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June 2002
The Manufacturers’ Agent
Personal Qualifications
Sincerity, dependability, honesty and resourcefulness are essential traits for anyone entering the field of the manufacturers’ agent. Other desirable qualifications are initiative, imagination, moderate
aggressiveness, enthusiasm and the ability to work without direct supervision. Agents must be able to deal with all types of people, be extremely well-groomed and have excellent oral and written communication skills.
Working Conditions
Manufacturers’ agents will work under varying conditions depending upon the products they sell. Since they are independent businesspeople, they work without supervision and are directly responsible for planning their
own time. Besides making sales calls, it will be necessary for them to schedule appointments, make numerous phone calls, and do a variety of paperwork. The size of an agent’s territory may range from small to
extremely large. However, all agents must do a considerable amount of traveling by automobile or airplane and may spend varying lengths of time away from home. Some agents are responsible for displaying their
product lines at national and regional trade shows, as well as traveling to make sales calls on customers.
Education and Training
High school students considering a career as a manufacturers’ agent should choose courses in sales, marketing, merchandising, business and math. Those interested in selling technical products should take as many
related courses as possible (e.g., chemical sales — chemistry, physics, math; industrial products — machine shop, math, physics, etc.). Although many manufacturers select only sales agents who have a college degree,
especially those who produce a highly technical product, opportunities do exist for persons with little or no college background. Experience in some form of retail selling, such as department stores or door-to-door,
may help qualify a person aspiring to become a manufacturers’ agent. Those planning to earn a college degree should major in either a specific technical field, if that is their interest, or in business
administration for those who plan to sell non-technical products.
Earnings
Since a manufacturers’ agent is paid on a commission basis, earnings will depend on a number of factors. The type of products sold, the number of manufacturers represented, the commission structure, and the
individual’s own sales ability all have an effect on the agent’s income. Therefore it is difficult to calculate an average wage. A beginner may make between $15,000 and $17,000 per year, with the average for a more
experienced agent being closer to $52,000. An agency owner, who has a number of independent agents working with him, may earn as much as $200,000 net (after expenses) or more. Unlike the direct salesperson, a
manufacturers’ agent is an independent businessperson and is not reimbursed for such things as transportation costs, hotels, phone calls, meals, car rentals or secretarial services. Agents are also responsible for
their own medical insurance, retirement plan, and for paying their own income and social security taxes.
Employment Outlook
There are over 30,000 manufacturers’ agencies in the U.S. today. The number will undoubtedly increase during the next 10 years. The factors that contribute to growth include a rise in population, a rise in the
standard of living, better distribution techniques, a wider variety of products and an increase in the technical skills needed to pioneer new products. New positions are created when there is a growth in these
areas. Openings also become available due to attrition as well as expansion. More and more manufacturers are making the switch from direct salaried sales forces to manufacturers’ agents because it lowers their fixed
cost, since they pay agents only on the basis of goods sold.
This concludes our “back-to-the-basics” look at the life of the professional outsourced field salesperson. Next month, we will examine business planning for manufacturers’ agents.
The Trials And Tribulations Of Starting A Manufacturers’ Agency From Scratch
by Sharon S. Kilborn
In early 1991, after years of cocktail discussions about starting our own business, my partner and I decided the time had come to begin the process. There were several driving factors that led us to the desire for
our own business — a desire to be stationary and stop the cycle of relocations around the country every couple of years, a belief that we had the skills necessary to be successful, an inclination to test our beliefs
that we could do things better than the management at companies where we’d worked, and a desire to steer our own destiny.
We also believed that because of downturns in the industry we were in and the company CEO’s plan to move the company to another state, our division would be moved in total in the relatively near future, leading to
another relocation or a layoff for both of us. There was also a new president from outside the industry, and we both had philosophical differences with him about how to run the company. We didn’t agree with his
desire to change the business into a division that only handled the very largest capital projects. We both felt that the strength of the division through the years had been the diversity of the product mix, and that
to make the above change would require basically all new personnel with different skills. We felt this was impractical in a depressed market, and would only lead to the demise of the division.
The First Year: Inventory
We inventoried our individual personal skills and developed a list of the things we felt were our strengths or that were areas of special technical expertise, including:
- Direct sales, both capital equipment and service sales
- Marketing, including market research
- Field service for air pollution control equipment
- Particularly strong technical expertise in particulate control, gaseous control, and fans
- Some technical expertise in turbines, material handling, and nuclear services.
- Business planning
- Contract administration
- Project management
- Knowledge of refining, utilities, and primary metals industries
- Construction management
The first year was spent in name searches, developing bylaws, buying office equipment, incorporating the business as a subchapter S corporation, and obtaining a general engineering contractor’s license for the state
of California. We continued to work for others during this process.
At the end of the first year the preliminary work was completed, and we had our own corporation. We didn’t have a product to sell or install, but the business existed and was starting to cost money each year.
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