Contracting out all sales..... a minefield or a boon?!?

[ed22]

Hi all and cheers for advice to date..

Well its certainly all go running a business!!!

I've been approached by a company that are offering to pick up all my sales (ads in my publication....)Tempting as we're stretched and profit only appears after we've sold x ads per month... which to be honest is a nightmare at the moment with just me doing it!!!

So...the company wants a 12month exclusive contract in respect of all sales.
He will get a percentage of all revenue he brings in.
This is governed by trigger points so he gets 10% at £x-£y, 25% if he gets above this etc etc.
Further, he thinks we're significantly underpriced and he could get a lot more per booking than I could (!)

However, this structure would guarantee that (assuming he sells any.....) I get at least what I'm currently charging and perhaps greater volume.

He's got 3 sales people and claims a strong sounding background in media sales.

Does anyone have any experience with this and could shed a bit of light on these things!??! Is it a complete minefield or a potential growth accelerator??

Cheers, ed22

[PetrolTed]

Have they significant experience in selling in this area? Have they got skills to offer that you don't have yourself?

There's a temptation to:

1) Thank the lord that someone else wants to do it rather than you
2) Be suspicious

Do a lot of investigation into what they do and who else they do it for. Ask them who their competitors are (or find out by some other means) and go talk to them and find out what their terms are etc. Talk to as many people as possible - then you'll be able to make a more informed decision.

It can be a good thing.

[Plotloss]

Contract sales force?

I'd never have thought...

Blimey.

Blimey.

[ed22]

PetrolTed said:

Have they significant experience in selling in this area? Have they got skills to offer that you don't have yourself?

Absolutely. They def. have skills that I don't... the main chap has direct experience of media selling (Times, Sunday Times... all sorts)

[/quote]
There's a temptation to:

1) Thank the lord that someone else wants to do it rather than you
2) Be suspicious

It can be a good thing. [/quote]

1) Yep!
2) Have asked for references which I will pursue. Part of my suspicion is that if I can earn a similar amount without doing the work then it has to be too good to be true! Typical suspicious mind.

[PetrolTed]

ed22 said:

Part of my suspicion is that if I can earn a similar amount without doing the work then it has to be too good to be true! Typical suspicious mind.

Just do the sums and don't forget to include the fact that if you're not doing the work you've got more time to work on other things to grow your business.

[GreenV8S]

Something that would bother me a bit is that the exclusive rights give them total control over your company's cash flow and of your relationship with every single customer. Isn't there a danger that the tail will end up wagging the dog? You might still own the company but you could lose control of the business, if you see what I mean?

[PetrolTed]

It's a good point. Some of my business is handled by an agency and I retain control of other aspects which then spreads the risk.

[Davel]

The main concern is that your success is mostly in their hands as they will be responsible for your income.

Ask them to supply you with the names of a few clients, that you can speak to or visit, to see if they really can achieve what they say they can.

Have they been established long?

I'd be nervous but I personally hate selling and if it is a skill that you can safely buy in, then you should consider it. Just make sure you use the right marketing company.

[judas]

Make sure there's a get-out clause if he's not hitting targets.

[roadsweeper]

GreenV8S said:

Something that would bother me a bit is that the exclusive rights give them total control over your company's cash flow and of your relationship with every single customer. Isn't there a danger that the tail will end up wagging the dog? You might still own the company but you could lose control of the business, if you see what I mean?

judas said:

Make sure there's a get-out clause if he's not hitting targets.

Both good points IMHO. I think it's worth investigating, but you need to be very careful.

[Eric Mc]

Yes, be very careful. Giving such control to outsiders is fraught with danger. It's not altogether dissimilar to Factoring of debts. When the going gets tough - these guys usually reach for the small print.

[ed22]

Thanks all once again for your advice.

Well, looks like a good option financially and it will help us to grow much quicker.

Thanks to 2sb too....

>> Edited by ed22 on Thursday 13th October 00:26

[2 Smokin Barrels]

...and the risk of confidential info enetering the public arena?

[Eric Mc]

"Grow" what much quicker?

[Hendry]

I run a contract sales company for IT vendors so know it from his perspective, albeit in a different industry. Asking you for exclusivity is an obvious thing for him to do (I would do it), but you then need to ensure HIS targets are YOUR targets plus some. If he is not acheiving targets then his contract reverts to that of a non-excluive agent.

That way he gets what he wants but needs to show he can do what he says.

I don't know how often you publish, or how long your cashflow could take no income (if he was crap), but I would make the period of exclusivity no longer than the shorter of the two.

If you need any advice drop me an e-mail to [e-mail].

Good luck!