by Robert Blanding, N.E. “Mac” MacGregor and Brad Starr, CPMR

Some Advice and Recommendations

The best advice is to run lean and mean! Minimize expenses, but don’t run so leanly that you fail to appear (and be) professional. To survive, you must watch your expenses and keep fixed costs low. Here are some start-up ideas to consider:

  • Use a shared office facility with good secretarial services and an available conference room … or … consider establishing a virtual office. (Remember the advice from a previous article about the problems to be avoided in a home office.) With today’s technology, you may find you can run your business and keep up with all types of communications from almost anywhere.
  • Keep up-to-date on new technology, and use it to improve your communications capabilities and lower your costs. Invest in sales automation software that includes an opportunity tracking function. Use the Internet and the information available on web sites (your principals’ and others) to operate more efficiently and to continually update your knowledge.
  • Whenever possible, lease high-priced equipment, and ask your accountant about the pros and cons of leasing your car(s).
  • Give a part of the business to your employees. It will motivate them to help the business grow, and you may help keep salaries lower. Another caution: If you pay poorly, you will have to resort to hiring either poor people or rookies. Young, enthusiastic people can be a plus, but adding at least one “gray hair” with experience to the staff can provide you with in-house coaching for other employees.
  • Before you establish compensation plans for your employees, review the various options available so you select the plan(s) that will serve your firm best.
  • Make expeditious use of the telephone and e-mail. Many reps are giving up their land lines and now using cellular phones exclusively.
  • Plan your territory travel wisely. Don’t criss-cross the countryside just to be responsive. If you ask, a day or two delay is often satisfactory to the customer or prospect.
  • Invest in a time management course and use what you learn.
  • Plan your work and work your plan.
  • Use entertainment wisely. If you wish, you can arrange meetings so that you won’t be obligated to buy meals. When your business grows and becomes profitable, you can use this selling tool more extensively.

Start-Up Expense Items

Your minimum start-up cost categories, excluding salaries, benefits and other items related to employees, will include expenditures for office and administration; company image; automobile; legal and accounting; plus dues and fees.

Office and administration expense items can include: furniture; telephone(s) purchase and installation; voice mail service; personal computer hardware and software; a facsimile machine (or a fax card for your computer) and a copier (or a combination unit with a scanner and computer printer included); filing cabinets (do it — be organized); shelving for product literature, etc.; test equipment (industry-dependent); a postage meter; post office box rental (if you choose this option); and a bulk mailing permit (depending on anticipated volume). Other options to consider include a personal digital assistant (PDA) and compact disk (CD) burner. Don’t forget to figure in the cost of any training needed for you (and your employees) to use your new equipment and software.

To establish your company image, you should also budget for graphic arts design services and production of letterhead and envelopes, business cards, line cards, stickers (for principals’ brochures), company resumes/brochures and folders for literature. With current computer printers, you can produce many or most of these items in-house, but you elect to have some items produced by a printing company. Your purchase or lease of an automobile for business use should be an example of moderation — in price and size.

In seeking legal and accounting services, ask other representatives and/or your trade association for referrals. Look for professionals who know and understand the representative business as well as the complexities of establishing one. Make it clear that you are a start-up and do not have significant resources. Some accountants and lawyers will take the chance that you will bring them future business and so will not charge major fees for business start-up requirements.

Your planned expenses for dues and fees should include banking fees (checking, loan interest, etc.), insurance, trade association dues, local business organization dues, publication subscriptions and local trade show expenses (ask your principals to supply equipment and even share booth rental costs).

This article, the last of a four-part series, is reprinted from the MANA/MRERF (Manufacturers’ Representatives Educational Research Foundation) Operations Manual for Manufacturers’ Representative Firms, which will be made available for purchase on CD-ROM in spring 2003.

Click here for information on a great deal on the Research Bulletin and Special Report series.