NFIB

When Going With the Biggest May Not Be in Your Best Interest
03/ 28/ 2002

It's natural for businesses to want the best and biggest groups to represent their products. However, this isn't always the best option. Jeffrey Moses explains in today's Workshop.

In every field of distribution and manufacturing, there are independent representatives who handle the most established and strongest companies. These reps usually have lots of personnel, lots of clout and make their clients lots of money. But unless your company has an absolutely top-flight line of products, you may get lost in the shuffle should the rep take you on.

Why, after all, would reps in the field spend a lot of time with a "new" line like yours, when they've made a ton of money in the past with established lines -- and they don't have to put forth any effort in creating brand recognition? They simply won't have much incentive to push your products.

It's usually best for a new, small business to select a rep that handles only 3-5 lines. This way, you'll be as important as the others and will get equal or almost equal billing during presentations. Note: when interviewing a smaller rep, make sure that the lines being handled are strong enough and diversified enough to give the rep clout with a wide spectrum of potential customers. And make sure that your line fits in with the others represented.

This general principle holds true in almost every field. An aspiring screenwriter, for example, would probably love to be represented by William Morris or any of the other huge agents that have offices in New York, Hollywood, and other glamorous film capitals overseas. But if you're just starting out, you'll be the unknown writer who the agent never mentions during high-pressure pitches to important producers and studios. It's better, in most cases, to go with a smaller but well-established agent who will take the time to develop and promote your work.

A new graphic arts firm or advertising agency may spend a lot of time and effort making presentations to large corporations -- but the fact is that most of these big companies will choose larger, more established agencies to work with. And even if the small graphics firm or ad agency does get some work from a huge company, the job will likely be less important and a one-time shot. It will be the type of work that the larger agency didn't want to do. Such work might produce something that looks good in your presentation package, but it won't pay the bills like steady work from a smaller firm that really values your expertise and personal handling of their business.

There is also potential risk when selling to the big guys too early in a company's development. If you sell a first-time large order of an unproven line to a large retailing chain or to a catalog, and those items don't move at the anticipated volume, you may get back returns that could line your inventory shelves for years, tying up revenue and squeezing your cash flow.

This article is not intended to quash your dreams of the big time. You should aspire to being handled by the big reps and by the big agents. But grow into them a step at a time, because if you sign up with them too early in your growth pattern, your long-term potential could be slowed.

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