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Whether using commercial agents can help you develop your business often depends on the nature of your product or service and where you want to sell. If you are producing an easily recognisable product or service for a local market then there may be little point in appointing an agent. In some cases, using an agent can be a cost-effective way to test a new market. 

Advantages of using commercial agents

Using sales agents and distributors for your business can offer many benefits. They can help reach your target market and provide a convenient and effective way to expand your business's reach and boost sales.

Immediate market access

Using sales agents and distributors can provide immediate access to your target market. This is especially helpful for small to medium-sized businesses, which may not have the resources to establish their sales presence.

Marketing expansion

Breaking into new markets can be challenging, especially unfamiliar or international ones. Sales agents and distributors have local market knowledge, established relationships, and expertise. This is especially valuable for expanding into overseas markets, where cultural differences, rules, and language barriers can be major obstacles.

Cost effective sales strategy

Using sales agents and distributors can be a low-cost alternative to having your own sales force. You can avoid the costs of recruiting, training, and keeping a dedicated sales team. Instead, you can use sales agents or distributors' existing resources and infrastructure. This will cut costs and allow you to allocate resources better.

Risk mitigation

Entering new markets or expanding your product line involves risk. You can mitigate some of these risks by using sales agents and distributors. They are usually paid based on performance, like commissions or purchase agreements. So, your financial risk is lower than for an in-house sales team. This model is based on performance, aligning their interests with your success and encourages them to sell your products.

Focus on core business activities

Outsourcing sales to agents or distributors lets you focus on your core business. These include product development, customer service, and overall strategy. This can lead to better products and services. It can also lead to a stronger position in the market.

Flexibility and scalability

Sales agents and distributors offer flexibility. This can be crucial for growing businesses. They also offer scalability. You can adjust the scale of your sales operations based on market demand and business needs. It avoids the complexities of scaling an in-house team.

Disadvantages of using commercial agents

Some of the downsides of using commercial agents are:

• Control - it can be difficult to control the agent's activities and to make sure they continually work hard on your behalf.
• Sales methods - an agent might not sell your product or service in the way that you would like.
• Customers - they might sell to unsuitable customers who might undermine the integrity of your product.
• Understanding - an agent might not fully understand your product or service and you may be better off with hands-on control.
• Contract - they can be entitled to compensation on termination of the contract even if they breached the agreement.

There are a number of routes to finding the right commercial agent for your business.

Your local Chamber of Commerce library is likely to keep a database of agents. Your local Enterprise Agency may also be able to recommend suitable agents for your business.

It is important that you narrow your search to agents relevant to your sector. If you belong to a trade association it is likely to have listings of agents with specific knowledge of your industry or market.

Similarly, if you attend your industry's exhibitions you may be able to have face-to-face meetings with potential agents who are always looking for companies to represent.

If you are looking to sell to overseas markets, joining trade visits is a good way of making contact with agents.

Choose the right agent

When you're recruiting an agent, it's a good idea to consider it as a decision equal in importance to hiring your own number two. Only selling can bring money into your business - and if an agent fails to meet your targets you could end up with cashflow problems or worse.

There are a number of factors you need to look for in a commercial agent:

• Trading history - is the agent established with a strong track record in the relevant sector?
• Financial security - carry out appropriate credit checks. If the agent goes out of business it could seriously damage your sales and reputation. You can check bank or trade references or use a credit checking agency.
• Reputation in the marketplace - is the agent well respected and seen as reliable, trustworthy and effective? Ask trusted business associates or your trade association for their opinion of the company. Check references beyond those provided by the agent to avoid bias and verify their reputation independently. Be aware that the agent is likely to provide you with references from companies that will portray them in a favourable light.
• Current portfolio - does the agent have a good portfolio of existing clients and, importantly, are any of them competitors who might raise a conflict of interest? Ask for a list of clients or check if there's a list on the agent's website.
• Knowledge of your sector - how well does the agent know your marketplace and its trading conditions? Ask the agent about their experience. The current client list will also demonstrate whether they have worked with similar businesses.
• Willingness to take on your business - how keen is the agent to take on your business? How hard will they work on your behalf? Consider how promptly and thoroughly the agent responds to your queries and calls.

It's important to clearly define your own needs. You should interview potential candidates so you can create a shortlist of those who are compatible with your business.

When you have found the right agent, it's important to draw up a contract, clearly setting out the responsibilities of both parties to the business relationship.

The main law regarding commercial agents is the .

A commercial agent is defined as a self-employed intermediary who has the authority to negotiate and conclude the selling or buying of goods on behalf of another person.

This definition covers incorporated and unincorporated bodies as well as individuals.

An individual cannot be a commercial agent if they are:

• an officer of a company or association and they have the power to enter into binding commitments on behalf of that company or association
• a partner who is lawfully authorised to enter into commitments binding on their partners
• an insolvency practitioner

The law on commercial agents also sets out the following:

• Agents are given substantial legal protection - similar to that given to employees.
• You must supply a commercial agent with all necessary documentation and information concerning the goods or services you wish the agent to sell.
• You have to inform the agent if sales volumes are likely to be lower than expected.
• The agent is also required to make proper efforts on behalf of your business and to communicate all necessary information to you.
• The agent is entitled to the same rates of pay as other agents in the same sector if no figures are mentioned in the contract.
• The law also sets out statutory notice periods of up to three months for agents. In many cases, the agent is also entitled to compensation when the agency's contract is terminated.