Begin a discussion on the benefits of the small independent manufacturers’ representative agency vs. that of the multi-person agency (or vice versa) and chances are the conversation will go on forever.

On the one hand, the one-to-three person agency (that makes up the majority of MANA’s membership) can boast of its ability to turn on a dime and make changes much more quickly than its larger counterpart; on the other hand, the large agency, that often covers several states and multiple territories, can boast of its sophistication and hundreds of feet on the street that can achieve immediate impact for its principals.

Many more variables can be tossed into the conversation, but the fact remains that the small agency is presented with a whole slate of challenges that its larger brothers don’t necessarily have to overcome. Successfully meeting those challenges can result in a long and prosperous business. Failure to identify them can lead to an early demise.

The need to identify and then meet particular challenges was brought to mind earlier this year when the CBS news program Sunday Morning had a brief segment on the biblical story of David and Goliath. As most of us know David was faced with the unenviable task to taking the Philistine giant Goliath off the battlefield. Armed with only a slingshot, he got the job done. Interestingly, CBS consulted with a forensic munitions expert who made the point that the slingshot David used was the equivalent today to a .45 caliber bullet. No wonder Goliath was relatively easy prey.

Recognizing Challenges

Just as it was for David, so too is it up to the small independent manufacturers’ representative to recognize the challenges at hand and then arm themselves with whatever weapons are available to effectively get the job done.

To learn what some of the challenges are that weigh heavy on the shoulders of some small agency leaders, Agency Sales contacted several of them. These were high on the list concerns:

• The constant need to find good principals.
• Time management.
• The pressing need for product knowledge and training.
• Information technology concerns.
• Succession planning and how the sustain the business.
• The need to communicate their knowledge of the territory to potential and existing principals.

Steve Brinker, and others, expanded on some of those points.

Brinker, formerly with Ritchie Industrial Marketing, Cincinnati, Ohio, is retired now, but it doesn’t take long for him to look back at some of the things that used to keep him up at night. High on the list of challenges or concerns for him as a small agency was “Where’s the next sale coming from?”

According to Brinker, “You do your work and are successful, but then in the middle of the night you wake up and ask yourself how things will continue. While that was obviously a concern, it’s also something that spurred me to continue aggressively the next day.”

Expanding Business

Brinker echoes the thoughts other small independent manufacturers’ representatives have about their business. “You’re always searching for how to expand your business. To do justice to any of your principals, you really have to have more than one person in your agency. Then you’re faced with the task of finding the right person(s). Given all the agency owner has to do, there isn’t a great deal of time left to supervise the person you ultimately choose. That’s why it’s so important when you locate someone that you make sure you’ve got the right person.”

Circling back to the subject of all the tasks that the small agency owner has to successfully perform, Brinker adds that time management also becomes a challenge. “You’ve got to put so much time in all the back office tasks that it takes time away from your major function, which is that of selling. It’s a delicate balance that the small agency owner has to deal with.”

The there’s the matter of succession planning. “That’s something that has to be approached carefully,” he says. “I don’t know how many other reps I’ve had say to me, ‘Why would someone want your business?’ My reaction to that question is never to let it affect me. Instead, I worked hard at my business and realized there was real value there. I was successful in selling my agency to another agency over a five-year period. But I’ll admit that that was something I worked hard on and carefully prepared for.”

Brinker is quick to admit that while he’s thoroughly enjoying his retirement, at the same time he looks back on his career as an agent with a great deal of satisfaction. “I’m glad I chose repping as a career. It’s something I have no regrets about.”

Succession Planning

The need for effective succession planning is a challenge fellow agent Tom Leslie has recognized early on — just as Brinker did. According to Leslie, Thomas M. Leslie & Assocs. Arcadia, California, his son inquired about joining the agency about 10 years ago. At that time, “Because I was so concerned about the sustainability of manufacturing in the United States, I told him it wasn’t such a good idea. However, now that things have turned around, both he and my son-in-law work at the agency.”

To ensure that there’s a succession plan in place, Leslie has met the challenge by working with a consultant who mapped out a path to follow. “The consultant is someone I worked with in the past. He’s very smart and familiar with family businesses. He initially took us through a SWOT and needs assessment analysis. During those sessions — which included our wives — we created a business plan, including a succession plan. It’s something that we review quarterly and everyone knows what’s going on. Finances are completely open, everyone can look at the books. What’s included there is the automatic succession plan, which is huge. If there’s anything I harp on when speaking to other reps it is the importance of a succession plan.”

Information Technology

If succession planning is a particular hot button for both Brinker and Leslie, Russ Sorrells casts a wary eye in the direction of information technology. As he considers the challenges he’s faced — and continues to face — as the head of a small rep firm, Sorrells, Advanced Solutions for Manufacturing, LLC, Fort Mill, South Carolina, looks to the IT side of the business as one area that commands a good deal of his time.

Sorrells explains that “I’m an engineer and have built computers and even written software. After opening my doors about 10 years ago, it took me four years before locating the appropriate business platform that that we need.” What he settled on was MicroSoft’s Office 365. He adds, however, that he — just as many other independent representatives — is still searching for the right CRM program for his agency. (Discussions on this subject have appeared frequently on MANA’s LinkedIn discussion site.)

Sorrells notes, however, that it’s more than IT challenges that take a good deal of his time:

• “When it comes to some of our smaller contracts, I’ve got enough experience to know what to look for. On the larger ones, however, I’m fortunate to have the legal counsel of one of MANA’s attorneys. If anything, I’ve learned over the years that not all principals are created equal. As a result, it’s important for me to have a rep-savvy attorney look over any agreement before it is signed.”
• “Since we’re in the capital equipment business, not all principals are familiar with progress payments and that’s something that’s important to us. For instance, we can make a sale but the principal may not pay us until they get paid. Because the principal isn’t necessarily rep-savvy, he may not be aware of the time, effort and expense we put into the sales effort. That’s why we spend so much time negotiating progress payments.”
• These concerns notwithstanding, Sorrells goes on to note that the size of his agency has never been an impediment when it comes to attracting principals. “Our size is neither a positive nor a negative. What we do is to show our value to principals and that usually turns things in our direction.”

Territory Coverage

Grant Melocik points to MANA as a place where he gets assistance in meeting many of the challenges facing his one-man agency. In rapid order, Melocik, Grant Melocik Sales, Fresno, California ticks off the following:

• “While I haven’t had occasion to use the legal assistance the association provides the members, it’s a great feeling knowing that it’s there. Like so many other rep firms, I don’t necessarily have the money to regularly pay an attorney. That’s why just knowing it’s available is great.”
• “There have been times when I’ve been looking for lines that I’ve found them through the association.”
• “Then there’s Agency Sales magazine. There’s a lot to learn in the pages of the publication. I particularly enjoy the articles on what to do and what not to do when it comes to sales. Basically, these are all things that we know, but if we don’t take the time to remind ourselves of how to do the job properly, then we’re going to make mistakes. In addition, the articles on technology and the tools that are available are very helpful.”

Having said all that, however, he did mention that one challenge he faces as a one-person agency is that of maintaining coverage of the territory whenever he wants or needs to take time away from the job. “Thankfully I have one line all to myself and then I sub-rep two other lines. Since I’m sub-repping, there’s always someone available to make sure the job gets done and the territory has coverage. At least that affords me the opportunity to take the time I might want for a vacation or for some other reason.”

Time Management

Organization and time management remain as two major challenges for Charles Bayless, CDB Instruments, Snellville, Georgia. Bayless explains that “Staying focused, avoiding interruption by non-selling events, being able to multi-task and maintaining the drive to sell your principals’ products” are major concerns he concentrates on.

“What bothers me most about some reps,” he continues, “is that they either haven’t made a plan or if they have, they fail to stick to their business plan. I’ve found that it’s reps who don’t stay organized, who don’t prioritize their activities, are most prone to failure. For myself, I’ve found that it’s effective to make lists of the things I have to be doing. I make a list and stick to it, until it’s done.”

If Bayless has any advice to other independent representative agencies his size it’s to take advantage of what MANA has to offer its agent members. “Membership in MANA is more of a two-way street than anything else. First, a rep ought to join the organization. Next, they should take advantage of everything the association has to offer. For instance, I’ve been a regular participant in teleforums MANA puts on with Nicki Weiss. Additionally, whenever I’ve had a question relative to my business, I contact MANA and get advice on the spot. Once, again, it’s all about taking advantage of what the organization has to offer.”

Challenges Persist

It’s fitting that the final person to comment on this subject of the challenges facing the small agency is John Haskell (aka, “Dr. Revenue”). Haskell, a frequent contributor to Agency Sales and a consultant to agencies for more than 40 years, looks at the challenges mentioned and offers the opinion that “It’s probably more difficult today than ever before for the small agency to succeed and thrive.”

According to Haskell, the challenges he sees include:

• Capital — “It’s challenging today for the small rep firm to get the capital they need to run their businesses. Among the many things they need capital for is to keep up with technological advances. They need the money in order to use these technological tools they way that they’re intended to be used.”
• Time Management — “Here’s the problem for the small rep firm — if there’s only one person there, he’s the salesperson, and the sales and office manager, and more. He really needs a split personality to get the job done. If I’m all by myself, I had better develop the discipline to write memos to myself so I can plan and organize properly. And, as all reps know, they are so busy doing the selling that they never have enough time to plan and organize.”
• Understanding — “One of the more difficult things for a small rep to accomplish is to understand the income potential and structure of their own package of lines. Too often they spend too much time going up blind alleys for sales that prove not to be worth their time or effort. They are constantly challenged to organize the way they should sell. That’s why it’s so important for the small firm to constantly look at who and what they rep and to make decisions as to whether they want to continue with certain lines.”
• Succession Planning — If the importance of succession planning hasn’t already been emphasized enough, Haskell notes that “There are a lot of reps out there who are pushing 50. They’ve worked hard all their lives at building prosperous businesses. They’ve got to start now when it comes to moving their business from one generation to the next.”

Haskell concludes by saying that “I don’t say a guy shouldn’t start a rep business today. What I would say is that if he’s going to open his doors, he should do so with a plan. At the same time, keep in mind that MANA can always help. I’m very high on MANA’s management. Their people have rep experience and can provide members with the information they need. I’d say that MANA membership is more vital today for every rep than ever before.”

MANA welcomes your comments on this article. Write to us at [email protected].