In the world of sales, there are often no right answers. What would you do in this tough sales situation? Make the call below, and see instantly how your judgment compares. Final results will appear in LBM Journal. Be sure to check back next month for a fresh Tough Call.

Tough Call - Big Stick and the Little Carrot

A competitor wants to buy your business—and your reps—but they aren’t willing to pay the price.

A competitor wants to buy your business—and your reps—but they aren’t willing to pay the price.

It wasn’t really any secret as to why you left your former company: As their top billing rep, your income climbed consistently—until the owners decided you were earning too much money. They didn’t come right out and say that, but they kept modifying your commission plan until they’d tweaked it to the point where you’d have to sell $100,000 more just to earn $10,000 less.

So you decided it was time to go.

Instead of going to the competition—whose compensation plans were strikingly similar to your previous employer—you went into business for yourself. And when you did, you vowed that you’d never, ever cut a sales rep’s commission. Now it’s 10 years later, and your company, All-Star Supply, has established a solid niche with high-end custom builders.

By design, your very generous commission structure has attracted the top reps in your market. Not only are you earning a comfortable living as the sole owner of a solid, growing business, you don’t begrudge your reps the very healthy commissions they earn.

You’d planned on growing this business for the balance of your working life, and then selling it to support your retirement. Those plans may be about to change.

The owners of Big Stick Lumber, a well-run regional chain that’s been growing through acquisition, have set their sights on All-Star Supply. You aren’t necessarily ready to sell, but for the right offer…. Plus, you know that these guys aren’t tire kickers. Their growth strategy is aggressive and very real.

After perusing your financials, they’re impressed with your bottom line—but they were visibly unimpressed with your direct cost of sales (i.e. commissions). Here’s why: Their sales compensation—which is the same at all of their yards—is a complex mix of salary and commission. Within Big Stick’s corporate structure, it’s not very likely that your sales people would continue taking home fat paychecks.

Bottom line: The folks at Big Stick want your yard, but only if you can deliver it with your sales team intact.

Although you hadn’t been thinking of selling, this offer from Big Stick has gotten your attention. Opportunity is knocking, and you want to answer. But you don’t see how you can guarantee that your sales reps will stay once their commission structure becomes more traditional—and less lucrative.

What would you do?

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