Hiring a salesperson for your service business won’t work (but here’s what will)
I've been trolling around LinkedIn Groups and Quora.com lately (as well as less mainstream and sometimes less restrained sites) and have come across many questions about hiring a business development person / salesperson for a service-based small business. As small business owners, we are all faced with a mountain of tasks in front of us and not enough people or time to accomplish it all. And for many of us, doing sales is something we're not natural at and, frankly, uncomfortable with. Hell, I remember early on in my business career tossing, turning, sweating the night before every networking event or pitch. So going out and finding a salesperson who actually likes to network, cold call, schmooze, etc., sounds like a sound business idea as well as an escape from stuff many of us dread. But (you knew a "but" was coming) ... many of the comments on the threads I read echoed my own personal experience with trying to hire a business development person ... it was a failure as well as a particularly miserable experience, both personally and for the business itself. Yes, it's a bit of a downer topic, but don't despair because I will also share later in this post ways you can overcome this roadblock. So why are the odds heavily against you in finding a salesperson who will actually help you grow your revenues and your business? 1. Nobody cares about your business as much as you do As enthusiastic, earnest and well-intentioned as a good salesperson may be, they still don't care as much about the success of your business as you. It's your baby, not theirs, and if their efforts fail, they can always look for a new job. You, on the other hand, are left holding the bag and picking up the pieces. Sounds harsh, but it's the honest truth. Here's another thing to consider. When you turn the business development duties of your business over to a salesperson, you are placing the responsibility of the future growth of your business mainly in the hands of someone else. If this doesn't scare the living crap out of you - or at least make you wince slightly - then you're already numb from god knows what other crisis in your business. 2. Most salespeople won't know how to sell your services Unless the salesperson has sold creative services, event planning services, web design services or whatever other service you may provide, they have no idea how to begin talking intelligently about your services to prospects or how to pitch them. And even if the salesperson does have experience in your industry, they still have to learn how you differentiate yourself and about your approach and sell what sets you apart. This learning curve takes time, so don't expect a salesperson to join your business and start selling immediately. In addition, you will also have to acclimate your salesperson to your proposal process. I personally despise proposals and avoid doing them whenever possible, but sometimes they are a necessary evil. I would expect a salesperson to eventually take on a bulk of the proposal creation process, but again it will take a while to get them up to speed on your pricing and how you communicate in writing. Oh, and if they worked for a competitor, you should look into what kind of noncompetes they may have signed with previous employers because you don't want a lawsuit coming your way that, even if you aren't at fault, can still cost you thousands to defend. 3. Paying for a salesperson to get up to speed before they make a sale can be financially crippling It takes a while to develop a pipeline of prospects, which means any savvy salesperson will try to negotiate some sort of base salary that supports them until they can start making sales and drawing their commissions. BTW, any deal you structure with a salesperson must, must, must involve commissions ... you want to give them lots of incentive to sell as much as possible. In fact, I personally would be fine with a commission structure where the salesperson has the chance to make more than the owners (but one that tapers the commissions back when they start hitting higher sales plateaus ... you don't want to drain the business). But I digress ... so while you are waiting for them to establish connections, adapt to your proposal and pricing process, find viable prospects, pitch them and land new work, you will be paying them to learn and get up to speed. This could take as little as a couple of months or as long as a year. Are you prepared to carry someone's salary for 3 months? 6 months? A year? I know of very few small businesses that have the capacity to take on that kind of risk with no guarantee of reward. You either need to have stockpiled for that extra salary or have factored that into your overhead rate ahead of time. Personally, I would set a probationary period where the salesperson got paid a modest base salary and set benchmark dates by which they need to hit certain sales plateaus. Otherwise you could just be funneling money into a bottomless pit for a long time. 4. Salespeople will eventually move on Say you got lucky and found the perfect biz dev person and they worked out beautifully. Average tenure for a salesperson is around 19 months. This means that, very likely, every couple of years you have to go out and find another perfect individual and train them and fund them while they get up to speed. On the other hand, you will never leave your business until the day you sell it, close it or turn it over to someone else to run. 5. The risks of failure are very high If/when your new sales hire doesn't work out, not only have you wasted lots of money but you have also incurred a pretty sizable opportunity cost of all that time that has passed in which you haven't been developing leads and business yourself. And it will take you time to get back up to speed yourself. You aren't even back to where you started ... you have digressed and now have to scramble to just get back to where you were. Sounds pretty daunting, doesn't it? So, instead of going through all that hell, try this instead: 1. Find other people to take over some of the day-to-day work in the business This includes assistants, designers, creative directors, programmers, planners, project managers, office managers, etc. By taking some of these responsibilities off your plate, it gives you more time to focus on business development. 2. Train an account manager to do inside sales Many service-based businesses need help managing accounts or projects. So why not hire an account/project manager to help you with all the busywork and client management duties and then train that person to generate more revenue from your current clients. They will already be getting acclimated to your processes and know how you relate to clients, so training them to find more work from current clients isn't really a stretch. 3. Slowly groom the account manager to be a salesperson Take your account manager to networking events with you. Have them sit in on and eventually participate in pitches. Have them help you put together proposals. Soon enough, you have a salesperson ready to hit the ground running. Just make sure you compensate them well enough and that they know that you are willing to take them on your ride to the top and that bigger titles and salaries await them if they stick around. ______________ Need some help clearing away the busywork so you can focus on growing your business? 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