Thinking about Hiring a Salesperson ? - 4 Things to Consider
Deciding to hire your next salesperson is an important decision, whether it’s your first freshly minted new hire or simply your latest addition to a team. Why? A salesperson is the first impression your company makes on the outside world. A salesperson can help you expand your interactions with customers, allowing you to delegate without giving up control. Furthermore, the financial commitments are often serious—and sometimes more extensive than you originally thought. Plus, from experience, I know that working with a salesperson can be more emotionally exhausting and draining than working with your admin, bookkeeper, or operations person. I am often asked, “What do I need to think about or plan for before I hire a salesperson?” Well, here are some key issues to consider before making the decision to hire a salesperson: 1. Financial: How much time does it take for a salesperson to become profitable? Hiring a new salesperson goes in three stages: no revenue, breaking even, and making a profit. It takes time to get to stage three, of course. First, consider all major financial disbursements associated with a salesperson. This can include base salary, commissions, bonuses, payroll tax, and benefits—but don’t forget about other expenses salespeople typically incur such as travel, meals, printed marketing materials, samples, catalogs, office supplies, telephone, etc. That’s a lot of costs to consider! Now it’s time to predict your revenue. From The One-Hour Business Plan, you know your sales cycle time or how many customers you can acquire each month. Just take these monthly sales estimates and subtract them from the aforementioned monthly expenses, and you should have a reasonable estimate of how long you have to fund a salesperson to profitable productivity. 2. Customers: Are you ready to let go of your customers? As the leader of your business, you’re probably close to your customers. You have a good understanding of what they need, how they buy, and the types of questions that they might ask. Are you ready to delegate those interactions to someone you recently met? It takes courage, trust, and a leap of faith even just to begin the journey. 3. Strategic Alternatives: Do you need a commissioned salesperson at all? What are the strategic alternatives to hiring a salesperson full-time? Is a commissioned sales representative a viable option? If you can get similar results from an independent sales representative, then you've reduced your financial risk. Unfortunately, control over the sales process abdicates to the independent representative here. Can we reduce risk by going from full-time to part-time? Part-time to full-time employment should be considered as a viable option. Alternatively, if you are competing for the best salespeople with other employers, then offering part-time work at first might be unattractive for the salesperson you want. Either way, at least consider some strategic alternatives before making a hiring decision. 4. Your Company Culture: Will this person fit in? You know how you prefer to work, and you have a good idea of the work habits of your employees. Admittedly, any group develops a personality of its own over time. But how well will the new salesperson fit in? How well will they work with you and your employees? To develop an understanding, you can let your key employees interview the candidate. Personality tests can help predict a cultural fit, to some degree. Once the decision is made to hire a salesperson, I know from experience that orientation, on-boarding, and training programs help most new hires get up to speed with how things work (and how to fit in) much faster than with none. The Final Word on Deciding to Hire a Salesperson A salesperson’s compensation package is often one of the most expensive payroll decisions. While selling and administrative expenses make the cost of the hiring decision less predictable relative to other employees, these expenses can be estimated and controlled. From a psychological perspective, many entrepreneurs have a difficult time letting go of their customers. Consider how ready you are, in fairness to both you and the salesperson. With any key decision, strategic alternatives exist. You have options beyond hiring full-time. Are independent sales representatives or part-time employment viable alternatives? Finally, no matter how successful the salesperson might be, if he or she does not fit with your culture, then you’ll have aggravating workdays ahead. At least consider the cultural fit of a new salesperson before hiring. What factors do you consider before hiring your first or latest salesperson? Send an email to me at john at planfoundations dot com and let me know. Also, if you know of anyone who might be hiring a salesperson, you should send this to them. Copyright © John McAdam 2015. All Rights Reserved.