Startups and Sales Reps

Sales are a key vital sign of a business. It’s like taking your temperature. Too hot or too cold and you’re in trouble. A lack of sales is a warning sign that things need to change.

So your startup has no sales? Hire a sales rep. Right? Maybe not. Hiring a salesperson for a startup requires a lot of thought and planning. If it’s not the right time, you run the risk of distracting your team, wasting money, and disappointing potential customers.

“I don’t invest anymore in entrepreneurs that don’t have charisma.” – Barbara Corcoran

Photo by Greg Habermann.

Photo by Greg Habermann.

If you can’t sell, you better learn fast. Life is about selling. Job interviews, products, a better rate from the mortgage company, a free drink on the plane, etc. If you can’t sell to customers, don’t be surprised if you can’t sell investors. Founders also need to know what the company’s sales cycle looks like. If you don’t know what your customers want to hear and what motivates them, you’re in trouble. How do you even know if you have a good product yet? You need to be able to close sales yourself.

If you’re not familiar with sales, you should learn before you hire someone. Talk to someone with a lot of sales experience. Talk to several and do a healthy amount of internet research. It’ll be academic to you but you’ll have a better understanding of what you need. Start by researching incentives, commissions, base salary, draws, lead/demand generation, who gets inbound sales, the difference between account management and selling.

Avoid the trap of commission only sales:

Yes it sounds wonderful. You only pay your sales rep when they bring in money for your company. Sales Reps should be producing anyway, right? If it’s this easy, why doesn’t everyone do it? Two reasons: 1. Very few experienced sales reps will start on commission alone. If they can make money anywhere else, they will. 2. Many times it’s not the salesperson that’s the problem. It’s the process, product, pricing, or other issues. The best time to hire a salesperson is after you’ve started closing sales. When it’s going well

Have a product – great sales people are wasted before you’re ready to go. If you want your sales rep to line up beta customers or vet your product, you’re wasting everybody’s time. Matthew Bellows –

Make sure your numbers work:

Tomasz Tunguz does a great job of spelling this out in his article on hiring a sales rep. The average sales person can close 15 sales per month. (full article here). If they’re earning $70k in base plus a commission, that requires $12k in monthly sales which means they need $800 per sale. If your product/service can’t meet that, hiring a sales person is a bad idea.

There must be additional opportunity that you can’t close because you’re busy. Don’t hire just to get the cream off the top. Don’t hire a sale professional to handle those calls. That’s just an order taker. Hire a sales person to cultivate the field. They need to be out in their territory generating leads and planting seeds for tomorrow.

Salespeople are best at selling themselves.

A sales manager once told me that and it’s true. Remember that when you’re getting excited about the potential hire. They sound like the perfect fit because they can sell themselves. Remember it again when they report to you about prospects. You need a plan for tracking their success that doesn’t rely on what they say alone.

Next up, I’ll take it back a step and talk about the importance of early sales in startups. We’re thinking about future posts on a better sales process, options for commissions, and the tools I use to make sales happen. Post a comment or send me a message if you’ve got a question or idea.