Investing in a sales force can be a decision-making nightmare most of the time. Finding the right people can be a boon to profits, but the wrong team can be a handicap.
For small businesses, this can be an especially scary or difficult process. While there are many factors to consider, experts say securing a sales pipeline is necessary for growth.
“If you don’t have revenue coming into your business, all the other positions are in danger,” says Karen Benjamin, partner and recruiter at Worldleaders Inc. “I think it gets very counterintuitive where, ‘Oh I have to invest in engineers,’ or ‘I have to hire more software developers,’ at that point if your revenue is not showing progressive growth you have to find that trade off.
“It doesn’t matter how great you are at all the rest of the stuff if no one knows about it, and it’s the salespeople that tell people about it.”
Results of a study by the Objective Management Group, a Boston-based research organization, showed that 74 percent of sales people currently in the field do not incrementally improve a company’s revenue position. These are the “non-performers” who are often unable to close deals and have a low commitment to the company. Benjamin stresses the importance of investing in the right kind of person for each business to avoid turnover, rather than having people who do not generate revenue or, worse yet, who could ruin a business’ reputation.
“The kind of skills that it takes to sell for a business that has no brand recognition yet, you need a higher level of sales person, not a lower level of sales person,” Benjamin says. “So you have to invest in sales for these reasons. You will grow faster if you do it, but it feels scary to start out.”
This was the position Amy Palka, owner of Affinity Enterprises, found herself in. Affinity is a technology provider and reseller focused on New York State, local governments and higher education. With the help of Benjamin and Worldleaders, Palka began investing in her sales team.
“The biggest challenge is that Affinity is small,” Palka says. “And with ownership transition and being fiscally conservative, I very much need the sales position to be commission-driven.”
The business was successful, but the previous owners of Affinity were at retirement age, as was most of the sales team. So for Palka, the need to hire salespeople came from succession planning and ownership transition for her new business.
Right now Palka’s sales team’s payment is 100 percent commission-based—the ultimate pay-for-performance challenge.
“It’s a relatively simple model, but Affinity doesn’t make money and the sales people don’t make money unless we sell,” Palka says. “And that 100 percent commission really narrows the field of candidates that want to be considered.”
For other startups, hiring sales representatives comes purely from the desire to grow, and so choosing the right kind of salesperson is especially important.
“I’ve made it a point that if I’m going to have a business, I’m going to be selective about who I hire and who I want to be involved with because I only want positive energy around me,” says Agathi Georgiou, owner and president of Agathi &Co., a local event-planning business. “And that extends to the sales reps.”
Agathi & Co. relies on sales representatives to sell booth spaces to vendors for the events that it organizes. La Femme by Agathi, formerly the Western New York Women’s Expos, are annual expos geared toward women. The vendors range from boutiques and jewelers to attorneys and financial analysts.
“Some of our sponsors are local hospitals so they bring in specialists to talk about cancer screenings, ovarian cancer, breast cancer,” Georgiou says. “It’s really an all-encompassing event for women.”
So far, Agathi & Co. has organized these women’s expos in Rochester, Syracuse and Buffalo and plans to expand nationwide in 2016.
“The goal in 2016 is to franchise to different cities, and then we can expand on it and make it an amazing event all over the country,” Georgiou says.
Since these events only happen a few times a year, Georgiou hires her sales representatives on a contractual basis, rather than having them on as part of the staff. Regardless of their employee status, Georgiou works closely with her sales representatives in choosing what vendors to seek out and how to approach them.
“I’m usually pretty specific, and we do a lot of brainstorming at the office about who we think would be a great fit at our expos,” Georgiou says. “It takes a special someone who can handle the intensity of this type of job. Sales reps solicit to vendors and receive a lot of noes before they get a yes sale. So it’s a tough job to do.”
Besides growth and business transition, the desire to hire a sales representative can also come from a business simply being stretched thin. This is especially true for small-business owners who not only manage the business’ finances, employees and operations, but also are the lone seeker of new customers and clients for the company. Such is the case for Andrew Hollister, owner and CEO of Simple Tech Innovations, a computer support and networking firm based in Rochester.
“It’s really hard to balance doing the IT work but then also selling jobs,” Hollister says. “If I’m not out selling, then in two or three weeks there could be a payroll issue. … (I’m) hoping that I can find somebody that can bridge that gap a little bit so I can get things done.”
Unlike Georgiou’s contracted sales representatives and Palka’s sales team, Hollister says his company will most benefit from having an account manager; someone to establish and maintain good relationships with their customers and keeps them on recurring services in addition to seeking out new business. For an information technology company this is especially vital due to the nature of computer maintenance and networking.
As for the decision to hire one, the biggest obstacle for Hollister right now is income.
“If I hire a salesperson, it doesn’t matter who I hire,” he says. “There’s always this time period of losing tons of money because I have to take a lot of my time from selling and also working both to generate revenue to train and work with that person.”
Hollister’s dilemma is one that Benjamin says many small businesses find themselves in if they hit a plateau where business starts to slow or it has not grown revenue from one quarter to the next.
“I would say don’t go more than 90 days like that,” Benjamin says. “That would be your indicator. If you do keep growing, and you have profitability in the company to be able to afford it at that point, that’s the time to do it because if you wait too long that’s when you start to run out of money.
“Do it while you still can invest in a salesperson, because when people wait too long then it becomes this catch-22; of course obviously they need sales, but they literally can’t afford it is what can happen to startups.”
Lisa Maria Rickman is a Rochester-area freelance writer.
7/10/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email firstname.lastname@example.org.