If I could offer one piece of advice to founders, it’s this: Don’t hire your own sales team until you hit about $5 million in sales. Until that point, it’s not affordable. (Remember, we work with B2B services firms, so that context matters with this advice.)
I’m constantly surprised when I see startups and their leaders obsessed with hiring a sales team or a VP of sales once they reach $500,000 in revenue.
What you should be doing at that point is building a scalable revenue machine, not blowing your money on a VP of Sales.
When a company brings Add1Zero on board, we’re aiming to bring in at least $10 in top-line revenue for every $1 the company pays us. If you went out and spent $300,000 on a VP, they would have to immediately make sales of $3 million in order to match that value – which they likely won’t be able to do.
Wouldn’t it be better to work at that 10:1 ratio of revenue to cost of sales and, in a couple of years’ time, be at that $3 million to $5 million mark? At that time you will have a fully documented revenue system that you built with your own money and good cash flow – that’s when you should go ahead and hire a VP of Sales.
Until that point, in the sales context, you should pay only for people who close money. You don’t need a VP of Sales; you just need sales.
We’ll handle the appointments, close the deals, send the MSA, and get it signed. At this point in your company’s growth, it is simply unwise to internalize a ridiculous expenditure on a full-time basis.
Why everybody finally thinks we’re smart
I have a lot of experience from working as a Fortune 500 consultant, working in technology organizations, and running my own company. One thing I realized is that no founder ever wakes up at 3am worrying about anything except more sales. So what I tried to figure out was a way of working so that the only thing I focused on was bringing people more revenue.
Yes, we will advise clients on areas further up the funnel like their marketing and messaging, but what we’re here to do is sell.
The understanding has always been that you had to shake hands across a table to close a deal. But I’ve been working remotely for five years and I’ve sold $40 million of stuff without ever being in the same room as the people who bought it.
So the way the world has changed and moved online in 2020 in the face of the pandemic, and kept doing business, hasn’t surprised me.
Looking forward, if your corporate culture or sales process is dependent on humans being in the same room, you’re in big trouble. You have to face the reality that that “old” world is not coming back, and sticking your head in the sand right now is a terrible idea.
You can sell anything this way and build meaningful relationships. Maybe people are scared of the unknown, but I’m just glad we made that leap a long time ago.
Optimizing every stage of the funnel has massive value
At Add1Zero, our focus is on the bottom of the funnel, working from appointment to close. We’re really awesome at that. The job of qualifying leads and carefully targeting prospects should be taken care of by people further up the funnel.
The more you can optimize your processes at every stage of the process, clearly defining what moves people from one stage to the next, the more of a difference it will make.
I like working at the bottom of the funnel. I like it when appointments show up on my calendar and I can get on a call, do my dance, take my notes, and move toward a proposal.
As a business owner, I am on the receiving end of a lot of pitches. I enjoy turning them into a sales pitch for me, saying: “I’m sorry Mr. Founder, you’re awful at this but I like your product – if you hire us we could sell a lot of it!”
If I had to offer one piece of advice to people trying to make sales, it would be to package your offering into named packages. That gives you so much power over costing, pricing, and bundling.
It also shows a level of authority, sending the message that you must have done this a lot and your process must be valuable because you took the time and effort to name it. Just doing this will raise your average ticket price by about 30%.
Check out the rest of what I had to say on the B2B Revenue Executive Experience podcast.