A challenge of running a startup is knowing when to hire a new employee for a critical position. Startups move quickly, requiring dynamic thinking and timely decision-making, and the Sales Manager role is one of the most important positions to hire early on.
Here are the things to know about when it’s time to hire a sales manager.
What Does a Sales Manager Do?
A sales manager focuses on qualifying leads and converting them into customers.
Because a sales manager holds one of the most direct connections with your business’s revenue, it’s easy to make a case for hiring one. Small business owners who don’t have a mastery of sales skills are in trouble if they don’t hire someone for the job.
If you’re worried about a lack of sales, a sales manager with experience in your industry can make a huge difference. They shouldn’t need much on-the-job training to start generating new leads and closing sales.
Do I Need a Sales Manager Now?
Your revenue is the lifeblood of your business. So, it makes sense to focus on the positions that lead to increased cash flow before focusing on other areas. One argument for hiring a sales manager is that you are essentially prioritizing revenue, which can then be used to scale your business, partially by hiring others.
However, hiring a sales manager isn’t always the right decision. Broadly speaking, as a startup founder, you are closer to your employees than you would be while managing a larger business. Your sales team is the last connection between your business and the customers. So, why add an extra layer between you and your sales team? On the other hand, you may be losing out by not hiring a professional with the skills to grow your business.
So, how do you know when to hire a sales manager?
Here’s a step-by-step process for deciding to hire a sales manager:
1. Assess Current Sales Performance
Start by measuring a few basic sales KPIs. You’re probably not ready to hire a Sales Manager until you’ve established a repeatable sales process and have a decent amount of revenue.
Some of the most common sales KIPs include:
- Total revenue
- Total revenue per sales professional
- Average revenue per customer (Lifetime value)
- Percentage of revenue from new vs. old customers
- Win rate
- Annual growth
- Quota attainment
- Sales expense ratio
An effective sales manager will understand all of the above indicators and will accelerate growth by scaling and optimizing the existing sales process.
2. Market Penetration
Another factor is your current market share. In terms of whether to hire a sales manager, it is important to know where your business stands relative to your competition. Your expected growth is determinant on this, so you should first look into the addressable market.
Your market penetration as a metric is:
MP = Total Revenue / Total Addressable Market
If your market penetration is weak, a sales manager with experience in your industry should be able to address the issue. They should know how to hire, train, and motivate salespeople to address existing shortcomings.
3. The Decision
So, your decision on whether or not to hire a sales manager should follow your business’s current sales performance and its place in the market. Now, there are some drawbacks to consider that may affect the decision:
- Barriers. You will add a new barrier between yourself and the clients accustomed to working with you. If your sales are primarily from existing customers and you rely on them, the effect of hiring a sales manager may be negative.
- Change in direction. Sales managers make decisions and direct sales staff on decisions such as client focus (large vs. small), geographic targeting, new vs. existing customers, and more. While the right sales manager can make positive changes, a bad decision can be disastrous.
- Complexity. Introducing a sales manager interrupts existing processes and relationships with sales staff, clients, and others. This can be remedied with a strong onboarding process and recruitment strategy. However, it’s one of the hurdles that must always be considered.
Hiring a sales manager removes your direct link with the staff members who interact with your customers. This can partially alienate you from them and, by extension from your customers. In some cases, this can be a mistake. For example, what if your biggest customer, who could benefit more from your involvement in sales to them, has another new layer to communicate with?
In most cases, a sales manager is one of the first leadership positions to fill. However, you will want a recruitment strategy and onboarding process that ensures the right professional is hired. But first, an assessment of your sales performance is in order.