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Compensation for sales person/ account executive

post #1 of 14
Thread Starter 
Hello,

We are a small mom & pop catering company in the San Francisco Bay Area. We cater high end weddings, corporate and wine and food pairing events, as well as recently adding authentic Texas Barbecue made in an all wood burning Texas BBq pit, to our repetoire. Our best year has produced sales of $300,00.00. We would like to grow our sales to $1,000,000.+. To do that we need to start by hiring a sales person. We would like some input from other caterers regarding compensation for a Sales person/ account executive. It is expensive to live here and catering is seasonal, so we think that a base salary of $1,800. to $2,500. per month is necessary to retain a good employee. After that, we are not sure how much commission they should receive and what creative strategies we can employ to encourage them. Should the commission start immediatly or after sales exceed a ceartain point, such as $50,000 for example. Should the commission increase after a higher sales target has been reached? Should the base salary be decreased or gradually eleminated? Should there be a cap on income? An end of year or season bonus offered? Should a draw against commision be employed?

How should a company protect itself from a sales person leaving and taking accounts with them? Contracts can be difficult to enforce and lawsuits are expensive.

We are also intersted in hearing any retrospective comments on the positive or negative aspects of how well an agreement has worked.

Thanks very much for your assistance,

Pierre
post #2 of 14
Having been in Sales and Sales Support fields the past 7 years...

I would recommend $30,000 to $40,000 per year salary and no commission. Perhaps offer a bonus incentive instead based on total sales growth. "If you produce $150,000 in new business you get 3 percent or $4,500" or something like that. You run very little risk of having a sales person steal your customers when they leave. You can be even more sure by having an incoming sales rep sign a "Non-Competition Agreement" basically they legally agree not to share any information about your company or even go work for your competition for a predetermined period of time after termination of employment by either party. These are pretty easy to draft up so counsel fees for getting an agreement should be negligible but worth the money.

My question is... when do I start?
Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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post #3 of 14
It's been my experience that such agreements aren't worth much. No self respecting salesman is going to sign an agreement that, even if s/he leaves under the best circumstances, will guarantee them virtually no job in the immediate area. 'Course, they could move out of the general area to comply witht the non-competition thingee, but then they'd have no local contacts or influence, and be pretty much non effective. What are they gonna do? Give up on the last 10 years of catering sales experience and become a carpenter? Legal action is just a bluff, if and when you do have to enforce the legal aspect, by then the damage is long done, and it will cost even more money to get a lawyer, and even then you have to wait it out untill you see a court date.

So who do you trust with your client list and banking info? You, yourself, and immediate family. The best scenerio is to take on more marketing and sales yourself, and delegate the quotations, daily stuff, and invoicing to junior staff, maybe spending some more money on better kitchen staff too.
...."This whole reality thing is really not what I expected it would be"......
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...."This whole reality thing is really not what I expected it would be"......
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post #4 of 14
You may have a point. Then again I am sure it is like any other industry. If you do a good job people tend to stick with you regardless of whether the salesman they usually talk to leaves. I think a good practice is to stay on top of the client base and make sure you have access to the database yourself. In this way if you have to let this person go or they leave you can lock it down.
Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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post #5 of 14
Thread Starter 

Job Descriptions for sales person

Hello and thank-you for your detailed and thoughtful answers to my questions. I am really thrilled with all the great information. We are working on composing a compensation package and will then start looking for a sales person. We also need a job description as well. We have a general idea, but it would be very beneficial if anyone was willing to share one.

Thank-you,

Pierre
post #6 of 14
This may be true for about 50% of the accounts, the other 50% focus on pricing. If the sales rep knows the pricing, quality, and style of the goods some clients want, he's in the door. Me, I've had clients for over 6 years I've had other clients who drop me becasue they can get frozen cheesecake from a national meat purveyor at 12 cents a 10" cake cheaper.

The only way to stay ontop of the data base is to do it yourself. If Marge, the office mngr form Crosby, Stills, & Nash lawfirm, one of your key accounts, has gone for elective surgery, who will tell you?
...."This whole reality thing is really not what I expected it would be"......
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...."This whole reality thing is really not what I expected it would be"......
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post #7 of 14
Having spent a lot of time in sales, I can only offer the opinion that personally I would prefer salary to commission. I think commissions and sales contests often lead to inflated figures both to the customer and the company. There is a lot of loading that can go into a price to boost the reps commission and wheeling and dealing. This is not to say all sales reps are underhanded. Most of course aren't, but you can also go through a ton of shysters trying to find a good one. I say pay a fair salary commensurate with the area and load in a performance bonus. That will increase the chance for fair dealings with the customers. Tie in the fact that a certain base needs to be met before the bonus gets paid. Perhaps the bonus can be semi annual or quarterly to keep steady help around. Good luck!
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My latest musical venture!
http://myspace.com/nikandtheniceguys
 
Also
http://www.myspace.com/popshowband "I'm at the age when food has taken the place of sex in my life. In fact I've just had a mirror put over my kitchen table." Rodney Dangerfield RIP
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post #8 of 14
http://www.businessballs.com/jobdescription.htm

This page has some good tips on writing a description as well as a few templates.
Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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post #9 of 14
Thread Starter 

Job Descriptions for sales person

Thanks for your advice. I checked out the link to sales job descriptions and found a lot of good info.

Pierre
post #10 of 14
You are very welcome
Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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Mike

“If there's anything more important than my ego around, I want it caught and shot now.” -- Zaphod Beeblebrox
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post #11 of 14

here's one that was posted on craigslist yesterday

funny enuf I came across this post for a catering company in Staten Island (that I happen to know and respect too) Thought it was quite interesting and then seeing this post, thought I would share it with the forum. They do many high end events both here in the metro NY area as well as a big olympic business (which accounts for the abroad statement)

"we are a catering firm located in Staten Island New York with over 25 years in the business. Majority of our work takes us to NYC and abroad.
Compensation as follows:
Compensation Package for Sales person

Salary
The salary package will be composed of THREE elements:
1. A draw of $40,000 will be based on $400,000 in food and beverage revenues, payable in 26 equal bi-weekly payments. This total base salary will ultimately be 10% of the total food and beverage revenues.
Each bi-weekly check will be exactly the same amount of money, $1,550.
2. Quarterly dividends… At the end of each quarter (March
31, June 30 and September 30), a dividend check will be
issued to compensate for additional sales in excess of
$100,000 for that quarter.
Should any quarter NOT EXCEED $100,000 in f & b
revenues, the final check issued on December 31st will
reflect the YEARLY totals for 10% of sales. We will sit
down together each quarter to review your successes and
if necessary, re-evaluate the package.
Expectation: We expect the food and beverage revenues in
the first year to surpass $500,000 and you will exceed our
expectations if the sales surpass $600,000.
3. “Billable Hours” - Whenever you work an event in a “billable” capacity, additional money will be paid to you at an agreed upon rate. (The current billable rate for a captain is $40 per hour of which $25 per hour would be paid to you directly.) This money is IN ADDITION to
your salary and would be paid with your quarterly
commissions.
Note: Events where you work in a “non-billable” capacity,
(e.g. stopping by at an event to check on the details) would
be considered part of the cost of doing business and
would not receive additional compensation.













Benefits
A health care package, presently costing Framboise $333.94
per month, will be provided after the second full month of
employment. This package is for ONE person. Additional family members may be added to this package, but would be at the employee’s expense.

Membership in various networking organizations will be paid
by Framboise. Additionally, attendance costs to attend
functions of these organizations will also be paid by
Framboise (e.g. Chamber of Commerce mixers, ISES
meetings, ABC meetings, etc.)

A small expense account will be provided to entertain clients. These expenses will be handled on a case by case basis. Approval for these expenses must be received PRIOR to the expenditure.


Hours of Employment
As a sales executive, you will be responsible for maintaining
your own hours. You will work as many (or as few) hours as
YOU deem necessary to fulfill your food and beverage quotas
for each quarter. We will review your success on monthly
basis and discuss opportunities for additional success.
Should all parties decide that the annual f & b quotas will not
be met, a more creative approach to reaching your desired
salary will be provided (e.g. more party hours can be added to
supplement your income).

Additional Notes:
Invoiced line items and pass-through expenses are NOT
commissionable. Only food and beverage sales are
commissionable. Items such as service staff, rental
equipment, florals, musicians, valets, invitations, etc. though
appearing on the final invoice, are not part of your f & b
quotas.
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post #12 of 14
As a sales person for many years and speaking from experience, a salaried person will give you the lowest common denominator in a person. If they are getting a straight salary, what would motivate them to do better? A promotion? To what? A Raise? What, another 5% a year? I doubt it.

I am baffled by people here that claim they are in sales and would like a salary. Salespeople become salespeople because they don't want anyone telling them how much they will make. We are generally motivated to set goals for ourselves and enjoy being rewarded when we hit those goals. If we don't hit a goal, we starve; if we do, then everyone wins.

As far as income, I don't really grasp the concept of inflated sales numbers, etc. I am sorry to be so critical of other posts in this thread, but we are dealing here with someone's business and their livlihood. The only way a salesperson should be paid is on GP$ (gross profit.) If you pay someone for selling a million dollar job and are locked in a a 10% commission, you are screwed if your salesperson negotiates only a 10% profit. If you pay on gross profit, then everyone wins. You can bet that your salesperson will not be wasting time booking unprofitable jobs.

What you need to do first is sit down and figure out your realistic goals (I believe you've already done that), then figure out what it will be worth to you to hit those goals. Are you willing to sacrifice some of your income in the short term to grow your business in the long term? How much? Will your salesperson bring you incremental profits that you wouldn't otherwise have realized?

Hiring and managing a salesperson for the first time is a daunting task. Picking the right person is even tougher. Decide on a method of compensation that will attract the right person (combination of base and commission) and help you attain your goals. Want to grow sales fast? Get an aggressive guy or girl and pay them a low base salary but give them a HUGE upside if they attain their goals. Remember, you only win if they win, and vice versa.

Good Luck,

-Kevin
post #13 of 14
Food sales must be different here. Sales people here are generally expected to bring a client base plus many perspective sales.
Their compensation is usually generated by their sales. Most good salespersons have no problem with this and will usually draw monies knowing full well what's expected of them and these monies are a loan.
I personally feel hiring someone to call-call and answer phones is right up there with news paper ads. I don't know your area, but here, a sales cell (clients deciding they have a new catering need for a new event) is a pretty small target. Most new business is business transfering from someone else. If your expecting someone to blitz existing business then I would be more comfortable hiring someone with the business in the bag.

The down side to this is your kitchen needs to be flexible. On the other hand, I feel the process of getting a salesperson to be an extension of your kitchen is a long one.
Just my 2 cents
I have a very good friend/customer with catering sales a little more then you. He hired a salesperson Oct. 1 06.. after losing one of his feeding contracts. He just finalized her package which is full of really nice perks. She brought in 520,000. in sales as of last week when we had lunch. He gets giddy when he has to cut huge checks to his salepeople!!!!

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post #14 of 14
If youy're considering this job, I'd suggest negotiating and reviewing the contract very carefully. I'm not a chef but I've been a sales manager for a long time, and I only THINK I know what this advertiser is trying to say.
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