This article was written by Barry McKinley, SCORE Orange County Business Mentor
The majority of small businesses fail within the first five years, not because of the product or service, not because of poor accounting practices, but from lack of sales! The owner is trying to wear too many hats, and at some point must commit to hiring a full time salesperson to continue sales growth.
Hiring the right person is not luck; it takes a lot of work and planning. It is not uncommon to interview 25-75 applicants before finding the right fit. I am sure you didn’t marry your mate after a ½ hour discussion. Hiring the right person is critical to the success and growth of your business.
In your planning stage you want to consider the following:
· What is the profile of your ideal applicant?
· Write a complete job description, who will they be calling on and what will they be selling?
· How will they determine who the customers are?
· What lead programs are in place?
· How will they be paid, commission, salary or a combination?
· How will you handle expenses, car, travel, meals, gas, insurance, parking, and misc.?
· Who will train the salesperson and what type of training is required?
· Who will be doing “Role Playing” with the salesperson?
· What type of sales tools will you be providing?
· Will you have a sales process to follow?
· What will be the requirements for support staff of the sales person?
· How much leeway will be given to the salesperson in regards to terms and pricing?
· Will you hire somebody within or outside the industry?
· Will you have defined sales areas?
· What type of search will you use to find the idea candidate?
· What will be their sales goals, 3 months, 6 months and a year?
· How will you establish these goals and will there also be incentives?
· How will you measure the sales person production and results?
· How will you manage them without micro-managing?
· What type of reporting will you require from them?
· What are the needed special skills of the person you wish to hire?
· Who will be doing the interviewing and what questions will be asked?
· Who will check references, social media, and handle drug testing?
Too many companies hiring expect almost immediate results. Depending on the product and the selling cycle it may take anywhere from one month to one year for the salesperson to become effective and profitable.
Salespeople should be put on a commission program at some point 60-100% commission. But at the start without having any sales or ramp up time the salesperson can’t be expected to live on “air”. A draw program where the salesperson is paid a minimum salary until sales commissions exceed the draw then they are put on straight commission or some variation of that. At the start expect turnover, normally even in the best situations sales people are coming and going every 2-4 years.
As the territory begins to grow you can base your sales quota on 2-10 times sales, depending on volume, profit, competition and other variables.
Some mistakes to avoid:
· Not having a sales plan in place before hiring
· Not having a clear picture of your “Ideal Candidate”
· Not interviewing a number of sales people to be able to compare
· Trying to hire ONLY a person with your industry experience
· Not making the applicants aware during the interview process of what is expected
· Not having a fair compensation package –keeping in mind lack of sales at startup
· Not having a good product and sales training program
· No sales tools
· No support and cheerleading from the office
· No systems to measure progress and results
· Setting expectations too high
Remember it will cost your company to hire a “good” salesperson anywhere from 100% to 200% of annual earnings. So you want to move slowly and have an excellent plan and training program in place to insure success.
For more ideas, SCORE offers a hiring workshop “Hiring Made Easy”, as well as offering personal one-one counseling regarding hiring sales team members.