The Winning Formula Part 2: The Sub-Agent Equation — Mistakes to Avoid, Best Practices from Nexion’s Best, and Independent Contractor vs. Employee
Written By: Cris De Souza, Vice President, Sales & Marketing – Nexion LLC
As promised in my Part 1 article on How to Successfully Add Sub-Agents to Expand Your Business and Grow Your Revenue Pipeline, this month I’m sharing insights and insider tips from Nexion’s best-of-the-best agency owners who have added independent contractors or employees successfully to find out about their winning formula. These Nexion members share their thoughts on adding sub-agents as independent contractors or adding employees, mistakes to avoid and some best practices. Let’s jump right in!
Q: How has adding sub-agents transformed your business? What’s changed as a result of this decision?
Nexion member, Nexion Advisory Board Member and Nexion Circle of Excellence recipient Elizabeth Caran from Outlander Travel:
“By adding sub-agents to my business, I now have a group of people who enjoy bouncing ideas off each other and sharing knowledge since each specialize in different areas of travel. We have Disney specialists, Europe specialists, FIT, domestic and adventure travel specialists. We even have a corporate agent who has decades of experience using Sabre and booking corporate and group travel. This transformed us from ‘me, in my home office, doing my best to do it all’ to a team of independent, yet social, people who want to grow their businesses together. And yes, we do pass referrals to each other when we feel something is out of our area of expertise.
Also, having more people getting our agency name out there via referrals, word of mouth or traditional advertising builds our brand and visibility, which in the end benefits all of us. There is no way I could do it all. To grow the way I wanted, I knew I needed more than just me.”
Nexion member Stacey Gross, CTC, of Favorite Place Travel:
“I started with Nexion as a sub-agent. After two years, I started my own agency and building my own brand. One by one people in my world would say, ‘I want to be a travel agent,’ and I would give them the nitty-gritty on what I had learned about getting started and set expectations. I was given a shot, so I can give these people a shot.
As my business grew, I brought on a total of seven sub-agents, including a European expert, a wellness travel expert, a cruise expert, an exotic travel expert and another Disney expert. Adding sub-agents allowed my clients to stay with my agency and be placed with a specialist who had a deep knowledge in a specific travel niche.”
Nexion members Jim and Diane Mason, ECC, CTC of The Cruise Planner (which moved from home-based last year to agency office space):
“Adding sub-agents has been a positive experience, as it has afforded us the opportunity to grow as a company and share our knowledge with like-minded individuals, so they may become successful agents with our mentorship. When you are fortunate and have experienced, producing agents, you must take care of them and treat them with the respect they have earned in this industry. There have been many changes on the administrative side of the house with having sub-agents, including making sure:
- The sub-agents are trained properly.
- Our business is covered legally and conducting business within the guidelines set forth.
- Our business has all the correct licensing.
- Our business has a quality E&O policy that covers not only us but our agents.
- We have a proper accounting system in place to ensure our sub-agents are paid in a timely, efficient and accurate manner.”
Q: What are some of the pitfalls or mistakes you made when you added sub-agents for the first time? What advice do you have for others on how to avoid them?
Elizabeth: “I did not have a training plan in place. I grew early and fast, and I was not expecting to add sub-agents as early as I did. I was relying on my host for training, and in all honesty, that is not a bad thing. Nexion has amazing training programs. There are still lots of things we do at Outlander Travel that I am still trying to build training on. So, have your own best practices in writing and ready to go. I am fortunate to have a great team of self-starters, but we definitely hit bumps, even today, because I have never been able to fully assemble my own in-house written policies and procedures manual.”
Stacey: “I started to realize these people relied on me to educate them, and I was spending a lot of time teaching them things that I had to learn on my own. The administration of paying their commissions and sending out travel documents began to take more time, and I knew I needed to shift my thinking from ‘I’m just giving these ladies a chance to do something they’ve always dreamed about’ to ‘I’m running a business, and I am responsible for the success of these ladies.’
So, I started doing weekly conference calls and set up a private Facebook group with my agents where we could ask questions and share information. I told my agents to always ask questions in our private group first before asking in one of the other Facebook groups, because people are mean. My goal was to create a community with my agents where we worked together and encouraged one another. We recognized the expertise each person had, and we didn’t hesitate to pass leads on to another agent, if it was not our area of knowledge.
I am also starting to refer my agents to Nexion’s on-site training events, Boot Camp and Agent Essentials, because Nexion offers great resources. Instead of blowing my phone up with simple questions, Nexion has created an avenue to help me help them and empower them to build their own travel business and do their dream job.
My biggest challenge with having sub-agents is not being afraid to have the hard conversations. That came with the realization that I am business owner. I’m no longer a ‘mom who sends families to Disney World as a side gig.’ I muster up the boldness and authority to have those hard conversations, and I’m better for it. I have been able to use that Business Management degree I got many years ago!”
Jim and Diane: “Diane and I have had many sub-agents over the years; some are still with us, but many are not. The largest mistake is believing that the prospect has a large clientele base and will bring in business overnight. We have listened to others about a prospect instead of going with our gut feelings.
We have had some sub-agents that only lasted a year with us. This is because we believed everything they said. These agents brought in only one to two bookings for the entire year, so they cost us a lot of money in sign-up fees and monthly fees, and not to mention the time we spent training and preparing them to work with our agency.
As far as advice or best practices, here are ours:
- Ensure you have an open line of communication with your ICs; it is important to them to know that you have their back if they find themselves in a situation that needs your experience to handle.
- Always have a signed agreement between you and them, and outline the terms of each responsible party in regards to commission splits, mailing cost, excessive fees, etc.
- Set production goals for your sub-agents – if anything to keep them honest and engaged in the business. They can be small at first and increase over time (if needed).
- Hold new sub-agents accountable: If a prospect says they are experienced in selling cruises or all-inclusive packages, don’t take their word for it. Put the burden of proof on them.”
- Look for agents who have really thought about a niche that they want to follow or pursue in booking specific types of passengers, groups or destinations.
- Find agents who have traveled. You can teach just about anyone how to sell travel, but you really can’t teach a person the feeling that travel brings you. When you are selling travel, you need to express that feeling to your client, and you just can’t do that if you have never traveled outside of the country or if you don’t even possess a passport.”
Q: Employees vs. Independent Contractors? What made you make the decision to go one way or the other? Any advice or experience to share with others on this topic?
Elizabeth: “One day, I know I will have some employees. I chose ICs, because I did not yet have the book of business to pass leads on to them. They came in knowing they were building their own book of business under my brand. But as my business grows, balancing agency owner, agent mentor and travel agent/expert is getting more and more difficult. My long-term plan definitely includes an employee or two!”
Stacey: “I never considered having employees versus ICs, because bringing on an IC was easy, low cost and low responsibility. I just wanted to help make dreams come true – in planning vacations and in allowing people the same opportunity I was given to plan travel. As I learned more about employees versus ICs, I stand on my decision to have ICs and not employees. Employees bring more administration, and I want to plan travel, not administer people who plan travel.”
Jim and Diane: “Diane and I have both employees and independent contractors. It truly depends on your business model. Some things to keep in mind when deciding which way to go:
- Independent contractors are flexible and can work from their home. Once they are trained and booking, our main responsibility is to make sure to pay them on time and properly.
- It is less expensive to have ICs, because they are responsible for their own taxes.
- This is important: During travel, a good independent contractor has the ability and experience to cover your agency when you are traveling, and in return, we cover for them when they travel, so it works out well. We all represent the same company with the same interest in mind to take care of the client.”
Jim and Diane continue with a word to the wise about hiring employees:
“On top of our four independent contractors, we have two full-time employees. One is an administrative assistant and is not a travel agent. She strictly answers the phones, processes our bookings through our CRM and keeps track of our schedules and appointments. Having an admin is worth every penny you pay that person and more. This one person allows us to grow leaps and bounds. We are selling travel, and she is taking care of the back-office information. Our other employee is a full-time, hourly wage experienced agent. It took us four months of advertising and interviews to find the right person for this position.
- With employees, be prepared for accounting overload, and get a true idea of what the costs and tax implications are going to be.
- It has been eight months for us having two full time, hourly wage employees. It is the best move we made, but there have been some very slim months, so be prepared for those months.
- Make sure to have a good payroll company to take care of your employees W-2s, tax withholdings and tax submissions.
