When Does It Make Sense to Hire Sales Reps for Your Business?
Many people think that the fastest way to grow a profitable business is to bring in sales reps early in the process to start closing deals and getting customers.
For this reason, a lot of startups jump the gun on building a sales team, which can be a costly mistake. I know, because I’ve made that mistake.
Some startups have the opposite problem, and they wait too long to hire sales reps. This isn’t necessarily better, as it can still result in missed opportunities, disorganization and lost revenue.
A lot of articles say “you’ll know when it’s the right time to hire a salesperson,” but if that were true, there wouldn’t be so many articles written about the right time to hire a salesperson. The truth is, most people don’t know, and they either hire too early or too late.
There are some ways to determine when it’s time to hire outside help, as well as some ways to know when it’s definitely not the right time. Opinions on the subject vary.
Take all the factors I’ll describe here into consideration, and even if they don’t reveal the exact right time to expand your team, you’ll at least be able to make a more informed decision about the best way to start building your sales team.
Your Company’s First Salesperson Should Be You
I’m a big believer that you shouldn’t hire a sales rep without testing out sales yourself. It doesn’t matter if you’re an introvert or if you don’t think you’re good at it. The reason you want to go out there and sell is because it’s your business and you probably understand it better than anyone else. This puts you in the position of being able to sell people on your vision for your product, service or organization.
Most people think hiring outside salespeople is a quick way to scale up and make money, but that couldn’t be further from the truth. Paul Graham of Y Combinator has a blog post that he wrote years ago that is still kind of famous called Do Things That Don’t Scale. Many startups try to scale too fast by hiring salespeople before they even know what they’re selling.
According to Graham:
“Startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going. A good metaphor would be the cranks that car engines had before they got electric starters. Once the engine was going, it would keep going, but there was a separate and laborious process to get it going.”
Basically, you can’t expect a salesperson to come in and define your sales funnel. That’s your job. You’re the one who knows the business inside and out. You’re the one who knows what your customers like and don’t like about it (and if you don’t know this, you need to find out!).
Even if it is the right time to expand your sales team, you’ll need to be able to educate and train a new salesperson — and you can’t do that if you don’t know how it’s done.
For that reason, Jason Lemkin of SaaStr says that you shouldn’t hire a salesperson until you’ve closed 10 sales yourself. Some people think that number should be higher, some lower. I think of it more in terms of time, and recommend that startup owners do all the selling for 30-60 days. No matter what your parameters are, you don’t know if you have a sellable product until you’ve actually tried to sell it.
If you hire prematurely, you will only end up having to fire people and losing money. You might even lose your company.
Understanding Objections Is an Important Part of the Sales Process
Do you know what keeps people from buying your product or service? If you don’t understand potential customers’ objections, you can’t train a salesperson to counteract them.
While you’re out there selling, you’re going to run into objections. You’re going to fail. And that’s a critical step in the process. Once you start dialing the phone or sending emails or knocking on doors, you’re going to run into people who say, “Sounds great, but….”
You need to address every single one of those “buts.” Maybe it’s a simple matter of customer education that an FAQ or how-to video can solve. Maybe your product pricing is wrong. Or maybe there’s an issue with the product itself. You won’t know any of the problems with your business model — or how to solve them — if you aren’t out there in the trenches chasing down leads.
When you have all of the feedback from would-be customers that you can get, tackle the issues you encounter and then go out there and try to sell again. When it starts to work consistently, then you can formularize your sales funnel. Then, and only then, is it time to start thinking about hiring an outside sales rep.
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Don’t Put Off Hiring for Too Long
If you’re closing sales on your own, you might be tempted to just keep doing it yourself instead of spending the money (not to mention the time and energy needed for recruitment) to hire someone else. But if you’re a startup founder, you have a lot on your plate — like, you know, running a business.
If you really can’t afford it, then yes, you have to put it off. But make sure that decision is based on actual math and not just a hunch. Lemkin has a great blog post about calculating sales salaries and the revenue you need in order to be able to pay them. It’s specific to SaaS companies, but I think it’s a helpful read for any startup business.
Don’t get bogged down in sales calls or evaluating leads for any longer than you absolutely need to. Your talents are better utilized for activities that fall under “The Big Picture.”
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Think About Hiring More Than One Sales Rep
Hiring your first salesperson is an exciting part of the business growth process. Not only does it mean that you won’t have to do it anymore — it also means that you’re bringing someone in with more experience selling than you. And because you’ve already established a process, they’re probably going to blow your sales numbers out of the water quickly.
Jason Lemkin has unique advice for startup founders hiring their first sales reps: hire two, if you can swing it. That way, you’ll have some data points to measure success. Say one excels and one fails miserably. If you only had one rep, you wouldn’t know if it was your product, the person or something else. If you have two to compare and contrast (like A/B testing people), you’ll be better able to know what’s working and what’s not, and how to fix what isn’t.
How to Find Your First Sales Rep(s)
Before you start the recruitment process, it’s important to define what exactly you’re looking for in a salesperson. Keep in mind that to customers, they’ll be the face of your brand. So what type of personality will accurately reflect your business? What character traits are you looking for?
Experience is another big factor. While it may be hard to find someone with experience in your particular niche, it’s not unreasonable to look for someone with experience selling for a company of your size and in your industry.
When you’ve identified your ideal candidate, it’s time for outreach, which you can do in a few different ways:
- Staffing agencies: Theoretically, agencies save you time by pre-screening candidates, but they have to understand your industry. Good agencies make the process easier; bad agencies do the opposite. And both good and bad agencies are generally expensive.
- Referrals: This is the easiest way to find candidates, but it comes with some risk. If the hire doesn’t work out, it may create conflict between you and the referrer. Make sure you have a “no hard feelings” talk upfront to mitigate any issues down the road.
- Job boards: Sites like Indeed have the biggest reach, but you’ll also be bombarded with unqualified leads. Niche job boards like Rainmakers, SalesJobs and SalesHeads will bring in more experienced candidates.
- Direct recruiting: Searching through profiles on LinkedIn and Indeed can help you find people with the exact background you’re looking for. The drawback, of course, is that those people may not be looking for a new job — and even if they are, they may not be interested in your company. You’ll have to do more selling of your company as a place to work than you would if you were on the receiving end of an emailed resume.
Once you’ve identified candidates that you’re interested in meeting, design a sales assessment that will be part of the interview process. It shouldn’t be too arduous or happen too early — reserve it only for those under serious consideration.
Sales assessments can include verbally selling you a product that they love, drafting a cold email to a lead or even pulling together a couple of presentation slides. Think about which metrics are most important to you and use them to create your assessment.
If you want to do a more in-depth test of their sales abilities, offer them a paid test. Just check on the labor laws in your area and make sure that your payment terms are on the up-and-up. Whether paid or unpaid, an assessment will give you a good idea of whether or not a candidate is a good fit.
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Your Hires May Not Work Out
There are a lot of reasons why a sales rep — or any hire, for that matter — may not work out. Maybe you hired a bad salesperson. Maybe you hired a good salesperson who wound up being a lousy fit for the company. Or maybe your sales funnel wasn’t as airtight as you thought it was.
If you hired more than one sales rep, it will be easier to answer the “why” so that you can do better next time. If not, take your best guess and try again.
Building a cohesive team isn’t easy and it isn’t fast. As the person behind the company, you should maintain high expectations, but don’t get deflated when you fail — it’s an important part of the growth process.
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Key Takeaway: Sales Reps Don’t Solve Everything
Before someone can sell your brand, you need to have a great product or service, and you need to understand how to sell it. Then, you need to hire the right person, train them on how to sell your product or service, and then teach them how to deal with the objections they’ll encounter in order to close the deal.
If any part of that equation is missing, your sales funnel will suffer. All those pieces need to be in place and working in tandem. The best salesperson in the world can’t fix those problems for you. I’ve made the mistake of expecting a salesperson to come in and take on every aspect, and I’ve paid dearly for it.
Remember that good salespeople are in high demand. When you manage to land one, make sure that he or she has the right tools and processes in place to take your vision and turn it into a profitable one.