rep will have too much incentive to under bid, which is a VERY easy thing to do. Especially if he has no experience with how long things take using your equipment.

Hell, I've been doing this for darn near a full season and I still battle the problem of bidding too cheap. I want to hear those customers say "yes" so I'm always thinking in terms of 'how low can I go and not kick myself'. If your sales rep doesn't have to deal with the consequences of working too cheap, he'll be even more inclined to bid too low.

You might consider something like this:

If you gross $xx/man/minute on that job he gets yy%

As xx goes up, yy goes up too.

Later,
DFW Area Landscaper

[studentlawn]

Good point, training him is one thing, which I plan on thuroughly doing, but doesnt he have incentive to bid high as well?... I mean the better he bids, the more money he can make per customer? I will definitly tell him whats acceptable and whats not. I was hopeing the whole purpose of him being a sales manager is to push all the extras, increasing our gross revenue, and also getting more clients, and getting them close together. I just know how sick I am of giving estimates. Mabye if i can come up with an incentive plan for him, like the greater the gross yearly contract, the greater percentage he earns?
Mabye thats what you just said

[Green in Idaho]

Let's see...

A) Bid high and get 10% of nothing due to no sales, or
B) bid low to get lots of contracts and then get 10% of them all and not suffer any consequences of the low bid contracts...

I'll choose B.


10%???
That is a lot. Net profit on average is less than 20% after expenses including labor (you). So you would be giving away at least 1/2 of your net profit. Most likely the net is less, in which case you'll be giving away even more... ouch. 3% is more realistic.

Most landscape biz need a sales rep after about $250,000. And the owner/operator ought to be the bidder up to that benchmark (even after $250K in most cases).


You wrote you are tired of giving estimates. Why is that?
How many estimates are you doing per week?
What is your sale/close rate?

A good full-time sales rep could get you more work than you would know what to do with as a solo or small operator. I would consider myself a good salesperson for this kind of stuff, and IF I was working at it 8 hrs a day, within a week I could easily have a month's work of small project jobs, and probably a full route if starting in the spring- more than one crew could handle (based on my quality level and scope of services).

Note your 10% commission and the above statement for a months work for mixed service-- let's estimate $10,000 gross sales for a month. If it takes a week to sell a months worth of work (160hrs+), a 10% salesperson makes $1,000 in a week with ZERO risk of loss. If someone can sell 4 months of work in one months of sales, you need the crews to keep up with the sales ($40,000/month x 9 months= $360,000 annual sales). of course spring & fall are more busy AND these are just rough numbers, BUT If you don't have enough crew hours to handle that sales volume there's no need to hire a salesperson.

THERE's LOTS of work out there!

[Rustic Goat]

Originally posted by studentlawn My company isnt very large, but im looking to expand. I was thinking of letting a sales representative handle all my customers.
Isn't there a conflict between the statements here?
Small biz- that's good
Wants to expand- that's good
Need sales rep to handle accts- Not

Any sales rep willing to dedicate the time to do the job properly is not going to be willing to carry the biz on his back from small to good sized or even large, without being a major player in the business.

Catch 22= You think you need a salesman to get there. You need to get there to really need a salesman.

Before you go cutting up the profit pie, I'd really have to consider doing the growing with what you've already got. As mentioned, how you going to train this rep anyway, without taking a chance on this person bidding lower than it costs?

This really sounds more like something YOU need to be doing. JMO
Thought there were at least three of you guys up there with this business.

[studentlawn]

Well i figure like this. My partner and I are in college as it is so this becomes a part time deal. Becuase we only have business and college loans to take care of our lives become alot less complicated financially. I don't have kids to feed and a mortgage to make. Making instant huge profits isnt a huge concern of mine. The growth of the company is. Between going to college full time and managing and operating the business. I get tired out in certain aspects. Especially in the spring. My partner also plays baseball which is going to limit his time during the estimate rushes. Re thinking, I do think 10% will be lowered, but I still think a sales rep is essential becuase he brings extra time and directed energy to the table.
Sam

[studentlawn]

In addition, am I supposed to cover this worker with worker's comp? I mean he won't be operating machinery but he could slip on a stair going to an estimate and break his neck.

[Rustic Goat]

Neither does a salesman in a shoe store (for example), but they're still covered by workers comp.:)

[Mudmower]

If you pay him strictly on commission, I believe that he is considered a contract employee. If the business makes money he does. If it doesen't, he doesen't.

My dad owns boats and the crews are considered contract workers. They aren't paid hourly, or salary. They only get paid if the boat catches something and sells it. But, a whole other can of worms are opened if they quit before the catch is sold. It gets into old maritime law.

Basically, he brings you work and is paid a percentage. The proper name is independent contractor.

Hope this helps,

Jim

[Green in Idaho]

Playing baseball vs. making bids..... ????

May I try these again?


You wrote you are tired of giving estimates. Why is that?
How many estimates are you doing per week?
What is your sale/close rate?

[Rustic Goat]

Originally posted by Mudmower
It gets into old maritime law.

You're right there, Jim, maritime law precedent was set long ago, and the laws of maritime should not be confused with any land based.
Even independent contractors can not stay on that status permanently, if they continue to 'work' for the same person/business for an extended period of time. Plus, if that 'work' requires them to adhere to a set schedule, follow 'company' rules, is instructed what to do and how to do it, the tax laws and their enforcers do not consider them independent, they are an employee.
Studentlawn, if you haven't hooked up with a CPA yet, you really ought to get that way, this person should be able to guide you on questions of this matter.

[cklands]

Originally posted by studentlawn
I don't have kids to feed and a mortgage to make.

You will some day won't you? What size are you now. If you have a guy doing the sales what are you going to be doing? Are you going to be doing the work that he is bidding on? So this guy is going to tell you, the owner, how long you have to do a certain job. No thanks. I would much prefer to be out doing the estimates and sales.

[Groundcover Solutions]

In my opinion, you should not hire a sales rep. If you want to have someone dedicated more to sales it should be you or your partner. It would be easier to hire someone to help out with the labor part in order to free one of you up to help bring in new accounts. You know your business better than anyone else. You know what kind of work you want to take on and what you don't want to do. If you try to train someone it would take a ton of your time to get this person to the point that you can truly trust him or her. I also don't think you will be able to afford some one. In the beginning this person is going to have to work extremely hard to make any money at all. Most reps start out on salary and then move to a commission type pay when they get good. If you are still set on finding a rep look for someone that is already familiar with the landscaping industry. If you have someone come in that dose not know your business or even know anything about landscaping then you are going to be in for allot of work. Try looking more for someone that was working for a landscaping company such as a foreman or something of that level that has a good personality and can work with customers. Personally right now I am buying into a company in the landscaping industry that is already partially established. What I plan on doing is hiring some help to run the operation while I try to get more contractors to sign on with us. I considered going the sales rep route but when I looked into it, in my area at least it would not be cost effective until the company is quite large. It just makes more sense to me to hire a foreman to run your operation so you can dedicate your time to bringing in new accounts and keeping the customers you have satisfied. Just make sure that the qualities of your work dose not decrease. This is all my two cents

[studentlawn]

Very good points, the more I think about it, I would rather pay someone 8 - 10 bucks an hour to fill in as a worker and me do the sales.
Right now we have around 40 customers, but we started this spring with no money, a crown vic, 2 craftsmans and a snowmobile trailer. Things are definitly different now. I want around 80 - 100 contracted customres for next year, anything above I will try to subout untill the next season where I will go for a 2nd crew.

The problem with estimates, is its timing. In the passed giving estimates were hectic, I guess it will be a little differnt in college. Last year my partner and I were getting up at 4 30 am to pass out flyers, going to a baseball lifting session by 7 going to school untill 3, haveing baseball practice till 6:00 then giving estimates until 8 - 9.. man sorry, i don't know how I found the energy, but I know theres got to be a better way. But i really like the idea of giving up mowing for the spring and concentrating on sales and customer relations. and Rustic Goat, i actually do have a CPA, and he answers questions, handles insurance, bankers, and does my taxes for no charge, as long as i keep his son out of trouble and promise i will hire him as a foreman when hes an old man and doesnt want to control money any longer..

[Blue Ribbon Turf]

Hey Mud
I agree, if you are needing a salesperson let your partner or yourself do it. It is hard to find "GOOD" sales people to work on just commission. What about their expenses, gas, millage ect. When and how would you pay this person? Each week? From what? If you have not performed the work for the customer and if the customer has not paid you for your service, then were is the money coming from? Working capital. What happens if the customer signs the contract and then drops you after two weeks and you have paid the sales rep commission then that is a double whammy! Ouch! I have been a sales manager for 20 years and have seen almost everything and made almost all the mistakes (more than once since I am a slow learner at times). When it comes to promoting your own small company it is better to represent it yourself. Thats my 2 cents.

[alpine692003]

ooo .. very interesting topic, I was going through this and I was planning on getting a contract sales rep as well.

If the sales rep closes the job, he/she will get a % of the job.

Lands a $1,000 job he gets 20-25% of that $1k.
Lands a commercial site 450 a month, he gets a % of that..

Hmmm.. smart idea..

[Soupy]

It will never work for a small company. The only way it would work is if you did a set price per neighborhood. but if you were going to do that, you would be better off paying some kids to hand out the legendary every lawn cut for X amount Flyer.

[two_planks]

I've done it and had it work. the rep would go door to door looking for possible customers and set up an appointment for me to come give an estimate. When I closed the deal he got 10%. Of course I always raised the price 10% to cover his end, the only problem was keeping the guy motivated.

[Team Gopher]

Two_Planks that is a good idea.

[Lawn-Scapes]

I'm glad this topic came up because I am playing with this very idea. The difference is.. the person I am talking with about this.. knows the business. We haven't really sat down and talked in great detail yet. Our thoughts are that he is going to do the marketing/estimating and he would earn 10% of the yearly contract. Maybe something like.. 1% each month for 10 months. If the clinet cancelled at some point.. so does his commission.

I am looking to double or even triple the size of my business for next season. It sure would free up a lot of my time to have someone else do it... and let me do what I do best... get the work done.

Do you guys really think this is a bad idea? Any other thoughts, comments, advice or ideas?

[alpine692003]

Welp, I'm going to be doing it as well.

I'm going to school this week to get education on landscape / horticulture design and maintenance.

Next year, hopefully I will get a sales rep to seek out contracts.

:waving: :waving: :waving: