When To Bring Sales Leadership Into Your Startup
Sooner the Better
“The sooner, the better
You must change yourself
to see the good result.”
from The Sooner, The Better by Gajanan Mishra
Frequently, when speaking with startup founders, I hear the comment, “ we are not ready for a sales leader.” The reasoning provided includes
- lack of funds (“ we need to generate some revenue first “),
- a sequence in hiring (“ we are busy hiring AEs and SDRs “),
- or delays in product development (“ the product is not ready for primetime “).
So, when is the right time to bring Sales Leadership into a startup?
You can argue that it is inherently there through the founder, who often does lead the initial sales efforts. But then they are also the Product Manager, COO, HR, and Accountant. And after winning a few initial clients, it is not just time to sell more but also time to create the playbook and build a sales team. So, the question is more, when do you bring in a dedicated resource to lead your sales efforts?
Sales, like any other hire, is an investment that pays off over time. Not investing or delaying investment comes with opportunity costs, like:
- missing revenue;
- making bad decisions, running trial and error, and having to redo or rebuild later;
- founders spending their time inefficiently;
- founders not spending their time where they can have a bigger impact.
Thinking about the comments or objections that I hear most frequently, they can definitely be connected to the risk of incurring an opportunity cost:
- (“ we need to generate some revenue first”) Sales is an investment, and Scott Stouffer recommends that B2B startups should manage sales & marketing spending like an investment portfolio. And McKinsey concludes research with, “senior executives in outperforming organizations embrace capability building.”
- (“ we are busy hiring AEs and SDRs”) In many ways, that’s putting the cart before the horse. You are setting those hires up for failure without the right leadership and the foundational work around the sales process, messaging, rewards, coaching, etc.
- (“ the product is not ready for primetime”) It always takes longer than anticipated to close a sale, especially the first couple of deals. If you anticipate a 90-day sales cycle, start six months before the product is ready with pre-sales activities.
The problem is well recognized: IAR Consulting interviewed a number of founders, investors, and board members of growth-stage companies and concluded: “ We often hear that by the time a company decides they need a role they are already behind. We asked our respondents to identify growth-stage companies that had gotten ahead of the executive staffing dilemma. Our favorite response was simple: “None.” The founders we spoke with echoed this…”
Hiring a VP of Sales comes with an investment of on-target earning somewhere between $200k and $600k (salary.com). Considering this, it is no wonder that founders look to hold off on the investment as long as they can, and maybe longer than they should. Because at the same time, the experience of a seasoned VP of Sales is crucial for growth.
Engaging the VP of Sales as a fractional contractor instead cuts that investment significantly, to the point that the opportunity cost becomes the only factor to consider.
Roshni Wijayasinha addressed the questions of when to bring in a senior resource for the Chief Marketing Officer (CMO) and when to bring them in as a fractional contractor. The reasons mirror those for the Sales Leader:
- To assist with critical problem-solving.
- To capitalize on new opportunities.
- To provide niche expertise.
- To provide interim assistance.
- To provide economies of scale.
- To maximize a lean budget.
And she concludes that “ the ability for companies to gain access to marketing leaders part-time and at a fraction of the cost has changed the game for those who need senior-level marketing expertise affordably and quickly.”
And with this game-changing option available to startup founders, for the answer to the question “when,” I turn to Rob Hayes, Partner at First Round: “Hire before you need to.”
First Round — Here’s the Advice I Give All of Our First Time Founders
Roshni Wijayasinha — When Should You Hire A Fractional CMO?
IAR Consulting — Before You Know It, It’s Too Late
Photo by Anne Gosewehr
Originally published at https://www.vendux.org on February 28, 2022.