Going For Brokers

Terror is probably the word that best describes what most entrepreneurs feel when they go up against huge competitors. It was certainly what I felt whenever I did battle with the likes of Procter & Gamble or Bristol-Meyers. One of the first lessons I learned was that you can't compete with big companies on their own terms -- which is not to say that you can't compete with them at all. You can, but only by doing what the big boys can't do: by being an entrepreneur and acting like one.

That's particularly true when it comes to building a sales force. A small company with a few salespeople is simply no match for the strong, well-organized, well-financed field sales organizations of the Fortune 500. When a big company cranks up its giant tank and starts it down the road, you'd be crazy to crank up your little tank and go against it. But suppose you trade your little tank for four jeeps with bazookas. Then you can get off the road and knock the sucker out.

I'll be specific.

Let's say you have a product with a unique claim, meaning that it's better, cheaper, more healthful, more efficient, whatever. Let's also assume that the claim is true. (If your product doesn't, in fact, have a unique claim, you should probably go back to the drawing board. With a "me-too" product, the best you can do is try to steal part of the market, which takes more money than most small companies have.) Finally, let's assume that your prime competitor is a giant, with tons of money and an army of people waiting to clobber anyone attempting to invade its territory.

The first thing you need is a field sales organization. For most small companies, that means hiring independent sales representatives -- exactly what kind depends on the product. If you have, say, an automatic cookie cutter, you probably need manufacturers' reps; if you have a cookie mix, on the other hand, you need food brokers. In any case, you'll be relying on third-party intermediaries to get your product to retail outlets, and it goes without saying that you want the best sales reps you can find.

I myself have spent a fair amount of time on both sides of this relationship. For more than 30 years, I've made a pretty good living as a food broker; for more than 20 years, I've been involved with products for which I've had to hire brokers. I'm here to tell you that there are specific things you can do to improve your chances of success.

For openers, go to the Yellow Pages and look under brokers, manufacturers' agents and reps, or what have you. (From here on, I will refer to brokers, rather than reps, but the same principles apply to hiring any third-party salesperson.) Then make a few calls. Ask whoever answers to give you the names of the three or four largest brokers in the area. During your calls, you should also find out who represents your competitors. In 15 minutes, you will know the names of the top 10 brokers around. Eliminate the names of your competitors' brokers, and you'll wind up with a list of firms that could, if they would, represent your product.

Next, call the names on your list. Again, you can talk to whoever answers the phone. Ask what lines the firm represents, paying special attention to the four largest and the four smallest.

Now it's time to do some comparison shopping. If you have a food product (as we are assuming in this instance), you'll want to visit a good cross section of the grocery outlets in the city -- not just big chain stores, but small independent ones as well. Don't ask anybody anything: just look and compare. Note particularly the distribution and shelf position of the four small-company products. Is Mother Hubbard's Cocoa at eye level, or way down by the floor? Does it have as many facings as Hershey's? Is there some sort of point-of-purchase display or sign, with coupons, fliers, or a special price? Can you find Mother Hubbard's above the milk cabinet, as well as in the cocoa section? Does it even have (miracle of miracles) and end display?

Obviously, what constitutes "good display" will vary from product to product, store to store, and business to business, but there is one universal truth: good display does not happen by accident or by magic. It happens only when someone makes it happen. By comparing the displays of the lines represented by a specific broker or rep, you can quickly tell whether or not he is dominated by his largest accounts. If he is, cross him off your list and go to the next name. Sooner or later, you should get a warm feeling about one of these brokers, a sense that he is paying attention to his small accounts. If you don't, go back and lengthen your list.

But when you do get that warm feeling, STOP. You've got your man. Don't even try to determine who is second or third.

In carrying out this research, you should resist the temptation to ask a store buyer who the best broker is. To begin with, his friends are probably not the best brokers. (Owners of successful brokerage firms tend to associate with store owners, rather than buyers.) Moreover, if he gives you a name, you're stuck. Thereafter, you can't appoint anyone else without insulting him. And should you hire the person he recommends, you'll never be able to change brokers. If you try, the broker will go straight to the buyer, who will probably threaten to cut you off. Worse, the broker will know you're stuck, and therefore will never give you the kind of service you need.

You should also refrain from asking the advice of friends in other companies, whose situation, after all, is not like yours. Let the distribution and displays do the talking. The shelves will tell you all you need to know: what sort of connections the broker has at the store management level; whether he has enough people to do the job; how well he represents all his lines in all stores.

Having picked your broker, get ready to roll out your jeeps. First, however, you should consider the person you want to enlist in your cause. Rest assured that he is a true entrepreneur. Since he is a successful broker -- that's why you chose him -- he is also very well off. His income may well be in the top 1% or 20% of the population, including fringes, such as yachts (or boats, as he will call them), fancy cars, ski lodges, you name it.

What he does not need is your product. If your company and product are new, chances are he won't even want to listen to you.After all, you are not going to produce instant commissions for him, and that's how he makes his money. It takes time to introduce a new line -- time that would otherwise be spent in the field, building sales of products that are already earning commissions. Meetings have to be held, pitches made, salespeople brought up to speed. The larger the market and the bigger the broker's organization, the more expensive it is for him to introduce a new line. For that reason, he generally won't take on any product that does not meet his minimum commission requirement.