Paying staff commission only for sales

mondeo

I am a self employed person, I need to generate more clients and want to hire some people to go out and assist me in doing so. Their position will be to go around to different businesses and secure new clients. I don't want to pay them hourly rates because they will be out in the field, and for all I know having coffee all day and doing nothing and still getting paid for it. I want to pay them commission only, they get paid for each solid client they generate for me. Each client they generate is worth about 500 Euro or more to me. The commission level I was thinking about paying the staff was 50 Euro per client they generate.

I can legally just pay staff commission only like this right ?

I don't need to take their P45's in this case right ? I want to just pay them by cheque or bank transfer at the end of each month and they can do their own taxes as self employed individuals.

What would I classify staff like this on my books as ? contractors ?

Hoboo

mondeo wrote: »

I am a self employed person, I need to generate more clients and want to hire some people to go out and assist me in doing so. Their position will be to go around to different businesses and secure new clients. I don't want to pay them hourly rates because they will be out in the field, and for all I know having coffee all day and doing nothing and still getting paid for it. I want to pay them commission only, they get paid for each solid client they generate for me. Each client they generate is worth about 500 Euro or more to me. The commission level I was thinking about paying the staff was 50 Euro per client they generate.

I can legally just pay staff commission only like this right ?

I don't need to take their P45's in this case right ? I want to just pay them by cheque or bank transfer at the end of each month and they can do their own taxes as self employed individuals.

What would I classify staff like this on my books as ? contractors ?

Think you need to first understand the difference between a contract of service and for service. Google will help you out.

With the little information provided they sound like employees and not contractors.

you control how, when and where the work is carried out

they supply labour only

they are not exposed to personal financial risk in carrying out the work

they do not assume any responsibility for investment and management in the business

they cannot profit from the management, scheduling or performance of the work

they carry out work for you or your business only


That's only a shortened list from the little info provided, the last point alone will make them employees.

Plumbthedepths

In an economy with what is classed as full employment good luck getting people working for commission only. Do you also expect them to use their own vehicle at their own expense?

mondeo

Plumbthedepths wrote: »

In an economy with what is classed as full employment good luck getting people working for commission only. Do you also expect them to use their own vehicle at their own expense?

No, I will give a fuel allowance.

Seve OB

who in their right mind would want to work for you?

Plumbthedepths

mondeo wrote:

No, I will give a fuel allowance.

You basically want free labour, you would have had a chance of attracting people at the height of the recession. I'm happy to say that won't happen now. Good luck in your endeavours though, however there is a multitude of sales positions out there paying a basic wage. You offer nothing attractive.

Trojan

I don't think offering zero base is looking for free labour, if the commission levels are right. In fact, really good sales people will want to negotiate a lower basic and higher commissions.

But the real issue is whether there are good sales people on the market - it's likely to be lower quality and less confident folks who are actively looking, and they certainly won't want zero or low basic.

storker

mondeo wrote: »

I can legally just pay staff commission only like this right ?

I don't need to take their P45's in this case right ? I want to just pay them by cheque or bank transfer at the end of each month and they can do their own taxes as self employed individuals.

What would I classify staff like this on my books as ? contractors ?

With that kind of attitude, no doubt you'll be swamped with so many applications that you might have to hire, oops I mean contract, someone to handle them for you... :rolleyes:

Plumbthedepths

Trojan wrote:

I don't think offering zero base is looking for free labour, if the commission levels are right. In fact, really good sales people will want to negotiate a lower basic and higher commissions.

You have managed to contradict yourself. 'In fact, really good sales people will to negotiate a lower basic' still a wage though it places a value on their labour.

mondeo

Plumbthedepths wrote: »

You basically want free labour, you would have had a chance of attracting people at the height of the recession. I'm happy to say that won't happen now. Good luck in your endeavours though, however there is a multitude of sales positions out there paying a basic wage. You offer nothing attractive.

I'm not forcing anyone to work for commission only, if they are interested then that is fine. If someone confident enough got say 3 sales a day at 50 Euro a pop, that would be 750 for a 5 day job. 150 Euro a day is not micky mouse money for anyone. Even 2 sales a day will keep anyone afloat.

mondeo

Seve OB wrote: »

who in their right mind would want to work for you?

Lots of confident individuals out there with a talent for sales. Good sales people are driven, I wouldn't let anyone go out there if I felt they would be walking around all day for nothing. If they are good, then at 50 Euro a pop per sale, the skys the limit for them.

Plumbthedepths

mondeo wrote:

I'm not forcing anyone to work for commission only, if they are interested then that is fine. If someone confident enough got say 3 sales a day at 50 Euro a pop, that would be 750 for a 5 day job. 150 Euro a day is not micky mouse money for anyone. Even 2 sales a day will keep anyone afloat.

I never suggested you were forcing anyone, so please don't accuse me of something I never said. I said good luck finding anyone willing to work for commission only, you're about 5 years too late. 100 euro a day self employed is rubbish to be honest, but as already pointed out to you what terms you are hoping to get a salesperson based on defines the person as an employee. Now I will leave it there.

amcalester

What’s a realistic OTE for this position?

At €150 a day and 232 working days a year that’s about €35K a year, you won’t get many people willing to work for that with no minimum guaranteed wage.

JustAThought

amcalester wrote: »

What’s a realistic OTE for this position?

At €150 a day and 232 working days a year that’s about €35K a year, you won’t get many people willing to work for that with no minimum guaranteed wage.

You might - doing nixers on the dole or working under the tax radar. Its still barely minimum wage rates but with no holiday pay nor security nor incentive to work as a "contractor". Luckily; as many such as the OP has found, the labour courts find in their favour invariably when there is a dispute (as there invariably is) and between that and revenue fines the price of the "free" - I mean "contractor" labour usually is prohibitive to the "non employer" and ends their little scam and "company" .

Zero hour contracts are also officially illegal now - and also covered under the Workforce Relations Comission and Employment Law /Labour Courts.

Gael23

People like the OP are the exact kind of employers that scuppered Jobsbridge.

The days of free labour are long over. You need to offer the minimum wage plus some commission to get any sort of reasonable applications

mondeo

Plumbthedepths wrote: »

I never suggested you were forcing anyone, so please don't accuse me of something I never said. I said good luck finding anyone willing to work for commission only, you're about 5 years too late. 100 euro a day self employed is rubbish to be honest, but as already pointed out to you what terms you are hoping to get a salesperson based on defines the person as an employee. Now I will leave it there.

Your suggesting I am looking for free labour, nonsense. Good confident sales people may prefer the higher earning potential of unlimited commission. This is the individual I am targeting, not looking to screw over some poor bastad without a sales note in their head. I will happily decline them in the interest of not wasting their or my time.

I'll do my market research and find out if there are people out there who may want what I'm offering. I'll find out if I'm 5 years too late or not. I will take it from there.

500 a week is better then being stuck on social welfare @ 198 Euro a week or whatever the rate is these days. Self employed or not. Imo.

Anyways good luck.

KildareP

mondeo wrote: »

I'm not forcing anyone to work for commission only, if they are interested then that is fine. If someone confident enough got say 3 sales a day at 50 Euro a pop, that would be 750 for a 5 day job. 150 Euro a day is not micky mouse money for anyone. Even 2 sales a day will keep anyone afloat.

What are you selling? Are you established or starting out?
Advertising material? Brochures? Blurb?
Is your sales pipeline ready to go with leads or are they expected to generate them too?
3 sales a day - what is your conversion rate?
How many hours per sale pitch (how many hours a day do they need to work)?
Are you paying commission immediately on close or is there a holding period to ensure the client does not back out?
Expenses? Mileage (not just fuel)? Telephony? Accessories (laptop, smartphone)?
Exclusivity terms, non-compete clause, non-solicitation terms?

mondeo

Gael23 wrote: »

People like the OP are the exact kind of employers that scuppered Jobsbridge.

The days of free labour are long over. You need to offer the minimum wage plus some commission to get any sort of reasonable applications

How can you say I would be that sort of employer without even knowing my business model or anything ? I'm not going to say exactly what type of business it is, but lets say there is a service involved that companies will find extremely useful. I just need some confident people to spread awareness. I can't do everything myself unfortunately, keeping costs down is in the interest of keeping myself afloat to. The problem with paying a basic out in the field is this.....You cannot monitor people out in the field, they may only knock on a few doors for the whole day and drink coffee for the rest. I am then stuck to pay them for the 8 hours where they may have actually only worked 3. At least with commission it will drive people to get out there and do it! The money will be there, if they pick it up its theirs for the taking, if not then it's their loss and they should not be doing sales in the first place.

Some here may not like commission only work because they themselves probably did it at one stage, and were probably not successful at it.

mondeo

KildareP wrote: »

What are you selling? Are you established or starting out?
Advertising material? Brochures? Blurb?
Is your sales pipeline ready to go with leads or are they expected to generate them too?
3 sales a day - what is your conversion rate?
How many hours per sale pitch (how many hours a day do they need to work)?
Are you paying commission immediately on close or is there a holding period to ensure the client does not back out?
Expenses? Mileage (not just fuel)? Telephony? Accessories (laptop, smartphone)?
Exclusivity terms, non-compete clause, non-solicitation terms?

I won't be saying what my business is exactly, other then it's a service I am offering directly to companies. I am established yes.

There is a target market yes.

Yes there will be advertising material, the sales people will take that with them. Can't expect them to go out with nothing on hand. They will need their own laptop with their own internet connection from which they can tether their connection, data uses will be minimal. They will be briefed well.

There will be a certain mileage allowance which I have not decided on yet.

For the rest of those questions, I will accurately answer when I properly complete my market research. I cannot answer them accurately yet.

mickmackmcgoo

mondeo wrote:

For the rest of those questions, I will accurately answer when I properly complete my market research. I cannot answer them accurately yet.

So assuming you get a few people to do this for you. What's your role then ? Do you sit at home waiting for the sales to come in or have you a premises etc that you work out of ? Why not pay someone a weekly salary to do your role and you go out on the road and get all those sales and you won't have to worry about how many doors they knock on .

Axwell

mondeo wrote: »

The problem with paying a basic out in the field is this.....You cannot monitor people out in the field, they may only knock on a few doors for the whole day and drink coffee for the rest. I am then stuck to pay them for the 8 hours where they may have actually only worked 3.

Are you just expecting them to randomly knock on doors or are you going to give them a list of potential clients to go and meet that day/week/month? And if you are then are these leads warm leads or completely cold calling and just showing up trying to offer them the service?

Your approach to how you manage that will be a big factor in whether or not they are sitting around drinking coffee or not. Also if they are just going out cold calling and the leads aren't in any way warm then it's unrealistic to expect someone to go out and work on commission only with no basic pay, they could get turned away all day the minute they step foot inside an office and come away with nothing for their days efforts - your €150 a day is all good in theory but how likely is that?

KildareP

mondeo wrote: »

I won't be saying what my business is exactly, other then it's a service I am offering directly to companies. I am established yes.

There is a target market yes.

Yes there will be advertising material, the sales people will take that with them. Can't expect them to go out with nothing on hand. They will need their own laptop with their own internet connection from which they can tether their connection, data uses will be minimal. They will be briefed well.

There will be a certain mileage allowance which I have not decided on yet.

For the rest of those questions, I will accurately answer when I properly complete my market research. I cannot answer them accurately yet.

You'll be hard pushed to get all that with no base rate, no vehicle, capped mileage, no equipment and expected daily earning of €100-€150. You'd make that selling broadband for one of the telcos door-to-door and also be provided with tablet, phone and vehicle on top.

What's burning up your own time at the moment? Do you need someone making sales or can you do it if you had more time?

Would you be better off getting someone in to cold call, generate active leads which you then follow up with an onsite, and that person also takes any follow ups?

That way you have them in sight at all times, you can track number of calls, experience needed will be lower than a field sales person, salary expectation and commission costs will therefore also be lower, no mileage or travel costs to reimburse and you would be better able to get them to do other admin-type duties.

amcalester

OP you’ve explained why you need someone to work for you, but what are you offering in return?

Unlimited commission obviously and mileage allowance but we’ve got near full employment so what sets your company apart that would attract an employee?

Tell me how

mondeo wrote: »

I'm not forcing anyone to work for commission only, if they are interested then that is fine. If someone confident enough got say 3 sales a day at 50 Euro a pop, that would be 750 for a 5 day job. 150 Euro a day is not micky mouse money for anyone. Even 2 sales a day will keep anyone afloat.

You think it is ok to have someone bring in circa €350,000/annum in revenue to you and you are not going to give them a guaranteed wage?

Seriously?

Gael23

mondeo wrote: »

How can you say I would be that sort of employer without even knowing my business model or anything ? I'm not going to say exactly what type of business it is, but lets say there is a service involved that companies will find extremely useful. I just need some confident people to spread awareness. I can't do everything myself unfortunately, keeping costs down is in the interest of keeping myself afloat to. The problem with paying a basic out in the field is this.....You cannot monitor people out in the field, they may only knock on a few doors for the whole day and drink coffee for the rest. I am then stuck to pay them for the 8 hours where they may have actually only worked 3. At least with commission it will drive people to get out there and do it! The money will be there, if they pick it up its theirs for the taking, if not then it's their loss and they should not be doing sales in the first place.

Some here may not like commission only work because they themselves probably did it at one stage, and were probably not successful at it.

If you had a shop how would you know your staff aren’t in the staff room drinking coffee when your not there? There’s a degree of trust in the workplace and that works both ways in terms of the employer and employee.

If you had a shop and there was a day with really bad weather which means few customers coming in the door, you would still have to pay your staff. Then the next day you could have customers queuing out the door. You win some and you lose some in business.

Fr_Dougal

mondeo wrote: »

Lots of confident individuals out there with a talent for sales. Good sales people are driven, I wouldn't let anyone go out there if I felt they would be walking around all day for nothing. If they are good, then at 50 Euro a pop per sale, the skys the limit for them.

Good sales people wouldn’t touch your deal, to be fair. Even those starting out in sales could get a €35k job with unlimited commission for b2b sales.

My advice would be to contact a field sales contracting company. You’ll pay higher commission, but they will manage the process for you.

And you can forget about €50 per sale, that won’t fly.

Your other choice is to contact a lead generation company. You profile your target audience, they’ll ring them and create appointments for you and charge per lead.

Looking at your posting history, I don’t think either would be a good fit for you.

Standman

Pay them a wage and give them targets like a normal job.

whoopsadaisy

OP are you currently a one-man band or have you hired before? Hiring someone is a lot more responsibility than just having someone to do the work you currently don't have the time to do. Given the amount you're prepared to pay, you absolutely won't get a contractor, you will have to hire outright, in which case a few more things worth bearing a thought towards:

• Will the employee be hired on a permanent basis, or temp / contract?
  
• Will you offer them any other benefits aside from commission and fuel allowance?
  
• Where will you find this person?
  
• What kind of person are you actually looking for? Experienced / non-experienced?

You will need to give something asides monetary reasons to get someone to stick around longer than a few weeks OR you need to be completely non-fussy about the type of person you'll hire. By the picture you've given, the type of applicants you would likely attract would be 16 year olds looking for summer / weekend work or non-nationals without a word of English.

K.Flyer

mondeo wrote: »

... If they are good, then at 50 Euro a pop per sale, the skys the limit for them.

You can have the best salesperson, but if the product / service is not, then it becomes a hardsell and hard work.
Sky is Not the limit under your proposal.
If the income stops at the 50.00euro, there are only so many hours in the day, only so many places you can visit, only so many conversions to a sale.
When do they get the 50? after you have been paid for the service? So income is delayed for them and not consistent.
Have you the staff to back up the potential increase in workload?
Have you considered profit share? So for every sales conversion they get the 50 plus a small percentage of all income from that new client. (encourages them to keep the client on board).

I started in commission only, making about €100 per day. It could be indeed past the time where that is possible now with workers, but even if it isn't, to get a commission only system going requires a bunch of things.

You need a team, daily training, and to create one of those cult type sales organizations where people get hyped up and motivated, and competitive with each other. There also needs to be lots of pressure from above to do well, constant checking up, and a whole machine to make it work. Commission only sales not only requires the 'self starter' and motivated young person, but the organizations that run that sort of operation successfully are using tried and tested system, and like I said are essentially cult like organizations.

If you just get a couple of people and send them out cold calling, commission only they will last a few hours without the whole system and just give up. They won't last a day most likely.

mada82

You sound like a great employer. I bet the cv’s will be flying in.

I’ll send you mine if you supply the paper and ink.