Learning From Agency Beginnings (Part 1)

Successful navigation of the learning curve coupled with strategic planning are the bywords most commonly cited by independent manufacturers’ representatives as they describe how and why they’ve done what they’ve done to get started.

For starters, we visited with Jeff Bowdish, J L B Manufacturing Solutions, Arlington, Texas. Bowdish started his agency in 1999 — a short enough time ago that the memories of what he went through and accomplished are still fresh in his mind.

According to Bowdish, “I had been working in sales for a company that manufactured machine tools. I told myself that I could make better decisions than the owner. Rather than be upset with my current job, I decided to go out on my own. As the saying goes, I wanted to be the fool rather than work for the fool. As a side note, however, I have more respect for previous employers today than when I worked for them.

“When I started, I represented companies that I sold machine tools to. I had a friend in the business that I subrepped for and eventually upgraded principals, keeping a few that I started with.”

Starting an Agency vs. Buying

From the beginning, Bowdish admits his mindset was firmly on starting his own agency vs. buying an existing business. Here’s his reasoning: “I’m a development guy, and growing something out of nothing with a $100 bill is more exciting to me. It also seems to be a better investment for my personality.

“When I started my agency, I didn’t have a business plan. I didn’t even know what a professional rep firm was. But for me, the rep agency seemed to be the best business model at the time. It does not require any capital to start, and if you have minimum expenses at home and at the office, you can overcome obstacles. I was very optimistic at how soon I would be profitable, and I was very committed and armed with extreme stubbornness.”

He explains that there was no overnight success for his venture. “What I thought would take three months took 12 months instead. On a positive note, that 12month period was two years better than many of my friends in this business. I put the business plan together after I was successful, and I’ll admit it was a poor one to start with.”

With that as his beginning, Bowdish looks back at what he’s accomplished and admits that over the years, “I have grown as a business owner through hard knocks, excellent information and training from MANA and other sources along the way.”

He continues that the agency has grown to the point where he’s hired his first salesman. If that hire is any indication of future hopedfor growth, business development hasn’t reached the point yet where succession planning has made an appearance on his radar screen. As Bowdish explains, “With the constant change in the marketplace and the changing of principals and customers, I don’t feel like I have a solid business that has built up enough equity to have any value in the marketplace. What I do have is a very good business that provides a very nice life for my family and now hopefully my new salesman and his lifestyle.”

It’s fair to still consider J L B Manufacturing Solutions a new agency, but even during the relatively short period of time Bowdish and the agency have been toiling in the marketplace, the Texas rep has formed a solid view of where his business is taking him — and where he will take it. According to Bowdish, “It seems that with the constant pressure of price and manufacturing and movement of entire product lines to China and other offshore locations, the business I currently service will eventually evolve to additional services in and around the same customer base. Looking 10 years out, I cannot see a rosy picture of what will be remaining as customers in the United States. I say this regardless of whether I represent domestic or lowcost foreign principals. I believe I will continue to service the marketplace I have chosen to sell for. I have grown in size as an agency, but I will have to add additional services to sell in order to continue to grow as an agency in a shrinking marketplace.”

The Need to Evolve

He further explains that he sees his rep firm having to “evolve with the times to keep up with my current standard of living, and having a succession plan for this type of a future is bleak. This business model has been wonderful both for me and my family and will continue to give me the flexibility and lifestyle I chose when I started.”

Reflecting on some of the steps he’s taken to get his agency where it is today, Bowdish offers that in his opinion, “finding companies to sell for has been easy. Finding companies that have business on the ground (receiving existing commissions as a new agency was impossible) has been hard. I give all the credit to God as customers found me and commissions came in. I started with no customers and a typed line card. Today I have many customers, and I bring additional value to the relationship with principals looking for representation.”

Some additional thoughts Bowdish shares as he looks back over four years of growth:

  • “To start a rep firm today in a down market the way I did in 1999 would be almost impossible unless you really get lucky with one customer. It is very possible to start a rep firm today, however, if you have one or two anchor principals that will give you money to start. This is the model that I would encourage any new rep firm to begin with.”
  • “Ask principals for marketing money for six months if there are no customers in your territory. If you get two to four of these lines, you should be able to meet your expenses monthly. This will also provide you with enough time to add lines and, of course, the most important part, customers. I would encourage other startup reps to be creative and take on a line with several customers at a highly reduced commission structure. This strategy will get new reps involved with customers who will get to know them. In turn, the rep can then crosssell other lines that have higher commissions. Also, new products with the anchor line should be represented at a higher commission rate.”
  • “Setting the vision and direction of your company will usually seem very easy until you get into it, so keep your mind open to changes. The most important part of this business is the money stream and how much you get to see of the money.”
  • “I’ve found that getting new lines is easy. I have found principals through referrals, MANA and Agency Sales Magazine. Referrals remain the most effective method. But the problem is that there is always some degree of exaggeration when taking on a new line. For instance, I took on a 5% line earlier this year that had more than $2 million in the territory. However, the reality of the situation was that the principal wanted to keep those as house accounts. I took on the principal because of their unique capabilities, but the amount of time I have devoted to it has been reflected in the lack of commissions.

“I also have taken on lines in the past with attractive commissions. Almost without exception, the results have been 30%50% of what the manufacturing company has claimed it was. This has been a very disturbing trend for me and other friends in the rep business. We take on these lines that seem to fit our product offering with a grain of salt and know that the real effort starts when either the commissions start or the opportunity justifies the effort.”

  • “I would give myself a poor grade when it comes to efforts to promote my agency. I continue to sell my agency well to new lines and new customers. I’m very good at networking, but my overall marketing has been nonexistent. I’m sure this will improve as my agency grows in sales, employees, principal quality and services. I’ve had a web site for two years and use it primarily to communicate my email address. I’m sure I will improve the site, but I have only found four customers for very small amounts of business with it.”
  • “After three years, I have finally outsourced the accounting function for the agency. I know I should have done this two years ago when I became profitable. What a relief it is not to have to do this. On some months, the income statement is not a relief, but more a reality of growth in a down market.”
  • “I would add that repping is one of the greatest businesses you can get into with a low investment of capital. If you have low expenses at home, you can succeed as a rep firm. This business can and will expand you into several other opportunities in life, and the contacts, information and business knowledge you will receive from principals, customers and other rep firms will stay with you the rest of your life. Jump in and hold on, because the roller coaster ride is worth the bumpy start.”

Bowdish wasn’t alone in generously sharing his thoughts covering the creation of his rep agency. Additional contributions from other reps will follow in the next two months.

This article is the first in a three-part series on start-up advice from actual successful rep firm founders.

Fill in these details and we’ll send you a link to run a FREE trial rep search!


Prefer not to share your info? Go directly to MANA’s RepFinder® database without registering!

Fill in these details and we’ll send you a link to run a FREE trial manufacturer search!


Prefer not to share your info? Go directly to MANA’s LineFinder® database without registering!