Are you wondering if it’s time to hire your first sales rep? Many business owners ask themselves that question. Here’s how to you can answer it.
Are You Wearing Too Many Hats?
Author and Sales Trainer, Tom Hopkins contends in his article on how to hire your first salesperson that 'the majority of small businesses fail in their first five years, not because of the product or service, not because of poor accounting practices, but from lack of sales.'
I regularly meet with business owners who have created a great niche business manufacturing an innovative new product or developing a unique service. The owner is usually wears many different hats. They are the product developer, production manager, and the head of accounting, marketing and sales. I call them the COE (Chief of Everything) for short. This role works for a while. But as they become more successful the company begins to outgrow the owner's personal resources, mainly time and energy. Once this occurs it becomes difficult for the COE to personally be the driver of all aspects of their business.
The Tipping Point to Know When It’s Time to Hire Your First Sales Rep
At some point the successful business owner will realize they can no longer keep up the pace of running everything.
That’s when it's time to start hiring qualified people to take over more aspects of the operation. Most often they look to hire a full time sales representative.
The question I most often get asked is; 'how do I know when I should be hiring a full time sales person for the company.”
How to Recruit the Best Sales Professionals (Includes 11 Telephone Interview Questions to Find Top Performers)
7 Questions to Know if it is Time to Hire Your First Sales Rep
1. How much of your time is actually spent selling your product or service?
2. How much do you currently sell each month or quarter?
3. What is the profit margin?
4. Do you want to be the company salesperson or is it time to hire one?
5. How much revenue do you calculate a dedicated salesperson could sell in the next year?
6. Do you have the time, resources and expertise to hire, train and manager a sales person?
7. How long can you afford to pay a sales rep’s salary before they become self-sufficient?
Direct Sales Rep Versus Independent Sales Agents
Once you decide it could be time to hire help in your sales department, the next decision is what kind of sales rep should you hire.
Should you hire a sales rep directly employed by your company, or should you look into independent sales agents.
There are pros and cons on both sides. So you need to take the time to consider which option best suits your business.
Framework For Finding Independent Sales Agents (With Template)
Understand Your Sales Compensation
Regardless of whether you choose direct sales reps or sales agents, you need to have your sales compensation programs in place before you start your recruiting process.
For more information on designing simple but effective sales compensations plans for direct sales reps, check out the B2B Sales Connections training program, Action Plan for Sales Management Success. It contains a full program that can help you get started.
For the best way to compensate independent sales agents, check out my eBook, How To Find, Recruit and Manage Independent Sales Agents. It will guide you step by step through the whole process. As one reader said, “If you are looking for a comprehensive guidebook that can help you find, train and manage independent sales agents (ISA’s), then this book is for you. I guarantee it will help you achieve your goals by giving you a step by step process for developing a successful sales agent program.”
Set Realistic Sales Goals
I often see people pull out the crystal ball and predict that a salesperson will sell an incredible amount of product in the first 90 days. Unfortunately, the sales target far exceeds anything the company has ever done. Look at your best 3 or 4 months over the past year. Use that as a starting point for your sales goals. If you sell a product with a long learning curve or long buying cycle then don't expect a new salesperson to miraculously start exceeding their targets in a few short weeks or months.
What's the Fastest Way to Make a New Salesperson Profitable?
Studies show that companies with a defined sales process consistently outperform those with no process. This includes a well structured onboarding process. The money you spend up front to have the right sales process and hiring process in place will result in a better hiring decision and a salesperson who will be producing revenue faster. After all are you looking for a someone that will take 6 month to a year to start selling or someone who can close business right out of the gate?
“When you lead a struggling sales division from the brink of closing to over $7.4 million dollars in annual sales you can be confident, Robert knows how to engage customers and build sales.”