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Sales Representative

Discussion in 'Business Operations' started by studentlawn, Oct 8, 2003.

  1. studentlawn

    studentlawn LawnSite Member
    Posts: 117

    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.

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

    Mudmower LawnSite Member
    Posts: 102

    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.

  3. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    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.

    DFW Area Landscaper
  4. studentlawn

    studentlawn LawnSite Member
    Posts: 117

    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
  5. Green in Idaho

    Green in Idaho LawnSite Senior Member
    from Idaho
    Posts: 833

    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.

    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!
  6. Rustic Goat

    Rustic Goat LawnSite Bronze Member
    Posts: 1,194

    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.
  7. studentlawn

    studentlawn LawnSite Member
    Posts: 117

    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.
  8. studentlawn

    studentlawn LawnSite Member
    Posts: 117

    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.
  9. Rustic Goat

    Rustic Goat LawnSite Bronze Member
    Posts: 1,194

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

    Mudmower LawnSite Member
    Posts: 102

    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,


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