BCM Finances Select Agents

Master agency Business Communications Management (BCM) has developed a program wherein it will finance a new agent’s entry into the telecom sales business. Based on early success, BCM’s CEO John Cunningham hopes to extend the program to additional market entrants in 2009.

BCM’s agent financing program has been running on an ad hoc basis for the past four years and has three graduates and two current enrollees, Cunningham said.

“If you are going to start your own [agency] business, you have to plan on not making much money for a year. That’s challenging if you have a family or expenses,” said Cunningham, explaining that most agents don’t get paid on their first sales for six months, but it takes several months of consistent sales to build up a base that generates significant commissions.

What BCM does is work with the prospective agent to arrive at a loan amount that will sustain the agent for the first 12 months he/she is in business. The agent must pay the loan back beginning in month 13 and has until month 60 to do so. The loan is interest-free for the first two years (months one-24).

The loan is tied to sales targets. So if the monthly loan amount is $10,000, the agent must sell an average of $10,000 a month in new business. The average sales number is determined on a rolling three months. So, the average sales for each of the previous three months needs to be $10,000, in this example. If it is, the loan continues in the next month. At month 13, the agent begins to pay back the loan from commissions earned. So, BCM withholds commissions in excess of the monthly loan figure (in this case, $10,000) until the loan is repaid.

However, if the average sales volume is not met, BCM will forgive the deficit and continue the loan for another month. If the deficit continues in the consecutive month, BCM will lower the monthly loan amount. If the deficit continues for a third month, BCM will discontinue the loan and issue repayment terms. Cunningham said, so far, the program has a zero-failure rate.

In addition to meeting the average monthly sales goal, agents also must commit to exclusivity during the loan period and for three years after it’s been repaid. This period ranges from five to eight years, depending on how quickly the loan is repaid. Cunningham said it’s feasible for an agent to repay the loan in year two and that has been the case so far.

Cunningham is quick to add that agents in the financing program do not take a hit on commissions. BCM pays its subagents 70 percent of what it makes in carrier commissions. “We want to pay competitive commissions. We are not expecting them to take a hit on commissions. We are expecting that if we help finance their business for two years interest-free ... we want some sort of commitment coming back our way,” said Cunningham.

BCM is not actively marketing the program, but Cunningham said he would be interested in having as many as three agents participating at a time. “So far we have done it with people that we know,” he said. “The risk is that the whole thing is a bust and we are out a significant amount of money. We are not a bank and we are not looking to make money on the interest.”