As a VC firm focused on early-stage B2B startups, we pay a lot of attention to the revenue generation strategies of prospective investments. Most of the issues we’ve come across in the first 1-2 years of scaling sales are related to 1 of 5 common mistakes. Below you’ll find an explanation of these 5 themes, as well as some effective solutions we’ve seen over the years.
Don’t Hire Senior Sales Leaders Prematurely
We are groomed to believe that experience is the most valuable asset in an employee. As such, it comes as no surprise that founders often feel inclined to immediately hire a senior sales leader to grow the team quickly and take pressure off the CEO. Unfortunately, this does not always work out. For one, many candidates that might seem like good “senior” hires may be unfamiliar with the early stage startup environment — these folks are efficient when they have a full understanding of the sales funnel, but may struggle without the resources of the larger company around them. Most early stage startups are still developing their sales strategy, and need someone who can be agile. Sometimes, this means CEOs need to stay on as primary deal-closers until they truly understand what it takes them to close a deal.
The second trap here is that the cost associated with hiring a senior level employee is likely to be significant: often a multiple of, for example, an SDR. A senior-level salary, coupled with the time spent to get them on board, may be an inefficient use of resources.
Start with a couple junior hires instead of one experienced senior hire. With two or more junior hires, you will be able to go through more volume, turn over more leads, and learn more about the entire sales process. Regardless of how these junior salespeople perform, you will learn and gain priceless knowledge about how your sales process works.
See how Justworks quickly scaled their inside sales team: Download the case study for free.
Map Out An Ideal Customer Profile (ICP) Early
Founders often have two customer sets in mind: the broader universe of customers down the road, and the low-hanging-fruit customers than can benefit from where the product is today. This information is critical and can’t just sit in the CEO’s head; it must be shared with and handed off to the sales team at some point, so they can test those hypotheses and focus in on the leads that matter. Without a clearly outlined and detailed ideal customer profile, your sales team will be selling blind and, in turn, will not be given their best chance to deliver results.
By not creating an ideal customer profile, a company can waste a great deal of time and resources in pursuing the wrong prospect demographics. Simply put, if a sales team cannot do their job to the best of their ability then there will be tons of missed opportunities. In this case, the missed opportunities might be the founder’s fault for not prioritizing focused lead gen, rather than the reps’ fault for not closing (this depends on the setup of your sales team of course, since cold-to-close reps may indeed hold full responsibility).
Give your sales team their best shot by formalizing your ideal customer profile early on, right after, or even before seed funding. Do your research and get the specific information you need to develop the customer profile. List out the factors you think might possibly make prospects more or less inclined to close a deal with you; these are startup-specific, but some examples include revenue scale, employees, web traffic, ad spend, financing raised, etc. Gather all of this data in a spreadsheet shared by your entire sales org. This will not only be beneficial to your current sales team, but also in building out the company in the future.
Develop A Long Term Game Plan
Managing a company and meeting its daily needs makes it difficult for founders or a CEO to create a vision or plan beyond the next 6 months. While entrepreneurs focus on the today and near future, investors place a spotlight on the future so they can see a trajectory for the future growth of your company and how your current plans fit into that story.
Failing to think ahead can cost a business investor interest and, as a result, funding. Without funding and investor backing, there are limited options for growth and expanding the business.
To keep investors in mind, always think on a larger scale. Figure out how your plans for the next 6 months will fit into the company’s plans for the next 1-3 years. The best way to do this is through basic financial modeling exercises (Excel or Google Sheets) — develop an operating model to show how your sales team and revenue will grow over time. What are your key assumptions and drivers? Which of these is most fundamental to the model working (e.g. low cost of customer acquisition, salesperson efficiency, limited burn, etc.)? This will not only show investors that you are thinking about a longer term story, but also help your company effectively build out its sales processes when the time comes.
Formalize Your Training And Scaling Process
Being a part of a startup means that things are a “work in progress” and policies are constantly evolving. Many new businesses forget to create a clear structure for their sales team, as they often cannot afford a sales manager, who is usually the person in charge of the training and scaling process.
Not having a formalized process creates confusion and an inefficient sales process. Things can fall through the cracks when each sales employee does not know what their exact responsibilities are and if they are unaware of the whole sales process and their role within it.
Create an internal SLA that clearly outlines all the aspects of the sales process and those involved. Make it detailed so that the ownership of leads and the handoffs are well defined. Outlining how to handle specific situations makes things clear for everyone involved and also your job easier. This also allows you to highlight the importance of everyone on the sales team and create a culture of codependence. As your company grows, investors want to see that you have a plan to efficiently scale out the sales team and also the train them.
Conduct Team And Individual Check-ins Regularly
A startup may think check-ins are premature since the company is new and finding its way, but there needs to be a monthly or quarterly review with the entire team. Failing to check-in with the team as a whole means that any existing team problems may not be getting addressed and resolved.
By not addressing team issues and inefficiencies, the long term growth and value of a business is directly impacted. A small issue can turn into a bigger problem, which could have been avoided altogether if handled appropriately from the get-go.
Schedule regular business reviews (most often monthly and / or quarterly) and establish a core set of metrics that each of your team members must report on at each of these meetings. Early on, you probably won’t have a sales operations person to keep track of the team, so it is essential that you train your team to understand what they need to keep track of themselves. These teams reviews also give you the opportunity to check the progress of the sales team as a whole and look at what needs to be improved on moving forward.