Are you a start-up CEO looking to bring on a sales person?
If so you will probably be contemplating:
- In lieu of a salary, should I induce a sales person with equity to work for my start-up?
- Could I afford to hire a sales person (without equity)?
- Can I find an organisation to be my sales/distribution channel?
Before we get deeper I want to emphasise something that should be top of mind:
As a start-up CEO you must be the organisation’s best sales person.
You need to know where your sales opportunities are, communicate the value proposition of your product, manage the sales process and close deals!
Quite frankly, if you don’t know how to sell your own products, you should fire yourself and find a better CEO!
A CEO who is good at selling will also be smarter at finding the right sales person (and eventually sales team) for their organisation.
Here are some things you should consider:
Equity Partner Sales Person
- Inducing a sales person with equity is attractive for many start-ups. It appears to be an inexpensive option for small organisations.
- It’s smart to link equity allocation to performance. Avoid handing over a big chunk of equity on the first day! One organisation I know issue a percentage of equity for every sale made by the sales person. Equity can be earned in lieu of sales commissions or bonuses. Seth Godin’s Start-up School Podcast covers this in great detail.
- Be aware that the person who agrees to help launch your start-up by selling your product may not be around in 2-3 years time. A poorly written shareholders agreement could erode much of your equity with very little return.
Employing a Sales Person Without Equity
- This is probably the most undervalued option.
- As a start-up you probably don’t have a lot of money lying around to pay top dollar for an experienced sales person.
- Another consideration is to hire one or two inexperienced graduate/university students for your start-up.
- Read this article.
- Uni students could work cheaply for 2-3 days per week. You could pay them a minimum base salary and offer commissions on sales success.
- Working in a start-up delivers great benefits to university students’ future careers. If you position this job well you may get a great range of high quality graduates/students wanting to be part of your start-up. Some may offer to work for free!
- Employees with less experience are usually willing to mould their approach to yours, as opposed to someone more experienced will likely use a selling style/strategy they have already learned. It’s a fine balance. A sales executive with extensive experience could get your sales moving faster than a graduate. But the experienced ones know how much they are worth will expect an attractive salary package.
Using an Outside Organisation for Sales Distribution
- Depending on what your product is and your customer network, you may consider distributing your products through a third-party organisation. If you work in industries like FMCG and you are a start-up you won’t have much choice.
- The up-side is that someone takes on the responsibility of selling your product. It leaves you to focus on what you do best – like pushing out better products or improving your software platform.
- The down-side is that you tend to lose control of customer relationships and your distributor will have a big say in your pricing and profit.
- Getting the right hiring model for a sales person is essential for a start-up. The wrong strategy will take the oxygen out of your organisation.
- The start-up CEO needs to be a high-performing sales person. If you are keen to be that person but don’t yet measure up, then find a coach that can help.