As an MSP business owner, one of the pivotal decisions you’ll face is knowing when to expand your sales team. Many factors influence this timing, from the structure of your company to your growth aspirations. Here’s a comprehensive guide on the strategic hiring of sales staff to accelerate your growth.
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Hire Sales Staff Early If You Have The Resources
If you have the backing of private equity and a solid cash flow, the best time to hire sales staff is right from the beginning. David Javaheri, one of our top winners, exemplifies this strategy. When he launched his IT company, his first hires were salespeople. Similarly, Robert Herjavec started the Herjavec Group with himself, another sales professional, and a tech support person. This early investment in sales resources laid a strong foundation for their rapid growth.
The Benefits Of Early Sales Hires
Hiring sales staff early allows you to focus on building relationships with potential clients from the get-go. It ensures that your sales pipeline is robust, providing a steady stream of new business opportunities. Additionally, having dedicated salespeople enables you to quickly identify and capitalize on market opportunities, giving you a competitive edge.
Case Studies: Success From The Start
- David Javaheri: His initial hires included sales professionals who could immediately start driving business. This proactive approach allowed his company to scale quickly and establish a strong market presence.
- Robert Herjavec: With two salespeople and one tech support person, Robert’s company could efficiently manage client acquisition and service delivery, leading to rapid growth and success.
Starting Small: The Role Of The SDR
If you’re a smaller operation, your initial focus should be on hiring a Sales Development Representative (SDR). A good SDR is invaluable for driving growth. They can consistently generate opportunities by following up on inbound leads, referrals, and marketing campaigns. Ideally, an effective SDR should be able to book at least eight good appointments a month, setting the stage for future sales conversions.
What Makes A Good SDR?
An effective SDR is persistent, organized, and has excellent communication skills. They should be comfortable making numerous calls and following up on various leads. The ability to manage a CRM system efficiently and track their progress is crucial for success in this role.
The Impact Of An SDR On Your Business
An SDR can help you maintain a consistent flow of potential clients, allowing you to focus on closing deals and delivering services. By handling the initial stages of the sales process, they free up your time to concentrate on higher-value activities. This role is essential in ensuring that your business continues to grow without overwhelming your current resources.
Scaling Up: When To Hire An Account Manager
Once you’ve reached around 20-25 managed clients, each contributing $2,000 to $3,000 a month, it’s crucial to hire an Account Manager. The Account Manager will develop IT roadmaps, manage client budgets, and oversee project implementation. They will also handle Quarterly Business Reviews (QBRs) and maintain ongoing client relationships, ensuring your service quality remains high and your clients are satisfied.
Responsibilities Of An Account Manager
- IT Roadmaps: Creating and managing long-term IT strategies for clients.
- Client Budgets: Developing and overseeing client budgets to ensure financial efficiency and resource allocation.
- Project Management: Coordinating with engineering and onboarding teams to implement client projects.
- Quarterly Business Reviews: Conducting regular reviews with clients to assess progress, address issues, and plan future initiatives.
The Financials
Here’s a quick breakdown:
- 20-25 clients: Each paying around $3,000 a month.
- Total monthly revenue: Approximately $75,000.
- Annual recurring revenue (ARR): Around $900,000.
- Project revenue: Estimated at $540,000, based on industry averages.
The Account Manager will handle this substantial revenue and manage up to 100 QBRs a year. This role is essential to ensure that your growth does not compromise client satisfaction and service delivery.
Expanding Further: Adding More Sales Roles
As you continue to grow, your sales team should evolve. After establishing a solid foundation with SDRs and Account Managers, the next step is to hire full-time outside salespeople. This phase typically involves:
- Additional SDRs: To keep the pipeline full and ensure consistent appointment scheduling.
- Outside Sales Hunters: To close larger deals and generate new business.
Building A Balanced Sales Team
Your marketing team, alongside the SDRs, should develop leads, with the outside sales team handling smaller deals and collaborating with you on larger opportunities. This balanced approach helps in managing workload and maximizing growth potential.
Training And Development
Investing in continuous training and development for your sales team is crucial. Ensure that they are up-to-date with the latest sales techniques, industry trends, and product knowledge. Providing ongoing training helps maintain high performance and motivates your team to achieve their targets.
The Reality Of SDR Turnover
It’s important to recognize that SDR positions have a high turnover rate. The nature of the job can be demanding, and many SDRs view it as a stepping stone rather than a long-term career. To retain top talent, you need to provide clear growth paths within your organization. This can include:
- Promotions to Senior SDR roles: With responsibilities for recruiting and training new SDRs.
- Transitioning to Account Management: For those who excel in client relations.
- Opportunities in Outside Sales: For ambitious SDRs aiming for higher earning potential.
Retention Strategies
To keep your SDRs motivated, offer them a clear career progression plan. Show them how they can advance within your organization and provide opportunities for skill development. Competitive compensation packages, including performance-based incentives, can also help retain top performers.
Conclusion: Hire When You Want To Grow
The right time to hire more sales staff is when you are ready to grow. Start with an SDR to generate leads and appointments, then add an Account Manager once your client base reaches a substantial level. As you scale, incorporate outside sales roles and additional SDRs to maintain momentum.
Hiring strategically not only supports your immediate growth goals but also ensures that you have a solid foundation for future expansion. Remember, the key is to hire with intention and always plan for the next stage of your company’s development.
