Contract and Commission Businesses

Posted by Roberta Budvietas on Sep 14, 2011 in Analysis, Behavior, Business, Communication, Contract, Information, Models, Needs, Networks, Planning, Promotion, Purpose, Structure, Systems | 4 comments

When you think of people working on a contract or commission basis, you often think of people who agree to work for some large firm at a particular rate and the large firm does the marketing and administration for the business.

The types of roles that fall within this category of businesses include:

Real estate salespeople
Insurance agents
Courier Van drivers,
Truck drivers and carriers
Contract laborers and tradesmen
Actors, actresses and performers
Trainers and speakers

And hundreds of other self-employed business owners with a large client paying regular fees and driving business to them

Over the last 20 years, the large utility companies, telcos, wholesalers and freighters have cut their payroll and put their many of their former staff onto service contracts.

This has meant that there are now hundreds more small business owners who contract their services to the company. Often they have bought their own vehicles and tools and but their brand is determined by a larger company. That company sends them business. A contract exists.

Often what happens though is there is a cancellation clause or a clause that allows the company to renegotiate either the volume of business they will send the contractors or the price they will pay for services. When the company changes the way they do business with the contractor, the contractors business can change dramatically and the owner can suddenly find themselves with debts but little income.

Commission agents are at the mercy of the large company in a similar way and it is critical that when they set up as agents they understand that they are setting up their own business. An agent needs to set up in such a way that if the company changes the terms of the agreement, they can survive the change and meet their personal obligations.

What many contractors and commission people seem to believe is that they are employed. Often they are told that the only thing that changes is the contract but it is just like being employed.

Under the contract they have more tax deductions now because they can claim – vehicle, phone, home office, etc as their expenses against income. In many cases, the income looks like a salary increase. Then one day the contractor gets sick or takes a holiday and suddenly their is no income coming from the business. And then the reality of what they agreed to hits the contractor and commission agent.

So a word of warning to anyone being offered a contract by a large company restructuring…

They want you to open your own business and you need to operate as a business not as an employee.

So learn how to run a business.

Get your mindset right before you sign those contracts.

And get BUSINESS advice as well as legal advice before you sign the contract.

And if you need help, ASK. Business mentors have experience with this type of contract work in setting-up a business.

Roberta

Simplifier, Presenter, Business Mentor