Thinking of taking your information technology company to the next level with a major capital investment or employing additional sales resources? They are decisions that can impact your company’s future. It might be time to consider the choice of offering your business. We tend to be approached by information technology company owners at a crossroads of taking the business to the next level.
5 million this can be a critical decision. So with that backdrop, let’s look at what might be a typical situation. 3.5 million in sales, has a good band of loyal customers, produces a nice income for its owner or owners, and has a lot more potential for sales growth in the opinion of the owner. Some lamp has been lit that suggests that they have to step this up to the next level after counting on word of mouth and the passion and energy of the owner to get to this stage.
I have either spoken with an increase of than 30, mainly information technology centered companies over the years that have encountered this exact situation and can count on one hand the ones that had a successful result. The natural inclination is to bite the bullet and bring on that expensive reference and hope your staff will keep up with the big influx of orders.
The reality is that generally the execution was an extremely expensive failure. 1. The 80 20 rule of salesmen. You know that one. 80% of sales are produced by 20% of the salespeople. If you’re only hiring a couple of, it is likely that you’ll not get a top performer. 2. The creator of the company is a technology guy and has no sales history, so the odds of him making the right hiring decision are greatly diminished.
He won’t learn how to properly established milestones, judge improvement, assess performance objectively, or coach the new hire. 3. To employ a good salesman that are designed for a complicated sale takes a bottom salary and a draw for at least 6 months that puts him in a much better financial condition than he is at on his last job.
150,000 annual run rate for a good candidate. 4. When you have not had a formalized sales effort before, you are probably lacking the sales infrastructure that your brand-new hire can be used to. Proper contact management systems, customer and prospect databases, developed collateral materials and sales presentations, sales routine timeframes and critical milestones and developed competition feature benefit matrix will need to be developed.
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5. Current customers are most likely the first adapters, risk takers, pioneers, etc., and are not afraid of making the buying decision with a small, more dangerous company. These early adopters, however, aren’t considered good sources for the greater conservative majority that requires the security of a big company support their product selection decision. 6. Your new hire is most probably someone that came from a bigger company like IBM or Oracle and could be comfortable performing in a founded sales department. It is the rare salesman that can transform from that environment to a fresh role of developing the sales infrastructure while trying to meet a sales quota.
7. Throw in addition to the objection that he hasn’t had to deal with before, the small company risk factor, and the chances of success diminish. When he was hired, he guaranteed you that he’d bring his very productive address book and deliver many of these customers from his Blue Chip prior company. He and you soon discover that he might not have been totally accountable for his sales success. Having Oracle or IBM on his business credit card may have been the predominant success factor.
8. Finally, this transformation from a primary band of early adapters to now selling to the conservative majority elongates the sales routine by 25% up to twice his previous experience. Unless you fire him first, he’ll probably stop when his pull operates out. What exactly are the alternatives? Certainly strategic alliances, route partnerships, value added resellers are options, but again the success rate for these preparations are suspect with no sales history in the executive suite.
A lower-risk approach is to outsource your VP of Sales or Chief Marketing Officer function. There are a number of highly experienced and talented freelancers that you can hire on a consulting basis that can help you establish a sales and marketing infrastructure and show you through the staffing process. Which may be the ultimate way to go.