Transitioning from owner-led sales to a sales team

Transitioning from owner-led sales to a sales team can be a challenging but necessary step for businesses looking to scale and grow. In this blog, we will explore the importance of this transition and the benefits and challenges involved, as well as provide a roadmap for successfully implementing a sales team.

Understanding the limitations of owner-led sales

Owner’s limited time and resources
As a business owner, your time and resources are often stretched thin. Handling all aspects of the business, including sales, can be overwhelming and may result in limited attention being given to sales efforts. This can lead to missed opportunities and slower growth.

Difficulty in scaling sales efforts
When sales responsibilities fall solely on the owner, it becomes challenging to scale sales efforts effectively. As the business grows, the owner may struggle to handle the increasing demands of growing revenue while also managing other crucial aspects of the business.

Benefits of transitioning to a sales team: scalability and growth potential

Increased sales capacity and reach
By building a sales team, you can significantly increase your sales capacity and reach. With multiple sales professionals working towards the same goal, you can cover a larger territory, target more customers, and handle a higher volume of sales inquiries.

Allowing owners to focus on strategic initiative
By delegating sales responsibilities to a dedicated team, business owners can free up their time to focus on strategic initiatives and overall business growth. This includes developing new products or services, exploring partnerships, and implementing long-term strategies that will drive the business forward.

Building and developing your sales team

Hiring an admin

The first step an owner can take when attempting to delegate some of the sales responsibilities is to hire an admin or someone who can help them with routine tasks such as quoting, basic lead generation and marketing coordination, and setting appointments. Then, when the owner is focused on selling and delegating these tasks, and it still isn’t enough, they can start to look for full-time sales help.

Hiring your first salesperson

1. Hire an inexperienced yet hungry person and harness their energy to work hard and hopefully close deals.

Pros

• Cost-effective
• You can teach them how you want it done
• Hungry and energetic

Cons

• Can’t represent the company well without you
• Don’t know what they don’t know about the industry or sales
• Don’t know if they are a closer
• Can’t create the confidence needed to be effective with clients

2. Hire an experienced salesperson who has shown a track record of closing deals.

Pros

• Should understand the sales process
• Should understand the industry and pick up nuances more quickly
• Should come with networking skills and some pre-existing relationships

Cons

• Expensive
• Will want to do things their way
• May come from a different type of sales background that doesn’t translate to the TSP’s needs

Challenges when making the transition

Delegation

All owners begin in the muscle and feel stage when it comes to sales. However, as your business grows and you try to jump to the next curve in the operational journey, an important challenge to overcome is delegating the sales responsibilities to a qualified sales professional. Often, owners may feel the need to put on a “super suit” and swoop in to save the day—but what you don’t realize when you do this is that you’re taking owner privilege every time this happens.

As the owner and the person responsible for making all the decisions, you can change the product, offering, or service they provide however you want or need, and your service team has to respond. After all, a service team can’t refuse to cooperate with the owner.

A salesperson won’t have the ability to make the same decisions as an owner would in any given situation because they don’t have the same authority level, and a service department often won’t be as likely to follow the direction coming from someone other than the owner.

In addition, an owner is also incredibly close to the business and typically knows the business better than a new employee, making it hard to delegate tasks to someone. It can be hard to pass work on to someone that you don’t trust has the same knowledge and investment in the company as you do.

Also, you likely have not developed and documented the KPIs and processes you want them to follow. Many times, the first few sales hires are left to work in a world of process and expectation ambiguity.

Finance

An important consideration for owners is determining if it financially makes sense to hire someone to make this transition. When determining how much to pay a qualified salesperson, we suggest using a version of the litmus test.

Ask yourself, “How much money would I hand someone and trust them to deliver?” That amount represents the size of the deal you can expect from your salesperson. There’s also a formula you can use to estimate how much you should pay a quality salesperson.

According to Service Leadership, Inc®, a ConnectWise company, and best-in-class managed service providers (MSPs), a salesperson’s salary needs generate a minimum of four times their total compensation in gross margin. Often, it takes a new salesperson 12-18 months to meet and exceed those goals. Onboarding a new salesperson who likely will not produce for that long is a significant financial strain on the business. 

Here’s an example of how you can calculate the minimum amount of revenue a salesperson needs to deliver if you are paying them $50,000 a year:

4 x $50,000 pay = $200,000 GM or $400,000 in new services if your service gross margin is close to the best-in-class guidelines of 50%.

Think about the amount of pipeline needed to hit your revenue goals and the number of new clients to add to make that happen. Is this $50,000 per year example going to be enough to have your business deliver on the bottom line?

Internal resistance to change

This is also a difficult transition for the technical team. In their current structure, they don’t have salespeople, so their culture is more technical. Plus, if you’re still doing the sales responsibilities, chances are good you have a higher level of knowledge around the products or services your business supports vs. an external representative. In addition, the internal teams will need to trust the salesperson who comes on board and understand when or why they might be making modifications to a service offering—and you will need to trust that the salesperson is making appropriate modifications if needed to close a deal.

Perceived external resistance to change

Small businesses typically buy from small business owners. When selling to small businesses, the small business owner recognizes a lot of themselves in the person they’re buying from. Will they have that same trust if you are sending a salesperson out to chat with small business owners?

Salespeople are essentially selling trust in an SKU—selling that someone is going to deliver a feeling. It’s important you find someone who will connect with these owners and be able to sell them that feeling.

Managing and motivating your sales team

Managing and motivating a sales team is crucial for driving success and achieving targets. Effective management involves setting clear expectations, providing ongoing support and guidance, and fostering a positive and collaborative work environment. It is important to establish regular communication channels to keep the team informed and engaged. Motivation can be achieved by recognizing and rewarding individual and team achievements, offering incentives and bonuses, and providing opportunities for professional growth and development.

A strong sales leader understands the unique strengths and weaknesses of each team member and tailors their management approach accordingly, ensuring that they feel valued, empowered, and motivated to perform at their best.

Setting up your configure, price, and quote (CPQ) tool and the processes around those tools to track the right things and provide the right performance data is crucial. You, as the owner, will also need to learn to manage the people, the activities, and the numbers needed to ensure revenue growth is happening.

Conclusion

If you can maximize your effectiveness in owner-led sales by hiring administrative help and bringing on someone to do basic account management while you implement the tools and processes to manage sales by the numbers, you’ll be ready to add staff and eventually hand much of the sales work off to an effectively run team.