Welcome to a BetaKit weekly series designed to help startups and entrepreneurs. Each week, investors Roger Chabra and Katherine Hague tackle the tough questions facing founders today. Have a question you would like answered? Tweet them with the #askaninvestor hashtag, or email them here.
I’m a big believer that your first salesperson should be one of your founders. The core team of a startup is someone who can sell and someone who can build. If you have more than two founders you’ll have overlap in these two areas, but the point is that one of your founders should eventually be designated as your sales lead. Nobody can sell your product or vision like a founder can.
As you build up your product and gain traction with customers, it’s time to start thinking about expanding the sales function of your business. This means hiring outside salespeople. However, when does an early-stage startup team know they are ready to bring in hired guns? That is the topic of today’s post.
Startups are about being bold and aggressive, and I subscribe to the playbook that founders should get ahead of the curve when thinking about salespeople. You may not be exactly ready when you start thinking about hiring, but you soon will be, and having a game plan in place ahead of your need can pay off.
The first signal that you are ready is when you have impending evidence of reaching product market fit (“PMF”). For more on knowing when you have PMF, have a look at a previous post we did in this column.
In the early days of a startup, founders do everything, whether the task is strategic or tactical. If your startup is progressing nicely, at some point founders will get overloaded with tasks. Fundraising, people management, administration, and back office items tend to creep up and overwhelm a small founding team. Some of these functions can be delegated and hired for (i.e. admin and back office), but some cannot (i.e. fundraising and people management). As your sales-focused founder starts to get overloaded with tasks that cannot be offloaded, you need to think about supplementing your sales efforts with an outside rep.
Another clear signal that you are ready for your first sales hire is that you have lots of inbound interest from potential customers. No brainer here. If you have more qualified leads than you can handle, especially in territories or sectors outside of your experience or time zone, think about getting help.
By having someone with a similar network, you can initially team up on sales calls and opportunities. Eventually, your salesperson will run with opportunities on their own.
The economics of your business need to be in place, or soon be in place, for you to hire externally. Of course, you need to have enough cash on hand to cover your salesperson’s salary. Budget for at least six months of covering their salary. It will take three to six months for any salesperson to ramp up and start paying for themselves as a resource. Beyond having cash on hand, you need to already be earning at least enough to pay for this person. After all, if you as a sales founder can’t pay for a salesperson’s salary, how can you expect a new person to do so?
Most importantly, you also need to be mentally ready to offload sales. This is probably the hardest hurdle for a sales-focused founder to get their head around. Again, you are used to doing everything yourself and it’s natural to feel anxiety about sharing such an important function as sales. If you don’t feel ready to have someone else be the face with your customers, don’t think about hiring anyone yet. You will set them up for sure failure. However, when the signals we discussed here are clearly there, be confident that you will get the right person in place. Hire slowly and very carefully, and give the person enough oversight, coaching, and eventually, latitude and freedom to truly succeed and expand your business.
So, when you are ready to hire your first salesperson, what kind of profile of person should you look for? A good approach is to look for someone who has some overlapping experience to yourself, but someone who also brings a net new set of contacts to your business. Your first sales hire is a very crucial one for your company. They can make or break your company. It’s essential for you to find someone who you can work directly with and shadow, for at least the first few months of their time with your company. Again, nobody can sell your product as well as your sales-focused founder. It doesn’t matter if that person came from a near identical role at another company.
They will never be as productive initially as they were elsewhere for various reasons. You need to make sure you are imparting your culture, experience, and techniques to this salesperson and getting them ramped up to your specific product and solution. By having someone with a similar network, you can initially team up on sales calls and opportunities. Eventually, your salesperson will run with opportunities on their own. That is where their new set of potential customer names comes in. If you can’t find someone with an overlap to your network, simply think about bringing that person on a number of sales calls and meetings with your current pipeline, and have them pulse in their new account names over time.
Got a question for the investors? Email them here.
Feature photo via Unsplash