I'd like to pay my friends while making money for myself. Halp?

March 23, 2010 8:51 AM

Help me figure out how to pay people in our new company.

So...I incorporated a new company, all my registrations are in, documents signed, etc. We're an equal partnership LLC, and we do IT. We've got lawyers working on our contracts (for employees and customers), and generally everything is going swell.

We both actually work regular full time jobs in addition to this company, and what we don't have time to do is recruit sales. We're looking at contract-retainers where people pre-pay for X hours of service a month, as well as one-off jobs, repairs, etc.

I've got some friends with whom I've worked before who I trust and would like to give the chance to make some money. Basically, I want them to politely cold-call, or rather semi-cold-call---go see people we've been asked to see by other clients but who may or may not know we're coming.

I know I plan to 1099 these folks. What I don't know is how to go about figuring out what to pay them? I'm assuming a straight %, which is easy on $200/month contracts but harder on one-off jobs. Also, I plan on training at least one of them on simple maintenance work, and thus they'll need paid-per-job that way too.

So...what are your thoughts? What %? Our fees are very low, like I said we primarily work with non profits but we make up a little with regular corporations. We also do trades...

And, just as a point of reference, if your company pays for contracted IT service, say 5 hours or so a month for an office of ~10 computers, what do you pay?

posted by TomMelee to work & money (3 answers total)

You'll get what you pay for. Cold calling is the absolute worst job in the world (IMHO). There has to be some significant compensation behind it to make it worth while. I suspect that if you pay these folks on a % basis you won't keep good people for long.

Establish an hourly rate, pay them for their time. The more you pay the more likely you'll get and maintain serious salespeople who will bring in clients.
posted by HuronBob at 8:55 AM on March 23, 2010

Oh--I should point out that these aren't friends who need money, and who have offered to do this free. "Cold calling" isn't really accurate, and there's no hard sell. It's more of a "hey we're new, here's some info, have a nice day."
posted by TomMelee at 9:00 AM on March 23, 2010

Cold-calling or inside sales does not necessarily have to be the worst job in the world, depending on your temperament, and depending on the quality of the product and the need for the product, and just how intelligently you assess and target prospective customers, as well as how intelligently you engage someone on a call.

Technology companies like yourself will sometimes hire inside sales staff on a part-time basis, and will pay $10-$20 an hour (assuming the sales person is expected to educate and not close). It's a perfect job for a university student or someone trying to make an extra buck, and shifts are limited to about four hours per day.

If the person moves beyond qualifying leads and actually starts negotiating and closing, then it makes sense to talk percentages, and it also makes sense in your case because instead of a scalable product you're selling services, which typically have low margins - it would be difficult to craft a meaningful percentage-based rate based on profits, and an hourly rate is easier to quantify for inside sales.

But if they are developing business and closing deals, that's a different story.

I hope this makes sense.
posted by KokuRyu at 9:39 AM on March 23, 2010 [1 favorite]