How to Use 1099 Contractors as Sales Reps

The ideal scenario for many businesses is to have a sales team of reps who are paid on contract, with no base salary and receiving 100% of their compensation in the form of commissions. And why not? Most employers would like their reps to assume all the risk of performing and be highly motivated to sell.  So why don’t more companies build teams this way? The reality is that good reps know their own value and if they are given the opportunity to change jobs they will usually go to the highest bidder which often is one who offers a package with a base plus commissions and support to ensure their success. There is, however a simple way to make the 1099 contractors work for sales hiring.

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**Disclaimer – we do not recommend building teams as 1099 contractors for a variety of performance reasons – see our earlier article 100% Commission Plans. This article addresses how you might build a sales team of 1099 contractors if none of the aforementioned issues apply to your situation.

The challenge of finding capable and reliable reps who will work for 100% commission is significant. To make it work, we suggest the following approach:

1. Market your position without mentioning you are hoping to find commission only sales reps. Few reliable sales professionals will apply for jobs advertised as commission only.

2. Offer two comp models – When you find a sales rep that would be suitable to join your team, offer them 2 comp plans. One with a modest base salary plus variable compensation model and a second with 100% commission and some sort of a draw against commissions (people do need some money to live).  The second option pays the rep significantly more for sales achievement than option 1 but the employers risk and monthly costs are lower.

Why does this work? Reps want to join a company where they think they can be successful and where they think they will make the most money.  Companies that offer a base salary are assumed to be successful. Good reps are attracted to employers that offer a base salary, but they will often take the higher overall compensation model once they are comfortable with the company.

For more information on the merits and business issues surrounding 1099 contractors, see
The Truth About 1099 Contractors

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3. Are Sales Reps Motivated by Money
4. Sales Contracts – Critical Elements
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