The Trials And Tribulations Of Starting A Manufacturers’ Agency From Scratch
At the end of our first full year with products, we reassessed the business plan we had done for each principal to see how to proceed, and evaluate what was working and what wasn’t working. We still had a couple of areas (CEMS, Fans, Turbines, Material Handling) that we needed products for, and we have one principal that we find we can’t sell because of the way we go to market. His line requires day-to-day selling to stock room personnel or maintenance personnel. We’re geared to maintenance as well as purchasing personnel, but we sell capital equipment and services where the services are bought at their most frequent on an annual basis, and are generally tied to outages. We don’t call at the right level and frequency in the customer base to suit his product.
We also may have to downsize our territory with a couple of our principals because we find that at present we can’t cost justify calling on general industry in New Mexico and Arizona. Our business by early 1995 had reached a point where it paid for itself, but we weren’t able to take any salaries yet.
We did a product search for a CEMS line, and obtained information and literature on about 30 companies in this market. We selected a packager rather than a manufacturer because we felt that their skills most closely fit the market as we saw it. We also added a packaged boiler line to our list of products. This was our first step toward adding “process equipment” to the “air pollution control products” that we already had.
We sold a very large CEMS order, a large customer baghouse, and a few other small orders. We also picked up a great line of tower packings that we got several small orders on immediately following an aggressive direct mail and sample campaign. Inquiries and activity level were really picking up at this point as we continued with active telemarketing and direct mail. 1995 was a successful year for us. We were able to fund all of the office expenses, and start to pay down a small portion of the debt of the corporation (from loans from my partner and me) that year. We had enough orders booked already to fund the office expenses for the next year from commissions due.
We are now beginning to focus on the holes in our lines to fit the customer base we are most comfortable and most successful with. We find that we now have lines that fit our selling skills, and most of them are reasonably sellable in our territory. We have a couple of principals who are inexperienced at working with sales representatives or who want to retain house accounts, and that may ultimately require a change to another vendor who can better fit our needs, although we hope not. There’s a lot to be said for the comfort of working with people over time as you each reach a point of knowing what you can expect from each other. We plan over the next few years to be the biggest and best manufacturers’ representative in the Southwest. We believe our success rate in these first years shows our ability to make that happen. We’ll be ready to move on to more product lines once we reach the point where we feel that every line we have is very successful in our territory, and we’re not there on all of our product lines yet.
The series continues next month.