Getting That First Sales Hire Right: The Lessons Early Stage Companies Can’t Do Without.

The first sales hires you make can have a huge impact on your business, not only in terms of revenue and performance but also the culture of the business. Equally the true cost of hiring the wrong person can be dramatic so it’s a topic worth thinking about.

Photo by Clem Onojeghuo

Focus

In my last blog we covered the importance of focus: how by following a structured process we can understand business impact, then build a prospect profile of the types of businesses we can deliver that business impact to. This understanding reveals the most logical sales engagement model and therefore the type of sales resource we need to hire, whether it be direct, enterprise or channel.

The Culture Cost

One aspect of sales hiring that businesses often overlook is the importance of compatibility with the culture of the company you are trying to create. The first few sales hires — especially your first sales leader — will be your company’s interface not only to the market and potential customers but also internally to your marketing and product development teams. Ensuring this public face of the company is compatible to the image and culture you are trying to develop, is critically important.

Photo by rawpixel

The true cost of hiring the wrong person at this stage cannot be underestimated. Let’s assume it takes you three months to find the person. It will be a further three months until they are up to speed with the company, the solution and how to pitch effectively. It will take another three months to realise you have hired the wrong person and yet three more months to deliberate whether they can be ‘fixed’, only to discover, no they can’t! One more month will pass while you fire them and then another three months finding an effective replacement based upon the lessons you’ve learned over the previous year or so. You’ve now lost at least 12 crucial months, forfeiting revenue and sales traction, valuable input to the product market fit and roadmap, plus the negative market perception of a false start. Funding pressure could also be part of the toxic mix as revenue and customer traction won’t be where you need it to raise funds effectively.

“When I talk to CEO’s about lessons learned in hiring they almost unanimously say that they waited too long to act”

So what are the lessons learnt to minimise the risk of such a costly mistake?

  1. Define the role. If you have followed the go-to-market process referred to earlier, you will know what your sales engagement model needs to be. This will inform you as to the profile, characteristics and experience of the person you need. Capture this in a written brief and decide which factors are must-haves and which are merely desirables. Don’t be tempted to compromise on the essentials. One of the ways to minimise risk is to have previous success in a start-up or early stage business as a mandatory requirement. It takes a special set of skills and character to win business against larger, established competitors and to generate your own pipeline of business without the support of an infrastructure around you.
  2. Decide on your recruitment process and commit to it. The best way of minimising risk and finding a great first sales lead hire is to use referrals from your network. Finding someone with a proven track record, vouched for by trusted advocates who know you and your business is incredibly valuable. Another very effective but seldom-used option is to ask your customers and prospects who they would recommend. Who are the people they think do a great job of understanding requirements and represent their companies well? When time and money are scarce the temptation is to outsource the recruitment process, maybe to several contingency companies. Whilst undoubtedly cheaper than a retained search firm, in my experience they will lack the insight into your company and this key role to perform effectively on your behalf. As a result you can find yourself wading through countless CVs and interviewing unsuitable candidates. For a critical hire, such as your first sales lead, I have found that it is better to invest in a retained search with a company with a proven track record in hiring for early stage businesses. Invest the time in briefing them effectively about the company and the role and you increase the chances that they will deliver a pre-screened shortlist of qualified candidates. Define the interview process and go about it in a structured way and involve the other stakeholders in the interview process
  3. Effective induction. Having invested the time and money to find a great lead salesperson make sure you then give them the best chance to be successful. Invest time in educating them about your solution, go on calls with them to show how you pitch the company, introduce them to your network and ensure they are quickly integrated into your team. Give them clear, quantifiable objectives that are tough but achievable and reinforce these with a compensation plan that will motivate them and reward over-performance.
“The one thing you cannot afford to waste in an early stage business is time.”

Finally remember we are all human and mistakes can still be made. If your gut instincts as an entrepreneur tell you the wrong hire has been made, trust them and act early. When I talk to CEOs about lessons learned in hiring they almost unanimously say that they waited too long to act, believing the situation could be salvaged. As my fellow venture partner, John Hamm , says, “these kind of problems age like bananas, not wine”. The one thing you cannot afford to waste in an early stage business is time.

The first sales lead in an early stage business is critical in winning your first customers, establishing references, and putting you on a path to revenue growth. The real cost of hiring the wrong person at this critical stage can be huge, but by following these steps you can help minimise the risk and improve your chances of achieving success.

Want some help asking the right questions to help your business to succeed? Get in touch with our experienced team at Octopus Ventures.