Creator to Consumer – Broker or No Brokers – Necessary Evil or Great Ally?


Creator to Consumer – Broker or No Brokers – Necessary Evil or Great Ally?


Season 2 – Episode 7 –


30 years and still learning - Having spent most of my career post leaving the Royal Navy working in consumer goods, primarily in the perishable food sector. I find it fascinating that I still learn every day, sometimes it’s a reminder of what I have forgot but for the most part, I learn something new every day… Today’s episode is Broker or No Broker – Necessary Evil or Great Ally.


Necessary Evil or Great Ally?

Well the simple answer is both, mainly driven by your perspective and approaching to working with brokers.


For our International readers, the simple explanation of a Broker here in the US:

A Broker in the Food/CPG/FMCG space is a hired sales team or individual who works for multiple companies at the fraction of the cost of hiring a direct full team for each company, which invariably is under paid for what you expect them to deliver.


Do you get value for money?

The simple answer is yes, the issue is what people/companies value their investment as.


What are the benefits of having a broker network?

There are many benefits to having a broker network, to name but a few:


They; - Leverage their contacts to get you meetings with your chosen targets. - Your voice on the street, additional exposure and mentions. - Get asked “oh do you know where I can get blah blah? every day and one day that blah maybe yours and bingo. - Know their customer base or base of expertise, so when negotiating they can take the pain away and for the most part make it work for you as the intermediary between you and the customers. - Complete all the paperwork and document submission, which can be a huge time saver. - Food show coverage, normally there are many meetings and events to attend nationally, which when there is a conflict the Broker is there to stand in for you and support you alongside even when you can attend. - Are your contracted sales team on the street and in various regions.

See them as an extension to you team and treat them as such, not as a cost of doing business.


Point to consider and worth mentioning.

I mention this point a few times over the various episodes because it is important for both our US and International readers to be reminded.


The continental US is the geographical equivalent of starting at the West Coast of Ireland all the way to the Eastern border of Turkey, it has 48 states in that space (not including Alaska and Hawaii, but they are not to be forgotten) All with their own local governments, legislation, state tax structures and more importantly cultures. The US is not one country one size fits all… you wouldn’t go to Europe and expect to do business in every country right out of the gate or without local support or knowledge so why does it not makes sense here to have local teams.


Back to brokers…


Are there good and bad brokers?

Of course, there are, like any business or personnel there are always good ones and bad ones.


How do I get a good one?

I use one of 3 ways to define/find a good broker;


1 Ask the customers you want supply with who they recommend.


2 Ask existing brokers you work with if they can recommend teams in other states.


3 Ask other people in your network who their business uses and why.


Hiring Brokers, how do I do it?

Like you would any other hire, set up a call, meet with the, ask the questions and if they come across good then hire them.


How do brokers get paid and how much?

Most brokers are paid on commission, starting at 5% and working down from there, depending on their specialist area, there are some that charge more because of unique circumstances, however a good start point guide is 5%. Bigger volume movers and shakers in commodity will work for cents per lb/unit, which is fine too, know your product and commodity group and work with it.


What if I do not have any sales yet?

Good luck with that one… it’s hard to get brokers to do missionary/pioneering work without compensation as it costs money to work… a good friend of mine who owns a small brokerage firm once told me it costs $250.00 per call to send someone from his team to a meeting and do all the prep and follow up, personally I think he under costed it. My guide is $500 per call. Most Brokers worth their value will turn you away.


How do I get a broker to do pioneering?

Some Brokers will entertain working for a retainer for the first year at least, then switch to commissions once the sales start and exceed the retainer.


How much do they charge if I have no sales?

There is no simple number or answer for this one, it depends on too many factors, the business you are in, the category, sector, channel, market and size of growth and effort you expect in return for you investment, I have experienced anything from $30,000.00 to $250,000.00 per year.


How do I manage the broker and what should I expect from them?

Set out what your expectations are at the interview stage, negotiate the effort and reporting structure and formalize the agreed processes before working together. Remember although reports are important to know what is going on, using the Brokers time to continually write reports will restrict their time and efforts in making sales, there is a balance.


Hold them accountable to the agreement and more importantly respond to and follow up with them as if they are as important as your #1 customer. Brokers work with people they can get support and answers from, the adage “the squeaky wheel gets the grease” works but it has to be reciprocal.


What is the length of a typical contract?

First, there are no typical contracts. Generally, Broker’s work on a 30-day notice period, however, on larger agreements where they invest in additional personnel of are committing to a project, pioneering or contracting agreement they can be on 12-month contracts with notice periods up to 3 months, again all negotiable.


What type of agreement should I have with a Broker?

Most Brokers have a boiler plate contract/agreement which is amended to suit where necessary it should include all the legal requirements for both parties and the structure for payments and termination.


Now it’s all clear as mud, need more, please ask.


In our next episode, we will be talking about Distributors, thanks for reading and continuing your journey from Creator to Consumer.


Interested in reading or finding out more about selling your passion or our Creator to Consumer series please visit our Chatter page at www.beachcitysales.com/blog and click on Creator to Consumer 1 & 2 or our general site at www.beachcitysales.com, for more direct interaction please e mail us at info@beachcitysales.com


Remember, whatever you know “good luck keeping up”

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