Hiring a Sales Person

Discussion in 'Business Operations' started by adrianvbarrera, Dec 11, 2003.

  1. adrianvbarrera

    adrianvbarrera LawnSite Member
    Posts: 163

    My company is looking to hire a full time estimator for landscaping and lawn work. We do not know what is best should we hire on salary or commission?

    If commission what is the on going rate?

    We have a person in mind that is a member of our church and this person use to do the estimating for her families landscaping business but because of conflict of interest she resigned from their company. She is highly experienced and seems like she knows what she is talking about. A true sales person at heart.

    Our question is Commission or Salary Pros and cons.



    Thanks
     
  2. hoyboy

    hoyboy LawnSite Senior Member
    from Chicago
    Posts: 346

    I've done a mixture with my 3 salesmen...part salary part commission. Enough salary to give them a sense of security, but not enough to make a good living. The commission then makes or breaks them.

    Dan Norton
     
  3. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    small salary, LARGE COMMISION that way she won't waste time with small no profit jobs
     
  4. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

  5. hoyboy

    hoyboy LawnSite Senior Member
    from Chicago
    Posts: 346

    wrong. It needs to be balanced between salary and commission. Too high commission and you will find that you can't compete on the LARGE jobs because your sales labor is variable (and high) whereas the next guy's sales labor is fixed (and low).

    How am I going to compete with the next company on a large project when I have to pay my salesman a 10% commission? No way it will happen. But if I'm paying a decent salary with, say, a 3% commission....I'm still competetive.

    In addition, a base salary keeps my salesmen on my side...they are not taking every cheap job that comes their way. They look out for the company and make sure the jobs are priced profitably. If they were strictly, or largely, commision...that might not be the case.

    A balance formula is definitely the way to go.

    Dan
     
  6. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    Its simple a good saleperson KNOWS what you have to make on a certain job and I'm talking about profit margin also and then they add there commmision on top. They bid to high no commision becoase you did not get the job and it wont take long to figure that out. If you pay only 3% they have to take all the cheap jobs to earn $$$$ the higher the commision the more incentive to sell.
     
  7. Johnny

    Johnny LawnSite Member
    Posts: 102

    Sales positions usually take time to mature. What I mean is that there is a growing process that may take years. Relationships will take time to develop. For a salesperson to earn a living there must be a fair base salary. If it is too low, the salesperson may not make enough money to survive personally. Thus, leaving for another job. This ends up being costly to your business, now you have to start all over (training, clientel development, etc.). The expense of their salary is spread over your existing revenue anyway.

    A fair salary will get you a good salesperson. Then a 3-5% commission will give enough incentive to sell. Over time this will grow, increasing sales. The initial increase in payroll (as a % of sales) will decrease over time.

    Hiring a salesperson is a long term investment. So you want someone to stick around for the long term. Balancing salary and commission is key.

    You want your salesperson to sell themselves and the company, not to think to much. Pricing standards must be provided to ensure success. They don't need to know why you charge a certain amount, just that these are the prices, sell them. And these are the services where you can bend a little on price (and this is how much you can bend).
     
  8. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    My dad is salesman for a large hardware and building supply wholesaler.The company he works for (been there 40 years) has tried strictly commission and salary.
    Salary gives the employee no incentive to sell.They know they'll be getting paid anyway.
    Small commissions also do not give very much incentive as your competitor will offer higher commissions and you'll lose employees.
    The best way has seemed to be commision only at around 5.8 to 6 %.
    Selling one million in services will give them a salary of 58,000 - 60,000.
    Two million will double it,and so on.
    Your salespersons salary will be dependant on how hard they work AND the territory they cover.They're not going to bring in much money working 40 square miles as opposed to 80 square miles.Also it depends on the area they're covering.A small town isn't going to bring in as much as a city.
    One more thing is you need to also pay for the employee's mileage.About .25 to .32 per mile or you need to furnish their vehicle and provide insurance for it.
    Another thing to consider is your ability to service all the accounts your salesperson brings in.If he/she is getting you 10 accounts per week and all you can possible do is 100 accounts per week,then you're not going to need a salesperson for very long.
    BTW,dad retires in less than two years.I get to hire a salesperson with over 40 years experience for the price of a few fishing lures and free lawn service:D
     
  9. Johnny

    Johnny LawnSite Member
    Posts: 102

    Nick,

    Selling goods and selling services are two different ball games!!
     
  10. MudslinginFX4

    MudslinginFX4 LawnSite Bronze Member
    Posts: 1,170

    I think the owener should be the salesperson! Atleast in my business it is. I like to know everything we are getting into and everything about my money!
     

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