Most startups initially thrive on founder-led sales, sales that a founder acquires. Even after the addition of the sales personnel, the sales remain largely founder driven as the operational control of the sales department still lies with the founder. Decisions about pursuing leads, sales scripts, crafting compelling value propositions and building the sales funnel are made solely by the founders.
However, this is not a sustainable model. There comes a time when moving away from founder-led sales is good for the startup. This usually happens when the sales department starts scaling up and it becomes difficult for the founder to manage the core business as well as the sales engine.
Let’s look at why transitioning away from founder-led sales is important for the startup and how to transition smoothly to ensure that sales don’t suffer.
Why transition from founder-led sales
Reduces the risk of founder burnout
Burnout is a common phenomenon unfortunately among founders. The primary cause, of course, is taking up responsibilities beyond one’s capacities. Transitioning from founder-driven sales, helps the founders to free up room for additional tasks without compromising their wellbeing.
With team members who take up the responsibility of the sales, the startup also gets the benefits of a new network through the new sales team members. Experienced sales hires will also bring their expertise and skill sets to the sales department which will help to diversify the approach and perspectives needed for scaling sales.
A founder-led sales team can pose problems if you want to sell
A startup that relies entirely on its founder to scale and grow struggles in the long run. Investors and buyers know that a one-person-business is never conducive to monetary benefits. If a founder wants to sell his business with a founder-driven sales engine then it means that a significant value goes away after the founder leaves making it a high-risk acquisition for the buyers.
Speaking of the potential issues, Balasubramanian Krishnan, who is the Founder/CEO of Nuveda Learning, said: “I found it difficult to drive sales, finding time to sell besides doing other things; there was a lack of consistent and continued focus on Sales; Revenue reliability was a big issue. And I felt an inordinate responsibility when we lost deals – there was a feeling that “I” was the problem.”
How to transition
Slow and intentional hiring
Be mindful of your first hires while transitioning. Think about what additional responsibilities will be transferred with the transition. How can the existing team members adapt to it and what help will they require to handle the additional tasks? Then prioritize the most important functions of the sales department and figure out the need for new talent.
Start by shortlisting candidates who fit your startup and can also handle the responsibility that comes with non-founder-driven sales. As a founder, you will also need to think about how the hires can be leveled-up in a few years once your sales volume increases. At Cusp, you will also get full guidance to develop a coaching strategy for your first sales hires.
“Early days, when I was going through the transition, it was really tough – I felt like I was staring at my failures again and again but I soon realized the need to build a lead gen engine and a healthy pipeline. Additionally, I started to enlist people in my journey – i.e., encouraged by people in my network, took the leap-of-faith to hire some sales folks and onboarded them”, opines Krishnan.
It is also important to develop a team expansion strategy. When you meet your potential sales hires, think about how they will perform throughout your pipeline. At what stage will you be promoting or hiring more sales personnel and what role will you play in it as a founder? This is often closely tied to the deals closed and future sales goals.
Your first few hires should always have a good view of the big picture, especially when the startup is transitioning from founder-driven sales.
Level up onboarding
As a founder, you will have a lot of experience with your products and sales strategies. As you start to grow and transition there will be a need to disseminate this knowledge to the new team members.
Hence, documentation for onboarding processes such as the introduction of the company, its vision, mission, products, audience, culture, and your personal journey towards building the startup, etc. must be well-documented.
The onboarding process is incredibly critical for new team members to set them up on the path to success. Impeccable on-boarding documentation when hiring your sales team while transitioning from founder-driven sales is non-negotiable.
Understand your commission structures
This is one of the biggest tasks when you are transitioning and transferring responsibilities. The team’s responsibilities, sales goals, and targets will change as you move away from sales leadership. Hence, there will be a need to revise the commission structures.
The proper incentive is a key to keeping your sales staff motivated. Building a strategy that rewards them justly and helps them grow as your revenue grows is a must if you want to see your startup soar high with a steep sales graph.
To maximize the profits and to design a healthy compensation system, you will need to get a clear picture of your overall product cost and how the product costs will fluctuate depending on your future product upgradation. Once you know these figures you will have an easy time deciding your team’s commissions.
Secure a talent pipeline
In sales, a lost potential hire means a loss in revenue. Hence, it is important to secure a talent hiring agency to avoid missing out on exceptional talent. Hiring an agency right from the beginning of your transition will help in reducing the timeframe between onboarding a new team member and figuring out new talent needs.
Acquaint your hiring agency with your sales pipeline and the need for future talent. This will help your vendor to understand the business goals and end-to-end talent requirements. At Cusp, we will help you to define long-term and short-term hiring goals, in addition to defining KRAs to come up with well-aligned incentives.
Speaking of selecting and hiring the right talent, Krishnan shared his experience: “Take a lot of care in hiring the sales folks – I have had approximately 50% success and that is not good enough; Also, I am in the process of hiring a Sales leader; I made a mistake there as well but intend not to repeat it.”
Transitioning from founder-driven sales is a big task. If you are overwhelmed about making such a big transition then get in touch with our team at Cusp and sit back as we lead the way from founder-driven sales to a startup with thriving sales teams.
To know more about hiring sales team, growth marketer and the mistakes to avoid, read our 4-part series: Playbook for Startup Founders after Raising Pre-Series Funding.