Commercial agents – to appoint or not to appoint?

Selling goods, especially on a large scale, can be complex and time-consuming. One way of making things a little easier is to appoint a commercial agent to act on your behalf. Commercial agents are self-employed, and will usually be responsible either for promoting your product, negotiating its sale or both. But as with most things, using an agent has its pros and cons – so here’s a list of some of the more important ones.

  • One benefit using an agent is lower costs, particularly when compared to those of employing a sales team. For example, you won’t have provide the agent with the same benefits that you provide to your employees (such as employer pension contributions).
  • Agents generally work on commission, so you’ll only need to pay them for the sales they make.
  • Agents will often have a wide range of contacts, some of whom may be valuable to your business.
  • Market research can play an important role when deciding how to present your product to potential buyers. The problem is that it can be timely and costly. If you use an agent to promote the sale of your product, they will carry out and meet the costs of any necessary market research.
  • Agents often have knowledge of local markets, customs and even languages. So if you sell, or are planning to sell, overseas then using an agent with the relevant local knowledge could be a considerable advantage.

So those are some of the pros, but what about the cons?

  • You won’t have as much say over an agent’s conduct as you would over an employee’s. For example, you may have little control over who the agent sells or promotes your product to.
  • It’s likely that you won’t be the only seller the agent is working for. So, although they shouldn’t do so, there’s a chance that they might not devote the same resources to promoting or selling your product than they do to those of the other sellers.
  • In most circumstances, agents will be entitled to compensation when their contracts are terminated.
  • Using an agent to promote or sell your product overseas may have tax implications. For example, it may mean that you have to pay tax in respect of sales of your product, made by the agent, in that territory.

More on commercial agents

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