Running a startup is easier said than done, especially when you have a tight budget and limited resources. It’s hard to know when you’re ready to hire a sales team — and the consequences can make or break your startup.
Perhaps not surprisingly, about 40% of new companies go out of business because they run out of cash or fail to raise capital, reports CB Insights.
In addition, approximately 35%of startups fail because there is no market need for their products or services.
And 20% of startups get plain out-competed.
Cutting non-essential expenses when your business is still new is critical. As a startup founder, you’ll have to wear multiple hats and do some of everything.
And that may include owning and executing the sales process, from initial outreach and lead generation to closing deals — not hiring a sales team right away.
I’ll tip my hand here — I believe it can be disastrous to hire a sales team too early. And not only do I think founder-led sales makes sense, I think it’s actively better for the success of your startup.
I’ll talk you through figuring out if you’re ready to hire salespeople, and make my pitch for why a founder-led sales strategy makes sense for early B2B startups.
How do you know you’re ready to hire a sales team?
✅ You have a minimum viable product (MVP) or service
✅ You’ve identified your ideal customer
✅ You have established standard operating procedures (SOPs)
✅ You developed sales training materials based on proven processes
✅ The company generates some revenue
LaunchDarkly’s co-founder and CEO Edith Harbaugh told Heavybit that many entrepreneurs overlook these aspects and rush into hiring salespeople. As a result, they miss out on the opportunity to truly connect with their target audience.
I’ve experienced this myself in our growing freelancing business.
We’re approached multiple times a day by lead generation companies or outsourced sales companies who are either paid on retainer — regardless of performance — or paid on performance.
Even though our company is scaling quickly and getting close to the point of full capacity, it’s not the right time to hire salespeople — because a pivot to something more sustainable could be in the works.
What happens if you hire a sales team too early in the life of your B2B startup?
There’s nothing wrong with hiring salespeople, but you must do it at the right time.
Hiring a sales team too soon can lead to issues like:
- Your team tries to sell a product to a market that doesn’t need it or want it.
- Your company incurs unnecessary expenses before figuring out product-market fit.
- You have a hard time managing your sales team without a clear strategy in place.
- You aren’t able to properly align sales and product development goals, leading to confusion and inefficiency.
- You overspend before having a steady stream of income.
- Your salespeople quit their jobs for better opportunities, resulting in high turnover and affecting your brand image.
So what’s the alternative? Founder-led sales.
Hear me out: I’ll explain why you’re uniquely positioned to be the best salesperson for your org. And, furthermore, how founder-led sales can actually drive your company’s success.
Founder-led sales: Why founders are the best salespeople
The founder knows — and believes in — the product
In a startup environment, the founder or CEO sets the tone for the execution of the sales process.
After all, you know the business and product better than anyone else, which allows you to devise a sound strategy and reach the right customers at the right time in the right context.
Plus, it’s your product: You believe in it. And promoting and selling something you believe in creates a positive feedback loop where potential customers are more likely to trust and buy the product.
Salespeople, especially newly hired ones, won’t have the same passion for or knowledge of the product as you do.
The founder is uniquely positioned to connect with buyers
Also, as a startup founder, you’re in the best position to reach out to prospects online or in person through your professional network. You’ve got the connections and authority.
(And this is a big deal. New data about buyer psychology in B2B software purchases from Datanyze found that more than 50% of buyers would respond to cold pitches from people they know in person or from LinkedIn.)
The chances your new salespeople will be better-connected in the space? Virtually zero.
The founder will make sacrifices for success you can’t expect from a sales team
You have to be willing to let the lines blur some when you’re getting traction built between personal time and professional time, to have more time freedom down the road.
Brian Hamilton, the co-founder of Sageworks, told Entrepreneur that work-life balance is a myth for those trying to get their business off the ground. This aspect alone differentiates startup founders from the average salesperson.
As a founder or CEO, you’ll go back and forth to keep your customers happy and stand out. While this approach doesn’t guarantee success, it’s more likely to be effective than bringing in an outsider to sell your products (at least while your business is in its early stages).
And here’s how founder-led sales can make your company thrive.
How founder-led sales can drive your startup to success
Create better products
The founder-led sales strategy grants you unique insight into your prospects’ pain points and what it might take to address them. This is critical in the early stages of your B2B company, when you’re still tweaking your product to fit the market.
Related guide for founders: Using Sales Conversations to Find Product-Market-Fit
Drive sales and revenue
This is simple. The more you understand your customers, the better you’ll be able to meet their needs.
When you combine the founder’s willingness to go the extra mile with this awareness of customer pain points, sales magic happens — and revenue follows.
Build a customer-centric culture
Founder-led sales can make it easier to build a customer-centric culture while your company is still in its infancy.
And according to Deloitte, customer-centric enterprises are 60% more profitable than those that don’t prioritize the customer experience. So if this wasn’t already top-of-mind for you, it should be.
For example, in my own experience as a founder: Before we enter into a new agreement with our freelancing clients we go through a deep-dive discovery process to better understand what matters most to them.
This does two things:
- It helps to paint a clearer picture of our ideal client persona which makes crafting a sales strategy much easier, and
- It helps us to constantly tweak and re-position our services to ensure what we’re providing is a deep need in our niche and not something we “believe should be.”
Customer-centricity is typically associated with large organizations, as most companies adopt this approach once they’re mature enough to recognize its importance. By taking charge of the sales process, you’ll get to know your customers and connect with them deeper. As a result, you’ll be able to focus on their needs and deliver personalized experiences early on.
With a founder-led sales strategy, you’ll decide:
- How to price your products
- When and how to sell them, and
- Upon which markets to focus
This is kind of a no-brainer: When you’re wearing all the hats, you can make faster, more informed decisions, which is particularly important in fast-moving markets.
When you’re in charge of the sales process, you have full control over the technology and other business aspects. You also maintain control over the ability to pivot, change technologies and approaches.
Earlier this year we pivoted our services to be less focused on solopreneurs — and more on agency and startup founders — and that pivot was relatively easy because we hadn’t yet outsourced our sales function. Therefore making changes to the messaging on our website and other marketing collateral was relatively easy and seamless and the changes in the messaging were also easy to make on social media and other promotional accounts. This would have been much more difficult if we had to pull the sales function back internally, for example.
Keep the costs down
Headcount is expensive. Period. In the early days of your startup — especially while you’re still figuring out your sales methodology and tactics — you’ll be burning money.
Later, once you understand what your needs will be, you can invest in sales tools and ramp your team.
Build customer trust and loyalty
The founder-led sales strategy lets you connect with potential and existing clients personally, increasing trust and loyalty.
(Need a proof point? About 20% of the B2B software buyers surveyed by Datanyze said they feel more inclined to purchase if the sales process has a human element.)
Most companies rely on sales automation software for lead generation and scoring, outreach, payment processing, and other mundane tasks in this digital age. There’s no denying modern technology makes everything easier, but it cannot replace human interaction.
Selling by yourself allows you to add a personalized touch to customer service and other operations. As a result, you can engage with your clients in real-time, act on their feedback, and give your business a human face. This interaction can lead to more meaningful relationships and drive repeat sales.
Deliver more effective sales pitches
Startup founders could be better at sales, but that’s a skill you can learn. Over time, you’ll become more comfortable talking with others about their problems and how your products can help. Moreover, you’ll gain insight into marketing your business and conveying your message to the target audience.
These experiences will allow you to deliver more effective sales pitches, which can lead to higher profits. You’ll also be able to use your skills to train others and build a winning sales team.
Ready to level up your sales game?
As a startup founder, you are “selling” your vision, ideas, and organizational values. You’re still involved in the sales process, even if you prefer to keep a low profile and let the brand speak for itself.
A founder-led sales strategy can be the first step to marketing success. If executed correctly, it can provide valuable insights into your audience, competitors, and the market you’re in. Over time, it may help you become a better leader and improve decision-making.
This approach allows you to validate your business idea and create better products while keeping costs low. Think of it as an opportunity to try new things and lay the foundation for future success. Once you’ve achieved product-market fit, you can take the next step and build a high-performing sales team.
Edited by Kendra Fortmeyer @ Sales Hacker 2023