As a natural products entrepreneur, you have a lot of tough decisions to make: what to charge, how to market and brand your product, which distribution channels you should be using, etc. One more thing you’ll have to consider is how to approach building a sales team that will help you get onto the shelves of top retailers across the country. Will you hire your own internal team, or, like many others, outsource your sales? There is no clear-cut answer to this question, and your choice will depend on your sales strategy, long-term goals, and, of course, your budget. Both internal sales and outsourcing have their benefits and their pitfalls. Knowing what each option offers can help you make an informed decision about where to spend your sales budget and how to best build an effective team.
Benefits of Internal Sales:
- Control: You recruit your sales force, you train them and manage them on a day-to-day basis. If you feel like your sales strategy isn’t working, you can quickly change it and your team will respond.
- Focus: An internal sales force has only one job: to sell your goods. You won’t have to worry about being neglected for another product that comes with a higher commission, which is one risk that comes with outsourcing your team. A sales manager will focus on managing your brokers and can help you expand your distribution.
- Time: When you have a competent, working sales team, this frees up time for you to focus on other things. You can work on developing and refining your product, meeting with investors, and building your brand, instead of worrying about making sales calls. An additional benefit? An internal sales team will be able to spend the time to build long-term relationships with your customers.
So what could go wrong when you decide to hire internal sales? It all comes down to cost.
The Cost of Internal Sales:
- Salary: You’re looking at anywhere from $85,000 to $125,000 to hire a quality sales manager. This is a year-round, long-term expense that could be avoided by outsourcing. Add benefits, vacation time, sick days…These numbers add up!
- Time: Consider the time (and money!) that you will spend on recruiting and hiring. Then you’ll need to train your new employee, essentially paying them even though they are not producing for you. And if your sales team feels that there is a lack of opportunity to grow or that they could do better elsewhere, you’ll be right back where you started—spending the time to find and train a replacement. Additionally, you’ll have to wait things out to see if your sales department is performing to your standards. There is no guaranteed production, and you might have a hard time getting rid of someone who isn’t working out for you once you’ve brought them into the fold as a full-time employee.
- Overhead: Once you’ve hired someone to handle your sales, consider the other costs. Your new employee will need a physical space to work meaning you’ll need an office that fits the needs of your growing team. Other costs include technology, data, computers, phones, etc…Paying your employee a decent wage is just the beginning.
If you have the money and know it’s best for your long-term goals, internal sales might be the right fit for you. If not, outsourcing might be the way to go. Of course, outsourced sales has it’s own set of benefits and drawbacks.
Benefits of Outsourcing:
- Savings: You won’t have to commit a salary to an outside agency. It’s a short-term commitment that allows you to spend what you can, when you can, to get the job done. You won’t need to spend any time or money on recruiting or training because you are hiring an outside business to perform a service that is their area of expertise.
- Results: When you hire internal sales, you never know if they will be able to produce for you. You might have to wait up to 90 days to see if the sales strategy is working. When you outsource, you are guaranteed results, usually within 30 days. Faster results lead to quicker growth for your business.
- Talent: These are professionals with proven records of success. They are experts in the field and you will have a large pool to pick from. Hiring an outside sales agent from an established company takes the guesswork out of choosing the right candidate for the job.
Of course, there is always a downside to every choice. Here are a few issues you might run into when outsourcing your sales.
Costs of Outsourcing:
- Loss of Control: When you hire outside your company, you give up a certain level of control that you are able to maintain with internal sales. An outside agent is going to have a plan, and it might not match completely with your vision. The fact that they work elsewhere could make them more difficult to manage since you don’t have the same kind of proximity that you would with your own employees. However, since their commission depends on selling your product, you can be sure that they will still work to make the sale.
- Lack of Focus: An outsourced sales agent is going to have multiple clients at the same time. If you are not the best-selling or most expensive product, their focus may be on making a higher commission with the other products they represent. An outside sales rep will want you to do well, but they won’t always hustle the way an internal employee might.
- Lack of Confidentiality: When you allow someone new access to your business information, this will always be a risk. Make sure you do your research and are very clear about your expectations in this area.
The risks associated with outsourcing may seem fewer, but it’s really just a matter of what suits the needs of your business. There is no one-size-fits-all approach to building a sales team; it truly depends on your strategies and goals. To learn more about sales and marketing strategy for your natural foods company, check out our webinar with Bill Capsalis, president of Naturally Boulder and a 20-year veteran of the natural foods business and P2Bi CEO and co-founder Krista Morgan.