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From the January 8, 2009, issue of ISO&Agent Weekly.
Working as an independent merchant-account sales agent means being prepared to do all of the work. As such, independent sales agents require incredible self-discipline to succeed.
Such self-discipline, and the attendant self-reliance it fosters, help fuel Dave Proy's motivation as an independent worker. "I have the right to be successful or a failure, whatever I choose to do," says Proy, an independent sales rep based in Sandusky, Ohio. "You have to be self-motivated. If you can't get out and maintain your own schedule, you'll never make it."
No industry is immune to layoffs, but ISO sales agents have a flexibility that others do not. The ability to continue to generate sales and income is not stripped away if laid off as a W-2 employee, so named because the employer pays the taxes and issues the employee the Internal Revenue Service form W-2 to show proof of payment.
An agent can continue to sell merchant accounts by becoming an independent contractor. Independent contractors are not salaried employees and typically do not receive benefits from their contracting companies. The term 1099 refers to the IRS form that contracting companies issue to independent workers.
Working As An Independent
Working as a 1099 contractor requires preparation and a constant juggling of responsibilities, observers note.
Beside the primary task of selling merchant accounts, independent reps have to manage the operations and support aspects of their enterprises, even if that means finding third-party companies to use for some of those services.
Steve Slagle, an independent sales agent based in Asheville, N.C., likes his independence because it gives him the freedom to choose his business relationships.
"It's the freedom to choose good merchants over bad ones," Slagle says. "You can choose the relationships you want to be in. That's worth more than money to me."
New independent workers should adopt a disciplined method of running the business, says Slagle. For him, that means making face-to-face time with merchants a priority and structuring other tasks around meetings.
For example, a sales agent may set aside time Monday morning for marketing, however a client wants to meet at that time, creating what may seem to be conflict, but is not, says Slagle. "If somebody calls you that means they're ready," he says.
Independent agents also should find a certified public accountant to help navigate complex tax issues, understand that merchants realize the sales agent has to make money, too, and develop niche groups of merchants and sell to them, recommends Slagle.
Slagle advises using a certified public accountant because they are required to complete continuing education courses.
Ensuring Profit
To ensure a steady profit, independent reps should avoid competing on price alone, Slagle advises.
A cut-rate competitor may offer a deal with as little as 10 basis points of profit, he says. A basis point is one-hundredth of a percentage point.
But Slagle says to avoid selling a merchant account for too little profit. His recommendation is for a profit of at least 50 basis points. "That way you get a portfolio full of small and mid-size merchants and when one leaves it doesn't bother you," he says.
Merchants understand the need to make a profit. "There are a lot of merchants that think like you. Everybody should make a fair shake," Slagle says.
That is vital to negotiations with ISOs, to ensure there is reasonable profit for both parties, Proy says.
"You have to be tough in negotiations in some regards, and have some contingencies built in there," Proy says. For example, if certain goals are met, such as closing a specific number of merchant accounts in a month, the contract could allow for a bonus payment.
But unless the sales rep has a proven merchant account sales record, do not expect an ideal contract from the start, Proy says, "because you haven't proved anything to them."
However, if the sales skills are quantifiable, the independent sales rep gains some negotiating ground, he says.
Education Important
Once set up, the sales rep should dedicate time to education and staying abreast of industry developments, according to observers.
"Rules change all the time," Proy says. "If you don't keep up and read the industry periodicals and have some good training, you could be in a real pickle."
Finding merchants is always vital to a sales rep's success. Both Proy and Slagle tout the insulating factor of having merchants from a broad range of industries to minimize the impact of economic hardship in any one industry.
They also encourage the development of niche groups of merchants. Some sales reps may consider establishing a referral agreement with a bank, wholesale distributor, networking club or similar group where the members have a common interest, says Slagle.
"Find a niche you like," Slagle advises. "If you find a niche that's off the beaten path, you're not going to be like the other sales reps out there." ꆱ
