How do I: Find, employ and manage a foreign
agent?
Identified an international opportunity but need an agent to develop the sales? Once the
business has decided to use an agent to help their exporting, the next steps are critical to long-term
success. Finding the right agent and securing their services, in a way which supports your business
objectives, can present challenges. Moreover, the importance of long-term management should not be
overlooked in the first flush of exporting euphoria. This guide is a simple summary of the key elements
which may help you develop your plan to successfully find, employ and manage an export agent.
In today’s global marketplace, many businesses consider exporting as an opportunity for growth when
developing their strategic plan. Exporting may be a viable strategy where it is deemed that the domestic
market is saturated, or that the business is ready for further market diversification. In many
circumstances, exporting represents opportunities for economies of scale. However, finding the best
export market requires careful evaluation (for more information on this see the How do I: Find the best
export market? guide). Thereafter, the decision needs to be taken as to how the export market will be
supplied. One of the key questions here is whether to use direct or indirect selling. Direct selling is where
the company supplies directly to the ultimate seller or consumer (for more information on this see How
do I: Select a route to a new geographic market? guide). Indirect selling includes using the services
of an agent to secure and service sales channels in the export market. The agent works on behalf of the
exporting company without taking title to the exported goods (ownership remains with the exporter until
sold onto the consumer or an intermediary e.g. a retailer). There are benefits to both these routes; the
key is to determine which best suits your business, your product and the export marketplace.
BENEFITS
There are many benefits to employing an export agent, including:
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Agents will bring specialist knowledge to your business.
Allows the business to quickly engage with an established trade network.
Agency agreement provides formal framework for targets and evaluation.
May cost-effectively satisfy a skills gap in the company.
Allows the business to maintain focus on its core skills while gaining knowledge of a new market.
GETTING STARTED
Understand the business opportunity. Selecting and employing an export agent is not the first step in
this process. Your business should already have undertaken valuable investigation and evaluation before
getting to this point, including:
Export or not? Is the business ready to export? For example, is your product exportable, can
the business finance an export operation; is the required infrastructure in place? For more
information on this initial evaluation stage see the How do I: Decide whether I am export
ready? guide.
Where to export? Finding the market that represents the best export opportunity is not as
simple as it may first sound. It involves an evaluation of the market, the consumer and the trade,
married with the practicalities of servicing e.g. your product, logistics and financial
considerations. For more information on this stage see the How do I: Find the best export
market? guide.
How to export? Should you export using a direct or indirect sales operation? Each route has its
pros and cons. The business has to decide which best suits its requirements. To help your
decision process the, How do I: Select a route to a new geographic market? guide, has
more information on direct selling.
The agent: assuming positive responses to the above and a clear determination by the business
to use an agent structure to service the export market, the next thing to do is find the best
agent. Firstly, write your brief encapsulating all the key elements of the agent’s role. The above
evaluation should have given you a very clear understanding of the business opportunity, market
conditions, your product fit within the market, key consumer dynamics and the reasons for
choosing the indirect route to market. In addition, the business should have agreed its key
objectives for exporting and its role within the business plan. This should translate into key
objectives and targets for the agent e.g. gain distribution in half of the country or have two
products listed by two key retailers in year 1. Include any relevant background information e.g.
company history and domestic operations. Use the brief to gather all the important information
and then secure approval internally before embarking on your search for an agent.
SELECTING THE AGENT
The first thing to do is to draw up a short-list of potential candidates. The best source of potential agents
will be colleagues within other food and drink companies. The internet, plus contact with Scottish
Development International and British Embassies could also prove worthwhile when composing lists and
screening candidates. Drawing up your short-list will be based on experience – both theirs and yours.
Remember that the agent will be an extension of your business and will very publicly represent you to
your customers. Over-riding criteria should include the qualities and standards you expect of your
domestic sales function, albeit allowing for the required translation to suit the export locale. In addition,
use a set of specific selection criteria to help direct your judgement, including:
Market experience: you are employing an agent to quickly provide you with expertise in a
foreign market either equal to or better than your own domestic expertise. The agent should be
able to demonstrate their market understanding and proven track record.
Sector experience: ideally the agent will have worked in your sector or related areas.
Current clients: will help gauge the level of an agent’s experience. It is worth probing what type
of relationship the agent has with their clients, the nature of their role and the level of their
responsibilities. You will need to assess the fit with your product, too. For example, does the
agent possess experience of your product sector? Will a conflict of interest arise?
Technical experience: if specific technical skills are required e.g. with frozen goods or alcohol,
the agent should be able to demonstrate their abilities.
Modus operandi: your business needs to be comfortable with how the agent would operate and
interact with it. This is both on a practical level e.g. invoicing and a behavioural level e.g.
transparency.
Personal experience: have you worked with the agency before and had positive experience of
them?
Recommendation: a colleague in another food or drink business may have recommended the
agent. Positive recommendation from someone you know can be useful input to a project.
Resource: this may include their staffing, premises, equipment and financial security.
Draw-up a short-list of potential agents, 3-4 is usually sufficient. Invite each to present credentials at an
introductory meeting. This meeting allows you to meet personnel, discuss areas of opportunity and their
potential to fulfil your requirements. Before assessing each potential agent, it is useful to draw up a set of
criteria against which all the credential/meetings will be judged. A simple system like scoring important
aspects of the response is a good way to capture your thoughts and compare the respective agents.
Ideally, your business may want to develop a long-term relationship with the agent. Therefore, include
important “softer” criteria like chemistry, ability to communicate, and potential to integrate with other key
company functions. The review process may require further company “interviews” with senior
management and this should be accommodated within the timing plan.
EMPLOYING AN AGENT
The successful tender response will form the initial outline agreement between your company and the
agent. Make sure the business is completely satisfied on all material elements before progressing further.
The process of employing the agent involves refining the agreement to an equitable structure. Refining the
agreement should involve other functions of the business including finance, legal and possibly human
resources. In addition to the elements included in the initial tendering process, the employment process
requires the specifics to be carefully and thoroughly considered. These include:
Remit: i.e. the level and extent of the agent’s responsibilities. Setting clear expectations at the
outset is a critical factor to building a long-term successful relationship. Agreeing the detail of this
may require input from both your company and the agent. While your company knows its
expectations and how this could be achieved domestically, the agent will have more
understanding of the practical considerations in the foreign market. Understanding the nature of
the agent’s responsibilities with their other clients may also help to formalise this.
Objectives and targets: clearly agree what the targets will be and the Key Performance
Indicators (KPIs). These should be consistent with the company’s strategic plan. The objectives
will give the agent a context for their role and the targets provide specific focus.
Evaluation: based on the KPIs, agree the formal method and timing of evaluation. Often agents
are incentivised by commission. The terms of this commission must be clearly linked to
performance if they are to have a positive impact on the business.
Personnel: you may want to determine that the agent does not sub-contract to another party
(or stipulate conditions for such a situation). Moreover, if dealing with a large agent, you may
want to specify key personnel who should be involved in your account.
Practical: details of who is responsible for securing any necessary licences, who pays shipping
duties, in what currency goods are charged, etc. should be built into the contract as an omission
can be both costly and time-consuming.
Marketing: will the agent be responsible for marketing in their territory or does this remain a
domestic role? Think of all the potential levels of marketing activity e.g. from mass advertising
through to local promotion or trade publicity. Agree upfront who owns marketing intelligence,
individual market research and confidentiality regarding the use of such information.
Exclusivity: consider the benefits to your company of awarding your agent an exclusive
contract; balance the pros and cons with short and long-term aims.
Reporting & timescales: agree procedures on reporting e.g. what type of information, to whom
and with what kind of regularity.
In general, elements which have to be added into the agreement after final ratification, usually do so at a
cost or penalty. It is therefore worth taking a thorough and comprehensive approach to this stage. Seek
advice where it is available. There are a number of organisations that can help (contact details at the
end). Ensure that you seek the best specialist advice, particularly legal, early on.
MANAGING AN AGENT
There are a number of reasons for wanting to develop a long-term relationship with your agent, including:
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Finding and employing an agent is a time-consuming task involving a number of company functions.
It is not something the company necessarily wants to undertake regularly.
The employment process will have involved divulging a lot of company information, much of which
will be competitively sensitive.
Your agent will be developing powerful trade and distribution relationships, which you will want to
preserve.
Key to managing a positive long-term relationship is to recognise this requirement from the start. The
necessary qualities your company needs for this relationship should be sought even at the tendering stage
of the process. Moreover, elements to help the development of a positive relationship should be built into
the contractual agreement. Some of the important elements to consider include:
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Ensure that both parties are clear about expectations and priorities.
Ensure that the agent is motivated to perform and that an evaluation framework is agreed at the start
of the contract.
Provide adequate support and internal resource to develop the relationship. This may require quite a
bit of time at the start of the relationship.
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Establish clear and open communication between the agent and all the relevant parts of your
company. This is both on a practical basis and to ensure the agent feels sufficiently part of your
business to best represent it to your customers.
Managing a positive relationship is an ongoing requirement. It is worth having a formal “start-up” meeting
with the agent to clarify immediate priorities and methods of working. Thereafter, a structure of
communication should be built in to your timetable. This may include bi-annual meetings, weekly calls,
monthly reports - whatever best suits your respective needs.
HOW DO I? SUMMARY
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Ensure you have done the necessary preparatory evaluation in terms of being ready to export,
identifying the market and deciding whether to use a direct or indirect sales source.
Develop the agent brief and secure the necessary internal agreement.
Draw up a short-list of potential agents based on selection criteria covering key elements that the
agent must have.
Interview potential agents and review credentials.
Carefully and comprehensively develop the agent’s contract involving other relevant company
functions and specialist advice.
Adopt the will and procedures to manage a positive, long-term relationship from the start of this
process.
Maintain regular communication and evaluation of the agent to build the relationship in a way, which
positively impacts on your business.
Seek help and advice from the many organisations with experience in this area.
OTHER SOURCES OF INFORMATION:
Visit www.scotlandfoodanddrink.org
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INSIGHTS : you can access data on geographic markets, consumers, retailers,
foodservice operators, specific product sectors and more
There are many other How Do I? Guides which can help you grow your business
Business Gateway:
www.bgateway.com
Scottish Development International:
www.sdi.co.uk
Overseas Market Information Service:
www.uktradeinvest.gov.uk
Chambers of Commerce:
www.chamberonline.co.uk
HM Revenue & Customs:
www.hmrc.gov.uk
(can be found on the UK Trade & Investment Website)
www.scotlandfoodanddrink.org - The information service tailored to the food and drink industry. To
contact Scotland Food & Drink please call us on 0131 524 8632 or, to access our food and drink
information Helpline, contact us on 0845 601 3752.