How to Recruit and Retain Beer, Spirits and Wine Reps for Your Distribution Business
In a distribution business, it is necessary for you to rely on sales representatives to put your offerings in front of retailers to score shelf space.
Here are some interesting and effective ideas from Josh Wand, founder of BevForce, on how to find and keep the best reps to drive your business forward.
I have a great product line-up. Isn’t that enough?
In addition to having an amazing product portfolio, it’s important to attract amazing talent. Products don’t sell themselves, the human element makes that happen. Even if you have great concepts and marketing, in order to drive sales, you need smart people who know the market to put your product in front of the customer.
What should my business infrastructure look like?
There should be four key tenets of your business: sales, marketing, finance, and operations. Given this, you have to ask yourself, “What are my strengths as an entrepreneur?” If you’re great at manufacturing/winemaking, you should be focused on production, operation, supply chain and the aspects of logistics. Likewise, if your strengths lie in sales and marketing, you’ll be focused on sales, distribution and building the brand. When you bring people into your organization, it’s important to build strength in all areas.
What’s the first thing to consider when I bring in new talent?
Keep in mind that one size does not fit all when it comes to a company and its needs. All companies have a different vision, mission, and philosophy. Because attracting and retaining talent is key to the long-term success of your business, any potential hires have to have a good understanding of who you are and where your company is headed.
The initial talent that you bring in are the people who will be developing the culture for your company and continue to attract the talent you want to grow in your organization. It’s critical that they become an extension of you and share the same philosophy.
Strategically Building Your Team
1. Hire for passion & expertise - Hire people who can add value based on their expertise.
2. Create a hybrid approach
(1) Interim hires provide access and gravitas.
(2) Full-time hires to give you 100% commitment.
Higher priced senior level executives might make more sense on an Interim/Advisory Consulting level. It can be more cost effective to hire them on a project basis (hourly, monthly retainers) and get advice about the direction of your business. That way, you can test the waters and don’t need to bring them onto the permanent payroll and offer insurance and worker’s comp.
Field Level Sales or Marketing is often outsourced. It is still always important to have someone internally manage that relationship with your agency partners. The challenge is to make sure they become an extension of your brand and focus attention on the brands that they need to sell. Head of Sales, Marketing, Finance or Operations is typically full-time permanent roles.
How does organizational design play into hiring new employees?
At your average small company, the staff consists of the CEO and a few key employees. All companies begin this way. To get to that fully operational machine, the company needs to focus on hires who will apply their strengths into functional divisions and help build a proper infrastructure for the company. After you identify your strengths, as well as those of your existing employees, hire experts in the areas where you’re not as strong. This is your job as the CEO.
This is an example of the organizational design of a medium-sized beverage company.
This is an example of an organizational chart for a larger wine distribution company. This type of growth happens with proper planning over time. At the present moment, you need to focus on your strengths and current gaps in the business.
How do I attract the right talent?
All too often, management conducts an interview as an informal chat that never reveals the applicant’s true strengths or weaknesses. Salespeople are excellent at chatting, so such interviews are a breeze for them. It’s important that your team is hiring on skill set and core competency. Create clearly-defined roles and develop a strategic interview process to hire for those roles. Make sure you’re asking the right questions about skill set and experience.
In addition to this, share the benefits of joining your organization. Hiring good talent has to be a mutually beneficial arrangement. They want to work for a company they’re passionate about, while you want them to be happy to work for you and dedicate their lives to helping you grow. Create a positive company culture where people want to stay, and this will help prevent your top talent from moving on to your competitors.
How can I plan for hiring?
In the early years, things will be lean. You won’t be able to run out and hire a crowd of people yet. Keep in mind that moving a company from zero to ten employees takes a different mindset than moving it from ten to thirty. As you grow, know how much your headcount costs so you can budget accordingly. It’s important not to overhire. Plan for six months to a year out, thinking about what you need to support the market when you launch your next product.
It is also important to consider the kind of people needed to do the type of work you need done at the stage at which you are currently at with your distribution company. The dedication and hard work required to take your company from 0 to 30,000 cases of sales is different to the direction and prowess needed to take it to the next rung – to 100,000 cases and beyond. Maybe the people that you hire today will be along for the long haul, but you will need to augment your team with a different talent set when you get there.
What about compensation?
Like all small companies, yours will start out with modest compensation. Figure out what fair market is for a company of your size and make sure you’re competitive within that framework. The compensation you provide will not be the same as that of a company moving millions of cases, but it should be similar to a company of the same size. You won’t be able to attract the stars of the industry yet, but that’s to be expected. Keep in mind that commission-only structures are tough for employees, as it’s hard for them to work for free for three to six months. If a sales rep is really talented, another company will come along and steal them by offering them a salary.
Everyone does equity and incentives, but this cannot replace an employee’s base salary. A base salary is needed to survive, while incentives and bonuses make them want to drive your business forward. A base salary is basic, but every salesperson also needs a bonus. This is required for them to have motivation to move product. Paying money towards fuel is also part of the package for a salesperson. These are not “extras”.
You want committed team members who are not looking over their shoulders for another $5k. Equity has the added benefit of making your employees feel like they’re part of something; it gives them pride in ownership. Equity can also be planned out over a few years, there are vesting schedules with annual cliffs that you can plan with. This is to protect you from giving away too much equity too early to employees who don’t stick around long enough for it to have made sense for you.
You will know it’s time to upgrade when you think you can start attracting a different level of talent. When you have developed a proof of concept and are ready to make the big leap, you will be talking to people in the strata that can make this happen.
Once I’ve hired them, how do I retain talented reps?
In addition to good compensation, it’s all about developing a healthy and positive company culture—one that fosters communication. People want to work in a happy environment and they want to feel as though they’re part of something bigger, that’s more than just a job. Give people opportunities to expand their skill set in areas that interest them. Employees value continuing education. Let them take a bartender examination or a sommelier class.
In addition to this, encourage communication within the company. Conduct employee reviews of the company. This will help you get feedback on the areas that need improvement. Written 360 degree reviews are an unflinching way to know exactly what your employees think about your company—why they’re following you and why they want to be led by you.
What are some common mistakes and how do I avoid them?
• Don’t try to go it alone with no guidance. Build an advisory board. Having mentors within the industry to give you advice and help you make decisions will be hugely helpful. The structure of your board should resemble that of your company: Sales/Distribution, Marketing, Finance/Accounting, and Production/Distribution.
• Keep growth at a steady pace. If you try to expand too fast, your company will experience growing pains. It’s better to be in just 5 markets and
has amazing sales than to be in 20 markets but barely move any product. Your brand is only credible if it’s connecting with consumers and they’re buying it.
• Treat your team with respect. Make them feel valued and say thank you. This helps to build a team that will stick with you through the rocky times.
• Hire people that are smarter than you. No person is a superhero and there will likely be areas where you aren’t the best one to manage. That’s ok. Own it and bring in smart people who can cover those areas and help you grow. You’re still the boss.
• Protect yourself with great legal support. It’s important to have a good attorney to take care of issues surrounding equity, co-founding and investing, among others. Line this up from the very beginning.