Becoming a Self-Employed Sales Agent – The Bare Facts

Thinking about going out on your own as a sales agent? This is the plain-English version of what the job actually involves: what a sales agent is, how you get started, what you can expect to earn, and the legal protection you have once you are up and running. If you are weighing up the move, start here and follow the links through to the detail as you need it.

What is a sales agent?

A sales agent is a freelance, self-employed salesperson who works, usually alone, for several non-competing companies. You obtain orders for those companies and are paid commission on those orders. Each arrangement with each company is called an agency, and the company you represent is your principal. You normally work within one area of industry and within agreed geographical limits, and most agents keep their agencies in the same trade so they can offer a customer a range of products on one visit, rather than the single product an employed salesperson carries.

Sales agent or distributor: what is the difference?

The two are often confused, but they are not the same thing.

In short, a distributor trades on their own account; an agent wins the order and the principal supplies, invoices and carries the risk.

How do I become one?

You can start straight away. Whether you trade as a sole trader or form a limited company is best decided with an accountant, though in the early days sole trader status is usually simpler and more tax-efficient. Whichever you choose, you must tell HMRC you have started trading, which brings you into Self Assessment. The fuller picture, business plan, finance, territory and tax, is in our guide to setting up as a sales agent.

Will I make it?

The one thing you really need before you start is sales experience. Trying to learn to sell and earn a living purely on results at the same time is very hard going. If you already know how to sell, you are comfortable with an income that varies from month to month, and you have the self-discipline to keep calling on customers when nobody is chasing you, you can make a real success of it. Whether the life actually suits you, the temperament it takes, the rewards and the risks, is covered in Is being a sales agent right for you?

What about commission?

Commission varies enormously depending on what you sell. As a rough guide, fast-moving, high-volume repeat products tend to pay less, often around 5 to 10 per cent, because the orders come quickly and keep coming. High-value items with long lead times, and services, tend to pay more, commonly 20 to 30 per cent, because each sale takes longer to win and you carry more risk of losing it along the way. Across the board, commission tends to average out at roughly 10 per cent.

Set-up costs

One of the real attractions of agency work is how little it costs to start. If you already have a car or access to transport, a phone and a computer, you are most of the way there. Sales literature and samples are usually supplied by your principals, though many agents like a simple set of their own business cards to present themselves as an independent agent.

Where do I find agencies?

Be careful where you look. Plenty of “opportunities” advertised online and in the press are not genuine agencies at all. Some are pyramid schemes and some ask you to put money in up front. A genuine agency never asks you to buy your way in. You can register free of charge on AgentBase, which adds you to our database so that our team and principals can find you. For full membership, with a promoted agent profile, active introductions to companies looking for agents, you sign up on our sister platform Salesagents.uk. Once you are established, a good number of agencies also come by word of mouth from other agents working for the same principals.

How many agencies should I hold?

Start with one or two while you find your feet, then build up gradually. Around five is a common comfortable number for an experienced agent, but the real answer is as many as you can service properly while giving each principal a fair share of your time. Do not “collect” agencies in the hope of easy income. Experienced principals can spot an agent who is spread too thin, and the whole point of holding several is to spread your risk, not to stretch yourself past the point of doing any of them justice. How to judge and choose a good agency is covered separately.

How secure is it, really?

Becoming a sales agent means starting your own business, so it is not a job in the usual sense. But there is more security than people expect. The Commercial Agents (Council Directive) Regulations 1993 give both you and your principal a set of rights and obligations, and these apply even if you never sign a written contract. Either side can ask for a signed written statement of the terms you have agreed. The part that matters most financially is this: if a principal ends your agency, the Regulations can entitle you to compensation or indemnity for the business you have built up for them. That is real protection an employed salesperson does not have, and it is worth understanding properly before you ever need it.

In short

Most self-employed sales agents consider themselves to be at the peak of their sales career. They live on their professionalism, their salesmanship and their customer relationships, and in return they can earn well beyond what a salaried salesperson takes home, with the only real ceiling being the time and effort they put in. Add the independence of being your own boss and running things your own way, and the appeal is easy to see. As one long-standing agent put it: once you become a sales agent, you need never be made redundant again. Principals may come and go, but you, working across a range of them, simply replace one with another, in your own time and on your own terms.