All Your Eggs In One Basket

In my January editorial, I quoted a manufacturer who regretted a hiring mistake that put $200,000 of his company’s money down the drain: “My problem is not that I have been searching for direct sales­people and didn’t find qualified candidates. My problem is that after a long search that didn’t turn up qualified candidates, a year ago I got impatient and decided to settle on the least problematic of the candidates who did apply.”

“Between salary, expenses, and medical insurance, I have spent $200,000 on the salesperson I hired a year ago, and I have absolutely nothing to show for it. $200,000 down the drain. That’s why I am calling you today to talk about reps.”

The manufacturer and I spoke about the benefits of using reps, but only later did I realize what may be the most important reason to use $200,000 to hire 8-10 rep firms instead of one direct salesperson. Not putting all your eggs in one basket. Spend $200,000 on one direct salesperson, and if that salesperson fails, “$200,000 down the drain.” Spend $200,000 on hiring 8-10 rep firms, and even if one or two turn out not to be a good fit, most of the reps will succeed, and you will still get a good return on your $200,000 investment.

It’s the same reason that savvy investors like Warren Buffet recommend buying shares in an S&P 500 fund instead of gambling on just one single stock: Diversification. A single stock may tank, but a diversified investment isn’t as risky, so your winners will probably outnumber your losers. That’s another reason manufacturers should spread their sales investment over a nationwide rep network instead of hiring a single direct salesperson. Because it’s too risky to put all your eggs in one basket.

The manufacturer’s comments have been edited for space and clarity.

Things Change

One thing that’s guaranteed in life — things change. Sometimes the changes are significant. For example, just look back at the past two years. Life today differs significantly from what it was in 2019. Other times, the changes are gradual, sometimes so gradual we fail to notice. In the manufacturers’ representative world, the companies the manufacturers’ representatives work with change. The company name remains the same, but it’s no longer the same company you signed up with 10 years ago. The same applies to the manufacturers’ representatives the manufacturers work with. In some cases, the changes are positive and the … Read the rest

Post Covid: The Future for Reps

MANA members, just as other businesspeople throughout the country, are gradually emerging from a tumultuous year. While the challenges for many have been daunting, a remarkable number of association members report that they have weathered the business, economic and Covid-related storms quite well. As a matter of fact, several reps report that by making specific changes in how they conduct business, they have enjoyed record or near-record years. In an effort to pass along some success stories, late last year in the course of a MANA panel discussion, three MANA reps reported on changes that have proved positive for them.… Read the rest

Response to the “Post Covid: The Future for Reps” panel discussion

I wanted to start off by thanking MANA for putting together the panel discussion. I had a few critiques about the call that I wanted to share with you in the hopes that we might revisit this very important topic about the “future of the manufacturers’ representative profession.” My takeaway from the panel/call was that it focused more on the effects of COVID-19 on our ability to conduct business, some of the changes that were made, and ways they succeeded in the new environment, but seemed to lack any … Read the rest