business deal?

[godstrong1 2]

A friend of mine is trying to work a deal with me, he wants to go to local businesses and get me contracts with different businesses. He has a patential contract hookup with the unified school district in my area and wants to meet today to talk some numbers. What type of deal should I work out with him for getting me contracts? Should I pay him a percentage of every job I do for the school or just pay him a one time fee amount for every contract he gets. I just want to be fair, without burning myself. Any advise is appreciated.

[hawkeyeent 0]

What I typically do for FRIENDS that send me work is I'll either do free bumper stickers for them or give them a discount for large graphics. That way in most cases you are still making something and a lot of people find it as a good incentive, without any legal obligations of a money transaction. I feel like anytime you have a friend finding you work for a little off the top, they become an employee... and from most of my experiences, you never mix business and family/friends.

[locknload1 17]

Start with a fair profit/cost schedule he can live with so that you're paying commission based upon a profit margin that you can both agree upon and then I'd go with a percentage of every job upon receipt of payment which is also based upon a sliding collections schedule which reduces the commission tier with every 30 day cycle that a bill goes unpaid and add a higher tier or bonus for payments collected within 15 days to add a positive spin.

This way he not only goes after the new accounts, he'll protect your profit and not give the farm away and he'll also be more willing to service the account for you as well as be obligated to "walk in" your bills and invoices and even pick up payments for you.

On another note, I've found that the reason it's so easy to get city/school district work is due to the poor track record for them paying their bills combined with the constant frustration of re-billing due to "lost" invoices. That is at least in my area...

As for the strict commission structure, I've been in commission based sales for over 20 years and the first thing I look for when I start a job is where I can punch holes in the comp plan and maximize my personal profitability and surpass company goals.

Why would I play collector or worry about profitability if I can focus strictly on volume and let somebody else worry about logistics and walking on water... the nature of a commission based salesman!

RG

[godstrong1 2]

what do you mean by Start with a fair profit/cost schedule he can live with so that you're paying commission based upon a profit margin that you can both agree upon. Can you explain this a little more in detail. Thanks alot

[godstrong1 2]

Also what's a fair percentage would you guys pay for every job someone got you. I was thinking. 20% or 25% for every job.

[locknload1 17]

what do you mean by Start with a fair profit/cost schedule he can live with so that you're paying commission based upon a profit margin that you can both agree upon. Can you explain this a little more in detail. Thanks alot

Start with cost factors for the jobs based upon your costs for materials plus overhead of say 20%, this is your operating expense or what the company gets for insured growth for any given job. This is as simple as giving him a catalog and telling him that your cost is the catalog price plus 20%.

Then you agree what your fee is for doing the heavy lifting (labor, estimating, inventory control, etc.) plus your costs for paying him.

Now he has a benchmark for his minimum cost for the buyer if he expects to get paid and, an avenue to make more money for the both of you by increasing your profitability in concert with increasing the amount he'll get per job. You also have the advantage of negotiating special pricing from vendors without having to include him (you can always reserve the option of perks like meal gift certificates or gas cards, sales people love these) and increase your pay.

In the future you also want to consider supplying tools like custom e-mail and cell phones, these keep your clients you've paid them for yours should a sales person decide to leave you.

He now has a stake in making you more money and you don't have to worry that the only people making money is him and your suppliers.

RG

[locknload1 17]

Also what's a fair percentage would you guys pay for every job someone got you. I was thinking. 20% or 25% for every job.

I'd start on the lower end of the scale while you train in cost factoring and then increase it as he makes the request, always leave yourself some wiggle room. Always consider an annual production based incentive also, this recharges his motivation while giving him a goal.

RG

[godstrong1 2]

wow thanks alot locknload1 for your knowledge! this is right on information. this info really helped helped. i just had a metting with my friend and shared some if theses ideas, and he said when do i start! 

[hawkeyeent 0]

Good luck and let us know how it works! 

[screenprintr 319]

I'm not trying to be Negative, but Never work with Friends or Family.

[godstrong1 2]

i have heard the same, but i have been working with my brothers for over six years, and were doing fine!

[locknload1 17]

I'm not trying to be Negative, but Never work with Friends or Family.

Though I have had a very bad experience in the past I have a few good ones that renew my faith in people constantly over the past several years.

My best friend and I have however, decided to never, ever mix the two again.

RG