We’ve already discussed why you need a foreign sales representative – basically, to help avoid cultural stumbling blocks and connect you with the decision-makers in your target market.  Now let’s turn to how to successfully identify a foreign representative.

First off, how do you come into contact with potential reps?  I’ve seen three different ways: the rep approaches you, through your network, or through an introduction.

• The rep approaches you.  A local representative might reach out to your company and request representational rights in their country or region.  Local reps often represent more than one company, and are always looking for new business opportunities.  If they think your product has potential in their country, they might proactively reach out to request representational rights.
• You work your network.  Local representatives often have connections in other countries in the region, if they represent similar products.  They’ve probably met at conferences or trainings and have some idea about their colleagues’ success rate and reputation.  Try asking your representative in Country A if they can recommend a colleague in neighboring Country B.
• You get introduced.  If the first two aren’t an option, don’t despair – the U.S. Commerce Department offers a matchmaking service between U.S. businesses and potential local partners.  This has a cost, but it could be a great way to identify potential partners.  (We’ll talk about Commerce’s services in more detail in a future post, but suffice to say they are super helpful to exporters!)

After you’ve identified one or more potential representatives, you need a screening process.  Here’s what has worked for me:

1.  Conduct an initial phone screening.

This is simply an initial screening to make sure that the potential rep seems to be a serious and responsible business person.  Call them up and have a basic conversation about their background and goals.  Do they have some knowledge of your industry and product?  Connections with decision makers?  A successful track record in representing similar products?  Do they seem honest?

As I said, this is just an initial screen, especially since you can’t really verify the veracity of their statements.  You’re just trying to get a general feeling about the rep and how they operate.

Finally, look out for red flags.  Any mention of “special costs” or “expediting approvals” may be a reference to bribery – which of course is forbidden under the Foreign Corrupt Practices Act.  Concerns in this area are a deal breaker and should immediately remove a potential rep from further consideration.

2.  Request an International Company Profile

If the potential rep passes your initial phone screen, you can move on to requesting an International Company Profile from the U.S. Department of Commerce.  This is basically a due diligence check on the potential representative and their company.  There is a fee for this service (last I checked, it was $600 for a small business), which is why you only want to request it for reps that have passed an initial screen.

According to their website, this report includes:

• A detailed credit report on a prospective overseas sales representative or partner in approximately 15 days or by the date negotiated with the overseas’ office.
• Banking and other financial information about the company
• Market information, including sales and profit figures, and potential liabilities
• The U.S. Commercial Service will also provide you with an opinion as to the viability and reliability of the overseas company or individual you have selected as well as an opinion on the relative strength of that company’s industry sector in your target market.

Like I said … super helpful.  Well worth the $600 fee, in my book.

Another possible red flag at this point would be if the person is overly concerned about a background check.  Granted, no one likes being “vetted” or investigated.  But if your potential rep flat-out refuses to undergo the background check, it’s probably not someone you want to work with.  (And yes, this really happens.)

3.  Make sure they have a valid U.S. Visa.

Last but not least, ask the potential rep to apply for a U.S. non-immigrant visa (or ask for a copy of their current, valid visa).  They will need one eventually to visit your offices for training or a client visit, so this is good to take care of up front. The visa application process involves further background checks (mostly for criminal and immigration records), so if there are any problems getting a visa, you want to know that up front.  It may not be a deal breaker, but definitely a relevant data point to consider.

4.  Sign a representational contract!

When you find someone that passes all of the hurdles above, congrats! You’ve found your new foreign sales representative.  You’ll need to hash out all the legal details – commission, exclusive rights, etc. etc.  and sign a formal agreement.