Salesman Partner Compensation

Discussion in 'Growing and Managing a Business' started by crush95, Jan 18, 2011.

  1. crush95

    crush95
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    I have started a company with two partners, one of which is a salesman who drives all of our revenue. Myself and the other partner handle all of the deals after the sale is made. Our original agreement was to split the profits equally, with some sort of short term compensation for the contacts the salesman brought with him to the company producing quick revenue.

    We are now having some consternation on how to give him some added compensation for his "in place" relationships without setting a long term expectation of unequal profit splits. Does anyone have any advice on a good short term solution to pay him some amount for his "in place " relationships while keeping him motivated as a salesman after this introductory period is over?

    Thank you for your advice.
     
  2. Fergal

    Fergal
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    Welcome to Business Advice Forum crush95, thanks for joining and posting your business questions.

    One option would be to offer an agreed commission percentage for sales that the salesman partner makes to his existing contacts. However, I would restrict this to sales made within a certain period of time, perhaps the first three months. You might also ask this person for a list of their existing contacts and restrict those commissions to sales made to those contacts, be careful that the list only includes his actual contacts and not everyone in the industry.

    Is that something that could work for you?

    Whatever you decide on, I'd advise getting the agreement written down and signed by all parties, in an effort to avoid any disagreements or misunderstandings in the future.
     
  3. scifi

    scifi
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    One viable solution for this type of problem is that you can fix a period when low sales occur each year and fix some percentage of commission in that year according to some sale limit....like 1% for 1 lakh units, 1.2% for 2 lakh units..this sort of...Then for period of high sales make this percentage lower like .5% for 2 lakh like this....
    Also associate with some quarterly bonus on some similar parameters to two partners other than sales man to keep them going through too!!
    This is a long term solution for your problems in my opinion...
     
  4. crush95

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    I think those are some great ideas to start these negotiations with. Thank you for taking the time to offer your advise and expertise.
     
  5. Fergal

    Fergal
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    Thanks for posting back crush95, I'm glad you found the replies helpful. Good luck with your negotiations and please do let us know how it works out.
     

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