Post By Thundergod
Post By TOK
Post By chokkidog
Good morning CoffeeSnobs,
My name is Adam and Im thinking about establishing a small coffee roasting business supplying high quality roasted coffee to cafes in Sydney. Im in the process of preparing a Business Plan and have a question about sales reps and how they are paid/compensated.
My original plan was to hire a sales rep solely on commission and provide them with sales leads and set them weekly targets to manage their performance.
Id like to know how much commission is considered acceptable and whether I should offer a small base wage in addition to a commission.
Id also like to know how other small roasteries manage their sales reps.
Many thanks in advance.
Selling coffee to those who already have coffee is a very difficult job and the likelihood of finding anyone with skills and experience willing to work for potentially nothing is about zero.
In addition, many cafes will be locked into supply contracts of one sort or another.
I'd suggest that you might consider a role in the industry first as any experience you can gain will be invaluable.
Sleep is overrated
Hi Adam - welcome to Coffee Snobs.
There are a lot of roasters out there now.
A lot of new businesses go broke every year.
Good to see you have a Business Plan.
Have you done a SWOT Analysis?
A Local Area Marketing Plan?
It reads like you intend to hire a sales rep from day one.
Most new roasters would be a one man band until the business built up enough to need more staff.
Beans are cheap compared to the equipment and overheads.
Will you have a Point of Difference?
Why would they buy from you?
Sorry if this sounds blunt but it needs to be.
I think initially being a one man band is the way to go. If you are roasting the coffee yourself, your passion will help you get those first few sales over the line. You could easily run yourself broke early if you are paying someone to sell your product and they don't deliver almost immediately. I say this quite vaguely because I have no idea what your startup costs are and how much capital your sitting on.
You should think of an approach like setting complete roast days. For example, roast Monday and Thursday all day. Then Tuesday, Wednesday and Friday you could get out there and try to promote your product and get sales. I don't think you should be employing a sales person until you haven't got enough time to do the roasting yourself.
Hi Adam and welcome to CS!
Unless you are extremely well cashed up, 'small roastery' and 'sales rep' are at odds with each other....... with one exception.
But then, if you're asking the question, a family member, spouse or partner isn't going to be doing the sales job?
How small is small? 500kgs/ week? 1 tonne/week? 200 kgs/week? Are you thinking of providing a vehicle?
To shift a cafe off their existing account can cost between 10&20K, especially in terms of business plan
development, and as Chris has mentioned..... very hard to do.
When you are set up and ready to roast, blend development will be your priority, followed by securing stock of your
selected beans. When you're at this stage you won't have any customers, or be doing any regular roasting.
Roast some coffee each week and get out on the road yourself to sell your product.
Just handing out samples won't cut it either, busy cafes are just too busy and will probably push the sample to the back of the pantry
and forget about it.
Let's just say that you do hire someone........
You will need a highly competent barista with good skills on the grinder and the milk jug.
Someone who also has an engaging 'salesy' personality with a nice smile and good communication skills
and who isn't daunted by continual rejection.
Retainer?? Whose vehicle.. yours or theirs?
$500/week (maybe $350 if your vehicle) + $250 for every 10kgs of regular accounts secured + phone allowance.
Thank you all so much for your feedback, I appreciate each of you taking the time to respond openly about your thoughts. When I started writing the Business Plan my original approach was to sell the coffee myself on the weekends (or whenever I could) as well as ask a family member to help me.
I thought it was important to understand the costs and risks of hiring a sales rep so I can see how it affected my financial forecasts. It's obvious to me now that it's not the right approach for a start-up.
Thank you again for your valuable feedback..... now, back to the plan.
Specifically with regard to the original question.
Coffee Sales Rep. in Australia.
You will get no one to work on commission only, in fact you will get plenty of belly laughs and deprecating comments if you try.
Anywhere from $55,000.00 to $65,000.00 PLUS ONGOING COMMISSION, PLUS a once only client ESTABLISHMENT FEE, plus vehicle plus telephone (and then all the usual other pluses...). As you can see there is no "small base wage" or retainer. Commission Agreements need to be very well written indeed to avoid you being taken to the cleaners by reps who go around signing up clients that will never stick with you... Both Commissions and Performance will need to be be tied together, where one area of performance will be client credit. If the client fails to pay his account, the rep fails to collect the ongoing commission or establishment fee on that client or has commission already paid deducted from his next pay or termination pay. Strict rules for supplied telephones and vehicles, with known penalties up front for misuse of them. That's just the start of it.
Performance will be structured around the leads the rep generates for him/herself, the number of client visits etc, because there will be no winning clients on a weekly basis. It takes months to convert established cafe clients...as others have said it is costly (and slow) to convert commercial clients.
You need to find the right person which is like trying to find a needle in a haystack....you don't find a capable, honest , good one straight up unless you were about to win the lottery anyway...
Some will simply take you for a ride, after they have taken you for the highest possible wage and conditions but failed to deliver on their promises. There are an aweful lot of reps that sell themselves mighty high to come over to your roasterie from wherever they are already working, then fail to deliver.
Once you win the lottery and find a capable, honest , good rep, you will then be constrained to treat him even better for fear of losing him/her. But that's well and truly ok, if he/she is delivering....but none of the above this can be done in a start up business.
The following is a rhetorical question not requiring a reply, however I would be remiss if I didn't wonder how a newcomer to roasting can deliver "high quality roasted coffee" straight up from start up (unless of course the newcomer already has a stack of experience gained by working for others).
Additionally, roasting coffee is only a small part of running a complete business that necessarily also has to offer a bunch of other services if it is going to be able to compete and grow bigger than a certain micro size.
Hope that helps.
Originally Posted by TOK
Likewise, TOK.... that one jumped out at me too!