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percentage for a sales man8/31
my shop needs to hire a sales man to get more kitchen work.
I would think 5 to 7% of gross is about right.
The problem is lead generation, as in who is responsible for lead generation?
Consider that when you have a salesman that he is in a position of power with your customers. You may want to consider doing the sales yourself and replace yourself at whatever you are doing.
Hiring salesman are like hiring any other worker as in a guy who can close and really make it happen is the rare bird as with other key positions.
At the risk of giving you unsolicited advice, you may want to back up a couple of steps and consider your marketing plan and your competitive advantage in the market place.
I was offered 8% once at a 2-4 man shop.
What Pat Gilbert said about marketing is paramount in determining what to pay a sales rep. How many leads do you currently have coming in each week/month?
Is your sales rep responsible for generating leads or do you generate leads or do some leads come from each of you?
Who are the targets? Homeowners? Home Builders? Remodelers? General Commercial/Institutional Contractors? Architects? Designers? Direct to business owners? Direct to building owners?
Are you willing to pay for car, phone, office and other expenses in addition to a percentage of the sale? How about business lunches/dinners or other entertainment expenses?
Good sales reps will expect minimum earnings well in excess of $60K/year plus either direct expense reimbursement or earning in addition to cover their expenses. How can you develop a plan for a good sales rep to reach that level or more?
Do you have the production capacity to SUBSTANTIALLY INCREASE output for the new business a sales rep will generate for you at levels where they can earn high 5 to low 6 figure incomes?
Sales in this business have a fairly long lead time from finding a prospect to closing a sale and ultimate delivery and invoicing for what was sold. That cycle is probably at least 2-3 months in most situations. Most good sales reps won't be willing to cover start up expenses from their own funds. If they would be willing to do so, there is little reason why they wouldn't start up their own businesses. How do you propose to cover the new sales rep's business and personal expenses during the start up period? A salary plus expense plus commission plan? A forgivable draw against future commissions? Straight commissions only?
You can hire lots of crappy sales people for less, but realize your reputation is what will be impacted by whoever you hire. What sort of reporting do you want from your new sales rep?
What duties would your new sales person handle? Will they also design? Estimate? Schedule production? Handle/coordinate delivery/installation? Invoicing and collections? What else?
There is lots to consider besides what percentage to pay. If you were hoping for someone who would be willing to jump in for a modest percentage of the sale, you will spend a very long searching for exactly the right person who can finance their own start up and can generate enough business to earn what they need to make from the beginning. It simply will not work long term for either you or the sales rep to start off on a straight commission plan if you expect success. It might work for an established sales rep who has been with your company and in your market for a few years, but expecting success from start up on a straight commission only is dreaming an impossible dream, IMHO.
Sales pros who work on straight commission only plans are relics of a bygone era. They were scarce when I entered the workforce in the 1970's (I was one for over 10 years back then) and virtually disappeared long before the turn of the century. Any remaining ones are now know as business owners.
I would pay a percentage of the profit , not the gross amount .